[Federal Register Volume 84, Number 159 (Friday, August 16, 2019)]
[Rules and Regulations]
[Pages 42044-42701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-16762]
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Vol. 84
Friday,
No. 159
August 16, 2019
Part II
Book 2 of 2
Pages 42043-42798
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413 and 495
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2020 Rates; Quality
Reporting Requirements for Specific Providers; Medicare and Medicaid
Promoting Interoperability Programs Requirements for Eligible Hospitals
and Critical Access Hospitals; Final Rule
Federal Register / Vol. 84 , No. 159 / Friday, August 16, 2019 /
Rules and Regulations
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, and 495
[CMS-1716-F]
RIN 0938-AT73
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Policy Changes and Fiscal Year 2020 Rates; Quality
Reporting Requirements for Specific Providers; Medicare and Medicaid
Promoting Interoperability Programs Requirements for Eligible Hospitals
and Critical Access Hospitals
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: We are revising the Medicare hospital inpatient prospective
payment systems (IPPS) for operating and capital-related costs of acute
care hospitals to implement changes arising from our continuing
experience with these systems for FY 2020 and to implement certain
recent legislation. We also are making changes relating to Medicare
graduate medical education (GME) for teaching hospitals and payments to
critical access hospital (CAHs). In addition, we are providing the
market basket update that will apply to the rate-of-increase limits for
certain hospitals excluded from the IPPS that are paid on a reasonable
cost basis, subject to these limits for FY 2020. We 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) for FY 2020. In this FY
2020 IPPS/LTCH PPS final rule, we are addressing wage index disparities
impacting low wage index hospitals; providing for an alternative IPPS
new technology add-on payment pathway for certain transformative new
devices and qualified infectious disease products; and revising the
calculation of the IPPS new technology add-on payment. In addition, we
are revising and clarifying our policies related to the substantial
clinical improvement criterion used for evaluating applications for the
new technology add-on payment under the IPPS.
We are establishing new requirements or revising existing
requirements for quality reporting by specific Medicare providers
(acute care hospitals, PPS-exempt cancer hospitals, and LTCHs). We also
are establishing new requirements and revising existing requirements
for eligible hospitals and critical access hospitals (CAHs)
participating in the Medicare and Medicaid Promoting Interoperability
Programs. We are updating policies for the Hospital Value-Based
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program,
and the Hospital-Acquired Condition (HAC) Reduction Program.
DATES: This final rule is effective October 1, 2019.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-
4487, Operating Prospective Payment, MS-DRGs, Wage Index, New Medical
Service and Technology Add-On Payments, Hospital Geographic
Reclassifications, Graduate Medical Education, Capital Prospective
Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital
(DSH) Payment Adjustment, Medicare-Dependent Small Rural Hospital (MDH)
Program, Low-Volume Hospital Payment Adjustment, and Critical Access
Hospital (CAH) Issues.
Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and
Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective
Payment System and MS-LTC-DRG Relative Weights Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786-0110, Frontier Community Health Integration
Project Demonstration Issues.
Erin Patton, (410) 786-2437, Hospital Readmissions Reduction
Program Administration Issues.
Lein Han, 410-786-0205, Hospital Readmissions Reduction Program--
Measures Issues.
Michael Brea, (410) 786-4961, Hospital-Acquired Condition Reduction
Program Issues.
Annese Abdullah-Mclaughlin, (410) 786-2995, Hospital-Acquired
Condition Reduction Program--Measures Issues.
Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261,
Hospital Inpatient Quality Reporting and Hospital Value-Based
Purchasing--Program Administration, Validation, and Reconsideration
Issues.
Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality
Reporting and Hospital Value-Based Purchasing--Measures Issues Except
Hospital Consumer Assessment of Healthcare Providers and Systems
Issues.
Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality
Reporting and Hospital Value-Based Purchasing--Hospital Consumer
Assessment of Healthcare Providers and Systems Measures Issues.
Nekeshia McInnis, (410) 786-4486 and Ronique Evans, (410) 786-1000,
PPS-Exempt Cancer Hospital Quality Reporting Issues.
Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data
Reporting Issues.
Elizabeth Holland, (410) 786-1309, Dylan Podson (410) 786-5031, and
Bryan Rossi (410) 786-065l, Promoting Interoperability Programs.
Benjamin Moll, (410) 786-4390, Provider Reimbursement Review Board
Appeals Issues.
SUPPLEMENTARY INFORMATION:
Tables Available Through the Internet on the CMS Website
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, the majority of the
IPPS tables and LTCH PPS tables are no longer published in the Federal
Register. Instead, these tables, generally, will be available only
through the internet. The IPPS tables for this FY 2020 final rule are
available through the internet on the CMS website at: https://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 2020 IPPS Final Rule Home Page'' or ``Acute
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2020
final rule are available through the internet on the CMS website at:
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation
Number CMS-1716-F. For further details on the contents of the tables
referenced in this final rule, we refer readers to section VI. of the
Addendum to this FY 2020 IPPS/LTCH PPS final rule.
Readers who experience any problems accessing any of the tables
that are posted on the CMS websites, as previously identified, should
contact Michael Treitel at (410) 786-4552.
Table of Contents
I. Executive Summary and Background
A. Executive Summary
B. Background Summary
C. Summary of Provisions of Recent Legislation Implemented in
This Final Rule
D. Issuance of Notice of Proposed Rulemaking
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E. Advancing Health Information Exchange
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
B. MS-DRG Reclassifications
C. Adoption of the MS-DRGs in FY 2008
D. FY 2020 MS-DRG Documentation and Coding Adjustment
E. Refinement of the MS-DRG Relative Weight Calculation
F. Changes to Specific MS-DRG Classifications
G. Recalibration of the FY 2020 MS-DRG Relative Weights
H. Add-On Payments for New Services and Technologies for FY 2020
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
B. Worksheet S-3 Wage Data for the FY 2020 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the FY 2020 Unadjusted Wage Index
E. Occupational Mix Adjustment to the FY 2020 Wage Index
F. Analysis and Implementation of the Occupational Mix
Adjustment and the Final FY 2020 Occupational Mix Adjusted Wage
Index
G. Application of the Rural Floor, Expired Imputed Floor Policy,
and Application of the State Frontier Floor
H. FY 2020 Wage Index Tables
I. Revisions to the Wage Index Based on Hospital Redesignations
and Reclassifications
J. Out-Migration Adjustment Based on Commuting Patterns of
Hospital Employees
K. Reclassification From Urban to Rural Under Section
1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103
L. Process for Requests for Wage Index Data Corrections
M. Labor-Related Share for the FY 2020 Wage Index
N. Final Policies To Address Wage Index Disparities Between High
and Low Wage Index Hospitals
IV. Other Decisions and Changes to the IPPS for Operating Costs
A. Changes to MS-DRGs Subject to Postacute Care Transfer and MS-
DRG Special Payment Policies
B. Changes in the Inpatient Hospital Updates for FY 2020 (Sec.
412.64(d))
C. Rural Referral Centers (RRCs) Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)
D. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
E. Indirect Medical Education (IME) Payment Adjustment (Sec.
412.105)
F. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2020 (Sec. 412.106)
G. Hospital Readmissions Reduction Program: Updates and Changes
(Sec. Sec. 412.150 Through 412.154)
H. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
I. Hospital-Acquired Condition (HAC) Reduction Program
J. Payments for Indirect and Direct Graduate Medical Education
Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)
K. Rural Community Hospital Demonstration Program
V. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Annual Update for FY 2020
VI. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY
2020
B. Methodologies and Requirements for TEFRA Adjustments to Rate-
of-Increase Ceiling
C. Critical Access Hospitals (CAHs)
VII. Changes to the Long-Term Care Hospital Prospective Payment
System (LTCH PPS) for FY 2020
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2020
C. Payment Adjustment for LTCH Discharges That Do Not Meet the
Applicable Discharge Payment Percentage
D. Changes to the LTCH PPS Payment Rates and Other Changes to
the LTCH PPS for FY 2020
VIII. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Hospital Inpatient Quality Reporting (IQR) Program
B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
D. Changes to the Medicare and Medicaid Promoting
Interoperability Programs
IX. MedPAC Recommendations
X. Other Required Information
A. Publicly Available Data
B. Collection of Information Requirements
XI. Provider Reimbursement Review Board (PRRB) Appeals
Regulation Text
Addendum--Schedule of Standardized Amounts, Update Factors, and Rate-
of-Increase Percentages Effective With Cost Reporting Periods Beginning
on or After October 1, 2019 and Payment Rates for LTCHs Effective With
Discharges Occurring on or After October 1, 2019
I. Summary and Background
II. Changes to the Prospective Payment Rates for Hospital Inpatient
Operating Costs for Acute Care Hospitals for FY 2020
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 2020
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2020
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2020
V. Updates to the Payment Rates for the LTCH PPS for FY 2020
A. LTCH PPS Standard Federal Payment Rate for FY 2020
B. Adjustment for Area Wage Levels Under the LTCH PPS for FY
2020
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
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 2020
VI. Tables Referenced in This FY 2020 IPPS/LTCH PPS Final Rule and
Available Through the Internet on the CMS Website
Appendix A--Economic Analyses
I. Regulatory Impact Analysis
A. Statement of Need
B. Overall Impact
C. Objectives of the IPPS and the LTCH PPS
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
H. Effects of Other Policy Changes
I. Effects of Changes in the Capital IPPS
J. Effects of Payment Rate Changes and Policy Changes Under the
LTCH PPS
K. Effects of Requirements for Hospital Inpatient Quality
Reporting (IQR) Program
L. Effects of Requirements for the PPS-Exempt Cancer Hospital
Quality Reporting (PCHQR) Program
M. Effects of Requirements for the Long-Term Care Hospital
Quality Reporting Program (LTCH QRP)
N. Effects of Requirements Regarding the Medicare Promoting
Interoperability Program
O. Alternatives Considered
P. Reducing Regulation and Controlling Regulatory Costs
Q. Overall Conclusion
R. Regulatory Review Costs
II. Accounting Statements and Tables
A. Acute Care Hospitals
B. LTCHs
III. Regulatory Flexibility Act (RFA) Analysis
IV. Impact on Small Rural Hospitals
V. Unfunded Mandate Reform Act (UMRA) Analysis
VI. Executive Order 13175
VII. Executive Order 12866
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Appendix B: Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2020
A. FY 2020 Inpatient Hospital Update
B. Update for SCHs and MDHs for FY 2020
C. FY 2020 Puerto Rico Hospital Update
D. Update for Hospitals Excluded From the IPPS
E. Update for LTCHs for FY 2020
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 FY 2020 IPPS/LTCH PPS 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). This final
rule also makes policy changes to programs associated with Medicare
IPPS hospitals, IPPS-excluded hospitals, and LTCHs. In this final rule,
we are addressing wage index disparities impacting low wage index
hospitals; providing for an alternative IPPS new technology add-on
payment pathway for certain transformative new devices and qualified
infectious disease products; revising the calculation of the IPPS new
technology add-on payment; and making revisions and clarifications
related to the substantial clinical improvement criterion under the
IPPS.
We are establishing new requirements and revising existing
requirements for quality reporting by specific providers (acute care
hospitals, PPS-exempt cancer hospitals, and LTCHs) that are
participating in Medicare. We also are establishing new requirements
and revising existing requirements for eligible hospitals and CAHs
participating in the Medicare and Medicaid Promoting Interoperability
Programs. We are updating policies for the Hospital Value-Based
Purchasing (VBP) Program, the Hospital Readmissions Reduction Program,
and the Hospital-Acquired Condition (HAC) Reduction Program.
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 2020 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; extended neoplastic disease care 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). Religious nonmedical
health care institutions (RNHCIs) are also excluded from the IPPS.
Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and
section 307(b)(1) of the BIPA (Pub. L. 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 LTCHs described in section
1886(d)(1)(B)(iv) of the Act.
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, which provides for the
establishment of 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(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.
Section 1886(b)(3)(B)(viii) of the Act, which requires the
Secretary to reduce the applicable percentage increase that would
otherwise apply to the standardized amount applicable to a subsection
(d) hospital for discharges occurring in a fiscal year if the hospital
does not submit data on measures in a 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, which establishes a Hospital-
Acquired Condition (HAC) Reduction Program, under which payments to
applicable hospitals are adjusted to provide an incentive to reduce
hospital-acquired conditions.
Section 1886(q) of the Act, as amended by section 15002 of
the 21st Century Cures Act, which establishes the Hospital Readmissions
Reduction Program. Under the program, payments for discharges from an
applicable hospital as defined under section 1886(d) of the Act will be
reduced to account for certain excess readmissions. Section 15002 of
the 21st Century Cures Act requires the Secretary to compare hospitals
with respect to the number of their Medicare-Medicaid dual-eligible
beneficiaries (dual-eligibles) in determining the extent of 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 (DSH) 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 requires
that, for fiscal year 2014 and each subsequent fiscal year, subsection
(d) hospitals that would otherwise receive a DSH payment made under
section 1886(d)(5)(F) of the Act will receive two separate payments:
(1) 25 percent of the amount they previously would have received under
section 1886(d)(5)(F) of the Act 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 section 1886(d)(5)(F) of the Act; (2) 1
minus the percent change in the percent of individuals who are
uninsured; and (3) a hospital's uncompensated care amount relative to
the uncompensated care amount of all DSH hospitals expressed as a
percentage.
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Section 1886(m)(6) of the Act, as added by section
1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act
of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the
Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the
establishment of site neutral payment rate criteria under the LTCH PPS,
with implementation beginning in FY 2016, and provides for a 4-year
transitional blended payment rate for discharges occurring in LTCH cost
reporting periods beginning in FYs 2016 through 2019. Section 51005(b)
of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B) by
adding new clause (iv), which specifies that the IPPS comparable amount
defined in clause (ii)(I) shall be reduced by 4.6 percent for FYs 2018
through 2026.
Section 1899B of the Act, as added by section 2(a) of the
Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT
Act) (Pub. L. 113-185), which provides for the establishment of
standardized data reporting for certain post-acute care providers,
including LTCHs.
2. Summary of the Major Provisions
In this final rule, we provide a summary of the major provisions in
this FY 2020 IPPS/LTCH PPS final rule. In general, these major
provisions are part of the annual update to the payment policies and
payment rates, consistent with the applicable statutory provisions. A
general summary of the proposed changes that were included in the FY
2020 IPPS/LTCH PPS proposed rule is presented in section I.D. of the
preamble of this final rule.
a. MS-DRG Documentation and Coding Adjustment
Section 631 of the American Taxpayer Relief Act of 2012 (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. The FY 2014 through FY 2017 adjustments
represented 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. Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment
we intended to make in FY 2018 with a 0.5 percent positive adjustment
to the standardized amount of Medicare payments to acute care hospitals
for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently
adjusted to 0.4588 percent by section 15005 of the 21st Century Cures
Act.) Therefore, for FY 2020, we are making an adjustment of +0.5
percent to the standardized amount.
b. Revisions and Clarifications to the New Technology Add-On Payment
Policy Substantial Clinical Improvement Criterion Under the IPPS
In the proposed rule, in addition to a broad request for public
comments for potential rulemaking in future years, in order to respond
to stakeholder feedback requesting greater understanding of CMS'
approach to evaluating substantial clinical improvement, we solicited
public comments on specific changes or clarifications to the IPPS and
Outpatient Prospective Payment System (OPPS) substantial clinical
improvement criterion used to evaluate applications for new technology
add-on payments under the IPPS and the transitional pass-through
payment for additional costs of innovative devices under the OPPS that
CMS might consider making in this FY 2020 IPPS/LTCH PPS final rule for
applications received beginning in FY 2020 for the IPPS and CY 2020 for
the OPPS, to provide greater clarity and predictability.
In this final rule, after consideration of public comments, we are
revising and clarifying certain aspects of our evaluation of the
substantial clinical improvement criterion under the IPPS in 42 CFR
412.87.
c. Alternative Inpatient New Technology Add-On Payment Pathway for
Transformative New Devices and Antimicrobial Resistant Products
As discussed in section III.H.8. of the preamble of this final
rule, after consideration of public comments, given the Food and Drug
Administration's (FDA's) expedited programs, and consistent with the
Administration's commitment to addressing barriers to health care
innovation and ensuring that Medicare beneficiaries have access to
critical and life-saving new cures and technologies that improve
beneficiary health outcomes, we are adopting an alternative pathway for
the inpatient new technology add-on payment for certain transformative
medical devices. In situations where a new medical device has received
FDA marketing authorization (that is, the device has received pre-
market approval (PMA); 510(k) clearance; or the granting of a De Novo
classification request) and is the subject of the FDA's Breakthrough
Devices Program, we are finalizing our proposal to create an
alternative inpatient new technology add-on payment pathway to
facilitate access to this technology for Medicare beneficiaries. In
addition, after consideration of public comments and concerns related
to antimicrobial resistance and its serious impact on Medicare
beneficiaries and public health overall, we are finalizing an
alternative inpatient new technology add-for Qualified Infectious
Disease Products (QIDPs).
Specifically, we are establishing that, for applications received
for IPPS new technology add-on payments for FY 2021 and subsequent
fiscal years, if a medical device is the subject of the FDA's
Breakthrough Devices Program or if a medical product technology
receives the FDA's QIDP designation and received FDA marketing
authorization, such a device or product will be considered new and not
substantially similar to an existing technology for purposes of new
technology add-on payment under the IPPS. We are also establishing that
the medical device or product will not need to meet the requirement
under 42 CFR 412.87(b)(1) that it represent an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries.
d. Revision of the Calculation of the Inpatient Hospital New Technology
Add-On Payment
The current calculation of the new technology add-on payment is
based on the cost to hospitals for the new medical service or
technology. Under Sec. 412.88, if the costs of the discharge
(determined by applying cost-to-charge ratios (CCRs), as described in
Sec. 412.84(h)) exceed the full DRG payment (including payments for
IME and DSH, but excluding outlier payments), Medicare will make an
add-on payment equal to the lesser of: (1) 50 percent of the costs of
the new medical service or technology; or (2) 50 percent of the amount
by which the costs of the case exceed the standard DRG payment. 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 or medical service.
As discussed in section III.H.9. of the preamble of this final
rule, after consideration of the concerns raised by
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commenters and other stakeholders, we agree that capping the add-on
payment amount at 50 percent could, in some cases, not adequately
reflect the costs of new technology or sufficiently support healthcare
innovations.
After consideration of public comments, we are finalizing the
proposed modification to the current payment amount to increase the
maximum add-on payment amount to 65 percent of the costs of the new
technology or medical service (except with respect to a medical product
designated by the FDA as a QIDP). Therefore, we are establishing that,
beginning with discharges occurring on or after October 1, 2019, for a
new technology other than a medical product designated as a QIDP by the
FDA, if the costs of a discharge involving a new medical service or
technology exceed the full DRG payment (including payments for IME and
DSH, but excluding outlier payments), Medicare will make an add-on
payment equal to the lesser of: (1) 65 percent of the costs of the new
medical service or technology; or (2) 65 percent of the amount by which
the costs of the case exceed the standard DRG payment. In addition,
after consideration of public comments and concerns related to
antimicrobial resistance and its serious impact on Medicare
beneficiaries and public health overall, we are establishing that,
beginning with discharges occurring on or after October 1, 2019, for a
new technology that is a medical product designated as a QIDP by the
FDA, if the costs of a discharge involving a new medical service or
technology exceed the full DRG payment (including payments for IME and
DSH, but excluding outlier payments), Medicare will make an add-on
payment equal to the lesser of: (1) 75 percent of the costs of the new
medical service or technology; or (2) 75 percent of the amount by which
the costs of the case exceed the standard DRG payment.
e. Finalized Policies To Address Wage Index Disparities
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20372), we
invited the public to submit further comments, suggestions, and
recommendations for regulatory and policy changes to the Medicare wage
index. Many of the responses received from this request for information
(RFI) reflect a common concern that the current wage index system
perpetuates and exacerbates the disparities between high and low wage
index hospitals. Many respondents also expressed concern that the
calculation of the rural floor has allowed a limited number of States
to manipulate the wage index system to achieve higher wages for many
urban hospitals in those States at the expense of hospitals in other
States, which also contributes to wage index disparities.
To help mitigate these wage index disparities, including those
resulting from the inclusion of hospitals with rural reclassifications
under 42 CFR 412.103 in the rural floor, in this final rule, we are
reducing the disparity between high and low wage index hospitals by
increasing the wage index values for certain hospitals with low wage
index values and doing so in a budget neutral manner through an
adjustment applied to the standardized amounts for all hospitals, as
well as changing the calculation of the rural floor. We also are
providing for a transition for hospitals experiencing significant
decreases in their wage index values as compared to their final FY 2019
wage index. We are making these changes in a budget neutral manner.
In this final rule, we are increasing the wage index for hospitals
with a wage index value below the 25th percentile wage index value for
a fiscal year by half the difference between the otherwise applicable
final wage index value for a year for that hospital and the 25th
percentile wage index value for that year across all hospitals.
Furthermore, this policy will be effective for at least 4 years,
beginning in FY 2020, in order to allow employee compensation increases
implemented by these hospitals sufficient time to be reflected in the
wage index calculation. In order to offset the estimated increase in
IPPS payments to hospitals with wage index values below the 25th
percentile wage index value, we are applying a uniform budget
neutrality factor to the standardized amount.
In addition, we are removing urban to rural reclassifications from
the calculation of the rural floor, such that, beginning in FY 2020,
the rural floor is calculated without including the wage data of
hospitals that have reclassified as rural under section 1886(d)(8)(E)
of the Act (as implemented in the regulations at Sec. 412.103). Also,
for the purposes of applying the provisions of section
1886(d)(8)(C)(iii) of the Act, we are removing urban to rural
reclassifications from the calculation of ``the wage index for rural
areas in the State in which the county is located'' as referred to in
the statute.
Lastly, for FY 2020, we are placing a 5-percent cap on any decrease
in a hospital's wage index from the hospital's final wage index in FY
2019. We are applying a budget neutrality adjustment to the
standardized amount so that our transition for hospitals that could be
negatively impacted is implemented in a budget neutral manner.
f. 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 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 the amount that
otherwise would have been paid as Medicare DSH payments, is paid as
additional payments after the amount is reduced for changes in the
percentage of individuals that are uninsured. Each Medicare DSH will
receive an additional payment based on its share of the total amount of
uncompensated care for all Medicare DSHs for a given time period.
In this FY 2020 IPPS/LTCH PPS final rule, we have updated our
estimates of the three factors used to determine uncompensated care
payments for FY 2020. We continue to use uninsured estimates produced
by CMS' Office of the Actuary (OACT), as part of the development of the
National Health Expenditure Accounts (NHEA) in the calculation of
Factor 2. We also are using a single year of data on uncompensated care
costs from Worksheet S-10 for FY 2015 to determine Factor 3 for FY
2020. In addition, we are continuing to use only data regarding low-
income insured days (Medicaid days for FY 2013 and FY 2017 SSI days) to
determine the amount of uncompensated care payments for Puerto Rico
hospitals, and Indian Health Service and Tribal hospitals. We did not
adopt specific Factor 3 polices for all-inclusive rate providers for FY
2020. In this final rule, we also are continuing to use the following
established policies: (1) For providers with multiple cost reports,
beginning in the same fiscal year, to use the longest cost report and
annualize Medicaid data and uncompensated care data if a hospital's
cost report does not equal 12 months of data; (2) in the rare case
where a provider has multiple cost reports beginning in the same fiscal
year, but one report also spans the entirety of the following fiscal
year, such that the hospital has no cost report for that fiscal year,
to use the cost report that spans both fiscal years for the latter
fiscal year;
[[Page 42049]]
and (3) to apply statistical trim methodologies to potentially aberrant
cost-to-charge ratios (CCRs) and potentially aberrant uncompensated
care costs reported on the Worksheet S-10.
g. Changes to the LTCH PPS
In this FY 2020 IPPS/LTCH PPS final rule, we set forth changes to
the LTCH PPS Federal payment rates, factors, and other payment rate
policies under the LTCH PPS for FY 2020. We also are establishing the
payment adjustment for LTCH discharges when the LTCH does not meet the
applicable discharge payment percentage and a reinstatement process, as
required by section 1886(m)(6)(C) of the Act. An LTCH will be subject
to this payment adjustment if, for cost reporting periods beginning in
FY 2020 and subsequent fiscal years, the LTCH's percentage of Medicare
discharges that meet the criteria for exclusion from the site neutral
payment rate (that is, discharges paid the LTCH PPS standard Federal
payment rate) of its total number of Medicare FFS discharges paid under
the LTCH PPS during the cost reporting period is not at least 50
percent. We are adopting a probationary cure period as part of the
reinstatement process.
h. Reduction of Hospital Payments for Excess Readmissions
We are making changes to policies for the Hospital Readmissions
Reduction Program, which was established under section 1886(q) of the
Act, as amended by section 15002 of the 21st Century Cures Act. The
Hospital Readmissions Reduction Program requires a reduction to a
hospital's base operating DRG payment to account for excess
readmissions of selected applicable conditions. For FY 2017 and
subsequent years, the reduction is based on a hospital's risk-adjusted
readmission rate during a 3-year period for acute myocardial infarction
(AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary
disease (COPD), elective primary total hip arthroplasty/total knee
arthroplasty (THA/TKA), and coronary artery bypass graft (CABG)
surgery. In this FY 2020 IPPS/LTCH PPS final rule, we are establishing
the following policies: (1) A measure removal policy that aligns with
the removal factor policies previously adopted in other quality
reporting and quality payment programs; (2) an update to the Program's
definition of ``dual-eligible,'' beginning with the FY 2021 program
year to allow for a 1-month lookback period in data sourced from the
State Medicare Modernization Act (MMA) files to determine dual-eligible
status for beneficiaries who die in the month of discharge; (3) a
subregulatory process to address any potential future nonsubstantive
changes to the payment adjustment factor components; and (4) an update
to the Program's regulations at 42 CFR 412.152 and 412.154 to reflect
policies we are finalizing in this final rule and to codify additional
previously finalized policies.
i. Hospital Value-Based Purchasing (VBP) Program
Section 1886(o) of the Act requires the Secretary to establish a
Hospital VBP Program under which value-based incentive payments are
made in a fiscal year to hospitals based on their performance on
measures established for a performance period for such fiscal year. In
this FY 2020 IPPS/LTCH PPS final rule, we are establishing that the
Hospital VBP Program will use the same data used by the HAC Reduction
Program for purposes of calculating the Centers for Disease Control and
Prevention (CDC) National Health Safety Network (NHSN) Healthcare-
Associated Infection (HAI) measures beginning with CY 2020 data
collection, which is when the Hospital IQR Program will no longer
collect data on those measures, and will rely on HAC Reduction Program
validation to ensure the accuracy of CDC NHSN HAI measure data used in
the Hospital VBP Program. We also are newly establishing certain
performance standards.
j. Hospital-Acquired Condition (HAC) Reduction Program
Section 1886(p) of the Act establishes an incentive to hospitals to
reduce the incidence of hospital-acquired conditions by requiring the
Secretary to make an adjustment to payments to applicable hospitals,
effective for discharges beginning on October 1, 2014. This 1-percent
payment reduction applies to hospitals that rank in the worst-
performing 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. As part of our agency-wide Patients over Paperwork and Meaningful
Measures Initiatives, discussed in section I.A.2. of the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41147 and 41148), we are: (1) Adopting a
measure removal policy that aligns with the removal factor policies
previously adopted in other quality reporting and quality payment
programs; (2) clarifying administrative policies for validation of the
CDC NHSN HAI measures; (3) adopting the data collection periods for the
FY 2022 program year; and (4) updating 42 CFR 412.172(f) to reflect
policies finalized in the FY 2019 IPPS/LTCH PPS final rule.
k. Hospital Inpatient Quality Reporting (IQR) Program
Under section 1886(b)(3)(B)(viii) of the Act, subsection (d)
hospitals are required to report data on measures selected by the
Secretary for a fiscal year in order to receive the full annual
percentage increase that would otherwise apply to the standardized
amount applicable to discharges occurring in that fiscal year.
In this FY 2020 IPPS/LTCH PPS final rule, we are making several
changes. We are: (1) Adopting the Safe Use of Opioids--Concurrent
Prescribing eCQM beginning with the CY 2021 reporting period/FY 2023
payment determination with a clarification and update; (2) adopting the
Hybrid Hospital-Wide All-Cause Readmission (Hybrid HWR) measure (NQF
#2879) in a stepwise fashion, beginning with two voluntary reporting
periods which will run from July 1, 2021 through June 30, 2022, and
from July 1, 2022 through June 30, 2023, before requiring reporting of
the measure for the reporting period that will run from July 1, 2023
through June 30, 2024, impacting the FY 2026 payment determination and
for subsequent years; and (3) removing the Claims-Based Hospital-Wide
All-Cause Unplanned Readmission Measure (NQF #1789) (HWR claims-only
measure), beginning with the FY 2026 payment determination. We are not
finalizing our proposal to adopt the Hospital Harm--Opioid-Related
Adverse Events eCQM. We also are establishing reporting and submission
requirements for eCQMs, including policies to: (1) Extend current eCQM
reporting and submission requirements for both the CY 2020 reporting
period/FY 2022 payment determination and CY 2021 reporting period/FY
2023 payment determination; (2) change the eCQM reporting and
submission requirements for the CY 2022 reporting period/FY 2024
payment determination, such that hospitals will be required to report
one, self-selected calendar quarter of data for three self-selected
eCQMs and the Safe Use of Opioids--Concurrent Prescribing eCQM (NQF
#3316e), for a total of four eCQMs; and (3) continue requiring that
EHRs be certified to all available eCQMs used in the Hospital IQR
Program for the CY 2020 reporting period/FY 2022 payment determination
and subsequent years. These eCQM reporting and submission policies are
in alignment with policies under the Promoting Interoperability
Program. We also are establishing reporting and submission requirements
[[Page 42050]]
for the Hybrid HWR measure. In addition, we are summarizing public
comments we received on three measures we are considering for potential
future inclusion in the Hospital IQR Program.
l. Medicare and Medicaid Promoting Interoperability Programs
For purposes of an increased level of stability, reducing the
burden on eligible hospitals and CAHs, and clarifying certain existing
policies, we are finalizing several changes to the Promoting
Interoperability Program. Specifically, we are: (1) Eliminating the
requirement that, for the FY 2020 payment adjustment year, for an
eligible hospital that has not successfully demonstrated it is a
meaningful EHR user in a prior year, the EHR reporting period in CY
2019 must end before and the eligible hospital must successfully
register for and attest to meaningful use no later than the October 1,
2019 deadline; (2) establishing an EHR reporting period of a minimum of
any continuous 90-day period in CY 2021 for new and returning
participants (eligible hospitals and CAHs) in the Medicare Promoting
Interoperability Program attesting to CMS; (3) requiring that the
Medicare Promoting Interoperability Program measure actions must occur
within the EHR reporting period, beginning with the EHR reporting
period in CY 2020; (4) revising the Query of PDMP measure to make it an
optional measure worth 5 bonus points in CY 2020, removing the
exclusions associated with this measure in CY 2020, requiring a yes/no
response instead of a numerator and denominator for CY 2019 and CY
2020, and clearly stating our intended policy that the measure is worth
a full 5 bonus points in CY 2019 and CY 2020; (5) changing the maximum
points available for the e-Prescribing measure from 5 points to 10
points beginning in CY 2020; (6) removing the Verify Opioid Treatment
Agreement measure beginning in CY 2020 and clearly stating our intended
policy that this measure is worth a full 5 bonus points in CY 2019; and
(7) revising the Support Electronic Referral Loops by Receiving and
Incorporating Health Information measure to more clearly capture the
previously established policy regarding CEHRT use. We also are amending
our regulations to incorporate several of these finalized policies.
For CQM reporting under the Medicare and Medicaid Promoting
Interoperability Programs, we are generally aligning our requirements
with requirements under the Hospital IQR Program. Specifically, we are:
(1) Adopting one opioid-related CQM (Safe Use of Opioids--Concurrent
Prescribing CQM beginning with the reporting period in CY 2021 (we are
not finalizing our proposal to add the Hospital Harm--Opioid-Related
Adverse Events CQM); (2) extending current CQM reporting and submission
requirements for the reporting periods in CY 2020 and CY 2021; and (3)
establishing CQM reporting and submission requirements for the
reporting period in CY 2022, which will require all eligible hospitals
and CAHs to report on the Safe Use of Opioids--Concurrent Prescribing
eCQM beginning with the reporting period in CY 2022.
We sought public comments on whether we should consider proposing
to adopt in future rulemaking the Hybrid Hospital-Wide All-Cause
Readmission (Hybrid HWR) measure, beginning with the reporting period
in CY 2023, a measure which we adopted under the Hospital IQR Program,
and we sought information on a variety of issues regarding the future
direction of the Medicare and Medicaid Promoting Interoperability
Programs. We may use the input we received to inform further
rulemaking.
3. Summary of Costs and Benefits
Adjustment for MS-DRG Documentation and Coding Changes.
Section 414 of the MACRA replaced the single positive adjustment we
intended to make in FY 2018 once the recoupment required by section 631
of the ATRA was complete with a 0.5 percentage point positive
adjustment to the standardized amount of Medicare payments to acute
care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was
subsequently adjusted to 0.4588 percentage point by section 15005 of
the 21st Century Cures Act.) For FY 2020, we are making an adjustment
of +0.5 percentage point to the standardized amount consistent with the
MACRA.
Alternative Inpatient New Technology Add-On Payment
Pathway for Transformative New Devices: In this FY 2020 IPPS/LTCH PPS
final rule, we are establishing an alternative inpatient new technology
add-on payment pathway for a new medical device that is subject to the
FDA Breakthrough Devices Program and has received FDA authorization
(that is, received PMA approval, 510(k) clearance, or the granting of
De Novo classification request). We are also establishing that, if a
medical product is designated by the FDA as a Qualified Infectious
Disease Product (QIDP) and received FDA market authorization. Under
these alternative inpatient new technology add-on payment pathways,
such a medical device or product will be considered new and not
substantially similar to an existing technology for purposes of new
technology add-on payment under the IPPS, and such a medical product or
device will not need to meet the requirement under Sec. 412.87(b)(1)
that it represent an advance that substantially improves, relative to
technologies previously available, the diagnosis or treatment of
Medicare beneficiaries.
Given the relatively recent introduction of FDA's Breakthrough
Devices Program, there have not been any medical devices that were part
of the Breakthrough Devices Program and received FDA marketing
authorization and for which the applicant applied for a new technology
add-on payment under the IPPS and was not approved. If all of the
future new medical devices that were part of the Breakthrough Devices
Program and QIDPs that would have applied for new technology add-on
payments would have been approved under the existing criteria, this
policy has no impact. To the extent that there are future medical
devices that were part of the Breakthrough Devices Program or QIDPs
that are the subject of applications for new technology add-on
payments, and those applications would have been denied under the
current new technology add-on payment criteria, this policy is a cost,
but that cost is not estimable. Therefore, it is not possible to
quantify the impact of this policy.
Revisions to the Calculation of the Inpatient
Hospital New Technology Add-On Payment: The current calculation of the
new technology add-on payment is based on the cost to hospitals for the
new medical service or technology. Under existing Sec. 412.88, if the
costs of the discharge exceed the full DRG payment (including payments
for IME and DSH, but excluding outlier payments), Medicare makes an
add-on payment equal to the lesser of: (1) 50 percent of the estimated
costs of the new technology or medical service; or (2) 50 percent of
the amount by which the costs of the case exceed the standard DRG
payment.
As discussed in section II.H.9. of the preamble of this final rule,
we have modified the current payment mechanism to increase the amount
of the maximum add-on payment amount to 65 percent (and 75 percent for
QIDPs). Specifically, for technologies other than QIDPs, if the costs
of a discharge (determined by applying CCRs as described in Sec.
412.84(h)) exceed the full DRG payment (including payments for IME and
DSH, but excluding outlier payments), Medicare
[[Page 42051]]
will make an add-on payment equal to the lesser of: (1) 65 percent (or
75 percent for QIDPs) of the costs of the new medical service or
technology; or (2) 65 percent (75 percent for QIDPs) of the amount by
which the costs of the case exceed the standard DRG payment.
We estimate that for the nine technologies for which we are
continuing to make new technology add on payments in FY 2020 and for
the nine FY 2020 new technology add-on payment applications that we are
approving for new technology add-on payments for FY 2020, these changes
to the calculation of the new technology add-on payment will increase
IPPS spending by approximately $94 million in FY 2020.
Technologies Approved for FY 2020 New Technology
Add-On Payments: In section II.H.5. of the preamble to this final rule,
we discuss 13 technologies for which we received applications for add-
on payments for new medical services and technologies for FY 2020. We
also discuss the status of the new technologies that were approved to
receive new technology add-on payments in FY 2019 in section II.H.4. of
the preamble to 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. Based on those technologies approved for new technology add-on
payments for FY 2020, new technology add-on payment are projected to
increase approximately $162 million as compared to FY 2019 (which also
reflects the estimated changes to the calculation of the inpatient new
technology add-on payment described above).
Changes To Address Wage Index Disparities. As discussed in
section III.N. of the preamble of this final rule, to help mitigate
wage index disparities, including those resulting from the inclusion of
hospitals with rural reclassifications under 42 CFR 412.103 in the
rural floor, we are reducing the disparity between high and low wage
index hospitals by increasing the wage index values for certain
hospitals with low wage index values (that is, hospitals with wage
index values below the 25th percentile wage index value across all
hospitals), as well as changing the calculation of the rural floor. In
order to offset the estimated increase in IPPS payments to hospitals
with wage index values below the 25th percentile wage index value, we
have applied a uniform budget neutrality adjustment to the standardized
amount. We also are establishing a transition for FY 2020 for hospitals
experiencing significant decreases in their wage index values, and we
are implementing this in a budget neutral manner by applying a budget
neutrality adjustment to the standardized amount.
Medicare DSH Payment Adjustment and Additional Payment for
Uncompensated Care. For FY 2020, we are updating our estimates of the
three factors used to determine uncompensated care payments. We are
continuing to use uninsured estimates produced by OACT, as part of the
development of the NHEA in the calculation of Factor 2. We also are
using a single year of data on uncompensated care costs from Worksheet
S-10 for FY 2015 to determine Factor 3 for FY 2020. To determine the
amount of uncompensated care for purposes of calculating Factor 3 for
Puerto Rico hospitals and Indian Health Service and Tribal hospitals,
we are continuing to use only data regarding low-income insured days
(Medicaid days for FY 2013 and FY 2017 SSI days).
We project that the amount available to distribute as payments for
uncompensated care for FY 2020 will increase by approximately $78
million, as compared to our estimate of the uncompensated care payments
that will be distributed in FY 2019. The payments have redistributive
effects, based on a hospital's uncompensated care amount relative to
the uncompensated care amount for all hospitals that are projected to
be eligible to receive Medicare DSH payments, and the calculated
payment amount is not directly tied to a hospital's number of
discharges.
Update to the LTCH PPS Payment Rates and Other
Payment Policies. Based on the best available data for the 384 LTCHs in
our database, we estimate that the changes to the payment rates and
factors that we presented in the preamble of and Addendum to this FY
2020 IPPS/LTCH PPS final rule, which reflect the end of the transition
of the statutory application of the site neutral payment rate and the
update to the LTCH PPS standard Federal payment rate for FY 2020, will
result in an estimated increase in payments in FY 2020 of approximately
$43 million.
Changes to the Hospital Readmissions Reduction Program.
For FY 2020 and subsequent years, the reduction is based on a
hospital's risk-adjusted readmission rate during a 3-year period for
acute myocardial infarction (AMI), heart failure (HF), pneumonia,
chronic obstructive pulmonary disease (COPD), elective primary total
hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery
bypass graft (CABG) surgery. Overall, in this FY 2020 IPPS/LTCH PPS
final rule, we estimate that 2,583 hospitals would have their base
operating DRG payments reduced by their determined proxy FY 2020
hospital-specific readmission adjustment. As a result, we estimate that
the Hospital Readmissions Reduction Program will save approximately
$563 million in FY 2020.
Value-Based Incentive Payments Under the Hospital VBP
Program. We estimate that there will be no net financial impact to
participating hospitals under the Hospital VBP Program for the FY 2020
program year in the aggregate because, by law, the amount available for
value-based incentive payments under the program in a given year must
be equal to the total amount of base operating MS-DRG payment amount
reductions for that year, as estimated by the Secretary. The estimated
amount of base operating MS-DRG payment amount reductions for the FY
2020 program year and, therefore, the estimated amount available for
value-based incentive payments for FY 2020 discharges is approximately
$1.9 billion.
Changes to the HAC Reduction Program. A hospital's Total
HAC score and its ranking in comparison to other hospitals in any given
year depend on several different factors. The FY 2020 program year is
the first year in which we are implementing our equal measure weights
scoring methodology. Any significant impact due to the HAC Reduction
Program changes for FY 2020, including which hospitals will receive the
adjustment, will depend on the actual experience of hospitals in the
Program. We also are updating the hourly wage rate associated with
burden for CDC NHSN HAI validation under the HAC Reduction Program.
Changes to the Hospital Inpatient Quality Reporting (IQR)
Program. Across 3,300 IPPS hospitals, we estimate that our changes for
the Hospital IQR Program in this FY 2020 IPPS/LTCH PPS final rule would
result in changes to the information collection burden compared to
previously adopted requirements. The only policy that will affect the
information collection burden for the Hospital IQR Program is the
policy to adopt the Hybrid Hospital-Wide All-Cause Readmission (Hybrid
HWR) measure (NQF #2879) in a stepwise fashion, beginning with two
voluntary reporting periods which will run from July 1, 2021 through
June 30, 2022, and from July 1, 2022 through June 30, 2023, before
requiring reporting of the measure for the reporting period that will
run from July 1, 2023 through
[[Page 42052]]
June 30, 2024, impacting the FY 2026 payment determination and for
subsequent years. We estimate that the impact of this change is a total
collection of information burden increase of 2,211 hours and a total
cost increase of approximately $83,266 for all participating IPPS
hospitals annually.
Changes to the Medicare and Medicaid Promoting
Interoperability Programs. We believe that, overall, the revised
policies in this FY 2020 IPPS/LTCH PPS final rule will reduce burden,
as described in detail in section X.B.9. of the preamble and Appendix
A, section I.N. of this final rule.
B. Background 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 into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located. If the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of 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 beginning on October 1, 2013, that considers the
amount of uncompensated care furnished by the hospital relative to all
other qualifying hospitals.
If the hospital is training residents in an approved residency
program(s), it receives a percentage add-on payment for each case paid
under the IPPS, known as the indirect medical education (IME)
adjustment. This percentage varies, depending on the ratio of residents
to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any eligible outlier payment is added to the DRG-adjusted base payment
rate, plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid in whole or in part based on their hospital-specific rate, which
is determined from their costs in a base year. For example, sole
community hospitals (SCHs) receive the higher of a hospital-specific
rate based on their costs in a base year (the highest of FY 1982, FY
1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the
standardized amount. SCHs are the sole source of care 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 an 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.
Under current law, the Medicare-dependent, small rural hospital
(MDH) program is effective through FY 2022. Through and including FY
2006, an MDH received the higher of the Federal rate or the Federal
rate plus 50 percent of the amount by which the Federal rate was
exceeded by the higher of its FY 1982 or FY 1987 hospital-specific
rate. For discharges occurring on or after October 1, 2007, but before
October 1, 2022, an MDH receives 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. MDHs are a major source of care for Medicare
beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act
defines an MDH as a hospital that is located in a rural area (or, as
amended by the Bipartisan Budget Act of 2018, a hospital located in a
State with no rural area that meets certain statutory criteria), 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).
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services in accordance with
a prospective payment system established by the Secretary. The basic
methodology for determining capital prospective payments is set forth
in our regulations at 42 CFR 412.308 and 412.312. Under the capital
IPPS, payments are adjusted by the same DRG for the case as they are
under the operating IPPS. Capital IPPS payments are also adjusted for
IME and DSH, similar to the adjustments made under the operating IPPS.
In addition, hospitals may receive outlier payments for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR part 412, subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
hospitals and hospital units are excluded from the IPPS. These
hospitals and units are: Inpatient rehabilitation facility (IRF)
hospitals and units; long-term care hospitals (LTCHs); psychiatric
hospitals and units; children's hospitals; cancer hospitals; extended
neoplastic disease care 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). Religious nonmedical health care institutions
(RNHCIs) are also excluded
[[Page 42053]]
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 IRF hospitals and units,
LTCHs, and psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)). (We note that the annual updates to the
LTCH PPS are included along with the IPPS annual update in this
document. Updates to the IRF PPS and IPF PPS are issued as separate
documents.) Children's hospitals, cancer hospitals, 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), and RNHCIs continue to be paid
solely under a reasonable cost-based system, subject to a rate-of-
increase ceiling on inpatient operating costs. Similarly, extended
neoplastic disease care hospitals are paid on a reasonable cost basis,
subject to a rate-of-increase ceiling on inpatient operating costs.
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 was established under the authority of sections 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 through September 30, 2015 all
LTCHs were paid 100 percent of the Federal rate. Section 1206(a) of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the
site neutral payment rate under the LTCH PPS, which made the LTCH PPS a
dual rate payment system beginning in FY 2016. Under this statute,
based on a rolling effective date that is linked to the date on which a
given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are
generally paid for discharges at the site neutral payment rate unless
the discharge meets the patient criteria for payment at the LTCH PPS
standard Federal payment rate. The existing regulations governing
payment under the LTCH PPS are located in 42 CFR part 412, subpart O.
Beginning October 1, 2009, we issue the annual updates to the LTCH PPS
in the same documents that update the IPPS (73 FR 26797 through 26798).
4. Critical Access Hospitals (CAHs)
Under sections 1814(l), 1820, and 1834(g) of the Act, payments 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) 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 That Are Implemented in
This Final Rule
1. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)
The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced
new payment rules in the LTCH PPS. Under section 1206 of this law,
discharges in cost reporting periods beginning on or after October 1,
2015, under the LTCH PPS, receive payment under a site neutral rate
unless the discharge meets certain patient-specific criteria. In this
FY 2020 IPPS/LTCH PPS final rule, we are continuing to update certain
policies that implemented provisions under section 1206 of the Pathway
for SGR Reform Act.
2. Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185)
The Improving Medicare Post-Acute Care Transformation Act of 2014
(IMPACT Act) (Pub. L. 113-185), enacted on October 6, 2014, made a
number of changes that affect the Long-Term Care Hospital Quality
Reporting Program (LTCH QRP). In this final rule, we are continuing to
implement portions of section 1899B of the Act, as added by section
2(a) of the IMPACT Act, which, in part, requires LTCHs, among other
post-acute care providers, to report standardized patient assessment
data, data on quality measures, and data on resource use and other
measures.
3. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L.
114-10)
Section 414 of the Medicare Access and CHIP Reauthorization Act of
2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive
adjustment to the standardized amount of Medicare payments to acute
care hospitals for FYs 2018 through 2023. These adjustments follow the
recoupment adjustment to the standardized amounts under section 1886(d)
of the Act based upon the Secretary's estimates for discharges
occurring from FYs 2014 through 2017 to fully offset $11 billion, in
accordance with section 631 of the ATRA. The FY 2018 adjustment was
subsequently adjusted to 0.4588 percent by section 15005 of the 21st
Century Cures Act.
4. The 21st Century Cures Act (Pub. L. 114-255)
The 21st Century Cures Act (Pub. L. 114-255), enacted on December
13, 2016, contained the following provision affecting payments under
the Hospital Readmissions Reduction Program, which we are continuing to
implement in this final rule:
Section 15002, which amended section 1886(q)(3) of the Act
by adding subparagraphs (D) and (E), which requires the Secretary to
develop a methodology for calculating the excess readmissions
adjustment factor for the Hospital Readmissions Reduction Program,
based on cohorts defined by the percentage of dual-eligible patients
(that is, patients who are eligible for both Medicare and full-benefit
Medicaid coverage) cared for by a hospital. In this FY 2020 IPPS/LTCH
PPS final rule, we are continuing to implement changes to the payment
adjustment factor to assess penalties, based on a hospital's
performance, relative to other hospitals
[[Page 42054]]
treating a similar proportion of dual-eligible patients.
D. Issuance of Notice of Proposed Rulemaking
In the FY 2020 IPPS/LTCH PPS proposed rule appearing in the Federal
Register on May 3, 2019 (84 FR 19158), we set forth proposed payment
and policy changes to the Medicare IPPS for FY 2020 operating costs and
capital-related costs of acute care hospitals and certain hospitals and
hospital units that are excluded from IPPS. In addition, we set forth
proposed changes to the payment rates, factors, and other payment and
policy-related changes to programs associated with payment rate
policies under the LTCH PPS for FY 2020.
In this final rule is a general summary of the 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 for FY 2020.
Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2020 in accordance with the
amendments made to section 7(b)(1)(B) of Public Law 110-90 by section
414 of the MACRA.
Proposed recalibration of the MS-DRG relative weights.
A discussion of the proposed FY 2020 status of new
technologies approved for add-on payments for FY 2019 and a
presentation of our evaluation and analysis of the FY 2020 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).
A request for public comments on the substantial clinical
improvement criterion used to evaluate applications for both the IPPS
new technology add-on payments and the OPPS transitional pass-through
payment for devices, and a discussion of potential revisions that we
were considering adopting as final policies related to the substantial
clinical improvement criterion for applications received beginning in
FY 2020 for the IPPS (that is, for FY 2021 and later new technology
add-on payments) and beginning in CY 2020 for the OPPS.
A proposed alternative IPPS new technology add-on payment
pathway for certain transformative new devices.
Proposed changes to the calculation of the IPPS new
technology add-on payment.
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble to the proposed rule we proposed to
make revisions to the wage index for acute care hospitals and the
annual update of the wage data. Specific issues addressed included, but
were not limited to, the following:
The proposed FY 2020 wage index update using wage data
from cost reporting periods beginning in FY 2016.
Proposals to address wage index disparities between high
and low wage index hospitals.
Calculation, analysis, and implementation of the proposed
occupational mix adjustment to the wage index for acute care hospitals
for FY 2020 based on the 2016 Occupational Mix Survey.
Proposed application of the rural floor and the frontier
State floor.
Proposed revisions to the wage index for acute care
hospitals, based on hospital redesignations and reclassifications under
sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
Proposed change to Lugar county assignments.
Proposed adjustment to the wage index for acute care
hospitals for FY 2020 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Proposed labor-related share for the proposed FY 2020 wage
index.
3. Other Decisions and Proposed Changes to the IPPS for Operating 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 to MS-DRGs subject to the postacute care
transfer policy and special payment policy.
Proposed changes to the inpatient hospital update for FY
2020.
Proposed conforming changes to the regulations for the
low-volume hospital payment adjustment policy.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
The statutorily required IME adjustment factor for FY
2020.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
A request for public comments on PRRB appeals related to a
hospital's Medicaid fraction in the DSH payment adjustment calculation.
Proposed changes to the policies for payment adjustments
under the Hospital Readmissions Reduction Program based on hospital
readmission measures and the process for hospital review and correction
of those rates for FY 2020.
Proposed changes to the requirements and provision of
value-based incentive payments under the Hospital Value-Based
Purchasing Program.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2020.
Proposed changes related to CAHs as nonproviders for
direct GME and IME payment purposes.
Discussion of the implementation of the Rural Community
Hospital Demonstration Program in FY 2020.
4. Proposed FY 2020 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 2020.
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 2020.
Proposed change related to CAH payment for ambulance
services.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
In section VII. of the preamble of the is proposed rule, we set
forth--
Proposed changes to the LTCH PPS Federal payment rates,
factors, and other payment rate policies under the LTCH PPS for FY
2020.
Proposed payment adjustment for discharges of LTCHs that
do not meet the applicable discharge payment percentage.
7. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section VIII. of the preamble of the proposed rule, we
addressed--
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the quality
reporting
[[Page 42055]]
program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting Program (LTCH QRP).
Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare and Medicaid Promoting
Interoperability Programs.
8. Provider Reimbursement Review Board Appeals
In section XI. of the preamble of the proposed rule, we discussed
the growing number of Provider Reimbursement Review Board appeals made
by providers and the action initiatives that are being implemented with
the goal to: Decrease the number of appeals submitted; decrease the
number of appeals in inventory; reduce the time to resolution; and
increase customer satisfaction.
9. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits for Acute Care Hospitals
In sections II. and III. of the Addendum to the proposed rule, we
set forth the proposed changes to the amounts and factors for
determining the proposed FY 2020 prospective payment rates for
operating costs and capital-related costs for acute care hospitals. We
proposed to establish the threshold amounts for outlier cases,
including a proposed change to the methodology for calculating those
threshold amounts for FY 2020 to incorporate a projection of outlier
payment reconciliations. In addition, in section IV. of the Addendum to
the proposed rule, we addressed the update factors for determining the
rate-of-increase limits for cost reporting periods beginning in FY 2020
for certain hospitals excluded from the IPPS.
10. Determining Prospective Payment Rates for LTCHs
In section V. of the Addendum to the proposed rule, we set forth
proposed changes to the amounts and factors for determining the
proposed FY 2020 LTCH PPS standard Federal payment rate and other
factors used to determine LTCH PPS payments under both the LTCH PPS
standard Federal payment rate and the site neutral payment rate in FY
2020. We proposed to establish the adjustments for wage levels, the
labor-related share, the cost-of-living adjustment, and high-cost
outliers, including the applicable fixed-loss amounts and the LTCH
cost-to-charge ratios (CCRs) for both payment rates.
11. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs, and PCHs.
12. 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 2020 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs of
acute care hospitals (and hospital-specific rates applicable to SCHs
and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by certain hospitals
excluded from the IPPS.
The LTCH PPS standard Federal payment rate and the site
neutral payment rate for hospital inpatient services provided for LTCH
PPS discharges.
13. 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 2019 recommendations concerning hospital inpatient
payment policies addressed the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We address these recommendations in Appendix B of this FY 2020 IPPS/
LTCH PPS final rule. For further information relating specifically to
the MedPAC March 2019 report or to obtain a copy of the report, contact
MedPAC at (202) 220-3700 or visit MedPAC's website at: http://www.medpac.gov.
E. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care. The Office of the
National Coordinator for Health Information Technology (ONC) and CMS
work collaboratively to advance interoperability across settings of
care, including post-acute care.
To further interoperability in post-acute care, we developed a Data
Element Library (DEL) to serve as a publicly available centralized,
authoritative resource for standardized data elements and their
associated mappings to health IT standards. The DEL furthers CMS' goal
of data standardization and interoperability. These interoperable data
elements can reduce provider burden by allowing the use and exchange of
health care data, support provider exchange of electronic health
information for care coordination, person-centered care, and support
real-time, data driven, clinical decision making. Standards in the Data
Element Library (https://del.cms.gov/) can be referenced on the CMS
website and in the ONC Interoperability Standards Advisory (ISA). The
2019 ISA is available at: https://www.healthit.gov/isa.
The 21st Century Cures Act (the Cures Act) (Pub. L. 114-255,
enacted December 13, 2016) requires HHS to take new steps to enable the
electronic sharing of health information ensuring interoperability for
providers and settings across the care continuum. In an important
provision, Congress defined ``information blocking'' as practices
likely to interfere with, prevent, or materially discourage access,
exchange, or use of electronic health information, and established new
authority for HHS to discourage these practices. In March 2019, ONC and
CMS published the proposed rules, ``21st Century Cures Act:
Interoperability, Information Blocking, and the ONC Health IT
Certification Program'' (84 FR 7424 through 7610) and
``Interoperability and Patient Access'' (84 FR 7610 through 7680), to
promote secure and more immediate access to health information for
patients and health care providers through the implementation of
information blocking provisions of the Cures Act and the use of
standardized application programming interfaces (APIs) that enable
easier access to electronic health information. These two proposed
rules extended their comment period by 30 days and closed on June 3,
2019. The proposed rules can be found at: www.regulations.gov.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19158), we
invited providers to learn more about these important developments and
how they are likely to affect hospitals paid under the IPPS and the
LTCH PPS.
[[Page 42056]]
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as 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.
Section 1886(d)(4)(C) of the Act requires that the Secretary adjust
the DRG classifications and relative weights at least annually to
account for changes in resource consumption. 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) and the FYs 2011 through 2019 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR
53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through
56872; 82 FR 38010 through 38085, and 83 FR 41158 through 41258,
respectively).
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 2020 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 Public Law 110-90 and
the Recoupment or Repayment Adjustment Authorized by Section 631 of the
American Taxpayer Relief Act of 2012 (ATRA)
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. 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 percentage
points to the national standardized amount. We provided for phasing in
this -4.8 percentage point adjustment over 3 years. Specifically, we
established prospective documentation and coding adjustments of -1.2
percentage points for FY 2008, -1.8 percentage points for FY 2009, and
-1.8 percentage points for FY 2010.
On September 29, 2007, Congress enacted the TMA [Transitional
Medical Assistance], Abstinence Education, and QI [Qualifying
Individuals] Programs Extension Act of 2007 (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 percentage point
for FY 2008 and -0.9 percentage point for FY 2009.
As discussed in prior year rulemakings, and most recently in the FY
2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we
implemented a series of adjustments required under sections 7(b)(1)(A)
and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of
FY 2008 and FY 2009 claims data. We completed these adjustments in FY
2013 but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274
through 53275) that delaying full implementation 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, and
that these overpayments could not be recovered under Public Law 110-90.
In addition, as discussed in prior rulemakings and most recently in
the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009),
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 represented 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.
2. Adjustments Made for FY 2018 and FY 2019 as Required Under Section
414 of Public Law 114-10 (MACRA) and Section 15005 of Public Law 114-
255
As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785),
once the recoupment required under section 631 of the ATRA was
complete, we had anticipated making a single positive adjustment in FY
2018 to offset the reductions required to recoup the $11 billion under
section 631 of the ATRA. However, section 414 of the MACRA (which was
enacted on April 16, 2015) replaced the single positive adjustment we
intended to make in FY 2018 with a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023. In the FY 2017
rulemaking, we indicated that we would address the adjustments for FY
2018 and later fiscal years in future rulemaking. Section 15005 of the
21st Century Cures Act (Pub. L. 114-255), which was enacted on December
13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section
631 of the ATRA and section 414 of the MACRA, to reduce the adjustment
for FY 2018 from a 0.5 percentage point positive adjustment to a 0.4588
percentage point positive
[[Page 42057]]
adjustment. As we discussed in the FY 2018 rulemaking, we believe the
directive under section 15005 of Public Law 114-255 is clear.
Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY
2018, we implemented the required +0.4588 percentage point adjustment
to the standardized amount. In the FY 2019 IPPS/LTCH PPS final rule (83
FR 41157), consistent with the requirements of section 414 of the
MACRA, we implemented a 0.5 percentage point positive adjustment to the
standardized amount for FY 2019. We indicated that both the FY 2018 and
FY 2019 adjustments were permanent adjustments to payment rates. We
also stated that we plan to propose future adjustments required under
section 414 of the MACRA for FYs 2020 through 2023 in future
rulemaking.
3. Adjustment for FY 2020
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19170 through
19171) consistent with the requirements of section 414 of the MACRA, we
proposed to implement a 0.5 percentage point positive adjustment to the
standardized amount for FY 2020. We indicated that this would
constitute a permanent adjustment to payment rates. We stated in the
proposed rule that we plan to propose future adjustments required under
section 414 of the MACRA for FYs 2021 through 2023 in future
rulemaking.
Comment: Several commenters stated that in order to comply with
ATRA requirements, CMS anticipated that a cumulative -3.2 percentage
point adjustment to the standardized amount would achieve the mandated
$11 billion recoupment. Commenters stated that CMS misinterpreted the
relevant statutory authority, which they asserted explicitly assumes
that recoupment under section 631 of the ATRA would result in an
estimated -3.2 percentage point cumulative adjustment by FY 2017.
Commenters asserted that the additional -0.7 percentage point
adjustment made in FY 2017 has been improperly continued in FY 2018 and
FY 2019, and failure to restore the additional 0.7 percentage point
adjustment will make this reduction in hospital payments a permanent
part of the baseline calculation of the IPPS rates, which, they
contend, was not Congress's legislative intent in implementing the
series of adjustments required under section 414 of the MACRA.
Commenters urged CMS to use its exceptions and adjustments authority
under section 1886(d)(5)(I) to restore an additional 0.7 percentage
point payment adjustment in FY2020 to restore payment equity to
hospitals and comply with what they asserted was Congressional intent.
Other commenters suggested CMS implement an approximate positive
adjustment of 1.0 percentage point by FY 2024 to fully and permanently
restore the entire -3.9 percentage point recoupment adjustment to IPPS
rates. A commenter requested that CMS provide its rationale for failing
to do so. Finally, some of the commenters, while acknowledging that CMS
may be bound by law, expressed opposition to the permanent reductions
and requested that CMS refrain from making any additional coding
adjustments in the future.
Response: As we discussed in the FY 2020 IPPS/LTCH PPS proposed
rule (84 FR 19170 through 19171), and in response to similar comments
in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41157), we believe
section 414 of the MACRA and section 15005 of the 21st Century Cures
Act set forth the levels of positive adjustments for FYs 2018 through
2023. We are not convinced that the adjustments prescribed by MACRA
were predicated on a specific adjustment level estimated or implemented
by CMS in previous rulemaking. While we had anticipated making a
positive adjustment in FY 2018 to offset the reductions required to
recoup the $11 billion under section 631 of the ATRA, section 414 of
the MACRA required that we implement a 0.5 percentage point positive
adjustment for each of FYs 2018 through 2023, and not the single
positive adjustment we intended to make in FY 2018. As discussed in the
FY 2017 IPPS/LTCH PPS final rule, by phasing in a total positive
adjustment of only 3.0 percentage points, section 414 of the MACRA
would not fully restore even the 3.2 percentage point adjustment
originally estimated by CMS in the FY 2014 IPPS/LTCH PPS final rule (78
FR 50515). Moreover, as discussed in the FY 2018 IPPS/LTCH PPS final
rule, Public Law 114-255, which further reduced the positive adjustment
required for FY 2018 from 0.5 percentage point to 0.4588 percentage
point, was enacted on December 13, 2016, after CMS had proposed and
finalized the final negative -1.5 percentage point adjustment required
under section 631 of the ATRA. We see no evidence that Congress enacted
these adjustments with the intent that CMS would make an additional
+0.7 percentage point adjustment in FY 2018 to compensate for the
higher than expected final ATRA adjustment made in FY 2017, nor are we
persuaded that it would be appropriate to use the Secretary's
exceptions and adjustments authority under section 1886(d)(5)(I) of the
Act to adjust payments in FY 2020 to restore any additional amount of
the original 3.9 percentage point reduction, given Congress'
prescriptive adjustment levels under section 414 of the MACRA and
section 15005 of the 21st Century Cures Act.
After consideration of the public comments we received, we are
finalizing our proposal to implement a 0.5 percentage point adjustment
to the standardized amount for FY 2020.
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 cost-based DRG
relative weights and to the FY 2008 IPPS final rule with comment period
(72 FR 47199) for information on how we blended relative weights based
on the CMS DRGs and MS-DRGs. We also refer readers to the FY 2017 IPPS/
LTCH PPS final rule (81 FR 56785 through 56787) for a detailed
discussion of the history of changes to the number of cost centers used
in calculating the DRG relative weights. Since FY 2014, we have
calculated the IPPS MS-DRG relative weights using 19 CCRs, which now
include distinct CCRs for implantable devices, MRIs, CT scans, and
cardiac catheterization.
2. Discussion of Policy for FY 2020
Consistent with our established policy, we calculated the final MS-
DRG relative weights for FY 2020 using 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 2020 is included in section II.G. of the preamble to
this FY 2020 IPPS/LTCH PPS final rule. As we did with the FY 2019 IPPS/
LTCH PPS final rule, for this FY 2020 final rule, we are providing the
version of the HCRIS from which we calculated these 19 CCRs on the CMS
website 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 2020 IPPS Final Rule Home Page'' or
``Acute Inpatient Files for Download.''
[[Page 42058]]
Comment: A commenter recommended that CMS work with stakeholders to
update cost reporting instructions and improve the accuracy and
validity of the national average CCRs. The commenter expressed concern
that the differences between hospitals' use of nonstandard cost center
codes and CMS' procedures for mapping and rolling up nonstandard codes
to the standard cost centers will continue to result in invalid CCRs
and inaccurate payments. The commenter stressed the need for
flexibility in cost reporting, to accommodate any new or unique
services that certain hospitals may provide, which may not be easily
captured through the cost reporting software. Finally, the commenter
again recommended, as it had done in response to prior IPPS rules, that
CMS pay particular attention to data used for CT scan and MRI cost
centers; the commenter believed that the hospital payment rates
established by CMS from the CT scan and MRI CCRs simply do not
correlate with resources used for these capital-intensive services.
Response: We have addressed similar public comments in prior
rulemaking and refer readers to the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56787) for our response to these issues. We note that we will
continue to explore ways in which we can improve the accuracy of the
cost report data and calculated CCRs used in the cost estimation
process.
F. Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for FY 2020 MS-DRG
Updates
a. Conversion of MS-DRGs to the International Classification of
Diseases, 10th Revision (ICD-10)
As of October 1, 2015, providers use the International
Classification of Diseases, 10th Revision (ICD-10) coding system to
report diagnoses and procedures for Medicare hospital inpatient
services under the MS-DRG system instead of the ICD-9-CM coding system,
which was used through September 30, 2015. 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 ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and
Reporting. For a detailed discussion of the conversion of the MS-DRGs
to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81
FR 56787 through 56789).
b. Basis for FY 2020 MS-DRG Updates
CMS has previously encouraged input from our stakeholders
concerning the annual IPPS updates when that input was made available
to us by December 7 of the year prior to the next annual proposed rule
update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38010), as we work with the public to examine the ICD-10 claims data
used for updates to the ICD-10 MS-DRGs, we would like to examine areas
where the MS-DRGs can be improved, which will require additional time
for us to review requests from the public to make specific updates,
analyze claims data, and consider any proposed updates. Given the need
for more time to carefully evaluate requests and propose updates, we
changed the deadline to request updates to the MS-DRGs to November 1 of
each year. This will provide an additional 5 weeks for the data
analysis and review process. Interested parties had to submit any
comments and suggestions for FY 2020 by November 1, 2018, and should
submit any comments and suggestions for FY 2021 by November 1, 2019 via
the CMS MS-DRG Classification Change Request Mailbox located at:
[email protected]. The comments that were submitted
in a timely manner for FY 2020 are discussed in this section of the
preamble of this final rule. As discussed in the proposed rule and in
the sections that follow, we may not be able to fully consider all of
the requests that we receive for the upcoming fiscal year. We have
found that, with the implementation of ICD-10, some types of requested
changes to the MS-DRG classifications require more extensive research
to identify and analyze all of the data that are relevant to evaluating
the potential change. We note in the discussion that follows those
topics for which further research and analysis are required, and which
we will continue to consider in connection with future rulemaking.
Following are the changes that we proposed to the MS-DRGs for FY
2020 in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19171 through
19257). We invited public comments on each of the MS-DRG classification
proposed changes, as well as our proposals to maintain certain existing
MS-DRG classifications discussed in the proposed rule. In some cases,
we proposed changes to the MS-DRG classifications based on our analysis
of claims data and consultation with our clinical advisors. In other
cases, we proposed to maintain the existing MS-DRG classifications
based on our analysis of claims data and consultation with our clinical
advisors. For the FY 2020 IPPS/LTCH PPS proposed rule, our MS-DRG
analysis was based on ICD-10 claims data from the September 2018 update
of the FY 2018 MedPAR file, which contains hospital bills received
through September 30, 2018, for discharges occurring through September
30, 2018. In our discussion of the proposed MS-DRG reclassification
changes, we referred to our analysis of claims data from the
``September 2018 update of the FY 2018 MedPAR file.''
In this FY 2020 IPPS/LTCH PPS final rule, we summarize the public
comments we received on our proposals, present our responses, and state
our final policies. For this FY 2020 final rule, we generally did not
perform any further MS-DRG analysis of claims data. Therefore, our MS-
DRG analysis is based on ICD-10 claims data from the September 2018
update of the FY 2018 MedPAR file, which contains hospital bills
received through September 30, 2018, for discharges occurring through
September 30, 2018, except as otherwise noted.
As explained in previous rulemaking (76 FR 51487), in deciding
whether to propose to make further modifications to the MS-DRGs for
particular circumstances brought to our attention, we consider whether
the resource consumption and clinical characteristics of the patients
with a given set of conditions are significantly different than the
remaining patients represented in the MS-DRG. We evaluate patient care
costs using average costs and lengths of stay and rely on the judgment
of our clinical advisors to determine whether patients are clinically
distinct or similar to other patients represented in the MS-DRG. In
evaluating resource costs, we consider both the absolute and percentage
differences in average costs between the cases we select for review and
the remainder of cases in the MS-DRG. We also consider variation in
costs within these groups; that is, whether observed average
differences are consistent across patients or attributable to cases
that are extreme in terms of costs or length of stay, or both. Further,
we consider the number of patients who will have a given set of
characteristics and generally prefer not to create a new MS-DRG unless
it would include a substantial number of cases.
In our examination of the claims data, we apply the following
criteria established in FY 2008 (72 FR 47169) to determine if the
creation of a new complication or comorbidity (CC) or major
complication or comorbidity
[[Page 42059]]
(MCC) subgroup within a base MS-DRG is 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 difference in average costs
between subgroups; and
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.
We are making the FY 2020 ICD-10 MS-DRG GROUPER and Medicare Code
Editor (MCE) Software Version 37, the ICD-10 MS-DRG Definitions Manual
files Version 37 and the Definitions of Medicare Code Edits Manual
Version 37 available to the public on our CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
2. Pre-MDC
a. Peripheral ECMO
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41166 through
41169), we discussed a request we received to review cases reporting
the use of extracorporeal membrane oxygenation (ECMO) in combination
with the insertion of a percutaneous short-term external heart assist
device. We also noted that a separate request to create a new ICD-10-
PCS procedure code specifically for percutaneous ECMO was discussed at
the March 6-7, 2018 ICD-10 Coordination and Maintenance Committee
Meeting for which we finalized the creation of three new procedure
codes to identify and describe different types of ECMO treatments
currently being utilized. These three new procedure codes were included
in the FY 2019 ICD-10-PCS procedure codes files (which are available
via the internet on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/2019-ICD-10-PCS.html) and were made publicly available in
May 2018. We received recommendations from commenters on suggested MS-
DRG assignments for the two new procedure codes that uniquely identify
percutaneous (peripheral) ECMO, including assignment to MS-DRG 215
(Other Heart Assist System Implant), or to Pre-MDC MS-DRG 004
(Tracheostomy with Mechanical Ventilation >96 Hours or Principal
Diagnosis Except Face, Mouth and Neck without Major O.R. Procedure)
specifically for the new procedure code describing percutaneous veno-
venous (VV) ECMO or an alternate MS-DRG within MDC 4 (Diseases and
Disorders of the Respiratory System). In our response, we noted that
because these codes were not finalized at the time of the proposed
rule, there were no proposed MDC or MS-DRG assignments or O.R. and non-
O.R. designations for these new procedure codes and they were not
reflected in Table 6B.--New Procedure Codes (which is available via the
internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html)
associated with the FY 2019 IPPS/LTCH PPS proposed rule.
We further noted that, consistent with our annual process of
assigning new procedure codes to MDCs and MS-DRGs, and designating a
procedure as an O.R. or non-O.R. procedure, we reviewed the predecessor
procedure code assignment. For the reasons discussed in the FY 2019
IPPS/LTCH PPS final rule, our clinical advisors did not support
assigning the new procedure codes for the percutaneous (peripheral)
ECMO procedures to the same MS-DRG as the predecessor code for open
(central) ECMO in pre-MDC MS-DRG 003.
Effective with discharges occurring on and after October 1, 2018,
the three ECMO procedure codes and their corresponding MS-DRG
assignments are as shown in the following table.
[[Page 42060]]
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As noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19173),
after publication of the FY 2019 IPPS/LTCH PPS final rule, we received
comments and feedback from stakeholders expressing concern with the MS-
DRG assignments for the two new procedure codes describing peripheral
ECMO. Specifically, these stakeholders stated that: (1) The MS-DRG
assignments for ECMO should not be based on how the patient is
cannulated (open versus peripheral) because most of the costs for both
central and peripheral ECMO can be attributed to the severity of
illness of the patient; (2) there was a lack of opportunity for public
comment on the finalized MS-DRG assignments; (3) patient access to ECMO
treatment and programs is now at risk because of inadequate payment;
and (4) CMS did not appear to have access to enough patient data to
evaluate for appropriate MS-DRG assignment consideration. They also
stated that the new procedure codes do not account for an open cut-down
approach that may be performed on a peripheral vessel during a
peripheral ECMO procedure. These stakeholders recommended that,
consistent with the usual process of assigning new procedure codes to
the same MS-DRG as the predecessor code, the MS-DRG assignment for
peripheral ECMO procedures should be revised to allow assignment of
peripheral ECMO procedures to Pre-MDC MS-DRG 003 (ECMO or Tracheostomy
with Mechanical Ventilation >96 Hours or Principal Diagnosis Except
Face, Mouth and Neck with Major O.R. Procedure). They stated that this
revision would also allow for the collection of further claims data for
patients treated with ECMO and assist in determining the
appropriateness of any future modifications in MS-DRG assignment.
We also received feedback from a few stakeholders that, for some
cases involving peripheral ECMO, the current designation provides
compensation that these stakeholders believe is ``reasonable'' (for
example, for peripheral ECMO in certain patients admitted with acute
respiratory failure and sepsis). Some of these stakeholders agreed with
CMS that once claims data become available, the volume, length of stay
and cost data of claims with these new codes can be examined to
determine if modifications to MS-DRG assignment or O.R. and non-O.R.
designation are warranted. However, some of these stakeholders also
expressed concerns that the current assignments and designation do not
appropriately compensate for the resources used when peripheral ECMO is
used to treat certain patients (for example, patients who are admitted
with cardiac arrest and cardiogenic shock of known cause or patients
admitted with a different principal diagnosis or patients who develop a
diagnosis after admission that requires
[[Page 42061]]
ECMO). These stakeholders stated that the current MS-DRG assignments
for such cases involving peripheral ECMO do not provide sufficient
payment and do not fully consider the severity of illness of the
patient and the level of resources involved in treating such patients,
such as surgical team, general anesthesia, and other ECMO support such
as specialized monitoring.
We stated in the proposed rule that with regard to stakeholders'
concerns that we did not allow the opportunity for public comment on
the MS-DRG assignment for the three new procedure codes that describe
central and peripheral ECMO, as noted above and as explained in the FY
2019 IPPS/LTCH PPS final rule (83 FR 41168), these new procedure codes
were not finalized at the time of the proposed rule. We noted that
although there were no proposed MDC or MS-DRG assignment or O.R. and
non-O.R. designations for these three new procedure codes, we did, in
fact, review and respond to comments on the recommended MDC and MS-DRG
assignments and O.R./non-O.R. designations in the final rule (83 FR
41168 through 41169). For FY 2019, consistent with our annual process
of assigning new procedure codes to MDCs and MS-DRGs and designating a
procedure as an O.R. or non-O.R. procedure, we reviewed the predecessor
procedure code assignments. Upon completing the review, our clinical
advisors did not support assigning the two new ICD-10-PCS procedure
codes for peripheral ECMO procedures to the same MS-DRG as the
predecessor code for open (central) ECMO procedures. Further, our
clinical advisors also did not agree with designating peripheral ECMO
procedures as O.R. procedures because they stated that these procedures
are less resource intensive compared to open ECMO procedures.
As noted, our annual process for assigning new procedure codes
involves review of the predecessor procedure code's MS-DRG assignment.
However, this process does not automatically result in the new
procedure code being assigned (or proposed for assignment) to the same
MS-DRG as the predecessor code. There are several factors to consider
during this process that our clinical advisors take into account. For
example, in the absence of volume, length of stay, and cost data, they
may consider the specific service, procedure, or treatment being
described by the new procedure code, the indications, treatment
difficulty, and the resources utilized. For FY 2020, as discussed in
the FY 2020 IPPS/LTCH PPS proposed rule, we have continued to consider
how these and other factors may apply in the context of classifying
procedures under the ICD-10 MS-DRGs, including with regard to the
specific concerns raised by stakeholders.
In the absence of claims data for the new ICD-10-PCS procedure
codes describing peripheral ECMO, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for cases reporting
the predecessor ICD-10-PCS procedure code 5A15223 (Extracorporeal
membrane oxygenation, continuous) in Pre-MDC MS-DRG 003, including
those cases reporting secondary diagnosis MCC and CC conditions, that
were grouped under the ICD-10 MS-DRG Version 35 GROUPER. Our findings
are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.002
The total number of cases reported in MS-DRG 003 was 14,456, with
an average length of stay of 29.6 days and average costs of $122,168.
For the cases reporting procedure code 5A15223 (Extracorporeal membrane
oxygenation, continuous), there was a total of 2,086 cases, with an
average length of stay of 20.2 days and average costs of $128,168. For
the cases reporting procedure code 5A15223 with an MCC, there was a
total 9 of 2,000 cases, with an average length of stay of 20.7 days and
average costs of $131,305. For the cases reporting procedure 5A15223
with a CC, there was a total of 79 cases, with an average length of
stay of 7.6 days and average costs of $58,231.
In the proposed rule, we stated that our clinical advisors reviewed
these data and noted that the average length of stay for the cases
reporting ECMO with procedure code 5A15223 of 20.2 days may not
necessarily be a reliable indicator of resources that can be attributed
to ECMO treatment. We also stated that our clinical advisors believed
that a more appropriate measure of resource consumption for ECMO would
be the number of hours or days that a patient was specifically
receiving ECMO treatment, rather than the length of hospital stay.
However, they noted that this information is not currently available in
the claims data. Further, we noted that our clinical advisors also
stated that the average costs of $128,168 for the cases reporting ECMO
with procedure code 5A15223 are not necessarily reflective of the
resources utilized for ECMO treatment alone, as the average costs
represent a combination of factors, including the principal diagnosis,
any secondary diagnosis CC and/or MCC conditions necessitating
initiation of ECMO, and potentially any other procedures that may be
performed during the hospital stay. Our clinical advisors recognized
that patients who require ECMO treatment are severely ill and
recommended we review the claims data to identify the number
(frequency) and types of principal and secondary diagnosis CC and/or
MCC conditions that were reported among the 2,086 cases reporting
procedure code 5A15223. Our findings are shown in the following tables
for the top 10 principal diagnosis codes, followed by the top 10
[[Page 42062]]
secondary diagnosis MCC and secondary diagnosis CC conditions that were
reported within the claims data with procedure code 5A15223.
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[[Page 42063]]
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We stated in the proposed rule that these data show that the
conditions reported for these patients requiring treatment with ECMO
and reported with predecessor ICD-10-PCS procedure code 5A1223
represent a greater severity of illness, present greater treatment
difficulty, have poorer prognoses, and have a greater need for
intervention. While the data analysis was based on the conditions
reported with the predecessor ICD-10-PCS procedure code 5A1223
(Extracorporeal membrane oxygenation, continuous), we stated that our
clinical advisors believe the data may provide an indication of how
cases reporting the new procedure codes describing peripheral
(percutaneous) ECMO may be represented in future claims data with
regard to indications for treatment, a patient's severity of illness,
resource utilization, and treatment difficulty.
Based on the results of our data analysis and further review of the
cases reporting ECMO, including consideration of the stakeholders'
concerns that the MS-DRG assignments for ECMO procedures should not be
based on the method of cannulation, we stated in the proposed rule that
our clinical advisors agreed that resource consumption for both central
and peripheral ECMO cases can be primarily attributed to the severity
of illness of the patient, and that the method of cannulation is less
relevant when considering the overall resources required to treat
patients on ECMO. Specifically, we stated that our clinical advisors
noted that consideration of resource consumption for cases reporting
the use of ECMO may extend well beyond the duration of time that a
patient was actively receiving ECMO treatment, which may range anywhere
from less than 24 hours to 10 days or more. As noted in the proposed
rule and above, in the absence of unique procedure codes that specify
the duration of time that a patient was receiving ECMO treatment, we
cannot ascertain from the claims data the resource use specifically
attributable to treatment with ECMO during a hospital stay (84 FR
19175). However, when reviewing consumption of hospital resources for
the cases in which ECMO was reported during a hospital stay, the claims
data clearly show that the patients placed on ECMO typically have
multiple MCC and CC conditions. These data provide additional
information on the expanding indications for ECMO treatment as well as
an indication of the complexities and the treatment difficulty
associated with these patients. We also stated in the proposed rule
that, while our clinical advisors continue to believe that central
(open) ECMO may be more resource intensive and carries significant
risks for complications, including bleeding, infection, and vessel
injury because it requires an incision along the sternum (sternotomy)
and is performed for open heart surgery, they believe that the subset
of patients who require treatment with ECMO, regardless of the
cannulation method, would be similar in terms of overall hospital
resource consumption. We also
[[Page 42064]]
noted that while we do not yet have Medicare claims data to evaluate
the new peripheral ECMO procedure codes, review of limited registry
data provided by stakeholders for patients treated with a reported
peripheral ECMO procedure did not contradict that costs for peripheral
ECMO appear to be similar to the costs of overall resources required to
treat patients on ECMO (regardless of method of cannulation) and appear
to be attributable to the severity of illness of the patient.
With regard to stakeholders who stated that the two new procedure
codes do not account for an open cut-down approach that may be
performed on a peripheral vessel during a peripheral ECMO procedure, we
noted in the proposed rule that a request and proposal to create ICD-
10-PCS codes to differentiate between peripheral vessel percutaneous
and peripheral vessel open cutdown according to the indication (VA or
VV) for ECMO was discussed at the March 5-6, 2019 ICD-10 Coordination
and Maintenance Committee meeting. We refer readers to the website at:
https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for the committee meeting materials
and discussion regarding this proposal. We also noted that, in this
same proposal, another coding option to add duration values to allow
the reporting of the number of hours or the number of days a patient
received ECMO during the stay was also made available for public
comment.
Upon further review and consideration of peripheral ECMO
procedures, including the indications, treatment difficulty, and the
resources utilized, for the reasons discussed above, in the FY 2020
IPPS/LTCH PPS proposed rule, we stated that our clinical advisors
supported the assignment of the new ICD-10-PCS procedure codes for
peripheral ECMO procedures to the same MS-DRG as the predecessor code
for open (central) ECMO procedures for FY 2020. Therefore, based on our
review, including consideration of the comments and input from our
clinical advisors, we proposed to reassign the following procedure
codes describing peripheral ECMO procedures from their current MS-DRG
assignments to Pre-MDC MS-DRG 003 (ECMO or Tracheostomy with Mechanical
Ventilation >96 Hours or Principal Diagnosis Except Face, Mouth and
Neck with Major O.R. Procedure) as shown in the table below. We stated
in the proposed rule that, if this proposal is finalized, we also would
make conforming changes to the titles for MS-DRGs 207, 291, 296, and
870 to no longer reflect the ``or Peripheral Extracorporeal Membrane
Oxygenation (ECMO)'' terminology in the title. We also noted in the
proposed rule that this proposal included maintaining the designation
of these peripheral ECMO procedures as non-O.R. Therefore, we stated in
the proposed rule that, if finalized, the procedures would be defined
as non-O.R. affecting the MS-DRG assignment for Pre-MDC MS-DRG 003.
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[[Page 42065]]
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Comment: Several commenters expressed support for the proposal to
reassign procedure codes 5A1522G and 5A1522H describing peripheral ECMO
procedures from their current MS-DRG assignments to Pre-MDC MS-DRG 003
and to revise the titles for MS-DRGs 207, 291, 296 and 870 as shown in
the table above. The commenters stated that this reassignment more
appropriately reflects the resource utilization of patients requiring
this treatment. A commenter also stated their appreciation of CMS'
research for the proposal which they believe was needed to maintain the
financial viability of ECMO programs. Another commenter stated they
agreed with the non-O.R. designation of peripheral ECMO procedures
noting these procedures are typically performed at the bedside or in
[[Page 42066]]
an ICU setting due to the emergent condition of the patient. This
commenter also stated that the delivery of ECMO support in a non-O.R.
setting does not diminish the resource intensive nature of the
treatment however, and therefore agreed with the designation of non-
O.R. affecting Pre-MDC MS-DRG 003.
Response: We thank the commenters for their support.
Comment: A few commenters recommended that ICD-10-PCS procedure
codes 5A1522G and 5A1522H be assigned to MS-DRG 215 (Other Heart Assist
System Implant) as opposed to Pre-MDC MS-DRG 003. The commenters stated
that MS-DRG 215 is the primary MS-DRG for peripheral heart assist pumps
with similar patient conditions and clinical coherence. A commenter
stated that assigning percutaneous (peripheral) ECMO into a different
category for payment than percutaneous VAD (Ventricular Assist Device)
creates a system of winners and losers by device.
Response: We thank the commenters for their recommendation. We note
that as stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41168),
in cases where a percutaneous external heart assist device is utilized,
in combination with a percutaneous ECMO procedure, effective October 1,
2018, the ICD-10 MS-DRG GROUPER logic results in a case assignment to
MS-DRG 215 because the percutaneous external heart assist device
procedure is designated as an O.R. procedure and assigned to MS-DRG
215. We also note that under the ICD-10-PCS classification, ECMO is not
defined as a device. The procedure codes in Table 5A0, specifically any
procedure code for ECMO, do not contain a device value for the sixth
character, rather they contain a function value for the sixth character
to identify oxygenation.
Comment: A commenter expressed concern with the proposal to
continue designating peripheral ECMO procedures as non-O.R. procedures,
however, the commenter acknowledged that these procedures may be
performed in non-O.R. locations such as the ER or ICU. The commenter
noted that the determining factor for the location where ECMO is
initiated is typically dictated by the patient's situation. According
to the commenter, for critically ill patients who require life-saving
ECMO, cannulation and initiation of the ECMO circuit is usually done in
an emergent manner. The commenter also noted that these patients are
often at risk of imminent death and cannot safely be moved to another
location for cannulation and ECMO initiation. The commenter requested
that CMS review the designation of the ECMO codes and consider the
unique nature of these procedures during the comprehensive review of
the ICD-10-PCS procedure codes.
Response: We appreciate the commenter's feedback. As noted in the
proposed rule and in section II.F.13.a. of the preamble of this final
rule, we plan to conduct a comprehensive, systematic review of the ICD-
10-PCS procedure codes, including the ECMO procedure codes, and as part
of that comprehensive procedure code review, we will also review the
process for determining when a procedure is considered an operating
room procedure.
Comment: A commenter noted that the FY 2020 ICD-10-PCS codes were
made publicly available in June 2019 and that new procedure codes
describing intraoperative ECMO were created. The commenter requested
that CMS provide guidance on the correct reporting of these procedure
codes when performed in the cardiac catheterization lab, the
electrophysiology lab or other inpatient places of service, including
the O.R., since the designation of these new procedure codes is non-
O.R.
Response: The commenter is correct that the FY 2020 ICD-10-PCS
procedure code files were made publicly available in June 2019 (which
are available via the internet on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/2020-ICD-10-PCS.html) and that new
procedure codes describing intraoperative ECMO have been created. As
shown in Table 6B.--New Procedure Codes, associated with this final
rule (which is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), procedure codes 5A15A2F (Extracorporeal
oxygenation, membrane, central, intraoperative), 5A15A2G
(Extracorporeal oxygenation, membrane, peripheral veno-arterial,
intraoperative) and 5A15A2H (Extracorporeal oxygenation, membrane,
peripheral veno-venous, intraoperative) are effective with discharges
on and after October 1, 2019 and are designated as non-O.R. procedures.
We note that, historically, we have not provided coding advice in
rulemaking with respect to policy. We collaborate with the American
Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and
ICD-10-PCS to promote proper coding (81 FR 56841).
Comment: Some commenters suggested that CMS should assign the new
procedure codes describing intraoperative peripheral ECMO procedures
(as discussed above) to Pre-MDC MS-DRG 003 until claims data is
available to analyze their impact on resource utilization.
Response: We appreciate the commenters' suggestion, however, as
discussed at the ICD-10 Coordination and Maintenance Committee meeting
held on March 5-6, 2019, the request (and subsequent finalization) for
new procedure codes describing the intraoperative use of ECMO was
specifically to address those situations in which the use of the ECMO
was in support of a surgical (O.R.) procedure and the ECMO was
discontinued at the conclusion of the procedure. For example, a patient
who undergoes a lung transplant and receives ECMO support during the
transplant procedure and the ECMO is discontinued at the conclusion of
the lung transplant procedure. In this scenario, it is the lung
transplant that is the surgical (O.R.) procedure and case assignment to
MS-DRG 007 (Lung Transplant) by the GROUPER logic is what is
appropriately reflected in the MedPAR claims data. As stated in the
proposed rule and in this final rule, our annual process of assigning
new procedure codes to MDCs and MS-DRGs, and designating a procedure as
an O.R. or non-O.R. procedure involves review of the predecessor
procedure code assignment. However, this process does not automatically
result in the new procedure code being assigned to the same MS-DRG as
the predecessor code. Consistent with our annual process of reviewing
the MS-DRGs, we will continue to monitor cases to determine if any
additional adjustments are warranted to account for changes in resource
consumption.
Comment: A few commenters requested that CMS consider reprocessing
claims for cases reporting procedure code 5A1522G or 5A1522H in MS-DRGs
207, 291, 296 or 870 in FY 2019 as a result of the financial impact it
has had on providers and their belief that the codes were
inappropriately classified. Specifically, commenters questioned if CMS
would permit acute care hospitals to re-bill all FY 2019 ECMO cases
under MS-DRG 003 to recoup lost revenues.
Response: As previously discussed, consistent with our annual
process of assigning new procedure codes to MDCs and MS-DRGs, we
reviewed the predecessor procedure code assignments, as well as other
factors relevant to the MS-DRG assignment. As
[[Page 42067]]
discussed in the proposed rule, after further consideration of these
factors and review of these cases, including the data analysis
described previously, CMS proposed to change the assignment of these
cases beginning in FY 2020. As such, and consistent with our general
approach to changes in MS-DRG assignment, the finalized policy we are
adopting with regard to the assignment of cases reporting peripheral
ECMO procedures is prospective, effective with discharges beginning in
FY 2020 and is not applicable to discharges in FY 2019. We also note
that section 1886(d)(5)(A) of the Act provides for Medicare payments to
Medicare-participating hospitals in addition to the basic prospective
payments for cases incurring extraordinarily high costs. To qualify for
outlier payments, a case must have costs above a fixed-loss cost
threshold amount (a dollar amount by which the costs of a case must
exceed payments in order to qualify for outliers).
Comment: A commenter stated that Tables 7A and 7B associated with
the proposed rule show a decline of the case counts in Pre-MDC MS-DRG
003 from Version 36 to Version 37 of the ICD-10 MS-DRG GROUPER (15,749
vs. 15,164). The commenter stated that under the current proposal to
reassign cases reporting peripheral ECMO procedures, they would expect
to see a shift in cases to Pre-MDC MS-DRG 003 from MS-DRGs 207, 291,
296, and 870 for the cases reporting procedures for peripheral ECMO.
The commenter requested that CMS revisit these tables to provide
insight and clarification concerning a potential issue with the
surgical hierarchy given that the peripheral ECMO procedure codes are
not recognized as O.R. procedures and the Version 36 volume of cases is
higher than the Version 37 volume of cases based on the data within
these tables.
Response: We reviewed the cases assigned to Pre-MDC MS-DRG 003 and
found that the majority of the reduction in the case counts between
Version 36 and Version 37 of the GROUPER was attributable to the
proposed change in the designation of the ICD-10-PCS procedure codes
describing bronchoalveolar lavage from O.R. to non-O.R. status, which
is discussed in section II.F.13.b.1. of the preamble of this final
rule. Since these procedures were the only operating room procedure
reported for these cases, the proposed change in the O.R. status of
these codes resulted in the reassignment or ``shift'' of these cases
reporting these procedures from Pre-MDC MS-DRG 003 to Pre-MDC MS-DRG
004. As discussed in section II.F.13.b.1, we are finalizing this
proposed change in designation for these procedure codes, and therefore
Tables 7A and 7B associated with this final rule reflect similar
``shifts'' in the volume of cases reported to MS-DRG 003 between
Version 36 and Version 37 of the GROUPER.
After consideration of the public comments we received, we are
finalizing our proposal to reassign the procedure codes describing
peripheral ECMO procedures from their current MS-DRG assignments to
Pre-MDC MS-DRG 003 and maintain the designation of the peripheral ECMO
procedures as non-O.R. We are also finalizing our proposal to make
changes to the titles for MS-DRGs 207, 291, 296, and 870 to no longer
reflect the ``or Peripheral Extracorporeal Membrane Oxygenation
(ECMO)'' terminology in the title under the ICD-10 MS-DRGs Version 37,
effective October 1, 2019.
b. Allogeneic Bone Marrow Transplant
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19176), we received a request to create new MS-DRGs for cases that
would identify patients who undergo an allogeneic hematopoietic cell
transplant (HCT) procedure. The requestor asked us to split MS-DRG 014
(Allogeneic Bone Marrow Transplant) into two new MS-DRGs and assign
cases to the recommended new MS-DRGs according to the donor source,
with cases for allogeneic related matched donor source assigned to one
MS-DRG and cases for allogeneic unrelated matched donor source assigned
to the other MS-DRG. The requestor stated that by creating two new MS-
DRGs for allogeneic related and allogeneic unrelated donor source,
respectively, the MS-DRGs would more appropriately recognize the
clinical characteristics and cost differences in allogeneic HCT cases.
The requestor stated that allogeneic related and allogeneic
unrelated HCT cases are clinically different and have significantly
different donor search and cell acquisition charges. According to the
requestor, 70 percent of patients do not have a matched sibling donor
(that is, an allogeneic related matched donor) in their family. The
requestor also stated that this rate is higher for Medicare
beneficiaries. According to the requestor, the current payment for
allogeneic HCT cases is inadequate and affects patient's access to
care.
The requestor performed its own analysis and stated that it found
the average costs for HCT cases reporting revenue code 0815 (Stem cell
acquisition) alone or revenue code 0819 (Other organ acquisition) in
combination with revenue code 0815 with one of the ICD-10-PCS procedure
codes for allogeneic unrelated donor source were significantly higher
than the average costs for HCT cases reporting revenue code 0815 alone
or both revenue codes 0815 and 0819 in combination with one of the ICD-
10-PCS procedure codes for allogeneic related donor source. Further,
the requestor reported that, according to its analysis, the average
costs for HCT cases reporting revenue code 0815 alone or both revenue
codes 0815 and 0819 in combination with one of the ICD-10-PCS procedure
codes for unspecified allogeneic donor source were also significantly
higher than the average costs for HCT cases reporting the ICD-10-PCS
procedure codes for allogeneic related donor source. The requestor
suggested that cases reporting the unspecified donor source procedure
code are highly likely to represent unrelated donors, and recommended
that, if the two new MS-DRGs are created as suggested, the cases
reporting the procedure codes for unspecified donor source be included
in the suggested new ``unrelated donor'' MS-DRG. The requestor also
suggested that CMS apply a code edit through the inpatient Medicare
Code Editor (MCE), similar to the edit in the Integrated Outpatient
Code Editor (I/OCE) which requires reporting of revenue code 0815 on
the claim with the appropriate procedure code or the claim may be
subject to being returned to the provider.
As noted in the proposed rule, the ICD-10-PCS procedure codes
assigned to MS-DRG 014 that identify related, unrelated and unspecified
donor source for an allogeneic HCT are shown in the following table.
BILLING CODE 4120-01-P
[[Page 42068]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.007
As noted in the FY 2020 IPPS/LTCH PPS proposed rule, we examined
claims data from the September 2018 update of the FY 2018 MedPAR file
for MS-DRG 014 and identified the subset of cases within MS-DRG 014
reporting procedure codes for allogeneic HCT related donor source,
allogeneic HCT unrelated donor source, and allogeneic HCT unspecified
donor source, respectively. Our findings are shown in the following
table.
[[Page 42069]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.245
BILLING CODE 4120-01-C
The total number of cases reported in MS-DRG 014 was 854, with an
average length of stay of 28.2 days and average costs of $91,446. For
the subset of cases reporting procedure codes for allogeneic HCT
related donor source, there were a total of 292 cases with an average
length of stay of 29.5 days and average costs of $87,444. For the
subset of cases reporting procedure codes for allogeneic HCT unrelated
donor source, there was a total of 466 cases with an average length of
stay of 27.9 days and average costs of $95,146. For the subset of cases
reporting procedure codes for allogeneic HCT unspecified donor source,
there was a total of 90 cases with an average length of stay of 26.2
days and average costs of $90,945.
We stated in the proposed rule that based on the analysis described
above, the current MS-DRG assignment for the cases in MS-DRG 014 that
identify patients who undergo an allogeneic HCT procedure, regardless
of donor source, appears appropriate. The data analysis reflects that
each subset of cases reporting a procedure code for an allogeneic HCT
procedure (that is, related, unrelated, or unspecified donor source)
has an average length of stay and average costs that are comparable to
the average length of stay and average costs of all cases in MS-DRG
014. We also noted that, in deciding whether to propose to make further
modifications to the MS-DRGs for particular circumstances brought to
our attention, we do not consider the reported revenue codes. Rather,
as stated previously, we consider whether the resource consumption and
clinical characteristics of the patients with a given set of conditions
are significantly different than the remaining patients represented in
the MS-DRG. We do this by evaluating the ICD-10-CM diagnosis and/or
ICD-10-PCS procedure codes that identify the patient conditions,
procedures, and the relevant MS-DRG(s) that are the subject of a
request. Specifically, we stated that, for this request, as noted
above, we analyzed the cases reporting the ICD-10-PCS procedure codes
that identify an allogeneic HCT procedure according to the donor
source. We then evaluated patient care costs using average costs and
average lengths of stay (based on the MedPAR data) and rely on the
judgment of our clinical advisors to determine whether the patients are
clinically distinct or similar to other patients represented in the MS-
DRG. We stated that because MS-DRG 014 is defined by patients who
undergo an allogeneic HCT transplant procedure, our clinical advisors
state they are all clinically similar in that regard. We also noted
that the ICD-10-PCS procedure codes that describe an allogeneic HCT
procedure were revised effective October 1, 2016 to uniquely identify
the donor source in response to a request and proposal that was
discussed at the March 9-10, 2016 ICD-10 Coordination and Maintenance
Committee meeting. We refer readers to the website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for the committee meeting materials and
discussion regarding this proposal.
In the proposed rule, in response to the requestor's statement that
allogeneic related and allogeneic unrelated HCT cases are clinically
different and have significantly different donor search and cell
acquisition charges, we stated that our clinical advisors supported
maintaining the current structure for MS-DRG 014 because they believe
that MS-DRG 014 appropriately classifies all patients who undergo an
allogeneic HCT procedures and, therefore, it is clinically coherent.
While the requestor stated that there are clinical differences in the
related and unrelated HCT cases, they did not provide any specific
examples of these clinical differences. With regard to the donor search
and cell acquisition charges, the requestor noted that the unrelated
donor cases are more expensive than the related donor cases because of
the donor search process, which includes a registry search to identify
the best donor source, extensive donor screenings, evaluation, and cell
acquisition and transportation services for the patient. The requestor
appeared to base that belief according to the donor source and average
charges reported with revenue code 0815. As noted in the proposed rule
and above, we use MedPAR data and do not consider the reported revenue
codes in deciding whether to propose to make further modifications to
the MS-DRGs. Based on our analysis of claims data for MS-DRG 014, our
clinical advisors stated that the resources are similar for patients
who undergo an allogeneic HCT procedure regardless of the donor source.
In reviewing this request, we also reviewed the instructions on
billing for stem cell transplantation in Chapter 3 of the Medicare
Claims Processing Manual and found that there appears to be inadvertent
duplication under Section 90.3.1 and Section 90.3.3 of Chapter 3, as
both sections provide instructions on Billing for Stem Cell
Transplantation. Therefore, in the proposed rule, we stated that we are
further reviewing the Medicare Claims Processing Manual to identify
potential revisions to address this duplication. However, we also noted
that section 90.3.1 and section 90.3.3 provide different instruction
regarding which revenue code should be reported. Section 90.3.1
instructs providers to report revenue code 0815 and Section 90.3.3
instructs providers to report revenue code 0819. We noted that we
issued instructions as a One-Time Notification, Pub. No. 100-04,
Transmittal 3571, Change Request 9674, effective January 1, 2017, which
instructs that the appropriate revenue code to report on claims for
allogeneic stem cell acquisition/donor services is revenue code 0815.
Accordingly, in the proposed rule, we stated that we also are
considering additional revisions as needed to conform the instructions
for reporting these codes in the Medicare Claims Processing Manual.
With regard to the requestor's recommendation that we create a new
code edit through the inpatient MCE similar to the edit in the I/OCE
which requires reporting of revenue code 0815 on the claim, in the
proposed rule we noted that the MCE is not designed to include revenue
codes for claims editing purposes. Rather, as stated in section
II.F.16. of the preamble of this final rule, it is a software program
that detects and reports errors in the coding of Medicare claims data.
The coding of Medicare claims data refers to diagnosis and procedure
coding, as well as demographic information.
For the reasons described above, in the FY 2020 IPPS/LTCH PPS
proposed
[[Page 42070]]
rule, we did not propose to change the current structure of MS-DRG 014.
In addition, we did not propose to split MS-DRG 014 into two new MS-
DRGs that assign cases according to whether the allogeneic donor source
is related or unrelated, as the requestor suggested.
In addition, while conducting our analysis of cases reporting ICD-
10-PCS procedure codes for allogeneic HCT procedures that are assigned
to MS-DRG 014, in the proposed rule, we noted that 8 procedure codes
for autologous HCT procedures are currently included in MS-DRG 014, as
shown in the following table. We stated that these codes are not
properly assigned because MS-DRG 014 is defined by cases reporting
allogenic HCT procedures.
In the proposed rule, we stated that the 8 ICD-10-PCS procedure
codes for autologous HCT procedures were inadvertently included in MS-
DRG 014 as a result of efforts to replicate the ICD-9-CM MS-DRGs. Under
the ICD-9-CM MS-DRGs, procedure code 41.06 (Cord blood stem cell
transplant) was used to identify these procedures and was also assigned
to MS-DRG 014. As shown in the ICD-9-CM code description, the reference
to ``autologous'' is not included. However, because the ICD-10-PCS
autologous HCT procedure codes were considered as plausible
translations of the ICD-9-CM procedure code (41.06), they were
inadvertently included in MS-DRG 014. We also noted that, of these 8
procedure codes, there are 4 procedure codes that describe a
transfusion via arterial access. As noted in the proposed rule and
described in more detail below, because a transfusion procedure always
uses venous access rather than arterial access, these codes are
considered clinically invalid and were the subject of a proposal
discussed at the March 5-6, 2019 ICD-10 Coordination and Maintenance
Committee meeting to delete these codes effective October 1, 2019 (FY
2020).
The majority of ICD-10-PCS procedure codes specifying autologous
HCT procedures are currently assigned to MS-DRGs 016 and 017
(Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy
and Autologous Bone Marrow Transplant without CC/MCC, respectively).
These codes are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.009
We stated in the proposed rule that, while we believe, as
indicated, the cases reporting ICD-10-PCS procedure codes for
autologous HCT procedures may be improperly assigned to MS-DRG 014, we
also examined claims data for this subset of cases to determine the
frequency with which they were reported and the relative resource use
as compared with all cases assigned to MS-DRGs 016 and 017. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.010
For the subset of cases in MS-DRG 014 reporting ICD-10-PCS codes
for autologous HCT procedures, there was a total of 6 cases with an
average length of stay of 23.5 days and average costs of $38,319. The
total number of cases reported in MS-DRG 016 was 2,150, with an average
length of stay of 18 days and average costs of $47,546. The total
number of cases reported in MS-DRG 017 was 104, with an average length
of stay of 11 days and average costs of $33,540.
As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, the
results of our analysis indicate that the frequency with which these
autologous HCT procedure codes were reported in MS-
[[Page 42071]]
DRG 014 is low and that average costs of cases reporting autologous HCT
procedures assigned to MS-DRG 014 are more aligned with the average
costs of cases assigned to MS-DRGs 016 and 017, with the average costs
being lower than the average costs for all cases assigned to MS-DRG 016
and higher than the average costs for all cases assigned to MS-DRG 017.
We further stated in the proposed rule that our clinical advisors also
indicated that the procedure codes for autologous HCT procedures are
more clinically aligned with cases that are assigned to MS-DRGs 016 and
017 that are comprised of autologous HCT procedures. Therefore, in the
FY 2020 IPPS/LTCH PPS proposed rule, we proposed to reassign the
following 4 procedure codes for HCT procedures specifying autologous
cord blood stem cell as the donor source via venous access to MS-DRGs
016 and 017 for FY 2020.
[GRAPHIC] [TIFF OMITTED] TR16AU19.011
As discussed in the proposed rule and earlier in this section, the
4 procedure codes for HCT procedures that describe an autologous cord
blood stem cell transfusion via arterial access currently assigned to
MS-DRG 014, as listed previously, are considered clinically invalid.
These procedure codes were discussed at the March 5-6, 2019 ICD-10
Coordination and Maintenance Committee meeting, along with additional
procedure codes that are also considered clinically invalid, as
described in the section below.
We stated in the proposed rule that during our analysis of
procedure codes that describe a HCT procedure, we identified 128
clinically invalid codes from the transfusion table (table 302) in the
ICD-10-PCS classification identifying a transfusion using arterial
access, as listed in Table 6P.1a. associated with the proposed rule
(which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). As shown in Table 6P.1a., these 128
procedure codes describe transfusion procedures with body system/region
values ``5'' Peripheral Artery and ``6'' Central Artery. Because a
transfusion procedure always uses venous access rather than arterial
access, these codes are considered clinically invalid and were proposed
for deletion at the March 5-6, 2019 ICD-10 Coordination and Maintenance
Committee meeting. We refer the reader to the website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html for
the Committee meeting materials regarding this proposal.
As discussed in the proposed rule, we examined claims data from the
September 2018 update of the FY 2018 MedPAR file for MS-DRGs 014, 016,
and 017 to determine if there were any cases that reported one of the
128 clinically invalid codes from the transfusion table in the ICD-10-
PCS classification identifying a transfusion using arterial access, and
as listed in Table 6P.1a. associated with the proposed rule. Our
clinical advisors agreed that because a transfusion procedure always
uses venous access rather than arterial access, these codes are
considered invalid. We stated in the proposed rule that because these
procedure codes describe clinically invalid procedures, we would not
expect these codes to be reported in any claims data. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.012
As shown in this table, we found a total of 3,108 cases across MS-
DRGs 014, 016, and 017 with an average length of stay of 20.4 days and
average costs of $59,140. We found a total of 31 cases (0.9 percent)
reporting a procedure code for an invalid transfusion procedure,
identifying the body system/region value ``5'' Peripheral Artery or
``6'' Central Artery, with an average length of stay of 19.6 days and
average costs of $52,912.
The results of the data analysis demonstrate that these invalid
transfusion procedures represent approximately 1 percent of all
discharges across MS-DRGs 014, 016, and 017.
To summarize, in the FY 2020 IPPS/LTCH PPS proposed rule, we
proposed to: (1) Reassign the four ICD-10-PCS codes for HCT procedures
specifying autologous cord blood stem cell as the donor source from MS-
DRG 014 to MS-DRGs 016 and 017 (procedure codes 30230X0, 30233X0,
30240X0, 30243X0); and (2) delete the 128 clinically invalid codes from
the transfusion table in the ICD-10-PCS Classification describing a
transfusion using arterial access that were discussed at the March 5-6,
2019 ICD-10 Coordination and Maintenance Committee meeting and listed
in Table 6P.1a associated with the proposed rule. As discussed
previously, we did not propose to split MS-DRG 014 into the two
requested new MS-DRGs that would assign cases according to whether the
allogeneic donor source is related or unrelated.
Comment: Commenters supported the proposal to maintain the current
structure of MS-DRG 014. Commenters also supported the proposals to (1)
reassign the four ICD-10-PCS codes for HCT procedures specifying
autologous cord blood stem cell as the donor source from MS-DRG 014 to
MS-DRGs 016 and 017 (procedure codes 30230X0, 30233X0, 30240X0,
30243X0); and (2) delete the 128 clinically invalid codes from the
transfusion table in the ICD-10-PCS Classification. A commenter
specifically expressed their appreciation with CMS' diligence in
ensuring the clinical appropriateness of the ICD-10 codes. This
commenter also requested that CMS create an edit (similar to what was
implemented in the CY 2017 Hospital Outpatient Prospective Payment
System final rule, which states outpatient claims assigned to C-APC
5224 with CPT code 38240 must be
[[Page 42072]]
reported with revenue code 0815, and if that code is missing, the claim
is returned by an edit to the provider) for inpatient claims utilizing
ICD-10-PCS codes and revenue code 0815. According to the commenter,
this would better inform CMS future ratesetting and reimbursement, as
well as provide access to the more robust data in revenue code 0815
which the commenter asserted would allow CMS to do a meaningful
analysis on the differences between search and procurement costs for
related versus unrelated transplants. The commenter also recommended
that CMS look at bone marrow and stem cell transplant services
holistically and consider the process that providers must follow in
order to correctly code and submit a claim.
Response: We appreciate the commenters' support. With regard to the
recommendation that we create a new code edit for ICD-10-PCS codes
reported with revenue code 0815 on the claim, as we noted in the
proposed rule, the MCE is not designed to include revenue codes for
claims editing purposes. Rather, as stated in section II.F.16. of the
preamble of this final rule, it is a software program that detects and
reports errors in the coding of Medicare claims data. In response to
the commenter's recommendation that we consider the process that
providers must follow in order to correctly code and submit a claim, we
note that, as stated in the proposed rule, and above, we issued
instructions as a One-Time Notification, Pub. No. 100-04, Transmittal
3571, Change Request 9674, effective January 1, 2017, which instructs
that the appropriate revenue code to report on claims for allogeneic
stem cell acquisition/donor services is revenue code 0815. As
indicated, we are considering additional revisions as needed to conform
the instructions for reporting these codes in the Medicare Claims
Processing Manual.
After consideration of the public comments we received, we are
finalizing our proposal to (1) reassign the four ICD-10-PCS codes for
HCT procedures specifying autologous cord blood stem cell as the donor
source from MS-DRG 014 to MS-DRGs 016 and 017 (procedure codes 30230X0,
30233X0, 30240X0, 30243X0); and (2) delete the 128 clinically invalid
codes from the transfusion table in the ICD-10-PCS Classification and
listed in Table 6P.1a associated with the proposed rule and this final
rule (which is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) under the ICD-10 MS-DRGs Version 37,
effective October 1, 2019.
c. Chimeric Antigen Receptor (CAR) T-Cell Therapies
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19180), we received a request to create a new MS-DRG for procedures
involving CAR T-cell therapies. The requestor stated that creation of a
new MS-DRG would improve payment for CAR T-cell therapies in the
inpatient setting. According to the requestor, while cases involving
CAR T-cell therapy may now be eligible for new technology add-on
payments and outlier payments, there continue to be significant
financial losses by providers. The requestor also suggested that CMS
modify its existing payment mechanisms to use a CCR of 1.0 for charges
associated with CAR T-cell therapy.
In addition, the requestor included technical and operational
suggestions related to CAR T-cell therapy, such as the development of
unique CAR T-cell therapy revenue and cost centers for billing and cost
reporting purposes. In the proposed rule, we stated that we will
consider these technical and operational suggestions in the development
of future billing and cost reporting guidelines and instructions.
In the FY 2020 IPPS/LTCH PPS proposed rule, we noted that,
currently, procedures involving CAR T-cell therapies are identified
with ICD-10-PCS procedure codes XW033C3 (Introduction of engineered
autologous chimeric antigen receptor t-cell immunotherapy into
peripheral vein, percutaneous approach, new technology group 3) and
XW043C3 (Introduction of engineered autologous chimeric antigen
receptor t-cell immunotherapy into central vein, percutaneous approach,
new technology group 3), which became effective October 1, 2017. In the
FY 2019 IPPS/LTCH PPS final rule, we finalized our proposal to assign
cases reporting these ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016
for FY 2019 and to revise the title of this MS-DRG to ``Autologous Bone
Marrow Transplant with CC/MCC or T-cell Immunotherapy''. We refer
readers to section II.F.2.d. of the preamble of the FY 2019 IPPS/LTCH
PPS final rule for a complete discussion of these final policies (83 FR
41172 through 41174).
As stated in the proposed rule and earlier, the current procedure
codes for CAR T-cell therapies both became effective October 1, 2017.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41172 through 41174), we
indicated we should collect more comprehensive clinical and cost data
before considering assignment of a new MS-DRG to these therapies. We
stated in the FY 2020 IPPS/LTCH PPS proposed rule that, while the
September 2018 update of the FY 2018 MedPAR data file does contain some
claims that include those procedure codes that identify CAR T-cell
therapies, the number of cases is limited, and the submitted costs vary
widely due to differences in provider billing and charging practices
for this therapy. Therefore, while these claims could potentially be
used to create relative weights for a new MS-DRG, we stated that we do
not have the comprehensive clinical and cost data that we generally
believe are needed to do so. Furthermore, we stated in the proposed
rule that given the relative newness of CAR T-cell therapy and our
proposal to continue new technology add-on payments for FY 2020 for the
two CAR T-cell therapies that currently have FDA approval
(KYMRIAHTM and YESCARTATM), as discussed in
section II.G.4.d. of the preamble of the proposed rule and this final
rule, at this time we believe it may be premature to consider creation
of a new MS-DRG specifically for cases involving CAR T-cell therapy for
FY 2020.
Therefore, we did not propose to modify the current MS-DRG
assignment for cases reporting CAR T-cell therapies for FY 2020. We
noted that cases reporting ICD-10-PCS codes XW033C3 and XW043C3 would
continue to be eligible to receive new technology add-on payments for
discharges occurring in FY 2020 if our proposal to continue such
payments is finalized. We stated that currently, we expect that, in
future years, we would have additional data that exhibit more stability
and greater consistency in charging and billing practices that could be
used to evaluate the potential creation of a new MS-DRG specifically
for cases involving CAR T-cell therapies.
Comment: Several commenters supported our proposal not to modify
the current MS-DRG assignment for cases reporting CAR T-cell therapies
for FY 2020, stating that CMS should wait until more clinical and cost
data are available. Commenters indicated that CMS should wait until
claims are coded and billed in a uniform manner so that consistent and
accurate claims data is available for rate-setting. MedPAC also stated
that incorporating new technologies into the Medicare program by using
an existing MS-DRG in conjunction with new technology add-on payments
and outlier payments has created incentives for efficiency and risk-
sharing between providers and the Medicare program.
[[Page 42073]]
Response: We appreciate the commenters' support for our proposal
and agree that incorporating new technologies into the Medicare program
by using an existing MS-DRG in conjunction with new technology add-on
payments, and outlier payments if applicable, is consistent with our
policies regarding how new technologies are incorporated into the IPPS.
Comment: Several other commenters encouraged CMS to develop a new
MS-DRG for cases reporting CAR T-cell therapies for FY 2020 in order to
adequately cover the costs of treatment and so as not to dis-
incentivize hospitals from providing CAR T-cell therapies due to
inadequate reimbursement. Most of these commenters recommended
alternative payment approaches for the CAR T-cell product if a new MS-
DRG were created.
A commenter stated that claims analyses from the FY 2019 IPPS/LTCH
PPS proposed rule for the KYMRIAHTM and
YESCARTATM new technology add-on payment applications found
a significant number of patients who may be eligible for use of these
therapies, which may be reflective of the potential growth of these
therapies in the future. The commenter also stated that according to
the FY 2018 MEDPAR update, other pre-MDC MS-DRGs contain fewer cases
than the 386 CAR T-cell discharges that CMS estimated would qualify for
new technology add-on payments. The commenter stated that this suggests
that there are enough cases for CAR T-cell therapies to be considered
for their own MS-DRG assignment. Another commenter stated that in the
FY 2019 IPPS/LTCH PPS proposed rule, CMS expressed concern about the
potential redistributive effects away from core hospital services over
time toward specialized hospitals and how that may affect payment for
core services if a new MS-DRG is created. The commenter stated they
shared these concerns; however, believed they are mitigated to the
extent that CMS creates a new MS-DRG during a time when the volume of
CAR T-cell cases is very low. They also noted the technology will
likely become less expensive, not more expensive over time, as commonly
occurs with expensive new technologies. The commenter urged CMS to
create a new MS-DRG specific to CAR T-cell cases for use in FY 2020.
The commenter expressed concern that if CMS waits to make an MS-DRG
change at a time when volume is higher, but before the CAR T-cell cases
have become less expensive, the CAR T-cell cases will draw a higher
amount of additional payments at the expense of all other cases.
Response: As discussed in the proposed rule, we continue to believe
that we do not have the comprehensive clinical and cost data that we
generally believe is needed to create a new MS-DRG. As stated earlier,
we also continue to believe that incorporating new technologies into
the Medicare program by using an existing MS-DRG in conjunction with
new technology add-on payments, and outlier payments if applicable, is
consistent with our policies regarding how new technologies are
incorporated into the IPPS. We note that we address additional comments
relating to the creation of a separate MS-DRG, including potential
payment approaches, in the discussion of alternative payment for CAR T-
cell therapy cases that follows.
With respect to the number of cases, we note that the new
technology add-on payment estimate is a projection of future cases. Our
standard practice in determining whether to create a new MS-DRG is to
examine the number of cases, and the clinical and cost characteristics
of those cases in the historical claims data. We do not have the
clinical and cost data about these projected future FY 2020 cases
available at this time.
With respect to the commenter who expressed concern that waiting to
create a new MS-DRG would draw a higher amount of additional payments
at the expense of all other cases, we are unclear as to the specific
concern being raised by the commenter. Each year, we calculate the
relative weights by dividing the average cost for cases within each MS-
DRG by the average cost for cases across all MS-DRGs. Since the
relative weight is recalculated each year, the implications for the
payments for other cases do not differ based on when a new MS-DRG is
created.
Therefore, after consideration of the comments we received, and for
the reasons discussed, we are finalizing our proposal not to modify the
MS-DRG assignment for cases reporting CAR-T cell therapies for FY 2020.
As noted previously, we address additional comments we received
relating to the creation of any potential new MS-DRG, including payment
under any such MS-DRG, in the discussion that follows.
As part of our solicitation of public comment on the potential
creation of a new MS-DRG for CAR-T cell therapy procedures, in the
proposed rule we also invited comment on the most appropriate way to
develop the relative weight if we were to finalize the creation of a
new MS-DRG in future rulemaking. We stated that, while the data are
limited, it may be operationally possible to create a relative weight
by dividing the average costs of cases that include the CAR T-cell
procedures by the average costs of all cases, consistent with our
current methodology for setting the relative weights for FY 2020 and
using the same applicable data sources used for other MS-DRGs (for FY
2020, the FY 2018 MedPAR data and FY 2016 HCRIS data). We invited
public comments on whether this is the most accurate method for
determining the relative weight, given the current variation in the
claims data for these procedures, and also on how to address the
significant number of cases involving clinical trials. We stated in the
proposed rule that, while we do not typically exclude cases in clinical
trials when developing the relative weights, in this case, the absence
of the drug costs on claims for cases involving clinical trial claims
could have a significant impact on the relative weight. We also stated
that it is unclear whether a relative weight calculated using cases for
which hospitals do and do not incur drug costs would accurately reflect
the resource costs of caring for patients who are not involved in
clinical trials. We stated that a different approach might be to
develop a relative weight using an appropriate portion of the average
sales price (ASP) for these drugs as an alternative way to reflect the
costs involved in treating patients receiving CAR T-cell therapies. We
requested public comments on these approaches or other approaches for
setting the relative weight if we were to finalize a new MS-DRG. We
noted that any such new MS-DRG would be established in a budget neutral
manner, consistent with section 1886(d)(4)(C)(iii) of the Act, which
specifies that 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.
Comment: We received many comments on the most appropriate way to
develop the relative weight and modify rate setting trims if we were to
finalize the creation of a new MS-DRG, including different ways to
determine the cost of the CAR T-cell therapy product, such as the use
of Average Sales Price data or acquisition cost data, and technical
comments on claims inclusion and exclusion criteria related to clinical
trials.
Response: As discussed previously in this section, we are
finalizing our proposal not to modify the MS-DRG assignment for cases
reporting CAR-T cell therapies for FY 2020. We will
[[Page 42074]]
consider these comments in connection with any future rulemaking
relating to the MS-DRG assignment for the CAR-T cell therapy cases.
As discussed further in section II.G.7. of the preamble to the
proposed rule, we also requested public comment on payment alternatives
for CAR T-cell cases, including eliminating the use of the CCR in
calculating the new technology add-on payment for KYMRIAH[supreg] and
YESCARTA[supreg] by making a uniform add-on payment that equals the
proposed maximum add-on payment. We also requested public comments on
whether we should consider utilizing a specific CCR for ICD-10-PCS
procedure codes used to report the performance of procedures involving
the use of CAR T-cell therapies; for example, a CCR of 1.0, when
determining outlier payments, when determining the new technology add-
on payments, and when determining payments to IPPS-excluded cancer
hospitals for CAR T-cell therapies.
We invited public comments on how payment alternatives for CAR T-
cell therapy would affect access to care, as well as how they would
affect incentives to encourage lower drug prices, which is a high
priority for this Administration. As discussed in the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41172 through 41174) and the FY 2020 IPPS/LTCH
PPS proposed rule (84 FR 19279), we are considering approaches and
authorities to encourage value-based care and lower drug prices. We
solicited public comments on how the effective dates of any potential
payment methodology alternatives, if any were to be adopted, may
intersect and affect future participation in any such alternative
approaches.
Comment: Some commenters indicated that CMS should pay for CAR T-
cell therapy products based on the Average Sales Price. Some commenters
noted that CMS pays for hemophilia blood clotting factors in this
manner. A commenter recognized that payment for blood clotting factors
in this manner was established by statute, but suggested that CMS may
have the statutory authority to pay using this approach, or CMS could
seek statutory authority from Congress. Another commenter urged CMS to
pay for CAR T-cell therapies at Wholesale Acquisition Cost (WAC) plus
six percent. Some commenters suggested that CMS require hospitals to
submit on the claim the particular CAR T-cell product's NDC code. Other
commenters stated given the similarity of CAR T-cell therapies to solid
organ transplants, in that they are high-cost, low-volume services, CMS
should pay for CAR T-cell therapies on a reasonable cost basis. Some
commenters indicated that CMS should require providers to report value
code 86, the actual invoice/acquisition cost, on their claims and
include the actual product acquisition cost on the claim for payment
purposes.
Several commenters suggested that CMS adopt a CCR of 1.0 for CAR T-
cell products for all payment purposes, including new technology add-on
payments, outlier payments, and payments to IPPS-excluded cancer
hospitals. These commenters stated that utilizing a CCR of 1.0 will
ensure uniformity among providers, many of whom are currently marking
up the CAR-T charge, which impacts CMS' ability to analyze claims data
that are critical for rate setting. These commenters also stated that
they believe the use of a CCR of 1.0 would ensure consistent billing
practices and payment that would be mutually beneficial for CMS and
providers, including eliminating the need for providers to mark-up the
CAR T-cell product cost. MedPAC expressed concern about using a CCR of
1.0, which would presume the hospitals charged their actual costs
despite what it stated was the clear financial incentive to increase
charges. MedPAC also expressed concern that this could set a precedent
for other items going forward, and instead recommended the use of a
lagged ASP based payment. Another commenter stated that using a CCR of
1.0 is a radical departure from previous payment methods and CMS should
carefully consider possible issues that may result.
Many commenters requested structural changes in new technology add-
on payments for the drug therapy, including the use of a uniform add-on
payment. Many commenters also requested a higher new technology add-on
payment percentage for CAR T-cell therapy products, up to 100 percent,
rather than our proposed 65 percent for all new technologies,
indicating that the proposed 65 percent would result in inadequate
payment.
Some commenters suggested that CMS develop and release for comment
an outcomes-based payment model for CAR T-cell therapy payments in the
future and encouraged CMS to consider a payment alternative for CAR T-
cell therapy under which CMS would test a new payment model through the
Innovation Center and would pay for these technologies based on outcome
and value rather than service.
Response: After a review of the comments received, we continue to
believe, similar to last year, that given the relative newness of CAR
T-cell therapy, and our continued consideration of approaches and
authorities to encourage value-based care and lower drug prices, it
would be premature to adopt structural changes to our existing payment
mechanisms, either under the IPPS or for IPPS-excluded cancer
hospitals, specifically for CAR T-cell therapy. For these reasons, we
disagree with the commenters' requested changes to our current payment
mechanisms for FY 2020, including, but not limited to, the creation of
a pass-through payment; structural changes in new technology add-on
payments and/or a differentially higher new technology add-on payment
percentage specifically for CAR T-cell products, and changes in the
usual cost-to-charge ratios (CCRs) used in ratesetting and payment,
including those used in determining new technology add-on payments,
outlier payments, and payments to IPPS excluded cancer hospitals.
However, as discussed elsewhere in this final rule, we are finalizing a
maximum new technology add-on payment percentage of 65 percent of the
costs of the new technology for FY 2020, a 30 percent ((0.65/0.50)-1)
increase from the current 50 percent. This increase to 65 percent will
apply to all approved new technologies (except products designated by
the FDA as a Qualified Infectious Disease Products, for which the
maximum add-on amount will be 75 percent of the costs of the new
technology), including CAR T-cell therapy products.
We stated in the proposed rule that another potential consideration
if we were to create a new MS-DRG is the extent to which it would be
appropriate to geographically adjust the payment under any such new MS-
DRG. Under the methodology for determining the Federal payment rate for
operating costs under the IPPS, the labor-related proportion of the
national standardized amounts is adjusted by the wage index to reflect
the relative differences in labor costs among geographic areas. The
IPPS Federal payment rate for operating costs is calculated as the MS-
DRG relative weight x [(labor-related applicable standardized amount x
applicable wage index) + (nonlabor-related applicable standardized
amount x cost-of-living adjustment)]. Given our understanding that the
costs for CAR T-cell therapy drugs do not vary among geographic areas,
and given that costs for CAR T-cell therapy would likely be an
extremely high portion of the costs for the MS-DRG, in the proposed
rule we invited public comments on whether we
[[Page 42075]]
should not geographically adjust the payment for cases assigned to any
potential new MS-DRG for CAR-T cell therapy procedures. We also invited
public comments on whether to instead apply the geographic adjustment
to a lower proportion of payments under any potential new MS-DRG and,
if so, how that lower proportion should be determined. We noted that
while the prices of other drugs may also not vary significantly among
geographic areas, generally speaking, those other drugs would not have
estimated costs as high as those of CAR T-cell therapies, nor would
they represent as significant a percentage of the average costs for the
case. We invited public comments on the use of our exceptions and
adjustments authority under section 1886(d)(5)(I) of the Act (or other
relevant authorities) to implement any such potential changes.
Comment: Some commenters stated that CMS should include adjustments
for the wage index in a potential future MS-DRG for CAR T-cell
therapies, including commenters that expressed concern that not
applying the wage index would increase provider losses on these
services. Some commenters stated that they did not believe CMS had the
statutory flexibility to selectively apply the wage index. Many other
commenters stated that CMS should not apply the wage index to the cost
of the drug, as the cost does not vary by location, and hospitals with
a wage index greater than 1 would be overpaid for the drug, while
hospitals with a wage index less than 1 would be underpaid.
Response: We appreciate the commenters' input on the application of
the wage index to a potential future MS-DRG for CAR T-cell therapies.
We will consider these comments should we develop a proposed MS-DRG for
CAR T-cell therapies in the future.
As discussed in the proposed rule, section 1886(d)(5)(B) of the Act
provides that prospective payment hospitals that have residents in an
approved graduate medical education (GME) program receive an additional
payment for a Medicare discharge to reflect the higher patient care
costs of teaching hospitals relative to nonteaching hospitals. The
regulations regarding the calculation of this additional payment, known
as the indirect medical education (IME) adjustment, are located at 42
CFR 412.105. The formula is traditionally described in terms of a
certain percentage increase in payment for every 10-percent increase in
the resident-to-bed ratio. For some hospitals, this percentage increase
can exceed an additional 25 percent or more of the otherwise applicable
payment. Some hospitals, sometimes the same hospitals, can also receive
a large percentage increase in payments due to the Medicare
disproportionate hospital (DSH) adjustment provision under section
1886(d)(5)(F) of the Act. The regulations regarding the calculation of
the additional DSH payment are located at 42 CFR 412.106.
In the proposed rule we stated that, given that the payment for
cases assigned to a new MS-DRG for CAR T-cell therapy could
significantly exceed the historical payment for any existing MS-DRG,
these percentage add-on payments could arguably result in unreasonably
high additional payments for CAR T-cell therapy cases unrelated in any
significant empirical way to the costs of the hospital in providing
care. For example, consider a teaching hospital that has an IME
adjustment factor of 0.25, and a DSH adjustment factor of 0.10. If we
were to create a new MS-DRG for CAR T-cell therapy procedures that
resulted in an average IPPS Federal payment rate for operating costs of
$400,000, under the current payment mechanism, the hospital would
receive an IME payment of $100,000 ($400,000 x 0.25) and a DSH payment
of $40,000 ($400,000 x 0.10), such that the total IPPS Federal payment
rate for operating costs including IME and DSH payments would be
$540,000 ($400,000 + $100,000 + $40,000). We invited public comments on
whether the IME and DSH payments should not be made for cases assigned
to any new MS-DRG for CAR T-cell therapy. We also invited public
comments on whether we should instead reduce the applicable percentages
used to determine these add-ons and, if so, how those lower percentages
should be determined. We invited public comments on the use of our
exceptions and adjustments authority under section 1886(d)(5)(I) of the
Act (or other relevant authorities) to implement any potential changes.
Comment: Several commenters stated that CMS should include
adjustments for DSH and IME in a potential future MS-DRG for CAR T-cell
therapies (as described below); some commenters stated that they did
not believe CMS had the statutory flexibility to selectively apply
these adjustments. Commenters also expressed concern that not applying
these adjustments would increases provider losses on these services.
Several commenters stated that the IME adjustment is not based on a
requirement that the costs for each service at a teaching hospital are
greater than at a non-teaching hospital, but is instead due to the
recognition that overall the costs are greater. A commenter stated that
teaching hospitals are under considerable financial strain, that they
will disproportionately shoulder the burdens of new, higher cost
services, and that CMS should consider these costs and burdens before
determining that the IME adjustment to CAR T-cell therapy cases would
result in a payment that is too high. This commenter also stated that
hospitals that receive DSH payments are less profitable than hospitals
serving better-insured populations. Therefore, in order for these
hospitals to access expensive new technologies, they need to receive a
level of reimbursement that can support these services.
Many commenters stated that CMS should not apply the DSH and IME
adjustments to the entire MS-DRG payment for CAR T-cell therapy cases,
as this would result in a higher than appropriate payment. Several of
these commenters also suggested that CMS consider ``carving out''
payment for CAR T-cell therapy cases to avoid this problem.
Response: We appreciate the commenters' input on the application of
the DSH and IME adjustments to a potential future MS-DRG for CAR T-cell
therapies. We will consider these comments should we develop a proposed
MS-DRG for CAR T-cell therapies in the future.
3. MDC 1 (Diseases and Disorders of the Nervous System): Carotid Artery
Stent Procedures
The logic for case assignment to MS-DRGs 034, 035, and 036 (Carotid
Artery Stent Procedures with MCC, with CC, and without CC/MCC,
respectively) as displayed in the ICD-10 MS-DRG Version 36 Definitions
Manual (which is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html) is
comprised of two lists of logic that include procedure codes for
operating room (O.R.) procedures involving dilation of a carotid artery
(common, internal or external) with intraluminal device(s). The first
list of logic is entitled ``Operating Room Procedures'' and the second
list of logic is entitled ``Operating Room Procedures with Operating
Room Procedures''. In the FY 2020 IPPS/LTCH PPS proposed rule, we
identified 46 ICD-10-PCS procedure codes in the second logic list that
do not describe dilation of a carotid artery with an intraluminal
device. Of these 46 procedure codes, we identified 24 codes describing
dilation of a carotid artery without an intraluminal device; 8 codes
describing dilation of the vertebral
[[Page 42076]]
artery; and 14 codes describing dilation of a vein (jugular, vertebral
and face), as shown in the following table.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR16AU19.013
BILLING CODE 4120-01-C
We examined claims data from the September 2018 update of the FY
2018 MedPAR file for MS-DRGs 034, 035, and 036 and identified cases
reporting any one of the 46 ICD-10-PCS procedure codes listed in the
tables above. Our findings are shown in the following table.
[[Page 42077]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.014
As shown in the table above, we found a total of 863 cases with an
average length of stay of 6.8 days and average costs of $27,600 in MS-
DRG 034. There were 15 cases reporting at least one of the 46 procedure
codes that do not describe dilation of the carotid artery with an
intraluminal device in MS-DRG 034 with an average length of stay of 8.8
days and average costs of $36,596. For MS-DRG 035, we found a total of
2,369 cases with an average length of stay of 3 days and average costs
of $16,731. There were 52 cases reporting at least one of the 46
procedure codes that do not describe dilation of the carotid artery
with an intraluminal device in MS-DRG 035 with an average length of
stay of 3.5 days and average costs of $17,815. For MS-DRG 036, we found
a total of 3,481 cases with an average length of stay of 1.4 days and
average costs of $12,637. There were 67 cases reporting at least one of
the 46 procedure codes that do not describe dilation of the carotid
artery with an intraluminal device in MS-DRG 036 with an average length
of stay of 1.4 days and average costs of $12,621.
In the proposed rule, we noted that our clinical advisors stated
that MS-DRGs 034, 035, and 036 are defined to include only those
procedure codes that describe procedures that involve dilation of a
carotid artery with an intraluminal device. Therefore, we proposed to
remove the procedure codes listed in the table above from MS-DRGs 034,
035, and 036 that describe procedures which (1) do not include an
intraluminal device; (2) describe procedures performed on arteries
other than a carotid; and (3) describe procedures performed on a vein.
We also indicated in the proposed rule that the 46 ICD-10-PCS
procedure codes listed in the table above are also assigned to MS-DRGs
037, 038, and 039 (Extracranial Procedures with MCC, with CC, and
without CC/MCC, respectively). Therefore, we also examined claims data
from the September 2018 update of the FY 2018 MedPAR file for MS-DRGs
037, 038, and 039. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.015
We found a total of 3,612 cases in MS-DRG 037 with an average
length of stay of 7.1 days and average costs of $23,703. We found a
total of 11,406 cases in MS-DRG 038 with an average length of stay of
3.1 days and average costs of $12,480. We found a total of 22,938 cases
in MS-DRG 039 with an average length of stay of 1.5 days and average
costs of $8,400.
In the proposed rule, we stated that during our review of claims
data for MS-DRGs 037, 038, and 039, we also discovered 96 ICD-10-PCS
procedure codes describing dilation of a carotid artery with an
intraluminal device that were inadvertently included as a result of
efforts to replicate the ICD-9 based MS-DRGs. These procedure codes are
also included in the logic for MS-DRGs 034, 035, and 036. Under ICD-9-
CM, procedure codes 00.61 (Percutaneous angioplasty of extracranial
vessel(s)) and 00.63 (Percutaneous insertion of carotid artery
stent(s)) are both required to be reported on a claim to identify that
a carotid artery stent procedure was performed and for assignment of
the case to MS-DRGs 034, 035, and 036. Procedure code 00.61 is
designated as an O.R. procedure, while procedure code 00.63 is
designated as a non-O.R. procedure. Under ICD-10-PCS, a carotid artery
stent procedure is described by one unique code that includes both
clinical concepts of the angioplasty (dilation) and the insertion of
the stent (intraluminal device). This ``combination code'' under ICD-
10-PCS is designated as an O.R. procedure. Under ICD-9-CM, procedure
code 00.61 reported in the absence of procedure code 00.63 results in
assignment to MS-DRGs 037, 038, and 039 according to the MS-DRG logic
because procedure code 00.61 has an inclusion term for vertebral
vessels, as well as for the carotid vessels. Therefore, when all of the
comparable translations of procedure code 00.61 as an O.R. procedure
were replicated from the ICD-9 based MS-DRGs to the ICD-10 based MS-
DRGs, this replication inadvertently results in the assignment of ICD-
10-PCS procedure codes that identify and
[[Page 42078]]
describe a carotid artery stent procedure to MS-DRGs 037, 038, and 039.
Therefore, we proposed to remove the 96 ICD-10-PCS procedure codes
describing dilation of a carotid artery with an intraluminal device
from MS-DRGs 037, 038, and 039.
We also found 6 procedure codes describing dilation of a carotid
artery with an intraluminal device in MS-DRGs 037, 038, and 039 that
are not currently assigned to MS-DRGs 034, 035, and 036. In the
proposed rule, we stated that our clinical advisors recommended that
these 6 procedure codes be reassigned from MS-DRGs 037, 038, and 039 to
MS-DRGs 034, 035, and 036 because the 6 procedure codes are consistent
with the other procedures describing dilation of a carotid artery with
an intraluminal device that are currently assigned to MS-DRGs 034, 035,
and 036. We refer readers to Table 6P.1b. associated with the proposed
rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for the complete list of procedure codes
that we proposed to remove from MS-DRGs 037, 038, and 039.
We also noted that, as discussed in the proposed rule and section
II.F.14.f. of the preamble of this final rule, we are deleting a number
of codes that include the ICD-10-PCS qualifier term ``bifurcation'' as
the result of the finalized proposal discussed at the September 11-12,
2018 ICD-10 Coordination and Maintenance Committee meeting. We refer
readers to the website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html for
the committee meeting materials and discussion regarding this proposal.
We noted in the proposed rule that, of the 96 procedure codes that we
proposed to remove from the logic for MS-DRGs 037, 038, and 039, there
are 48 procedure codes that include the qualifier term ``bifurcation''.
Therefore, we stated in the proposed rule that these 48 procedure codes
will be deleted effective October 1, 2019. We stated that the 48
remaining valid procedure codes that do not include the term
``bifurcation'' that we proposed to remove from MS-DRGs 037, 038, and
039 will continue to be assigned to MS-DRGs 034, 035, and 036.
Lastly, we stated in the proposed rule that, if the applicable
proposed MS-DRG changes are finalized, we would make a conforming
change to the ICD-10 MS-DRG Version 37 Definitions Manual for FY 2020
by combining all the procedure codes identifying a carotid artery stent
procedure within MS-DRGs 034, 035, and 036 into one list entitled
``Operating Room Procedures'' to better reflect the definition of these
MS-DRGs based on the discussion and proposals described above.
Comment: Several commenters supported this proposal stating that
only procedures involving dilation of a carotid artery using
intraluminal devices should be included in MS-DRGs 034-036 and that
procedures that do not involve both a carotid artery and an
intraluminal device should be removed from MS-DRGs 034-036. Several
commenters also supported our proposal to remove 96 ICD-10 PCS codes
describing dilation of a carotid artery with intraluminal device from
MS-DRGs 037, 038 and 039 and to delete the 48 procedure codes from MS-
DRGs 037, 038, and 039 that include the qualifier term ``bifurcation.
Response: We appreciate the commenters' support.
Comment: A commenter expressed concern and disagreed with the
proposal to delete the procedure codes that include the qualifier term
``bifurcation''. The commenter stated that in vascular surgery, use of
the term bifurcation may be used to document when a procedure occurs in
a branch vessel.
Response: We appreciate the commenter's suggestion, however, as
discussed at the ICD-10 Coordination and Maintenance Committee meeting
held on September 11-12, 2018, the qualifier value Bifurcation was
proposed (and subsequently finalized) to be deleted from the following
ICD-10-PCS tables--037 Dilation of Upper Arteries, 03C Extirpation of
Upper Arteries, 047 Dilation of Lower Arteries, 04C Extirpation of
Lower Arteries and 04V Restriction of Lower Arteries. The original
proposal for the qualifier Bifurcation was intended to capture data
specifically regarding procedures on coronary arteries. The term
bifurcation describes diagnosis related information, and generally,
under ICD-10 PCS we do not include diagnosis related information in the
procedure classification.
After consideration of the public comments we received, we are
finalizing our proposal to remove the procedure codes listed previously
from MS-DRGs 034, 035, and 036 that describe procedures which (1) do
not include an intraluminal device; (2) describe procedures performed
on arteries other than a carotid; and (3) describe procedures performed
on a vein. We are also finalizing our proposal to remove 96 ICD-10 PCS
codes describing dilation of a carotid artery with intraluminal device
from MS-DRGs 037, 038 and 039 and are finalizing our proposal to
reassign the 6 procedure codes discussed above from MS-DRGs 037, 038,
and 039 to MS-DRGs 034, 035, and 036 because the 6 procedure codes are
consistent with the other procedures describing dilation of a carotid
artery with an intraluminal device that are currently assigned to MS-
DRGs 034, 035, and 036. We refer readers to Table 6P.1b. associated
with this final rule (which is available via the internet on the CMS
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for the complete list of
procedure codes that we removed from MS-DRGs 037, 038, and 039.
Additionally, we are finalizing our proposal to delete the 48 procedure
codes from MS-DRGs 037, 038, and 039 that include the qualifier term
``bifurcation''. Finally, we are finalizing our proposal to make a
conforming change to the ICD-10 MS-DRG Version 37 Definitions Manual
for FY 2020 by combining all the procedure codes identifying a carotid
artery stent procedure within MS-DRGs 034, 035, and 036 into one list
entitled ``Operating Room Procedures'' to better reflect the definition
of these MS-DRGs.
4. MDC 4 (Diseases and Disorders of the Respiratory System): Pulmonary
Embolism
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19185), we
discussed that we received a request to reassign three ICD-10-CM
diagnosis codes for pulmonary embolism with acute cor pulmonale from
MS-DRG 176 (Pulmonary Embolism without MCC) to the higher severity
level MS-DRG 175 (Pulmonary Embolism with MCC). The three diagnosis
codes are identified in the following table.
[[Page 42079]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.016
The requestor noted that, in the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41231 through 41234), we finalized the proposal to remove the
special logic in the GROUPER for processing claims containing a code on
the Principal Diagnosis Is Its Own CC or MCC Lists and deleted the
relevant tables from the ICD-10 MS-DRG Definitions Manual Version 36,
effective October 1, 2018. As a result of this change, cases reporting
any one of the three ICD-10-CM diagnosis codes describing a pulmonary
embolism with acute cor pulmonale were reassigned from MS-DRG 175 to
MS-DRG 176, absent a secondary diagnosis code to trigger assignment to
MS-DRG 175. The requestor stated that this change in the MS-DRG
assignment for these cases resulted in a reduction in payment for cases
involving pulmonary embolism with acute cor pulmonale and that the FY
2019 payment rate for MS-DRG 176 does not appropriately account for the
costs and resource utilization associated with these cases because the
subset of patients with pulmonary embolism with acute cor pulmonale
often represents a more severe set of patients with pulmonary embolism.
The logic for case assignment to MS-DRGs 175 and 176 is displayed
in the ICD-10 MS-DRG Version 36 Definitions Manual, which is available
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, we
analyzed claims data from the September 2018 update of the FY 2018
MedPAR file for MS-DRGs 175 and 176 to identify cases reporting
diagnosis codes describing pulmonary embolism with acute cor pulmonale
as listed above (ICD-10-CM diagnosis codes I26.01, I26.02 or I26.09) as
the principal diagnosis or as a secondary diagnosis. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.017
As shown in the table, for MS-DRG 175, there was a total of 24,389
cases with an average length of stay of 5.2 days and average costs of
$10,294. Of these 24,389 cases, there were 2,326 cases reporting
pulmonary embolism with acute cor pulmonale, with an average length of
stay 5.7 days and average costs of $13,034. For MS-DRG 176, there was a
total of 30,215 cases with an average length of stay of 3.3 days and
average costs of $6,356. Of these 30,215 cases, there were 1,821 cases
reporting pulmonary embolism with acute cor pulmonale with an average
length of stay of 3.9 days and average costs of $9,630.
As stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41231
through 41234), available ICD-10 data can now be used to evaluate other
indicators of resource utilization and, as shown by our claims
analysis, the data indicate that the average costs of cases reporting
pulmonary embolism or saddle embolus with acute cor pulmonale ($9,630)
in MS-DRG 176 are closer to the average costs for all pulmonary
embolism cases in MS-DRG 175 ($10,294) as compared to the average costs
for all cases in MS-DRG 176 ($6,356). We stated in the proposed rule
that our clinical advisors also agreed that this subset of patients
with acute cor pulmonale often represents a more severe set of patients
and that these cases are more appropriately assigned to the higher
severity level ``with MCC'' MS-DRG. Therefore, in the proposed rule, we
proposed to reassign cases reporting diagnosis code I26.01, I26.02, or
I26.09 to the higher severity level MS-DRG 175 and to revise the title
for MS-DRG 175 to ``Pulmonary Embolism with MCC or Acute Cor
Pulmonale'' to more accurately reflect the diagnoses assigned there.
Comment: Commenters supported our proposed reassignment of
diagnosis codes I26.01, I26.02, and I26.09 to the higher severity level
MS-DRG 175 and revision of the title for MS-DRG 175 to ``Pulmonary
Embolism with MCC or Acute Cor Pulmonale'' to more accurately reflect
the diagnoses.
Response: We thank the commenters for their support. After
consideration of the public comments we received, we are finalizing our
proposal to reassign cases reporting diagnosis code I26.01, I26.02, or
I26.09 to the higher severity level MS-DRG 175 and to revise the title
for MS-DRG 175 to ``Pulmonary Embolism with MCC or Acute Cor
Pulmonale''.
[[Page 42080]]
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Transcatheter Mitral Valve Repair With Implant
As we did for the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28008
through 28010) and for the FY 2017 IPPS/LTCH PPS proposed rule (81 FR
24985 through 24989), for FY 2020, as discussed in the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19185 through 19193), we received a
request to modify the MS-DRG assignment for transcatheter mitral valve
repair (TMVR) with implant procedures. ICD-10-PCS procedure code
02UG3JZ (Supplement mitral valve with synthetic substitute,
percutaneous approach) identifies and describes this procedure. This
request also included the suggestion that CMS give consideration to
reclassifying other endovascular cardiac valve repair procedures.
Specifically, the requestor recommended that cases reporting procedure
codes describing an endovascular cardiac valve repair with implant be
reassigned to MS-DRGs 266 and 267 (Endovascular Cardiac Valve
Replacement with and without MCC, respectively) and that the MS-DRG
titles be revised to Endovascular Cardiac Valve Interventions with
Implant with and without MCC, respectively. We refer readers to
detailed discussions of the MitraClip[supreg] System (hereafter
referred to as MitraClip[supreg]) for transcatheter mitral valve repair
in previous rulemakings, including the FY 2012 IPPS/LTCH PPS proposed
rule (76 FR 25822) and final rule (76 FR 51528 through 51529), the FY
2013 IPPS/LTCH PPS proposed rule (77 FR 27902 through 27903) and final
rule (77 FR 53308 through 53310), the FY 2015 IPPS/LTCH PPS proposed
rule (79 FR 28008 through 28010) and final rule (79 FR 49889 through
49892), the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24356 through
24359) and final rule (80 FR 49363 through 49367), and the FY 2017
IPPS/LTCH PPS proposed rule (81 FR 24985 through 24989) and final rule
(81 FR 56809 through 56813), in response to requests for MS-DRG
reclassification, as well as the FY 2014 IPPS/LTCH PPS proposed rule
(78 FR 27547 through 27552), under the new technology add-on payment
policy. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50575), we were
unable to consider further the application for a new technology add-on
payment for MitraClip[supreg] because the technology had not received
FDA approval by the July 1, 2013 deadline.
In the FY 2015 IPPS/LTCH PPS final rule, we finalized our proposal
to not create a new MS-DRG or to reassign cases reporting ICD-9-CM
procedure code 35.97 that described procedures involving the
MitraClip[supreg] to another MS-DRG (79 FR 49889 through 49892). Under
a new application, the request for new technology add-on payments for
the MitraClip[supreg] System was approved for FY 2015 (79 FR 49941
through 49946). The new technology add-on payment for MitraClip[supreg]
was subsequently discontinued effective FY 2017.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), we finalized
a modification to the MS-DRGs to which procedures involving the
MitraClip[supreg] were assigned. For the ICD-10 based MS-DRGs to fully
replicate the ICD-9-CM based MS-DRGs, ICD-10-PCS code 02UG3JZ
(Supplement mitral valve with synthetic substitute, percutaneous
approach), which identifies the MitraClip[supreg] technology and is the
ICD-10-PCS code translation for ICD-9-CM procedure code 35.97
(Percutaneous mitral valve repair with implant), was assigned to new
MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with MCC and
without MCC, respectively) and continued to be assigned to MS-DRGs 231
and 232 (Coronary Bypass with PTCA with MCC and without MCC,
respectively).
In the FY 2017 IPPS/LTCH PPS proposed and final rules, we also
discussed our analysis of MS-DRGs 228, 229, and 230 (Other
Cardiothoracic Procedures with MCC, with CC, and without CC/MCC,
respectively) with regard to the possible reassignment of cases
reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve
with synthetic substitute, percutaneous approach). We finalized our
proposal to collapse these MS-DRGs (228, 229, and 230) from three
severity levels to two severity levels by deleting MS-DRG 230 and
revising the structure of MS-DRG 229. We also finalized our proposal to
reassign ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve
with synthetic substitute, percutaneous approach) from MS-DRGs 273 and
274 to MS-DRG 228 and revised MS-DRG 229 (81 FR 56813).
As we discussed in the proposed rule, according to the requestor,
there are substantial clinical and resource differences between the
transcatheter mitral valve repair (TMVR) procedure and other procedures
currently grouping to MS-DRGs 228 and 229. The requestor noted that,
currently, ICD-10-PCS procedure code 02UG3JZ is the only endovascular
valve intervention with implant procedure that maps to MS-DRGs 228 and
229. The requestor also noted that other ICD-10-PCS procedure codes
describing procedures for endovascular (transcatheter) cardiac valve
repair with implant map to MS-DRGs 273 and 274 or to MS-DRGs 216, 217,
218, 219, 220, and 221 (Cardiac Valve and Other Major Cardiothoracic
Procedures with and without Cardiac Catheterization with MCC, with CC
and without CC/MCC, respectively). The requestor further noted that all
ICD-10-PCS procedure codes for endovascular cardiac valve replacement
procedures map to MS-DRGs 266 (Endovascular Cardiac Valve Replacement
with MCC) and 267 (Endovascular Cardiac Valve Replacement without MCC).
As noted in the proposed rule, the ICD-10-PCS procedure codes
describing a transcatheter cardiac valve repair procedure with an
implant are listed in the following table.
BILLING CODE 4120-01-P
[[Page 42081]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.018
As also noted in the proposed rule, the ICD-10-PCS procedure codes
describing a transcatheter cardiac valve replacement procedure are
listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.019
[[Page 42082]]
BILLING CODE 4120-01-C
We noted in the proposed rule that the requestor performed its own
analyses, first comparing TMVR procedures (ICD-10-PCS procedure code
02UG3JZ) to other procedures currently assigned to MS-DRGs 228 and 229,
as well as to the transcatheter cardiac valve replacement procedures in
MS-DRGs 266 and 267. We refer the reader to the ICD-10 MS-DRG Version
36 Definitions Manual for complete documentation of the logic for case
assignment to MS-DRGs 228 and 229 (which is available via the internet
on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html). According to the requestor, its findings indicate that
TMVR is more closely aligned with MS-DRGs 266 and 267 than MS-DRGs 228
and 229 with regard to average length of stay and average
[standardized] costs. The requestor also examined the impact of
removing cases reporting a TMVR procedure (ICD-10-PCS procedure code
02UG3JZ) from MS-DRGs 228 and 229 and adding those cases to MS-DRGs 266
and 267. The requestor noted this movement would have minimal impact to
MS-DRGs 266 and 267 based on its analysis. In addition, the requestor
stated that its request is in alignment with CMS' policy goal of
creating and maintaining clinically coherent MS-DRGs.
The requestor acknowledged that CMS has indicated in prior
rulemaking that TMVR procedures are not clinically similar to
endovascular cardiac valve replacement procedures, and the requestor
agreed that they are distinct procedures. However, the requestor also
believed that TMVR is more similar to the replacement procedures in MS-
DRGs 266 and 267 compared to the other procedures currently assigned to
MS-DRGs 228 and 229. The requestor provided the following table of
procedures in volume order (highest to lowest) to illustrate the
clinical differences between TMVR procedures and other procedures
currently assigned to MS-DRGs 228 and 229.
[GRAPHIC] [TIFF OMITTED] TR16AU19.020
The requestor noted that, among the procedures listed in the table,
TMVR is the only procedure that involves treatment of a cardiac valve
and is the only procedure that involves implanting a synthetic
substitute.
To illustrate the similarities between TMVR procedures and
endovascular cardiac valve replacements in MS-DRGs 266 and 267, the
requestor provided the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.021
The requestor noted that both TMVR procedures and endovascular
cardiac valve replacements use a percutaneous approach, treat cardiac
valves, and use an implanted device for purposes of improving the
function of the specified valve. The requestor believed that the
analyses support the request to group TMVR procedures with endovascular
cardiac valve replacements from a resource perspective and an
improvement to clinical coherence could be achieved because TMVR
procedures are more similar to the endovascular cardiac valve
replacements compared to the other procedures in MS-DRGs 228 and 229,
where TMVR is currently assigned.
As noted in the proposed rule and earlier in this section, the
request also included the suggestion that CMS give consideration to
reclassifying other endovascular cardiac valve repair with implant
procedures to MS-DRGs 266 and 267; specifically, endovascular cardiac
valve repair with implant procedures involving the aortic, pulmonary,
tricuspid and other non-TMVR mitral valve procedures that currently
group to MS-DRGs 273 and 274 or MS-DRGs 216, 217, 218, 219, 220 and
221. The requestor acknowledged that endovascular cardiac valve repair
with implant procedures involving these other cardiac valves have lower
volumes in comparison to the TMVR procedure (ICD-10-PCS procedure code
02UG3JZ), which makes analysis of these procedures a little more
difficult. However, the requestor suggested that movement of these
procedures to MS-DRGs 266 and 267 would enable the ability to maintain
clinical coherence for all endovascular cardiac valve interventions.
The requestor also stated that there is an anticipated increase in the
volume of not only the TMVR procedure described by ICD-10-PCS procedure
code 02UG3JZ (which has grown annually since the MitraClip[supreg] was
approved for new technology add-on payment in FY 2015), but also for
the other endovascular cardiac valve repair with implant procedures,
such as those involving the tricuspid valve, which are currently under
study in the United States and Europe. Based on this anticipated
increase in volume for endovascular cardiac valve repair with implant
procedures, the requestor believed that it would be advantageous to
take this opportunity to restructure the MS-DRGs by moving all the
endovascular cardiac valve repair with implant procedures to MS-DRGs
266 and 267 with revised titles as noted previously, to improve
clinical consistency beginning in FY 2020. The requestor further noted
that while the
[[Page 42083]]
requestor believes its request reflects the best approach for
appropriate MS-DRG assignment for TMVR and other endovascular cardiac
valve repair with implant procedures, the requestor understands that
CMS may consider other alternatives.
As indicated in the proposed rule, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for cases reporting
ICD-10-PCS procedure code 02UG3JZ in MS-DRGs 228 and 229 as well as
cases reporting one of the procedure codes listed above describing a
transcatheter cardiac valve repair with implant procedure in MS-DRGs
216, 217, 218, 219, 220, 221, 273, and 274. Our findings are shown in
the tables below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.022
As shown in the table, we found a total of 5,909 cases for MS-DRG
216 with an average length of stay of 16 days and average costs of
$70,435. Of those 5,909 cases, there were 48 cases reporting a
procedure code for a transcatheter cardiac valve repair with an average
length of stay of 12.6 days and average costs of $72,556. We found a
total of 2,166 cases for MS-DRG 217 with an average length of stay of
9.4 days and average costs of $47,299. Of those 2,166 cases, there was
a total of 25 cases reporting a procedure for a transcatheter cardiac
valve repair with an average length of stay of 3.4 days and average
costs of $40,707. We found a total of 268 cases for MS-DRG 218 with an
average length of stay of 6.8 days and average costs of $39,501. Of
those 268 cases, there were 4 cases reporting a procedure code for a
transcatheter cardiac valve repair with an average length of stay of
1.3 days and average costs of $45,903. We found a total of 15,105 cases
for MS-DRG 219 with an average length of stay of 10.9 days and average
costs of $55,423. Of those 15,105 cases, there were 55 cases reporting
a procedure code for a transcatheter cardiac valve repair with an
average length of stay of 7.1 days and average costs of $65,880. We
found a total of 15,889 cases for MS-DRG 220 with an average length of
stay of 6.6 days and average costs of $38,313. Of those 15,889 cases,
there were 40 cases reporting a procedure code for a transcatheter
cardiac valve repair with an average length of stay of 3 days and
average costs of $38,906. We found a total of 2,652 cases for MS-DRG
221 with an average length of stay of 4.7 days and average costs of
$33,577. Of those 2,652 cases, there were 13 cases reporting a
procedure code for a transcatheter cardiac valve repair with an average
length of stay of 2.2 days and average costs of $29,646.
For MS-DRG 228, we found a total of 5,583 cases with an average
length of stay of 9.2 days and average costs of $46,613. Of those 5,583
cases, there were 1,688 cases reporting ICD-10-PCS procedure code
02UG3JZ (Supplement mitral valve with synthetic substitute,
percutaneous approach) with an average length of stay of 5.6 days and
average costs of $49,569. As noted previously and in the proposed rule,
ICD-10-PCS procedure code 02UG3JZ is the only endovascular cardiac
valve repair with implant procedure assigned to MS-DRGs 228 and 229. We
found a total of 6,593 cases for MS-DRG 229 with an average length of
stay of 4.3 days and average costs of $32,322. Of those 6,593 cases,
there were 2,018 cases reporting ICD-10-PCS procedure code 02UG3JZ with
an average length of stay of 1.7 days and average costs of $38,321.
For MS-DRG 273, we found a total of 7,785 cases with an average
length of stay of 6.9 days and average costs of $27,200. Of those 7,785
cases, there were 6 cases reporting a procedure code for a
transcatheter cardiac valve repair with an average length of stay of
7.5 days and average costs of $52,370. We found a total of 20,434 cases
in MS-DRG 274 with an average length of stay of 2.3 days and average
costs of $22,771. Of those 20,434 cases, there were 7 cases reporting a
procedure code for a transcatheter cardiac valve repair with an average
length of stay of 1.4 days and average costs of $28,152.
As also indicated in the proposed rule, we also analyzed cases
reporting any one of the procedure codes listed above describing a
transcatheter cardiac valve replacement procedure in MS-DRGs 266 and
267. Our findings are shown in the table below.
[[Page 42084]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.023
As shown in the table, there was a total of 15,079 cases with an
average length of stay of 5.6 days and average costs of $51,402 in MS-
DRG 266. For MS-DRG 267, there was a total of 20,845 cases with an
average length of stay of 2.4 days and average costs of $41,891.
As stated previously and in the proposed rule, the requestor noted
that ICD-10-PCS procedure code 02UG3JZ describing a transcatheter
mitral valve repair with implant procedure is the only endovascular
cardiac valve intervention with implant procedure assigned to MS-DRGs
228 and 229. The data analysis shows that for the cases reporting
procedure code 02UG3JZ in MS-DRGs 228 and 229, the average length of
stay and average costs are aligned with the average length of stay and
average costs of cases in MS-DRGs 266 and 267, respectively.
The data also show that, for MS-DRGs 216, 217, 218, 219, 220, and
221 and for MS-DRG 274, the average length of stay for cases reporting
a transcatheter cardiac valve with implant procedure is shorter than
the average length of stay for all the cases in their assigned MS-DRG.
For MS-DRG 273, the average length of stay for cases reporting a
transcatheter cardiac valve with implant procedure is slightly longer
(7.5 days versus 6.9 days). In addition, the average costs for the
cases reporting a transcatheter cardiac valve with implant procedure
are higher when compared to all the cases in their assigned MS-DRG with
the exception of MS-DRG 217 ($40,707 versus $47,299) and MS-DRG
221($29,646 versus $33,577).
In the proposed rule, we stated that our clinical advisors continue
to believe that transcatheter cardiac valve repair procedures are not
the same as a transcatheter (endovascular) cardiac valve replacement.
However, we stated that they agreed with the requestor and, based on
our data analysis, that these procedures are more clinically coherent
in that they also describe endovascular cardiac valve interventions
with implants and are similar in terms of average length of stay and
average costs to cases in MS-DRGs 266 and 267 when compared to other
procedures in their current MS-DRG assignment. For these reasons, we
stated that our clinical advisors agreed that we should propose to
reassign the endovascular cardiac valve repair procedures (supplement
procedures) listed previously to the endovascular cardiac valve
replacement MS-DRGs.
We also analyzed the impact of grouping the endovascular cardiac
valve repair with implant (supplement) procedures with the endovascular
cardiac valve replacement procedures. The following table reflects our
findings for the proposed revised endovascular cardiac valve
(supplement) procedures with the endovascular cardiac valve replacement
MS-DRGs with a 2-way severity level split.
[GRAPHIC] [TIFF OMITTED] TR16AU19.024
As shown in the table, there was a total of 16,922 cases for the
endovascular cardiac valve replacement and supplement procedures with
MCC group, with an average length of stay of 5.7 days and average costs
of $51,564. There was a total of 22,958 cases for the endovascular
cardiac valve replacement and supplement procedures without MCC group,
with an average length of stay of 2.4 days and average costs of
$41,563. As indicated in the proposed rule, we applied the criteria to
create subgroups for the two-way severity level split for the proposed
revised MS-DRGs and found that all five criteria were met. For the
proposed revised MS-DRGs, there is at least (1) 500 or more cases in
the MCC group or in the without MCC subgroup; (2) 5 percent or more of
the cases in the MCC group or in the without MCC subgroup; (3) a 20
percent difference in average costs between the MCC group and the
without MCC group; (4) a $2,000 difference in average costs between the
MCC group and the without MCC group; and (5) a 3-percent reduction in
cost variance, indicating that the proposed severity level splits
increase the explanatory power of the base MS-DRG in capturing
differences in expected cost between the proposed MS-DRG severity level
splits by at least 3 percent and thus improve the overall accuracy of
the IPPS payment system.
As stated in the proposed rule, during our review of the
transcatheter cardiac valve repair (supplement) procedures in MS-DRGs
216, 217, 218, 219, 220, and 221, MS-DRGs 228 and 229, and MS-DRGs 273
and 274, our clinical advisors recommended that we also analyze the
claims data to identify other (non-supplement) transcatheter
(endovascular) procedures that involve the cardiac valves and are
assigned to those same MS-DRGs to determine if additional modifications
may be warranted, consistent with our ongoing efforts to refine the
ICD-10 MS-DRGs.
[[Page 42085]]
We analyzed the following ICD-10-PCS procedure codes that are
currently assigned to MS-DRGs 216, 217, 218, 219, 220, and 221.
[GRAPHIC] [TIFF OMITTED] TR16AU19.025
We also analyzed ICD-10-PCS procedure code 02TH3ZZ (Resection of
pulmonary valve, percutaneous approach) that is currently assigned to
MS-DRGs 228 and 229. Lastly, we analyzed the following ICD-10-PCS
procedure codes that are currently assigned to MS-DRGs 273 and 274.
[GRAPHIC] [TIFF OMITTED] TR16AU19.026
We analyzed claims data from the September 2018 update of the FY
2018 MedPAR file for cases reporting any of the above listed procedure
codes in MS-DRGs 216, 217, 218, 219, 220, and 221, MS-DRGs 228 and 229,
and MS-DRGs 273 and 274. Our findings are shown in the following
tables. We noted in the proposed rule that there were no cases found in
MS-DRGs 228 and 229 reporting ICD-10-PCS procedure code 02TH3ZZ
(Resection of pulmonary valve, percutaneous approach).
[[Page 42086]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.027
[GRAPHIC] [TIFF OMITTED] TR16AU19.028
In the proposed rule, we stated we found that the overall frequency
with which cases reporting at least one of the above ICD-10-PCS
procedure codes were reflected in the claims data was 2,075 times with
an average length of stay of 8.5 days and average costs of $27,838.
ICD-10-PCS procedure code 027F3ZZ (Dilation of aortic valve,
percutaneous approach) had the highest frequency of 1,720 times with an
average length of stay of 8.6 days and average costs of $25,265. We
also found that cases reporting ICD-10-PCS procedure code 02WF3KZ
(Revision of nonautologous tissue substitute in aortic valve,
percutaneous approach) had the highest average costs of $69,030 with an
average length of stay of 1 day. While not displayed above, we also
noted that, of the 7,785 cases found in MS-DRG 273, from the remaining
procedure codes describing procedures other than those performed on a
cardiac valve, there were 4,920 cases reporting ICD-10-PCS procedure
code 02583ZZ (Destruction of conduction mechanism, percutaneous
approach) with an average length of stay of 6.6 days and average costs
of $26,800, representing approximately 63 percent of all the cases in
that MS-DRG. In addition, of the 20,434 cases in MS-DRG 274, from the
remaining procedure codes describing procedures other than those
performed on a cardiac valve, there were 9,268 cases reporting ICD-10-
PCS procedure code 02583ZZ (Destruction of conduction mechanism,
percutaneous approach) with an average length of stay of 3.2 days and
average costs of $21,689, and 8,775 cases reporting ICD-10-PCS
procedure code 02L73DK (Occlusion of left atrial appendage with
intraluminal device, percutaneous approach) with an average length of
stay of 1.2 days and average costs of $25,476, representing
approximately 88 percent of all the cases in that MS-DRG.
We stated in the proposed rule that after analyzing the claims data
to identify the overall frequency with which the other (non-supplement)
ICD-10-PCS procedure codes describing a transcatheter (endovascular)
cardiac valve procedure were reported and assigned to MS-DRGs 216, 217,
218, 219, 220, and 221, MS-DRGs 228 and 229, and MS-DRGs 273 and 274,
our clinical advisors suggested that these other cardiac valve
procedures should be grouped together because the procedure codes are
describing procedures performed on a cardiac valve with a percutaneous
(transcatheter/endovascular) approach, they can be performed in a
cardiac catheterization laboratory, they require that the
interventional cardiologist have special additional training and
skills, and often require additional ancillary procedures and
equipment, such as trans-esophageal echocardiography, to be available
at the time of the procedure. Our clinical advisors noted that these
procedures are generally considered more complicated and resource-
intensive, and form a clinically coherent group. They also noted that
the majority of procedures currently being reported in MS-DRGs 273 and
274 are procedures other than those involving a cardiac valve and,
therefore, believed that reassignment of the other (non-supplement)
ICD-10-PCS procedure codes describing a transcatheter (endovascular)
cardiac valve procedure would have minimal impact to those MS-DRGs.
We then analyzed the impact of grouping the other transcatheter
cardiac valve procedures. The following table reflects our findings for
the suggested other endovascular cardiac valve procedures MS-DRGs with
a 2-way severity level split.
[[Page 42087]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.029
As shown in the table, there were 1,527 cases for the other
endovascular cardiac valve procedures with MCC group, with an average
length of stay of 9.7 days and average costs of $27,801. There was a
total of 560 cases for the other endovascular cardiac valve procedures
without MCC group, with an average length of stay of 3.9 days and
average costs of $17,027. As stated in the proposed rule, we applied
the criteria to create subgroups for the two-way severity level split
for the suggested MS-DRGs and found that all five criteria were met.
For the suggested MS-DRGs, there is at least (1) 500 or more cases in
the MCC group or in the without MCC subgroup; (2) 5 percent or more of
the cases in the MCC group or in the without MCC subgroup; (3) a 20
percent difference in average costs between the MCC group and the
without MCC group; (4) at least a $2,000 difference in average costs
between the MCC group and the without MCC group; and (5) a 3-percent
reduction in cost variance, indicating that the proposed severity level
splits increase the explanatory power of the base MS-DRG in capturing
differences in expected cost between the proposed MS-DRG severity level
splits by at least 3 percent and thus improve the overall accuracy of
the IPPS payment system.
For FY 2020, we proposed to modify the structure of MS-DRGs 266 and
267 by reassigning the procedure codes describing a transcatheter
cardiac valve repair (supplement) procedure from the list above and to
revise the title of these MS-DRGs. We also proposed to revise the title
of MS-DRGs 266 from ``Endovascular Cardiac Valve Replacement with MCC''
to ``Endovascular Cardiac Valve Replacement and Supplement Procedures
with MCC'' and the title of MS-DRG 267 from ``Endovascular Cardiac
Valve Replacement without MCC'' to ``Endovascular Cardiac Valve
Replacement and Supplement Procedures without MCC'', to reflect the
proposed restructuring. In addition, we proposed to create two new MS-
DRGs with a two-way severity level split for the remaining (non-
supplement) transcatheter cardiac valve procedures listed above. These
proposed new MS-DRGs are proposed new MS-DRG 319 (Other Endovascular
Cardiac Valve Procedures with MCC) and proposed new MS-DRG 320 (Other
Endovascular Cardiac Valve Procedures without MCC), which would also
conform with the severity level split of MS-DRGs 266 and 267. We
proposed to reassign the procedure codes from their current MS-DRGs to
the proposed new MS-DRGs.
Comment: Several commenters agreed with the proposal to reassign
the procedure codes describing a transcatheter cardiac valve repair
(supplement) procedure from their current MS-DRG assignments as
displayed and discussed above, to proposed revised MS-DRGs 266 and 267.
Commenters also agreed with our proposal to revise the titles for MS-
DRGs 266 and 267 to reflect the proposed restructuring. Commenters
noted the procedural technique, skills, staff, equipment and average
costs of the transcatheter cardiac valve repair (supplement) procedures
closely correspond with other transcatheter valve procedures that are
currently classified within MS-DRGs 266 and 267. Commenters stated the
proposal ensures that the new MS-DRG assignments accurately capture the
resource utilization and clinical coherence for these transcatheter
cardiac valve procedures. Commenters stated that the procedure for
transcatheter mitral valve repair (TMVR) with implant (e.g.,
Mitraclip[supreg]), identified by ICD-10-PCS procedure code 02UG3JZ
(Supplement mitral valve with synthetic substitute, percutaneous
approach) has demonstrated evidence-based clinical benefits and the
proposal would allow effective treatment options for high risk patients
where open heart surgery is not an option. Other commenters commended
CMS for reviewing the MS-DRG assignment for transcatheter cardiac valve
procedures and proposing to reassign the supplement procedures to MS-
DRGs 266 and 267 since, according to the commenters, these MS-DRGs were
specifically created to classify these kinds of patients. Commenters
also stated that the proposal ensures more appropriate payment to
providers for these procedures. A commenter who expressed support for
the proposal encouraged CMS to continue to monitor these MS-DRGs as
therapies continue to evolve and future modifications may be warranted.
Response: We appreciate the commenters' support. We agree the
proposal would accurately capture the resource utilization and clinical
coherence for these transcatheter cardiac valve procedures. Consistent
with our annual process of reviewing the MS-DRGs, we will continue to
monitor cases to determine if any additional adjustments are warranted.
Comment: Some commenters also agreed with the proposal to create
new MS-DRGs 319 and 320 for the other transcatheter (non-supplement)
cardiac valve procedures and stated this would better reflect the
resource consumption for these patients. A commenter who supported the
proposal requested that CMS clarify that the procedures can be
performed by both interventional cardiologists, as well as
cardiothoracic surgeons. This commenter agreed that, regardless of the
provider performing the procedure, additional training and skills are
required. The commenter also recommended that CMS continue to monitor
the claims data for the affected procedure codes to ensure that
unintended consequences do not occur and patient access is not at risk.
A few commenters recommended that CMS delay the proposed
reassignment of non-supplement transcatheter cardiac valve procedures
to proposed new MS-DRGs 319 and 320 until more data informing resource
use for non-supplement percutaneous cardiac valve procedures becomes
available and further consideration is given to clinical coherence. A
commenter believed that reassignment of these procedures at this time
is premature and that a decision by CMS to delay the implementation of
this proposed policy specific to non-
[[Page 42088]]
supplement valve procedures by percutaneous approach would have minimal
impact on the adoption and implementation of the proposed separate
policy related to the reassignment of transcatheter cardiac valve
repair (supplement) procedures to MS-DRGs 266 and 267. Another
commenter expressed concern that not all the procedure codes describing
non-supplement transcatheter cardiac valve procedures included in the
proposed reassignment to proposed new MS-DRGs 319 and 320 appear to be
consistent with the rationale presented in the proposed rule nor did
the analysis identify all the potentially impacted cases and therefore,
according to the commenter, the analysis does not sufficiently estimate
the impact on providers for FY 2020.
Response: We thank the commenters for their support and feedback.
We wish to clarify that the transcatheter (non-supplement) cardiac
valve procedures can be performed by both interventional cardiologists,
as well as cardiothoracic surgeons. Our clinical advisors agree with
the commenter that regardless of the provider performing the procedure,
additional training and skills are required.
We disagree with delaying the proposed reassignment of non-
supplement transcatheter cardiac valve procedures to proposed new MS-
DRGs 319 and 320 and that reassignment of these procedures at this time
is premature. We also disagree with the commenter who expressed concern
that not all the procedure codes describing non-supplement
transcatheter cardiac valve procedures included in the proposed
reassignment to proposed new MS-DRGs 319 and 320 appear to be
consistent with the rationale presented in the proposed rule. As
discussed in the proposed rule and previously in this section, our
clinical advisors, as well as several other commenters, supported
grouping these other cardiac valve procedures together because the
procedure codes are describing procedures performed on a cardiac valve
with a percutaneous (transcatheter/endovascular) approach, they can be
performed in a cardiac catheterization laboratory, they require special
additional training and skills, and often require additional ancillary
procedures and equipment. With regard to the commenter's concern that
the analysis did not identify all the potentially impacted cases and
therefore does not sufficiently estimate the impact on providers for FY
2020, we note that the analysis we provided was based on the MS-DRGs
that were discussed under the proposal for cases that reported any of
the non-supplement transcatheter cardiac valve procedures. (If no cases
were found to report one of the listed procedure codes describing a
non-supplement transcatheter cardiac valve procedure then that
procedure code was not reflected in the data analysis table). As stated
in the proposed rule, we presented the impact of grouping the
transcatheter (non-supplement) cardiac valve procedures with a 2-way
severity level split. The analysis was based on the September 2018
update of the FY 2018 MedPAR data and included the proposed changes to
the CC/MCC severity level designations. While, as previously noted, we
do not generally perform any further MS-DRG analysis of claims data for
purposes of the final rule, in response to the commenter's concern
regarding whether the analysis identified all potentially impacted
cases, we further examined the proposed 2-way severity level split
using the March 2019 update of the FY 2018 MedPAR data.
[GRAPHIC] [TIFF OMITTED] TR16AU19.030
As shown in the table, there were 1,700 cases for the other
endovascular cardiac valve procedures with MCC group, with an average
length of stay of 10.1 days and average costs of $29,181. There was a
total of 624 cases for the other endovascular cardiac valve procedures
without MCC group, with an average length of stay of 3.9 days and
average costs of $16,706. Similar to our process discussed in the
proposed rule, we again applied the criteria to create subgroups for
the two way severity level split for the proposed MS-DRGs and found
that all five criteria were met. We note that, as discussed in section
II.F.14.c.1. of the preamble of this final rule, we are generally not
finalizing the proposed changes to the CC/MCC severity level
designations that were considered under the comprehensive CC/MCC
analysis. Therefore, the above updated analysis reflects the finalized
policy.
For the reasons noted previously, we continue to believe it is
appropriate to group all the non-supplement transcatheter cardiac valve
procedures together, and the updated data analysis also continues to
support the two way severity level split. In response to the
commenter's recommendation that we monitor the claims data for the
affected procedure codes to ensure that unintended consequences do not
occur and patient access is not put at risk, consistent with our annual
process of reviewing the MS-DRGs, we will continue to monitor cases to
determine if any additional modifications are warranted. For the
reasons described above and after consideration of the public comments
we received, we are finalizing our proposal to modify the structure of
MS-DRGs 266 and 267 by reassigning the procedure codes describing a
transcatheter cardiac valve repair (supplement) procedure from the list
above and to revise the title of MS-DRG 266 from ``Endovascular Cardiac
Valve Replacement with MCC'' to ``Endovascular Cardiac Valve
Replacement and Supplement Procedures with MCC'' and to revise the
title of MS-DRG 267 from ``Endovascular Cardiac Valve Replacement
without MCC'' to ``Endovascular Cardiac Valve Replacement and
Supplement Procedures without MCC''. In addition, we are finalizing our
proposal to create new MS-DRG 319 (Other Endovascular Cardiac Valve
Procedures with MCC) and new MS-DRG 320 (Other Endovascular Cardiac
Valve Procedures without MCC) and reassigning the non-
[[Page 42089]]
supplement transcatheter cardiac valve procedure codes displayed and
discussed earlier in this section from their current MS-DRGs to these
new MS-DRGs, under the ICD-10 MS-DRGs Version 37, effective October 1,
2019.
b. Revision of Pacemaker Lead
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19193), in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41189 through
41190), we finalized our proposal to maintain the Version 35 ICD-10 MS-
DRG GROUPER logic for the Version 36 ICD-10 MS-DRG GROUPER logic within
MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device
Replacement with MCC, with CC and without CC/MCC, respectively) so that
cases reporting any of the ICD-10-PCS procedure codes describing
procedures involving pacemakers and related procedures and associated
devices would continue to be assigned to those MS-DRGs under MDC 5
because they are reported when a pacemaker device requires revision and
they have a corresponding circulatory system diagnosis. We also
discussed and finalized the addition of ICD-10-PCS procedure codes
02H63MZ (Insertion of cardiac lead into right atrium, percutaneous
approach) and 02H73MZ (Insertion of cardiac lead into left atrium,
percutaneous approach) to the GROUPER logic as non-O.R. procedures that
impact the MS-DRG assignment when reported as stand-alone codes for the
insertion of a pacemaker lead within MS-DRGs 260, 261, and 262 in
response to a commenter's suggestion.
After publication of the FY 2019 IPPS/LTCH PPS final rule, it was
brought to our attention that ICD-10-PCS procedure code 02H60JZ
(Insertion of pacemaker lead into right atrium, open approach) was
inadvertently omitted from the GROUPER logic for MS-DRGs 260, 261, and
262. This procedure code is designated as a non-O.R. procedure.
However, we note that, within MDC 5, in MS-DRGs 242, 243, and 244, this
procedure code is part of a code pair that requires another procedure
code (cluster). In the FY 2020 IPPS/LTCH PPS proposed rule, we proposed
to add procedure code 02H60JZ to the list of non-O.R. procedures that
would impact MS-DRGs 260, 261, and 262 when reported as a stand-alone
procedure code, consistent with ICD-10-PCS procedure codes 02H63JZ
(Insertion of pacemaker lead into right atrium, percutaneous approach)
and 02H64JZ (Insertion of pacemaker lead into right atrium,
percutaneous endoscopic approach), which also describe the insertion of
a pacemaker lead into the right atrium. We stated in the proposed rule
that, if the proposal is finalized, we would make conforming changes to
the ICD-10 MS-DRG Definitions Manual Version 37.
Comment: Commenters agreed with the proposal to add procedure code
02H60JZ to the list of non-O.R. procedures that would impact MS-DRGs
260, 261, and 262 when reported as a stand-alone procedure code.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add procedure code 02H60JZ to the list of
non-O.R. procedures that would impact MS-DRGs 260, 261, and 262 when
reported as a stand-alone procedure code under the ICD-10 MS-DRGs
Version 37, effective October 1, 2019, and will make conforming changes
to the ICD-10 MS-DRG Definitions Manual Version 37.
6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Knee Procedures With Principal Diagnosis of Infection
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19193 through 19199), we received a request to add ICD-10-CM diagnosis
codes M00.9 (Pyogenic arthritis, unspecified) and A54.42 (Gonococcal
arthritis) to the list of principal diagnoses for MS-DRGs 485, 486, and
487 (Knee Procedure with Principal Diagnosis of Infection with MCC,
with CC, and without CC/MCC, respectively) in MDC 8. The requestor
believed that adding diagnosis code M00.9 is necessary to accurately
recognize knee procedures that are performed with a principal diagnosis
of infectious arthritis, including those procedures performed when the
specific infectious agent is unknown. The requestor stated that,
currently, only diagnosis codes describing infections caused by a
specific bacterium are included in MS-DRGs 485, 486, and 487. The
requestor stated that additional diagnosis codes such as M00.9 are
indicated for knee procedures performed as a result of infection
because pyogenic arthritis can reasonably be diagnosed based on the
patient's history and clinical symptoms, even if a bacterial infection
is not confirmed by culture. For example, the requestor noted that a
culture may present negative for infection if a patient has been
treated with antibiotics prior to knee surgery, but other clinical
signs may indicate a principal diagnosis of joint infection. In the
absence of a culture identifying an infection by a specific bacterium,
the requestor stated that ICD-10-CM diagnosis code M00.9 should also be
included as a principal diagnosis in MS-DRGs 485, 486, and 487.
The requestor also asserted that ICD-10-CM diagnosis code A54.42
should be added to the list of principal diagnoses for MS-DRGs 485,
486, and 487 because gonococcal arthritis is also an infectious type of
arthritis that can be an indication for a knee procedure.
We noted in the proposed rule that, currently, cases reporting ICD-
10-CM diagnosis codes M00.9 or A54.42 as a principal diagnosis group to
MS-DRGs 488 and 489 (Knee Procedures without Principal Diagnosis of
Infection with and without CC/MCC, respectively) when a knee procedure
is also reported on the claim.
As indicated in the proposed rule, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for ICD-10-CM
diagnosis codes M00.9 and A54.42, which are currently assigned to
medical MS-DRGs 548, 549, and 550 (Septic Arthritis with MCC, with CC,
and without CC/MCC, respectively) in the absence of a surgical
procedure. Our findings are shown in the following table.
[[Page 42090]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.031
As shown in the table, we found a total of 2,172 cases in MS-DRGs
548, 549, and 550. A total of 601 cases were reported in MS-DRG 548,
with an average length of stay of 8.1 days and average costs of
$13,974. Cases in MS-DRG 548 with a principal diagnosis of pyogenic
arthritis (ICD-10-CM diagnosis code M00.9) accounted for 312 of these
601 cases, and reported an average length of stay of 7.6 days and
average costs of $13,177. As we stated in the proposed rule, none of
the cases in MS-DRG 548 had a principal diagnosis of gonococcal
arthritis (ICD-10-CM diagnosis code A54.42).
The total number of cases reported in MS-DRG 549 was 1,169, with an
average length of stay of 5 days and average costs of $8,547. Within
this MS-DRG, 686 cases had a principal diagnosis described by ICD-10-CM
diagnosis code M00.9, with an average length of stay of 4.7 days and
average costs of $7,976. Two of the cases reported in MS-DRG 549 had a
principal diagnosis described by ICD-10-CM diagnosis code A54.42. These
2 cases had an average length of stay of 8 days and average costs of
$7,070.
The total number of cases reported in MS-DRG 550 was 402, with an
average length of stay of 3.5 days and average costs of $6,317. Within
this MS-DRG, 260 cases had a principal diagnosis described by ICD-10-CM
diagnosis code M00.9 with an average length of stay of 3.2 days and
average costs of $6,209. Three of the cases reported in MS-DRG 550 had
a principal diagnosis described by ICD-10-CM diagnosis code A54.42.
These 3 cases had an average length of stay of 2.3 days and average
costs of $3,929.
In summary, for MS-DRGs 548, 549, and 550, there were 1,258 cases
that reported ICD-10-CM diagnosis code M00.9 as the principal diagnosis
and 5 cases that reported ICD-10-CM diagnosis code A54.42 as the
principal diagnosis. We noted that, overall, our data analysis suggests
that the MS-DRG assignment for cases reporting ICD-10-CM diagnosis
codes M00.9 and A54.42 is appropriate based on the average costs and
average length of stay. However, we stated in the proposed rule that it
is unclear how many of these cases involved infected knee joints
because neither ICD-10-CM diagnosis code M00.9 nor A54.42 is specific
to the knee.
We then analyzed claims data for MS-DRGs 485, 486, and 487 (Knee
Procedures with Principal Diagnosis of Infection with MCC, with CC, and
without CC/MCC, respectively) and for MS-DRGs 488 and 489 (Knee
Procedures without Principal Diagnosis of Infection with and without
CC/MCC, respectively). For MS-DRGs 488 and 489, we also analyzed claims
data for cases reporting a knee procedure with ICD-10-CM diagnosis code
M00.9 or A54.42 as a principal diagnosis, as these are the MS-DRGs to
which such cases would currently group. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.032
As shown in the table, we found a total of 1,021 cases reported in
MS-DRG 485, with an average length of stay of 9.7 days and average
costs of $23,980. We found a total of 2,260 cases reported in MS-DRG
486, with an average length of stay of 6.0 days and average costs of
$16,060. The total number of cases reported in MS-DRG 487 was 614, with
[[Page 42091]]
an average length of stay of 4.2 days and average costs of $12,396. For
MS-DRG 488, we found a total of 2,857 cases with an average length of
stay of 4.8 days and average costs of $14,197. Of these 2,857 cases, we
found 524 cases that reported a principal diagnosis of pyogenic
arthritis (ICD-10-CM diagnosis code M00.9), with an average length of
stay of 7.1 days and average costs of $16,894. There were no cases
found that reported a principal diagnosis of gonococcal arthritis (ICD-
10-CM diagnosis code A54.42). For MS-DRG 489, we found a total of 2,416
cases with an average length of stay of 2.4 days and average costs of
$9,217. Of these 2,416 cases, we found 195 cases that reported a
principal diagnosis of pyogenic arthritis (ICD-10-CM diagnosis code
M00.9), with an average length of stay of 4.1 days and average costs of
$9,526. We found 1 case that reported a principal diagnosis of
gonococcal arthritis (ICD-10-CM diagnosis code A54.42) in MS-DRG 489,
with an average length of stay of 8 days and average costs of $10,810.
Upon review of the data, we noted in the proposed rule that the
average costs and average length of stay for cases reporting a
principal diagnosis of pyogenic arthritis (ICD-10-CM diagnosis code
M00.9) in MS-DRG 488 are higher than the average costs and average
length of stay for all cases in MS-DRG 488. We found similar results
for MS-DRG 489 for the cases reporting diagnosis code M00.9 or A54.42
as the principal diagnosis.
As stated in the proposed rule and earlier, the requestor
recommended that ICD-10-CM diagnosis codes M00.9 and A54.42 be added to
the list of principal diagnoses in MS-DRGs 485, 486, and 487 to
recognize knee procedures that are performed with a principal diagnosis
of an infectious type of arthritis. As we stated in the proposed rule,
because these diagnosis codes are not specific to the knee in the code
description, we examined the ICD-10-CM Alphabetic Index to review the
entries that refer and correspond to these diagnosis codes.
Specifically, we searched the Index for codes M00.9 and A54.42 and
found the following entries.
[GRAPHIC] [TIFF OMITTED] TR16AU19.033
We stated in the proposed rule that our clinical advisors agreed
that the results of our ICD-10-CM Alphabetic Index review combined with
the data analysis results support the addition of ICD-10-CM diagnosis
code M00.9 to the list of principal diagnoses of infection for MS-DRGs
485, 486, and 487. The entries for diagnosis code M00.9 include
infection of the knee, and as discussed above, in our data analysis, we
found cases reporting ICD-10-CM diagnosis code M00.9 as a principal
diagnosis in MS-DRGs 488 and 489, indicating that knee procedures are,
in fact, being performed for an infectious arthritis of the knee. In
addition, the average costs for cases reporting a principal diagnosis
code of pyogenic arthritis (ICD-10-CM diagnosis code M00.9) in MS-DRG
488 are similar to the average costs of cases in MS-DRG 486 ($16,894
and $16,060, respectively). We stated in the proposed rule that,
because MS-DRG 488 includes cases with a CC or an MCC, we reviewed how
many of the 524 cases reporting a principal diagnosis code of pyogenic
arthritis (ICD-10-CM diagnosis code M00.9) were reported with a CC or
an MCC. We found that there were 361 cases reporting a CC with an
average length of stay of 6 days and average costs of $14,092 and 163
cases reporting an MCC with an average length of stay of 9.5 days and
average costs of $23,100. Therefore, the cases in MS-DRG 488 reporting
a principal diagnosis code of pyogenic arthritis (ICD-10-CM diagnosis
code M00.9) with an MCC have average costs that are consistent with the
average costs of cases in MS-DRG 485 ($23,100 and $23,980,
respectively), and the cases with a CC have average costs that are
consistent with the average costs of cases in MS-DRG 486 ($14,092 and
$16,060, respectively), as noted above. We also noted that the average
length of stay for cases reporting a principal diagnosis code of
pyogenic arthritis (ICD-10-CM diagnosis code M00.9) with an MCC in MS-
DRG 488 is similar to the average length of stay for cases in MS-DRG
485 (9.5 days and 9.7 days, respectively), and the cases with a CC have
an average length of stay that is equivalent to the average length of
stay for cases in MS-DRG 486 (6 days and 6 days, respectively). We
further noted that the average length of stay for cases reporting a
principal diagnosis code of pyogenic arthritis (ICD-10-CM diagnosis
code M00.9) in MS-DRG 489 is similar to the average length of stay for
cases in MS-DRG 487 (4.1 days and 4.2 days, respectively). Lastly, the
[[Page 42092]]
average costs for cases reporting a principal diagnosis code of
pyogenic arthritis (ICD-10-CM diagnosis code M00.9) in MS-DRG 489 are
consistent with the average costs for cases in MS-DRG 487 ($9,526 and
$12,396, respectively), with a difference of $2,870. For these reasons,
we proposed to add ICD-10-CM diagnosis code M00.9 to the list of
principal diagnosis codes for MS-DRGs 485, 486, and 487.
Comment: Commenters agreed with CMS' proposal to add ICD-10-CM
diagnosis code M00.9 to the list of principal diagnosis codes for
assignment to MS-DRGs 485, 486 and 487. The commenters stated that the
proposal was reasonable, given the ICD-10-CM diagnosis code and the
information provided.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-CM diagnosis code M00.9 to the
list of principal diagnosis codes for assignment to MS-DRGs 485, 486
and 487 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
In the proposed rule, we stated that our clinical advisors did not
support the addition of ICD-10-CM diagnosis code A54.42 to the list of
principal diagnosis codes for MS-DRGs 485, 486, and 487 because ICD-10-
CM diagnosis code A54.42 is not specifically indexed to include the
knee or any infection in the knee. Therefore, we did not propose to add
ICD-10-CM diagnosis code A54.42 to the list of principal diagnosis
codes for these MS-DRGs.
Comment: Commenters did not support CMS' proposal to not add ICD-
10-CM diagnosis code A54.42 to the list of codes for these MS-DRGs.
Commenters noted that although A54.42 is not specific to the knee, the
code is intended to be used for any joint, similar to code M00.9.
Commenters also noted that the GROUPER logic for MS-DRGs 485, 486 and
487 that requires the combination of a principal diagnosis code and an
ICD-10-PCS procedure code for a knee procedure will ensure that cases
that report a principal diagnosis code of A54.42 and a knee procedure
are clinically similar to other cases in MS-DRGs 485, 486 and 487.
Response: We agree with commenters that diagnosis code A54.42 would
be the appropriate code for a diagnosis of gonococcal arthritis of the
knee although the Index entry is not specific. Our clinical advisors
reviewed this issue and the ICD-10-CM Alphabetic index and noted that
there are no other diagnosis codes in the subcategory A54.- series
(Gonococcal infection) that are more specific to the knee. Our clinical
advisors noted that although there was only one case reporting
gonococcal arthritis as the principal diagnosis with a knee procedure
performed in the September 2018 update of the FY 2018 MedPAR file, they
agreed that based on the result of further review, including
consideration of the commenters' concerns, there is merit in adding
A54.42 to MS-DRGs 485, 486 and 487 because diagnosis code A54.42 would
be the appropriate code to report a diagnosis of gonococcal arthritis
of the knee. We agree with commenters that this reassignment is
consistent with the reassignment of ICD-10-CM diagnosis code M00.9
because, although the Index entries do not specifically include the
knee or any infection of the knee, diagnosis code A54.42 would also be
used to report an infection of the knee. Therefore, after consideration
of the public comments that we received and for the reasons described,
we are finalizing the assignment of ICD-10-CM diagnosis code A54.42 to
the list of principal diagnosis codes for assignment to MS-DRGs 485,
486, and 487 (Knee Procedure with Principal Diagnosis of Infection with
MCC, with CC, and without CC/MCC, respectively) in the ICD-10 MS-DRGs
Version 37, effective October 1, 2019.
In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that upon
review of the existing list of principal diagnosis codes for MS-DRGs
485, 486, and 487, our clinical advisors recommended that we review the
following ICD-10-CM diagnosis codes currently included on the list of
principal diagnosis codes because the codes are not specific to the
knee.
[GRAPHIC] [TIFF OMITTED] TR16AU19.034
These ICD-10-CM diagnosis codes are currently assigned to medical
MS-DRGs 559, 560, and 561 (Aftercare, Musculoskeletal System and
Connective Tissue with MCC, with CC, and without CC/MCC, respectively)
within MDC 8 in the absence of a surgical procedure. Similar to the
process described above, in the proposed rule, we stated that we
examined the ICD-10-CM Alphabetic Index to review the entries that
refer and correspond to the diagnosis codes shown in the table above.
We found the following entries.
[[Page 42093]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.035
The Index entries for the ICD-10-CM diagnosis codes listed above
reflect terms relating to an infection. However, none of the entries is
specific to the knee. In addition, in the proposed rule we noted that
there are other diagnosis codes in the subcategory T84.5-series
(Infection and inflammatory reaction due to internal joint prosthesis)
that are specific to the knee. For example, ICD-10-CM diagnosis code
T84.53X- (Infection and inflammatory reaction due to internal right
knee prosthesis) or ICD-10-CM diagnosis code T84.54X- (Infection and
inflammatory reaction due to internal left knee prosthesis) with the
appropriate 7th digit character to identify initial encounter,
subsequent encounter or sequela, would be reported to identify a
documented infection of the right or left knee due to an internal
prosthesis. We further noted that these ICD-10-CM diagnosis codes
(T84.53X- and T84.54X-) with the 7th character ``A'' for initial
encounter are currently already in the list of principal diagnosis
codes for MS-DRGs 485, 486, and 487.
We stated in the proposed rule that our clinical advisors supported
the removal of the above ICD-10-CM diagnosis codes from the list of
principal diagnosis codes for MS-DRGs 485, 486, and 487 because they
are not specifically indexed to include an infection of the knee and
there are other diagnosis codes in the subcategory T84.5-series that
uniquely identify an infection and inflammatory reaction of the right
or left knee due to an internal prosthesis as noted above.
As indicated in the proposed rule, we also analyzed claims data for
MS-DRGs 485, 486 and 487 to identify cases reporting one of the above
listed ICD-10-CM diagnosis codes not specific to the knee as a
principal diagnosis. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.036
For MS-DRG 485, we found 13 cases reporting one of the diagnosis
codes not specific to the knee as a principal diagnosis with an average
length of stay of 11.2 days and average costs of $30,765. For MS-DRG
486, we found 43 cases reporting one of the diagnosis codes not
specific to the knee as a principal diagnosis with an average length of
stay of 6.5 days and average costs of $15,837. For MS-DRG 487, we found
7 cases reporting one of the diagnosis codes not specific to the knee
as a principal diagnosis with an average length of stay of 2.6 days and
average costs of $11,362.
We stated in the proposed rule that, overall, for MS-DRGs 485, 486,
and 487, there were a total of 63 cases reporting one of the ICD-10-CM
diagnosis codes not specific to the knee as a principal diagnosis with
an average length of stay of 7 days and average costs of $18,421. Of
those 63 cases, there were 32 cases reporting a principal diagnosis
code from the ICD-10-CM subcategory T84.5-series (Infection and
inflammatory reaction due to internal joint prosthesis); 23 cases
reporting a principal diagnosis code from the ICD-10-CM subcategory
T84.6-series (Infection and inflammatory reaction due to internal
fixation device), with 22 of the 23 cases reporting ICD-10-CM diagnosis
code T84.69XA (Infection and inflammatory reaction due to internal
fixation device of other site, initial encounter) and 1 case reporting
ICD-10-CM diagnosis code T84.63XA (Infection and inflammatory reaction
due to internal fixation device of spine, initial encounter); and 8
cases reporting ICD-10-CM diagnosis code M86.9 (Osteomyelitis,
unspecified) as a principal diagnosis.
We stated in the proposed rule that our clinical advisors believe
that there may have been coding errors among the 63 cases reporting a
principal diagnosis of infection not specific to the knee. For
[[Page 42094]]
example, 32 cases reported a principal diagnosis code from the ICD-10-
CM subcategory T84.5-series (Infection and inflammatory reaction due to
internal joint prosthesis) that was not specific to the knee and, as
stated previously and in the proposed rule, there are other codes in
this subcategory that uniquely identify an infection and inflammatory
reaction of the right or left knee due to an internal prosthesis.
Based on the results of our claims analysis and input from our
clinical advisors, in the FY 2020 IPPS/LTCH PPS proposed rule, we
proposed to remove the following ICD-10-CM diagnosis codes that do not
describe an infection of the knee from the list of principal diagnosis
codes for MS-DRGs 485, 486, and 487: M86.9, T84.50XA, T84.51XA,
T84.52XA, T84.59XA, T84.60XA, T84.63XA, and T84.69XA. We did not
propose to change the current assignment of these diagnosis codes in
MS-DRGs 559, 560, and 561.
Comment: Many commenters agreed with the proposal to remove the
eight diagnosis codes that do not describe an infection specific to the
knee from the list of principal diagnosis codes for MS-DRGs 485, 486,
and 487, and to maintain their current assignment in MS-DRGs 559, 560,
and 561. A commenter did not support the proposal and believed the
diagnosis of osteomyelitis should continue to be included in MS-DRGs
485, 486 and 487 because osteomyelitis describes an infection of the
knee which includes cartilage, ligaments, tendons and bones.
Response: We appreciate the commenters' support. We agree that
osteomyelitis as a diagnostic term describes an infection which can
include cartilage, ligaments, tendons and bones. However, as discussed
in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19196), the diagnosis
codes that are the subject of this proposal, including diagnosis code
M86.9 (Osteomyelitis, unspecified) are not specific to the knee. There
are other diagnosis codes in the subcategory M86.-series
(Osteomyelitis) that are specific to the knee and will continue to be
included in MS-DRGs 485, 486 and 487.
Therefore, after consideration of the comments we received, we are
finalizing our proposal to remove ICD-10-CM diagnosis codes M86.9,
T84.50XA, T84.51XA, T84.52XA, T84.59XA, T84.60XA, T84.63XA, and
T84.69XA from the list of principal diagnosis codes for MS-DRGs 485,
486, and 487, and maintain their current assignment in MS-DRGs 559,
560, and 561 in the ICD-10 MS-DRGs Version 37, effective October 1,
2019.
In addition, we stated in the proposed rule that our clinical
advisors recommended that we add the following ICD-10-CM diagnosis
codes as principal diagnosis codes for MS-DRGs 485, 486, and 487
because they are specific to the knee and describe an infection.
[GRAPHIC] [TIFF OMITTED] TR16AU19.037
As indicated in the proposed rule, ICD-10-CM diagnosis code A18.02
(Tuberculous arthritis of other joints) is currently assigned to
medical MS-DRGs 548, 549, and 550 (Septic Arthritis with MCC, with CC,
and without CC/MCC, respectively) within MDC 8 and MS-DRGs 974, 975,
and 976 (HIV with Major Related Condition with MCC, with CC, and
without CC/MCC, respectively) within MDC 25 (Human Immunodeficiency
Virus Infections) in the absence of a surgical procedure. ICD-10-CM
diagnosis codes M01.X61 (Direct infection of right knee in infectious
and parasitic diseases classified elsewhere), M01.X62 (Direct infection
of left knee in infectious and parasitic diseases classified
elsewhere), and M01.X69 (Direct infection of unspecified knee in
infectious and parasitic diseases classified elsewhere) are currently
assigned to medical MS-DRGs 548, 549, and 550 (Septic Arthritis with
MCC, with CC, and without CC/MCC, respectively) within MDC 8 in the
absence of a surgical procedure. ICD-10-CM diagnosis codes M71.061
(Abscess of bursa, right knee), M71.062 (Abscess of bursa, left knee),
M71.069 (Abscess of bursa, unspecified knee), M71.161 (Other infective
bursitis, right knee), M71.162 (Other infective bursitis, left knee),
and M71.169 (Other infective bursitis, unspecified knee) are currently
assigned to medical MS-DRGs 557 and 558 (Tendonitis, Myositis and
Bursitis with and without MCC, respectively) within MDC 8 in the
absence of a surgical procedure.
Similar to the process described above, in the proposed rule we
examined the ICD-10-CM Alphabetic Index to review the entries that
refer and correspond to the diagnosis codes shown in the table above.
We found the following entries.
BILLING CODE 4120-01-P
[[Page 42095]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.038
[[Page 42096]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.039
BILLING CODE 4120-01-C
We noted that there were no Index entries specifically for ICD-10-
CM diagnosis codes M71.061, M71.062, M71.069, M71.161, M71.162, and
M71.169. Rather, there were Index entries at the subcategory levels of
M71.06- and M71.16-. We found the following entries.
[GRAPHIC] [TIFF OMITTED] TR16AU19.040
[[Page 42097]]
We stated that our clinical advisors agreed that the results of our
review of the ICD-10-CM Alphabetic Index support the addition of these
ICD-10-CM diagnosis codes to MS-DRGs 485, 486, and 487 because the
Index entries and/or the code descriptions clearly describe or include
an infection that is specific to the knee.
Therefore, we proposed to add the following ICD-10-CM diagnosis
codes to the list of principal diagnosis codes for MS-DRGs 485, 486,
and 487: A18.02, M01.X61, M01.X62, M01.X69, M71.061, M71.062, M71.069,
M71.161, M71.162, and M71.169.
Comment: Commenters agreed with CMS' proposal to add 10 additional
ICD-10-CM diagnosis codes that are specific to the knee and describe an
infection to the list of principal diagnosis codes for assignment to
MS-DRGs 485, 486 and 487. The commenters stated that the proposal was
reasonable, given the ICD-10-CM diagnosis codes and the information
provided.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-CM diagnosis codes A18.02,
M01.X61, M01.X62, M01.X69, M71.061, M71.062, M71.069, M71.161, M71.162,
and M71.169 to the list of principal diagnosis codes for assignment to
MS-DRGs 485, 486 and 487 in the ICD-10 MS-DRGs Version 37, effective
October 1, 2019.
b. Neuromuscular Scoliosis
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19201 through 19202), we received a request to add ICD-10-CM diagnosis
codes describing neuromuscular scoliosis to the list of principal
diagnosis codes for MS-DRGs 456, 457, and 458 (Spinal Fusion except
Cervical with Spinal Curvature or Malignancy or Infection or Extensive
Fusions with MCC, with CC, and without CC/MCC, respectively). As we
stated in the proposed rule, excluding the ICD-10-CM diagnosis codes
that address the cervical spine, the following ICD-10-CM diagnosis
codes are used to describe neuromuscular scoliosis.
[GRAPHIC] [TIFF OMITTED] TR16AU19.041
The requestor asserted that all levels of neuromuscular scoliosis,
except cervical, should group to the non-cervical spinal fusion MS-DRGs
for spinal curvature (MS-DRGs 456, 457, and 458). The requestor also
noted that the current MS-DRG logic only groups cases reporting
neuromuscular scoliosis to MS-DRGs 456, 457, and 458 when neuromuscular
scoliosis is reported as a secondary diagnosis. The requestor contended
that it would be rare for a diagnosis of neuromuscular scoliosis to be
reported as a secondary diagnosis because there is not a ``code first''
note in the ICD-10-CM Tabular List of Diseases and Injuries indicating
to ``code first'' the underlying cause. We stated in the proposed rule
that, according to the requestor, when a diagnosis of neuromuscular
scoliosis is the reason for an admission for non-cervical spinal
fusion, neuromuscular scoliosis must be sequenced as the principal
diagnosis because it is the chief condition responsible for the
admission. However, this sequencing, which adheres to the ICD-10-CM
Official Guidelines for Coding and Reporting, prevents the admission
from grouping to the non-cervical spinal fusion MS-DRGs for spinal
curvature caused by neuromuscular scoliosis.
As indicated in the proposed rule, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for cases reporting
any of the ICD-10-CM diagnosis codes describing neuromuscular scoliosis
(as listed previously) as a principal diagnosis with a non-cervical
spinal fusion, which are currently assigned to MS-DRGs 459 and 460
(Spinal Fusion except Cervical with MCC and without MCC, respectively).
Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.042
The data reveal that there was a total of 56,500 cases in MS-DRGs
459 and 460. We found 3,903 cases reported in MS-DRG 459, with an
average length of stay of 8.6 days and average costs of $46,416. Of
these 3,903 cases, 3 reported a principal diagnosis code of
neuromuscular scoliosis, with an average length of stay of 15.3 days
and average costs of $95,745. We found a total of 52,597 cases in MS-
DRG 460, with an average length of stay of 3.3
[[Page 42098]]
days and average costs of $28,754. Of these 52,597 cases, 8 cases
reported a principal diagnosis code describing neuromuscular scoliosis,
with an average length of stay of 4.3 days and average costs of
$71,406. We stated in the proposed rule that the data clearly
demonstrate that the average costs and average length of stay for the
small number of cases reporting a principal diagnosis of neuromuscular
scoliosis are higher in comparison to all the cases in their assigned
MS-DRG.
We also analyzed claims data for MS-DRGs 456, 457, and 458 (Spinal
Fusion except Cervical with Spinal Curvature or Malignancy or Infection
or Extensive Fusions with MCC, with CC, and without CC/MCC,
respectively) to identify the spinal fusion cases reporting any of the
ICD-10-CM codes describing neuromuscular scoliosis (as listed
previously) as a secondary diagnosis. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.043
As we noted in the proposed rule, the data indicate that there were
1,344 cases reported in MS-DRG 456, with an average length of stay of
12 days and average costs of $66,012. Of these 1,344 cases, 6 cases
reported a secondary diagnosis code describing neuromuscular scoliosis,
with an average length of stay of 18.2 days and average costs of
$79,809. We found a total of 3,654 cases in MS-DRG 457, with an average
length of stay of 6.2 days and average costs of $47,577. Twelve of
these 3,654 cases reported a secondary diagnosis code describing
neuromuscular scoliosis, with an average length of stay of 4.5 days and
average costs of $31,646. Finally, the 1,245 cases reported in MS-DRG
458 had an average length of stay of 3.4 days and average costs of
$34,179. Of these 1,245 cases, 6 cases reported neuromuscular scoliosis
as a secondary diagnosis, with an average length of stay of 3.3 days
and average costs of $31,117.
We reviewed the ICD-10-CM Tabular List of Diseases for subcategory
M41.4 and confirmed there is a ``Code also underlying condition'' note.
We also reviewed the ICD-10-CM Official Guidelines for Coding and
Reporting for the ``code also'' note at Section 1.A.12.b., which
states: ``A `code also' note instructs that two codes may be required
to fully describe a condition, but this note does not provide
sequencing direction.'' We stated in the proposed rule that our
clinical advisors agreed that the sequencing of the ICD-10-CM diagnosis
codes is determined by which condition leads to the encounter and is
responsible for the admission. They also note that there may be
instances in which the underlying cause of the diagnosis of
neuromuscular scoliosis is not treated or responsible for the
admission.
As discussed in the proposed rule and earlier, our review of the
claims data shows that a small number of cases reported neuromuscular
scoliosis either as a principal diagnosis in MS-DRGs 459 and 460 or as
a secondary diagnosis in MS-DRGs 456, 457, and 458. We stated that our
clinical advisors agreed that while the volume of cases is small, the
average costs and average length of stay for the cases reporting
neuromuscular scoliosis as a principal diagnosis with a non-cervical
spinal fusion currently grouping to MS-DRGs 459 and 460 are more
aligned with the average costs and average length of stay for the cases
reporting neuromuscular scoliosis as a secondary diagnosis with a non-
cervical spinal fusion currently grouping to MS-DRGs 456, 457, and 458.
Therefore, for the reasons described above, we proposed to add the
following ICD-10-CM codes describing neuromuscular scoliosis to the
list of principal diagnosis codes for MS-DRGs 456, 457, and 458:
M41.40, M41.44, M41.45, M41.46, and M41.47.
Comment: Commenters agreed with CMS' proposal to add ICD-10-CM
diagnosis codes M41.40, M41.44, M41.45, M41.46, and M41.47 that
describe neuromuscular scoliosis to the list of principal diagnosis
codes for assignment to MS-DRGs 456, 457 and 458 (Spinal Fusion except
Cervical with Spinal Curvature of Malignancy or Infection or Extensive
Fusions with MCC, with CC, and without CC/MCC, respectively). The
commenters stated that the proposal was reasonable, given the ICD-10-CM
diagnosis codes and the information provided. A commenter specifically
expressed appreciation for CMS' display of cost and length of stay data
in the analysis, in addition to the clinical factors that support our
decision making.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-CM diagnosis codes M41.40,
M41.44, M41.45, M41.46, and M41.47 to the list of principal diagnosis
codes for assignment to MS-DRGs 456, 457 and 458 in the ICD-10 MS-DRGs
Version 37, effective October 1, 2019.
c. Secondary Scoliosis and Secondary Kyphosis
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19202 through 19204), we received a request to add ICD-10-CM diagnosis
codes describing secondary scoliosis and secondary kyphosis to the list
of principal diagnoses for MS-DRGs 456, 457, and 458 (Spinal Fusion
except Cervical with Spinal Curvature or
[[Page 42099]]
Malignancy or Infection or Extensive Fusions with MCC, with CC, and
without CC/MCC, respectively). As we indicated in the proposed rule,
excluding the ICD-10-CM diagnosis codes that address the cervical
spine, the following ICD-10-CM diagnosis codes are used to describe
secondary scoliosis.
[GRAPHIC] [TIFF OMITTED] TR16AU19.044
Excluding the ICD-10-CM diagnosis codes that address the cervical
spine, the following ICD-10-CM diagnosis codes are used to describe
secondary kyphosis.
[GRAPHIC] [TIFF OMITTED] TR16AU19.045
The requestor stated that generally in cases of diagnoses of
secondary scoliosis or kyphosis, the underlying cause of the condition
is not treated or is not responsible for the admission. If a patient is
admitted for surgery to correct non-cervical spinal curvature, it is
appropriate to sequence the diagnosis of secondary scoliosis or
secondary kyphosis as principal diagnosis. However, reporting a
diagnosis of secondary scoliosis or secondary kyphosis as the principal
diagnosis with a non-cervical spinal fusion procedure results in the
case grouping to MS-DRG 459 or 460 (Spinal Fusion except Cervical with
MCC and without MCC, respectively), instead of the spinal fusion with
spinal curvature MS-DRGs 456, 457, and 458.
As indicated in the proposed rule, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for MS-DRGs 459 and
460 to determine the number of cases reporting an ICD-10-CM diagnosis
code describing secondary scoliosis or secondary kyphosis as the
principal diagnosis. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.046
As shown in the table, we found a total of 3,903 cases in MS-DRG
459, with an average length of stay of 8.6 days and average costs of
$46,416. Of these 3,903 cases, we found 4 cases that reported a
principal diagnosis of secondary scoliosis, with an average length of
stay of 7.3 days and average costs of $56,024. We also found 4 cases
that reported a principal diagnosis of secondary kyphosis, with an
average length of stay of 5.8 days and average costs of $41,883. For
MS-DRG 460, we found a total of 52,597 cases with an average length of
stay of 3.3 days and average costs of $28,754. Of these 52,597 cases,
we found 34 cases that reported a principal diagnosis of secondary
scoliosis, with an average length of stay of 3.6 days and average costs
of $34,424. We found 31 cases that reported a principal diagnosis of
secondary kyphosis in MS-DRG 460, with an average length of stay of 4.6
days and average costs of $42,315.
We also analyzed claims data for MS-DRGs 456, 457, and 458 to
determine the number of cases reporting an ICD-10-CM diagnosis code
describing secondary scoliosis or secondary kyphosis as a secondary
diagnosis. Our findings are shown in the following table.
[[Page 42100]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.047
As we stated in the proposed rule, the data indicate that there
were 1,344 cases in MS-DRG 456, with an average length of stay of 12
days and average costs of $66,012. Of these 1,344 cases, there were 37
cases that reported a secondary diagnosis of secondary scoliosis, with
an average length of stay of 7.7 days and average costs of $58,009.
There were also 52 cases in MS-DRG 456 reporting a secondary diagnosis
of secondary kyphosis, with an average length of stay of 12 days and
average costs of $78,865. In MS-DRG 457, there was a total of 3,654
cases, with an average length of stay of 6.2 days and average costs of
$47,577. Of these 3,654 cases, there were 187 cases that reported
secondary scoliosis as a secondary diagnosis, with an average length of
stay of 4.9 days and average costs of $37,655. In MS-DRG 457, there
were also 114 cases that reported a secondary diagnosis of secondary
kyphosis, with an average length of stay of 5.2 days and average costs
of $37,357. Finally, there was a total of 1,245 cases in MS-DRG 458,
with an average length of stay of 3.4 days and average costs of
$34,179. Of these 1,245 cases, there were 190 cases that reported a
secondary diagnosis of secondary scoliosis, with an average length of
stay of 3 days and average costs of $29,052. There were 39 cases in MS-
DRG 458 that reported a secondary diagnosis of secondary kyphosis, with
an average length of stay of 3.7 days and average costs of $31,015.
We stated in the proposed rule that our clinical advisors agreed
that the average length of stay and average costs for the small number
of cases reporting secondary scoliosis or secondary kyphosis as a
principal diagnosis with a non-cervical spinal fusion currently
grouping to MS-DRGs 459 and 460 are generally more aligned with the
average length of stay and average costs for the cases reporting
secondary scoliosis or secondary kyphosis as a secondary diagnosis with
a non-cervical spinal fusion currently grouping to MS-DRGs 456, 457,
and 458. They also noted that there may be instances in which the
underlying cause of the diagnosis of secondary scoliosis or secondary
kyphosis is not treated or responsible for the admission. Therefore,
for the reasons described above, we proposed to add the following ICD-
10-CM diagnosis codes describing secondary scoliosis and secondary
kyphosis to the list of principal diagnosis codes for MS-DRGs 456, 457,
and 458: M40.10, M40.14, M40.15, M41.50, M41.54, M41.55, M41.56, and
M41.57.
Comment: Commenters agreed with CMS' proposal to add ICD-10-CM
diagnosis codes M40.10, M40.14, M40.15, M41.50, M41.54, M41.55, M41.56,
and M41.57 that describe secondary scoliosis and secondary kyphosis to
the list of principal diagnosis codes for assignment to MS-DRGs 456,
457 and 458 (Spinal Fusion except Cervical with Spinal Curvature of
Malignancy or Infection or Extensive Fusions with MCC, with CC, and
without CC/MCC, respectively). The commenters stated that the proposal
was reasonable, given the ICD-10-CM diagnosis codes and the information
provided.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-CM diagnosis codes M40.10,
M40.14, M40.15, M41.50, M41.54, M41.55, M41.56, and M41.57 that
describe secondary scoliosis and secondary kyphosis to the list of
principal diagnosis codes for assignment to MS-DRGs 456, 457 and 458 in
the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
As also discussed in the proposed rule, during our review of MS-
DRGs 456, 457, and 458, we found the following diagnosis codes that
describe conditions involving the cervical region.
[[Page 42101]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.048
We stated that our clinical advisors noted that because the
diagnosis codes shown in the table above describe conditions involving
the cervical region, they are not clinically appropriate for assignment
to MS-DRGs 456, 457, and 458, which are defined by non-cervical spinal
fusion procedures (with spinal curvature or malignancy or infection or
extensive fusions). Therefore, our clinical advisors recommended that
these codes be removed from the MS-DRG logic for these MS-DRGs. As
such, in the FY 2020 IPPS/LTCH PPS proposed rule, we proposed to remove
the diagnosis codes that describe conditions involving the cervical
region as shown in the table above from MS-DRGs 456, 457, and 458.
Comment: Commenters agreed with the proposal to remove 34 diagnosis
codes that describe conditions involving the cervical region from the
list of principal diagnosis codes for MS-DRGs 456, 457, and 458, to
improve clinical homogeneity and better reflect resource costs since
these MS-DRGs are defined by non-cervical spinal fusion procedures. The
commenters stated that the proposal was reasonable, given the ICD-10-CM
diagnosis codes and the information provided.
Response: We appreciate the commenters' support. Therefore, we are
finalizing our proposal to remove the ICD-10-CM diagnosis codes that
describe conditions involving the cervical region as shown the table
above from the list of principal diagnosis codes for MS-DRGs 456, 457,
and 458 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
7. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract):
Extracorporeal Shock Wave Lithotripsy (ESWL)
As discussed in the FY 2020 IPPS/LTCH PPS (84 FR 19204 through
19210), we received two separate, but related requests to add ICD-10-CM
diagnosis code N13.6 (Pyonephrosis) and ICD-10-CM diagnosis code
T83.192A (Other mechanical complication of indwelling ureteral stent,
initial encounter) to the list of principal diagnosis codes for MS-DRGs
691 and 692 (Urinary Stones with ESW Lithotripsy with CC/MCC and
without CC/MCC, respectively) in MDC 11 so that cases are assigned more
appropriately when an Extracorporeal Shock Wave Lithotripsy (ESWL)
procedure is performed.
As noted in the proposed rule, ICD-10-CM diagnosis code N13.6
currently groups to MS-DRGs 689 and 690 (Kidney and Urinary Tract
Infections with MCC and without MCC, respectively) and ICD-10-CM
diagnosis code T83.192A currently groups to MS-DRGs 698, 699, and 700
(Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and
without CC/MCC, respectively).
As stated in the proposed rule, the ICD-10-PCS procedure codes for
identifying procedures involving ESWL are designated as non-O.R.
procedures and are shown in the following table.
[[Page 42102]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.049
Pyonephrosis can be described as an infection of the kidney with
pus in the upper collecting system which can progress to obstruction.
Patients with an obstruction in the upper urinary tract due to urinary
stones (calculi), tumors, fungus balls or ureteropelvic obstruction
(UPJ) may also have a higher risk of developing pyonephrosis. If
pyonephrosis is not recognized and treated promptly, it can result in
serious complications, including fistulas, septic shock, irreversible
damage to the kidneys, and death.
As noted in the proposed rule and above, the requestor recommended
that ICD-10-CM diagnosis codes N13.6 and T83.192A be added to the list
of principal diagnosis codes for MS-DRGs 691 and 692. There are
currently four MS-DRGs that group cases for diagnoses involving urinary
stones, which are subdivided to identify cases with and without an ESWL
procedure: MS-DRGs 691 and 692 (Urinary Stones with ESW Lithotripsy
with and without CC/MCC, respectively) and MS-DRGs 693 and 694 (Urinary
Stones without ESW Lithotripsy with and without MCC, respectively).
The requestor stated that when patients who have been diagnosed
with hydronephrosis secondary to renal and ureteral calculus
obstruction undergo an ESWL procedure, ICD-10-CM diagnosis code N13.2
(Hydronephrosis with renal and ureteral calculous obstruction) is
reported and groups to MS-DRGs 691 and 692. However, if a patient with
a diagnosis of hydronephrosis has a urinary tract infection (UTI) in
addition to a renal calculus obstruction and undergoes an ESWL
procedure, ICD-10-CM diagnosis code N13.6 must be coded and reported as
the principal diagnosis, which groups to MS-DRGs 689 and 690. The
requestor stated that ICD-10-CM diagnosis code N13.6 should be grouped
to MS-DRGs 691 and 692 when reported as a principal diagnosis because
this grouping will more appropriately reflect resource consumption for
patients who undergo an ESWL procedure for obstructive urinary calculi,
while also receiving treatment for urinary tract infections.
With regard to ICD-10-CM diagnosis code T83.192A, the requestor
believed that when an ESWL procedure is performed for the treatment of
calcifications within and around an indwelling ureteral stent, it is
comparable to an ESWL procedure performed for the treatment of urinary
calculi. Therefore, the requestor recommended adding ICD-10-CM
diagnosis code T83.192A to MS-DRGs 691 and 692 when reported as a
principal diagnosis and an ESWL procedure is also reported on the
claim.
We stated in the proposed rule that, to analyze these separate, but
related requests, we first reviewed the reporting of ICD-10-CM
diagnosis code N13.6 within the ICD-10-CM classification. We noted that
ICD-10-CM diagnosis code N13.6 is to be assigned for conditions
identified in the code range N13.0-N13.5 with infection. (Codes in this
range describe hydronephrosis with obstruction.) Infection may be
documented by the patient's provider as urinary tract infection (UTI)
or as specific as acute pyelonephritis. We agreed with the requestor
that if a patient with a diagnosis of hydronephrosis has a urinary
tract infection (UTI) in addition to a renal calculus obstruction and
undergoes an ESWL procedure, ICD-10-CM diagnosis code N13.6 must be
coded and reported as the principal diagnosis, which groups to MS-DRGs
689 and 690. In this case scenario, we stated that the ESWL procedure
is designated as a non-O.R. procedure and does not impact the MS-DRG
assignment when reported with ICD-10-CM diagnosis code N13.6.
The ICD-10-CM classification instructs that when both a urinary
obstruction and a genitourinary infection co-exist, the correct code
assignment for reporting is ICD-10-CM diagnosis code N13.6, which is
appropriately grouped to MS-DRGs 689 and 690 (Kidney and Urinary Tract
Infections with MCC and without MCC, respectively) because it describes
a type of urinary tract infection. Therefore, in response to the
requestor's suggestion that ICD-10-CM diagnosis code N13.6 be grouped
to MS-DRGs 691 and 692 when reported as a principal diagnosis to more
appropriately reflect resource consumption for patients who undergo an
ESWL procedure for obstructive urinary calculi while also receiving
treatment for urinary tract infections, we noted in the proposed rule
that the ICD-10-CM classification provides instruction to identify the
conditions reported with ICD-10-CM diagnosis code N13.6 as an
infection, and not as urinary stones. We stated that our clinical
advisors agreed with this classification and the corresponding MS-DRG
assignment for diagnosis code N13.6. In addition, our clinical advisors
noted that an ESWL procedure is a non-O.R. procedure and we stated that
they do not believe that this procedure is a valid indicator of
resource consumption for cases that involve an infection and
obstruction. We stated that our clinical advisors believe that the
resources used for a case that involves an infection and an obstruction
are clinically distinct from the cases that involve an obstruction only
in the course of treatment. Therefore, our clinical advisors did not
agree with the request to add ICD-10-CM diagnosis code N13.6 to the
list of principal diagnoses for MS-DRGs 691 and 692.
As also indicated in the proposed rule, we also performed various
analyses of claims data to evaluate this request. We analyzed claims
data from the September 2018 update of the FY 2018 MedPAR file for MS-
DRGs 689 and 690 to identify cases reporting ICD-10-CM diagnosis code
N13.6 as the principal diagnosis with and without an ESWL procedure.
Our findings are reflected in the table below.
[[Page 42103]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.050
For MS-DRG 689, we found a total of 68,020 cases with an average
length of stay of 4.8 days and average costs of $7,873. Of those 68,020
cases, we found 1,024 cases reporting pyonephrosis (ICD-10-CM diagnosis
code N13.6) as a principal diagnosis with an average length of stay of
6.1 days and average costs of $13,809. Of those 1,024 cases reporting
pyonephrosis (ICD-10-CM diagnosis code N13.6) as a principal diagnosis,
there were 6 cases that also reported an ESWL procedure with an average
length of stay of 14.2 days and average costs of $45,489. For MS-DRG
690, we found a total of 131,999 cases with an average length of stay
of 3.5 days and average costs of $5,692. Of those 131,999 cases, we
found 4,625 cases reporting pyonephrosis (ICD-10-CM diagnosis code
N13.6) as a principal diagnosis with an average length of stay of 3.6
days and average costs of $5,483. Of those 4,625 cases reporting
pyonephrosis (ICD-10-CM diagnosis code N13.6) as a principal diagnosis,
there were 24 cases that also reported an ESWL procedure with an
average length of stay of 4.8 days and average costs of $14,837.
As we stated in the proposed rule, the data indicate that the 1,024
cases reporting pyonephrosis (ICD-10-CM diagnosis code N13.6) as a
principal diagnosis in MS-DRG 689 have a longer average length of stay
(6.1 days versus 4.8 days) and higher average costs ($13,809 versus
$7,873) compared to all the cases in MS-DRG 689. The data also indicate
that the 6 cases reporting pyonephrosis (ICD-10-CM diagnosis code
N13.6) as a principal diagnosis that also reported an ESWL procedure
have a longer average length of stay (14.2 days versus 4.8 days) and
higher average costs ($45,489 versus $7,873) in comparison to all the
cases in MS-DRG 689. We found similar results for cases reporting
pyonephrosis (ICD-10-CM diagnosis code N13.6) as a principal diagnosis
with an ESWL procedure in MS-DRG 690, where the average length of stay
was slightly longer (4.8 days versus 3.5 days) and the average costs
were higher ($14,837 versus $5,692).
We then conducted further analysis for the six cases in MS-DRG 689
that reported a principal diagnosis of pyonephrosis with ESWL to
determine what factors may be contributing to the longer lengths of
stay and higher average costs. Specifically, we analyzed the MCC
conditions that were reported across the six cases. Our findings are
shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.051
We found seven secondary diagnosis MCC conditions reported among
the six cases in MS-DRG 689 that had a principal diagnosis of
pyonephrosis with ESWL. We stated that these MCC conditions appear to
have contributed to the longer lengths of stay and higher average costs
for those six cases. As shown in the table above, the overall
[[Page 42104]]
average length of stay for the cases reporting these conditions is 12.8
days with average costs of $39,069, which we stated in the proposed
rule is consistent with the average length of stay of 14.2 days and
average costs of $45,489 for the cases in MS-DRG 689 that had a
principal diagnosis of pyonephrosis with ESWL.
We then analyzed the 24 cases in MS-DRG 690 that reported a
principal diagnosis of pyonephrosis with ESWL to determine what factors
may be contributing to the longer lengths of stay and higher average
costs. Specifically, we analyzed the CC conditions that were reported
across the 24 cases. Our findings are shown in the table below.
BILLING CODE 4120-01-P
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[[Page 42105]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.053
BILLING CODE 4120-01-C
We found 37 secondary diagnosis CC conditions reported among the 24
cases in MS-DRG 690 that had a principal diagnosis of pyonephrosis with
ESWL. We stated that these CC conditions appear to have contributed to
the longer length of stay and higher average costs for those 24 cases.
As shown in the table above, the overall average length of stay for the
cases reporting these conditions is 6.6 days with average costs of
$18,173, which we stated is higher, although comparable, to the average
length of stay of 4.8 days and average costs of $14,837 for the cases
in MS-DRG 690 that had a principal diagnosis of pyonephrosis with ESWL.
We noted that it appears that 1 of the 24 cases had at least 4
secondary diagnosis CC conditions (F33.1, I48.1, I50.22, and J96.10)
with an average length of stay of 12 days and average costs of $55,034,
which we believed contributed greatly overall to the longer length of
stay and higher average costs for those secondary diagnosis CC
conditions reported among the 24 cases.
We stated that our clinical advisors agreed that the resource
consumption for the 6 cases in MS-DRG 689 and the 24 cases in MS-DRG
690 that reported a principal diagnosis of pyonephrosis with ESWL
cannot be directly attributed to ESWL and believe that it is the
secondary diagnosis MCC and CC conditions that are the major
contributing factors to the longer average length of stay and higher
average costs for these cases.
As also indicated in the proposed rule, we also analyzed claims
data for MS-DRGs 691 and 692 (Urinary Stones with ESW Lithotripsy with
CC/MCC and without CC/MCC, respectively) and MS-DRGs 693 and 694
(Urinary Stones without ESW Lithotripsy with MCC and without MCC,
respectively) to identify claims reporting pyonephrosis (ICD-10-CM
diagnosis code N13.6) as a secondary diagnosis. Our findings are shown
in the following table.
[[Page 42106]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.054
As shown in the table above, in MS-DRG 691, there was a total of
140 cases with an average length of stay of 3.9 days and average costs
of $11,997. Of those 140 cases, there were 3 cases that reported
pyonephrosis as a secondary diagnosis and an ESWL procedure with an
average length of stay of 8.0 days and average costs of $24,280. There
was a total of 124 cases found in MS-DRG 692 with an average length of
stay of 2.1 days and average costs of $8,326. We stated in the proposed
rule that there were no cases in MS-DRG 692 that reported pyonephrosis
as a secondary diagnosis with an ESWL procedure. For MS-DRG 693, there
was a total of 1,315 cases with an average length of stay of 5.1 days
and average costs of $9,668. Of those 1,315 cases, there were 16 cases
reporting pyonephrosis as a secondary diagnosis with an average length
of stay of 5.5 days and average costs of $9,962. For MS-DRG 694, there
was a total of 7,240 cases with an average length of stay of 2.7 days
and average costs of $5,263. Of those 7,240 cases, there were 89 cases
reporting pyonephrosis as a secondary diagnosis with an average length
of stay of 3.5 days and average costs of $6,678.
Similar to the process described above, we then conducted further
analysis for the three cases in MS-DRG 691 that reported a secondary
diagnosis of pyonephrosis with ESWL to determine what factors may be
contributing to the longer lengths of stay and higher average costs.
Specifically, we analyzed what other MCC and CC conditions were
reported across the three cases. We stated in the proposed rule that we
found no other MCC conditions reported for those three cases. Our
findings for the CC conditions reported for those three cases are shown
in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.055
We found six secondary diagnosis CC conditions reported among the
three cases in MS-DRG 691 that had a secondary diagnosis of
pyonephrosis with ESWL. We stated in the proposed rule that these CC
conditions appear to have contributed to the longer lengths of stay and
higher average costs for those three cases. As shown in the table
above, the overall average length of stay for the cases reporting these
conditions is 6.4 days with average costs of $20,181, which we stated
is more consistent with the average length of stay of 8.0 days and
average costs of $24,280 for the cases in MS-DRG 691 that had a
secondary diagnosis of pyonephrosis with ESWL.
We stated in the proposed rule that our clinical advisors believe
that the resource consumption for those three cases cannot be directly
attributed to ESWL and that it is the secondary diagnosis CC conditions
reported in addition to pyonephrosis, which is also designated as a CC
condition, that are the major contributing factors for the longer
average lengths of stay and higher average costs for these cases in MS-
DRG 691.
As indicated in the proposed rule, we did not conduct further
analysis for the 16 cases in MS-DRG 693 or the 89 cases in MS-DRG 694
that reported a secondary diagnosis of pyonephrosis because MS-DRGs 693
and 694 do not include ESWL procedures and the average length of stay
and average costs for those cases were consistent with the
[[Page 42107]]
data findings for all of the cases in their assigned MS-DRG.
As discussed earlier in this section and the proposed rule, the
requestor suggested that ICD-10-CM diagnosis code N13.6 should be
grouped to MS-DRGs 691 and 692 when reported as a principal diagnosis
because this grouping will more appropriately reflect resource
consumption for patients who undergo an ESWL procedure for obstructive
urinary calculi, while also receiving treatment for urinary tract
infections. However, as we stated in the proposed rule, based on the
results of the data analysis and input from our clinical advisors, we
believe that cases for which ICD-10-CM diagnosis code N13.6 was
reported as a principal diagnosis or as a secondary diagnosis with an
ESWL procedure should not be utilized as an indicator for increased
utilization of resources based on the performance of an ESWL procedure.
Rather, we stated that we believe that the resource consumption is more
likely the result of secondary diagnosis CC and/or MCC diagnosis codes.
In the proposed rule, with respect to the requestor's concern that
cases reporting ICD-10-CM diagnosis code T83.192A (Other mechanical
complication of indwelling ureteral stent, initial encounter) and an
ESWL procedure are not appropriately assigned and should be added to
the list of principal diagnoses for MS-DRGs 691 and 692 (Urinary Stones
with ESW Lithotripsy with CC/MCC and without CC/MCC, respectively), we
stated that our clinical advisors note that ICD-10-CM diagnosis code
T83.192A is not necessarily indicative of a patient having urinary
stones. As such, they did not support adding ICD-10-CM diagnosis code
T83.192A to the list of principal diagnosis codes for MS-DRGs 691 and
692.
As indicated in the proposed rule, we analyzed claims data to
identify cases reporting ICD-10-CM diagnosis code T83.192A as a
principal diagnosis with ESWL in MS-DRGs 698, 699, and 700 (Other
Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC/
MCC, respectively). Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.056
For MS-DRG 698, there was a total of 56,803 cases reported, with an
average length of stay of 6.1 days and average costs of $11,220. Of
these 56,803 cases, 35 cases reported ICD-10-CM diagnosis code T83.192A
as the principal diagnosis, with an average length of stay of 7.1 days
and average costs of $14,574. We stated that there were no cases that
reported an ESWL procedure with ICD-10-CM diagnosis code T83.192A as
the principal diagnosis in MS-DRG 698. For MS-DRG 699, there was a
total of 33,693 cases reported, with an average length of stay of 4.2
days and average costs of $7,348. Of the 33,693 cases in MS-DRG 699,
there were 63 cases that reported ICD-10-CM diagnosis code T83.192A as
the principal diagnosis, with an average length of stay of 4.1 days and
average costs of $7,652. We stated that there was only 1 case in MS-DRG
699 that reported ICD-10-CM diagnosis code T83.192A as the principal
diagnosis with an ESWL procedure, with an average length of stay of 3
days and average costs of $7,986. For MS-DRG 700, there was a total of
3,719 cases reported, with an average length of stay of 3 days and
average costs of $5,356. We stated that there were no cases that
reported ICD-10-CM diagnosis code T83.192A as the principal diagnosis
in MS-DRG 700. Of the 98 cases in MS-DRGs 698 and 699 that reported a
principal diagnosis of other mechanical complication of indwelling
ureteral stent (diagnosis code T83.192A), only 1 case also reported an
ESWL procedure. Based on the results of our data analysis and input
from our clinical advisors, we did not propose to add ICD-10-CM
diagnosis code T83.192A to the list of principal diagnosis codes for
MS-DRGs 691 and 692.
Comment: Commenters supported CMS' proposal to not add ICD-10-CM
diagnosis codes N13.6 and T83.192A to the list of principal diagnosis
codes for MS-DRGs 691 and 692. Commenters commended CMS for conducting
the analysis and continuing to make further refinements to the MS-DRGs.
The commenters stated that the proposal was reasonable, given the ICD-
10-CM diagnosis codes and the information provided.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to not add ICD-10-CM diagnosis codes N13.6 and
T83.192A to the list of principal diagnosis codes for MS-DRGs 691 and
692 in the ICD-10 MS-DRGs Version 37, effective October 1, 2019.
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule, in
connection with these requests, our clinical advisors recommended that
we evaluate the frequency with which ESWL is reported in the inpatient
setting across all the MS-DRGs. Therefore, we also analyzed claims data
from the September 2018 update of the FY 2018 MedPAR file to identify
the other MS-DRGs to which claims reporting an ESWL procedure were
reported. Our findings are shown in the following table.
BILLING CODE 4120-01-P
[[Page 42108]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.057
As noted in the proposed rule, our findings with respect to the
cases reporting an ESWL procedure in each of these MS-DRGs, as compared
to all cases in the applicable MS-DRG, are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.058
[[Page 42109]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.059
[[Page 42110]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.060
We stated in the proposed rule that our data analysis indicates
that, generally, the subset of cases reporting an ESWL procedure appear
to have a longer average length of stay and higher average costs when
compared to all the cases in their assigned MS-DRG. However, we noted
in the proposed rule that this same subset of cases also reported at
least one O.R. procedure and/or diagnosis designated as a CC or an MCC,
which our clinical advisors believe are contributing factors to the
longer average lengths of stay and higher average costs, with the
exception of the case assigned to MS-DRG 700, which is a medical MS-DRG
and has no CC or MCC conditions in the logic. Therefore, we stated that
our clinical advisors do not believe that cases reporting an ESWL
procedure should be considered as an indication of increased resource
consumption for inpatient hospitalizations.
Our clinical advisors also suggested that we evaluate the reporting
of ESWL procedures in the inpatient setting over the past few years. We
analyzed claims data for MS-DRGs 691 and 692 from the FY 2012 through
the FY 2016 MedPAR
[[Page 42111]]
files, which were used in our analysis of claims data for MS-DRG
reclassification requests effective for FY 2014 through FY 2018. We
note that the analysis findings shown in the following table reflect
ICD-9-CM, ICD-10-CM and ICD-10-PCS coded claims data.
[[Page 42112]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.061
BILLING CODE 4120-01-C
As indicated in the proposed rule, the data show a steady decline
in the number of cases reporting urinary stones with an ESWL procedure
for the
[[Page 42113]]
past 5 years. As previously noted, the total number of cases reporting
urinary stones with an ESWL procedure for MS-DRGs 691 and 692 based on
our analysis of the September 2018 update of the FY 2018 MedPAR file
was 264, which again is a decline from the prior year's figures. As
discussed throughout this section and in the proposed rule, an ESWL
procedure is a non-O.R. procedure which currently groups to medical MS-
DRGs 691 and 692. Therefore, we stated in the proposed rule that
because an ESWL procedure is a non-O.R. procedure and due to decreased
usage of this procedure in the inpatient setting for the treatment of
urinary stones, our clinical advisors believe that there is no longer a
clinical reason to subdivide the MS-DRGs for urinary stones (MS-DRGs
691, 692, 693, and 694) based on ESWL procedures.
Therefore, we proposed to delete MS-DRGs 691 and 692 and to revise
the titles for MS-DRGs 693 and 694 from ``Urinary Stones without ESW
Lithotripsy with MCC'' and ``Urinary Stones without ESW Lithotripsy
without MCC'', respectively to ``Urinary Stones with MCC'' and
``Urinary Stones without MCC'', respectively.
Comment: Commenters supported the proposal to delete MS-DRGs 691
and 692 and to revise the titles for MS-DRGs 693 and 694 from ``Urinary
Stones without ESW Lithotripsy with MCC'' and ``Urinary Stones without
ESW Lithotripsy without MCC'', respectively to ``Urinary Stones with
MCC'' and ``Urinary Stones without MCC''. Commenters agreed that
deleting MS-DRGs 691 and 692 and revising the titles for MS-DRGs 693
and 694 will better reflect utilization of resources for cases
reporting urinary stones with a EWSL procedure as well as provide for
appropriate payment for the procedures. The commenters noted that the
proposal was reasonable, given the data, the ICD-10-PCS procedure
codes, and information provided.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to delete MS-DRGs 691 and 692 and to revise the
titles for MS-DRGs 693 and 694 from ``Urinary Stones without ESW
Lithotripsy with MCC'' and ``Urinary Stones without ESW Lithotripsy
without MCC'', respectively to ``Urinary Stones with MCC'' and
``Urinary Stones without MCC'', in the ICD-10 MS-DRGs Version 37,
effective October 1, 2019.
8. MDC 12 (Diseases and Disorders of the Male Reproductive System):
Diagnostic Imaging of Male Anatomy
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19210 through 10211), we received a request to review four ICD-10-CM
diagnosis codes describing body parts associated with male anatomy that
are currently assigned to MDC 5 (Diseases and Disorders of the
Circulatory System) in MS-DRGs 302 and 303 (Atherosclerosis with MCC
and Atherosclerosis without MCC, respectively). The four codes are
listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.062
The requestor recommended that the four diagnosis codes shown in
this table be considered for assignment to MDC 12 (Diseases and
Disorders of the Male Reproductive System), consistent with other
diagnosis codes that include the male anatomy. However, the requestor
did not suggest a specific MS-DRG assignment within MDC 12.
As indicated in the proposed rule, we examined claims data from the
September 2018 update of the FY 2018 MedPAR file for MS-DRGs 302 and
303 to identify any cases reporting a diagnosis code for abnormal
radiologic findings on diagnostic imaging of the testicles. We did not
find any such cases.
We stated in the proposed rule that our clinical advisors reviewed
this request and determined that the assignment of diagnosis codes
R93.811, R93.812, R93.813, and R93.819 to MDC 5 in MS-DRGs 302 and 303
was a result of replication from ICD-9-CM diagnosis code 793.2
(Nonspecific (abnormal) findings on radiological and other examination
of other intrathoracic organs) which was assigned to those MS-DRGs.
Therefore, we stated that our clinical advisors supported reassignment
of these codes to MDC 12. Our clinical advisors agreed that this
reassignment is clinically appropriate because these diagnosis codes
are specific to the male anatomy, consistent with other diagnosis codes
in MDC 12 that include the male anatomy. Specifically, we stated in the
proposed rule that our clinical advisors suggested reassignment of the
four diagnosis codes to MS-DRGs 729 and 730 (Other Male Reproductive
System Diagnoses with CC/MCC and without CC/MCC, respectively).
Therefore, we proposed to reassign ICD-10-CM diagnosis codes R93.811,
R93.812, R93.813, and R93.819 from MDC 5 in MS-DRGs 302 and 303 to MDC
12 in MS-DRGs 729 and 730.
Comment: Commenters supported our proposed reassignment of ICD-10-
CM diagnosis codes R93.811, R93.812, R93.813, and R93.819 from MDC 5 to
MDC 12.
Response: We thank the commenters for their support. After
consideration of the public comments we received, we are finalizing our
proposal to reassign ICD-10-CM diagnosis codes R93.811, R93.812,
R93.813, and R93.819 from MDC 5 in MS-DRGs 302 and 303 to MDC 12 in MS-
DRGs 729 and 730.
9. MDC 14 (Pregnancy, Childbirth and the Puerperium): Reassignment of
Diagnosis Code O99.89
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19211 through 19214), we received a request to review the MS-DRG
assignment for cases reporting ICD-10-CM diagnosis code O99.89 (Other
specified diseases and conditions complicating pregnancy, childbirth
and the puerperium). The requestor stated that it is experiencing
[[Page 42114]]
MS-DRG shifts to MS-DRG 769 (Postpartum and Post Abortion Diagnoses
with O.R. Procedure) as a result of the new obstetric MS-DRG logic when
ICD-10-CM diagnosis code O99.89 is reported as a principal diagnosis in
the absence of a delivery code on the claim (to indicate the patient
delivered during that hospitalization), or when there is no other
secondary diagnosis code on the claim indicating that the patient is in
the postpartum period. As we stated in the proposed rule, according to
the requestor, claims reporting ICD-10-CM diagnosis code O99.89 as a
principal diagnosis for conditions described as occurring during the
antepartum period that are reported with an O.R. procedure are grouping
to MS-DRG 769. In the example provided by the requestor, ICD-10-CM
diagnosis code O99.89 was reported as the principal diagnosis, with
ICD-10-CM diagnosis codes N13.2 (Hydronephrosis with renal and ureteral
calculous obstruction) and Z3A.25 (25 weeks of gestation of pregnancy)
reported as secondary diagnoses with ICD-10-PCS procedure code 0T68DZ
(Dilation of right ureter with intraluminal device, endoscopic
approach), resulting in assignment to MS-DRG 769. The requestor noted
that, in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41212), we stated
``If there was not a principal diagnosis of abortion reported on the
claim, the logic asks if there was a principal diagnosis of an
antepartum condition reported on the claim. If yes, the logic then asks
if there was an O.R. procedure reported on the claim. If yes, the logic
assigns the case to one of the proposed new MS-DRGs 817, 818, or 819.''
In the requestor's example, there were not any codes reported to
indicate that the patient was in the postpartum period, nor was there a
delivery code reported on the claim. Therefore, the requestor suggested
that a more appropriate assignment for ICD-10-CM diagnosis code O99.89
may be MS-DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R.
Procedure with MCC, with CC and without CC/MCC, respectively).
As noted in the proposed rule, in the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41202 through 41216), we finalized our proposal to
restructure the MS-DRGs within MDC 14 (Pregnancy, Childbirth and the
Puerperium) which established new concepts for the GROUPER logic. We
stated that, as a result of the modifications made, ICD-10-CM diagnosis
code O99.89 was classified as a postpartum condition and is currently
assigned to MS-DRG 769 (Postpartum and Post Abortion Diagnoses with
O.R. Procedure) and MS-DRG 776 (Postpartum and Post Abortion Diagnoses
without O.R. Procedure) under the Version 36 ICD-10 MS-DRGs. As also
discussed and displayed in Diagram 2 in the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41212 through 41213), we explained in the proposed rule
that the logic asks if there was a principal diagnosis of a postpartum
condition reported on the claim. If yes, the logic then asks if there
was an O.R. procedure reported on the claim. If yes, the logic assigns
the case to MS-DRG 769. If no, the logic assigns the case to MS-DRG
776. Therefore, we stated in the proposed rule that the MS-DRG
assignment for the example provided by the requestor is grouping
accurately according to the current GROUPER logic.
As indicated in the proposed rule, we analyzed claims data from the
September 2018 update of the FY 2018 MedPAR file for cases reporting
diagnosis code O99.89 in MS-DRGs 769 and 776 as a principal diagnosis
or as a secondary diagnosis. Our findings are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.063
As shown in the table above, we found a total of 91 cases in MS-DRG
769 with an average length of stay of 4.3 days and average costs of
$11,015. Of these 91 cases, 7 cases reported ICD-10-CM diagnosis code
O99.89 as a principal diagnosis with an average length of stay of 5.6
days and average costs of $19,059, and 61 cases reported ICD-10-CM
diagnosis code O99.89 as a secondary diagnosis with an average length
of stay of 12.1 days and average costs of $41,717. For MS-DRG 776, we
found a total of 560 cases with an average length of stay of 3.1 days
and average costs of $5,332. Of these 560 cases, 57 cases reported ICD-
10-CM diagnosis code O99.89 as a principal diagnosis with an average
length of stay of 3.5 days and average costs of $6,439. We stated in
the proposed rule that there were no cases reporting ICD-10-CM
diagnosis code O99.89 as a secondary diagnosis in MS-DRG 776.
For MS-DRG 769, the data show that the 68 cases reporting ICD-10-CM
diagnosis code O99.89 as a principal or secondary diagnosis have a
longer average length of stay and higher average costs compared to all
the cases in MS-DRG 769. For MS-DRG 776, the data show that the 57
cases reporting a principal diagnosis of ICD-10-CM diagnosis code
O99.89 have a similar average length of stay compared to all the cases
in MS-DRG 776 (3.5 days versus 3.1 days) and average costs that are
consistent with the average costs of all cases in MS-DRG 776 ($6,439
versus $5,332).
We noted in the proposed rule that the description for ICD-10-CM
diagnosis code O99.89 ``Other specified diseases and conditions
complicating pregnancy, childbirth and the
[[Page 42115]]
puerperium'', describes conditions that may occur during the antepartum
period (pregnancy), during childbirth, or during the postpartum period
(puerperium). In addition, in the ICD-10-CM Tabular List of Diseases,
there is an inclusion term at subcategory O99.8- instructing users that
the reporting of any diagnosis codes in that subcategory is intended
for conditions that are reported in certain ranges of the
classification. Specifically, the inclusion term states ``Conditions in
D00-D48, H00-H95, M00-N99, and Q00-Q99.'' There is also an
instructional note to ``Use additional code to identify condition.'' As
a result, we stated that ICD-10-CM diagnosis code O99.89 may be
reported to identify conditions that occur during the antepartum period
(pregnancy), during childbirth, or during the postpartum period
(puerperium). However, it is not restricted to the reporting of
obstetric specific conditions only. In the example provided by the
requestor, ICD-10-CM diagnosis code O99.89 was reported as the
principal diagnosis with ICD-10-CM diagnosis code N13.2 (Hydronephrosis
with renal and ureteral calculous obstruction) as a secondary
diagnosis. In the proposed rule, we stated that ICD-10-CM diagnosis
code N13.2 is within the code range referenced earlier in this section
(M00-N99) and qualifies as an appropriate condition for reporting
according to the instruction.
As noted in the proposed rule and earlier, ICD-10-CM diagnosis code
O99.89 is intended to report conditions that occur during the
antepartum period (pregnancy), during childbirth, or during the
postpartum period (puerperium) and is not restricted to the reporting
of obstetric specific conditions only. However, because the diagnosis
code description includes three distinct obstetric related stages, we
stated in the proposed rule that it is not clear what stage the patient
is in by this single code. For example, upon review of subcategory
O99.8-, we recognized that the other ICD-10-CM diagnosis code sub-
subcategories are expanded to include unique codes that identify the
condition as occurring or complicating pregnancy, childbirth or the
puerperium. Specifically, sub-subcategory O99.81- (Abnormal glucose
complicating pregnancy, childbirth, and the puerperium) is expanded to
include the following ICD-10-CM diagnosis codes.
[GRAPHIC] [TIFF OMITTED] TR16AU19.064
These codes specifically identify at what stage the abnormal
glucose was a complicating condition. We stated in the proposed rule
that, because each code uniquely identifies a stage, the code can be
easily classified under MDC 14 as an antepartum condition (ICD-10-CM
diagnosis code O99.810), occurring during a delivery episode (ICD-10-CM
diagnosis code O99.814), or as a postpartum condition (ICD-10-CM
diagnosis code O99.815). The same is not true for ICD-10-CM diagnosis
code O99.89 because it includes all three stages in the single code.
Therefore, we examined the number and type of secondary diagnoses
reported with ICD-10-CM diagnosis code O99.89 as a principal diagnosis
for MS-DRGs 769 and 776 to identify how many secondary diagnoses were
related to other obstetric conditions and how many were related to non-
obstetric conditions.
[GRAPHIC] [TIFF OMITTED] TR16AU19.065
As shown in the table above, there was a total of 59 secondary
diagnoses reported with diagnosis code O99.89 as the principal
diagnosis for MS-DRG 769. Of those 59 secondary diagnoses, 13 were
obstetric (OB) related diagnosis codes (11 antepartum, 1 postpartum and
1 delivery) and 46 were non-obstetric (Non-OB) related diagnosis codes.
For MS-DRG 776, there was a total of 376 secondary diagnoses reported
with diagnosis code O99.89 as the principal diagnosis. Of those 376
secondary diagnoses, 113 were obstetric (OB) related diagnosis codes
(88 antepartum, 19 postpartum and 6 delivery) and 263 were non-
obstetric (Non-OB) related diagnosis codes.
The data reflect that, for MS-DRGs 769 and 776, the number of
secondary diagnoses identified as OB-related antepartum diagnoses is
greater than the number of secondary diagnoses identified as OB-related
postpartum diagnoses (99 antepartum diagnoses versus 20 postpartum
diagnoses). The data also indicate that, of the 435 secondary diagnoses
reported with ICD-10-CM diagnosis code O99.89 as the principal
diagnosis, 309 (71 percent) of those secondary diagnoses were non-OB-
related diagnosis codes. Because there was a greater number of
secondary
[[Page 42116]]
diagnoses identified as OB-related antepartum diagnoses compared to the
OB-related postpartum diagnoses within the postpartum MS-DRGs when ICD-
10-CM diagnosis code O99.89 was reported as the principal diagnosis, we
performed further analysis of diagnosis code O99.89 within the
antepartum MS-DRGs.
Under the Version 35 ICD-10 MS-DRGs, diagnosis code O99.89 was
classified as an antepartum condition and was assigned to MS-DRG 781
(Other Antepartum Diagnoses with Medical Complications). Therefore, we
also analyzed claims data for MS-DRGs 817, 818 and 819 (Other
Antepartum Diagnoses with O.R. Procedure with MCC, with CC and without
CC/MCC, respectively) and MS-DRGs 831, 832, and 833 (Other Antepartum
Diagnoses without O.R. Procedure with MCC, with CC and without CC/MCC,
respectively) for cases reporting ICD-10-CM diagnosis code O99.89 as a
secondary diagnosis. We noted in the proposed rule that the analysis
for the proposed FY 2020 ICD-10 MS-DRGs is based upon the September
2018 update of the FY 2018 MedPAR claims data that were grouped through
the ICD-10 MS-DRG GROUPER Version 36. Our findings are shown in this
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.066
As shown in the table above, we found a total of 63 cases in MS-DRG
817 with an average length of stay of 5.7 days and average costs of
$14,948. Of these 63 cases, there were 8 cases reporting ICD-10-CM
diagnosis code O99.89 as a secondary diagnosis with an average length
of stay of 10.8 days and average costs of $24,359. For MS-DRG 818, we
found a total of 78 cases with an average length of stay of 4.1 days
and average costs of $9,343. Of these 78 cases, there were 7 cases
reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis with
an average length of stay of 3.4 days and average costs of $14,182. For
MS-DRG 819, we found a total of 25 cases with an average length of stay
of 2.2 days and average costs of $5,893. Of these 25 cases, there was 1
case reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis
with an average length of stay of 1 day and average costs of $4,990.
For MS-DRG 831, we found a total of 747 cases with an average
length of stay of 4.8 days and average costs of $7,714. Of these 747
cases, there were 127 cases reporting ICD-10-CM diagnosis code O99.89
as a secondary diagnosis with an average length of stay of 5.4 days and
average costs of $7,050. For MS-DRG 832, we found a total of 1,142
cases with an average length of stay of 3.6 days and average costs of
$5,159. Of these 1,142 cases, there were 145 cases reporting ICD-10-CM
diagnosis code O99.89 as a secondary diagnosis with an average length
of stay of 4.2 days and average costs of $5,656. For MS-DRG 833, we
found a total of 537 cases with an average length of stay of 2.6 days
and average costs of $3,807. Of these 537 cases, there were 47 cases
reporting ICD-10-CM diagnosis code O99.89 as a secondary diagnosis with
an average length of stay of 2.6 days and average costs of $3,307.
As we stated in the proposed rule, overall, there was a total of
335 cases reporting ICD-10-CM diagnosis code O99.89 as a secondary
diagnosis within the antepartum MS-DRGs. Of those 335 cases, 16 cases
involved an O.R. procedure and 319 cases did not involve an O.R.
procedure. The data indicate that ICD-10-CM diagnosis code O99.89 is
reported more often as a secondary diagnosis within the antepartum MS-
DRGs (335 cases) than it is reported as a principal or secondary
diagnosis within the postpartum MS-DRGs (125 cases).
Further, we stated that our clinical advisors believe that, because
ICD-10-CM diagnosis code O99.89 can be reported during the antepartum
period (pregnancy), during childbirth, or during the postpartum period
(puerperium), there is not a clear clinical indication as to which set
of MS-DRGs (antepartum, delivery, or postpartum) would be the most
[[Page 42117]]
appropriate assignment for this diagnosis code. They recommended that
we collaborate with the National Center for Health Statistics (NCHS) at
the Centers for Disease Control and Prevention (CDC), in consideration
of a proposal to possibly expand ICD-10-CM diagnosis code O99.89 to
become a sub-subcategory that would result in the creation of unique
codes with a sixth digit character to specify which obstetric related
stage the patient is in. For example, under subcategory O99.8-, a
proposed new sub-subcategory for ICD-10-CM diagnosis code O99.89- could
include the following proposed new diagnosis codes:
O99.890 (Other specified diseases and conditions
complicating pregnancy);
O99.894 (Other specified diseases and conditions
complicating childbirth); and
O99.895 (Other specified diseases and conditions
complicating the puerperium).
We noted in the proposed rule that, if such a proposal to create
this new sub-subcategory and new diagnosis codes were approved and
finalized, it would enable improved data collection and more
appropriate MS-DRG assignment, consistent with the current MS-DRG
assignments of the existing obstetric related diagnosis codes. We
stated, for instance, a new diagnosis code described as ``complicating
pregnancy'' would be clinically aligned with the antepartum MS-DRGs, a
new diagnosis code described as ``complicating childbirth'' would be
clinically aligned with the delivery MS-DRGs, and a new diagnosis code
described as ``complicating the puerperium'' would be clinically
aligned with the postpartum MS-DRGs. (We note that all requests for new
diagnosis codes require that a proposal be approved for discussion at a
future ICD-10 Coordination and Maintenance Committee meeting.)
We stated in the proposed rule that, while our clinical advisors
could not provide a strong clinical justification for classifying ICD-
10-CM diagnosis code O99.89 as an antepartum condition versus as a
postpartum condition for the reasons described above, they did consider
the claims data to be informative as to how the diagnosis code is being
reported for obstetric patients. In analyzing both the postpartum MS-
DRGs and the antepartum MS-DRGs discussed earlier in this section, they
agreed that the data clearly show that ICD-10-CM diagnosis code O99.89
is reported more frequently as a secondary diagnosis within the
antepartum MS-DRGs than it is reported as a principal or secondary
diagnosis within the postpartum MS-DRGs.
Based on our analysis of claims data and input from our clinical
advisors, we proposed to reclassify ICD-10-CM diagnosis code O99.89
from a postpartum condition to an antepartum condition under MDC 14. We
stated in the proposed rule that, if finalized, ICD-10-CM diagnosis
code O99.89 would follow the logic as described in the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41212) which asks if there was a principal
diagnosis of an antepartum condition reported on the claim. If yes, the
logic then asks if there was an O.R. procedure reported on the claim.
If yes, the logic assigns the case to MS-DRG 817, 818, or 819. If no
(there was not an O.R. procedure reported on the claim), the logic
assigns the case to MS-DRG 831, 832, or 833.
Comment: Commenters supported the proposal to reclassify ICD-10-CM
diagnosis code O99.89 from a postpartum condition to an antepartum
condition under MDC 14. Commenters also agreed with the recommendation
to expand diagnosis code O99.89 to create a new sub-subcategory that
would result in the creation of unique codes with a sixth digit
character to specify which obstetric related stage the patient is in.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to reclassify ICD-10-CM diagnosis code O99.89
from a postpartum condition to an antepartum condition. For FY 2020,
cases reporting diagnosis code O99.89 will follow the logic as
previously described in the FY 2019 IPPS/LTCH PPS final rule (83 FR
41212) which asks if there was a principal diagnosis of an antepartum
condition reported on the claim. If yes, the logic then asks if there
was an O.R. procedure reported on the claim. If yes, the logic assigns
the case to MS-DRG 817, 818, or 819 (Other Antepartum Diagnoses with
O.R. Procedure with MCC, with CC and without CC/MCC, respectively). If
no (there was not an O.R. procedure reported on the claim), the logic
assigns the case to MS-DRG 831, 832, or 833 (Other Antepartum Diagnoses
without O.R. Procedure with MCC, with CC and without CC/MCC,
respectively).
10. MDC 22 (Burns): Skin Graft to Perineum for Burn
As discussed in the FY 2020 IPPS/LTCH PPS (84 FR 19214 through
19215), we received a request to add seven ICD-10-PCS procedure codes
that describe a skin graft to the perineum to MS-DRG 927 (Extensive
Burns Or Full Thickness Burns with MV >96 Hours with Skin Graft) and
MS-DRGs 928 and 929 (Full Thickness Burn with Skin Graft Or Inhalation
Injury with CC/MCC and without CC/MCC, respectively) in MDC 22. The
seven procedure codes are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.067
[[Page 42118]]
As indicated in the proposed rule, these seven procedure codes are
currently assigned to MS-DRGs 746 and 747 (Vagina, Cervix and Vulva
Procedures with CC/MCC and without CC/MCC, respectively). In addition,
we stated in the proposed rule that when reported in conjunction with a
principal diagnosis in MDC 21 (Injuries, Poisonings and Toxic Effects
of Drugs), these codes group to MS-DRGs 907, 908, and 909 (Other O.R.
Procedures For Injuries with MCC, with CC and without CC/MCC,
respectively), and when reported in conjunction with a principal
diagnosis in MDC 24 (Multiple Significant Trauma), these codes group to
MS-DRGs 957, 958, and 959 (Other O.R. Procedures For Multiple
Significant Trauma with MCC, with CC and without CC/MCC, respectively).
In addition, we stated that these procedures are designated as non-
extensive O.R. procedures and are assigned to MS-DRGs 987, 988 and 989
(Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) when a principal
diagnosis that is unrelated to the procedure is reported on the claim.
The requestor provided an example in which it identified one case
where a patient underwent debridement and split thickness skin graft
(STSG) to the perineum area (only), and expressed concern that the case
did not route to MS-DRGs 928 and 929 to recognize operating room
resources. (We note that the requestor did not specify the diagnosis
associated with this case nor the MS-DRG to which this one case was
grouped.) The requestor stated that providers may document various
terminologies for this anatomic site, including perineum, groin, and
buttocks crease; therefore, when a provider deems a burn to affect the
perineum as opposed to the groin or buttock crease, cases should route
to MS-DRGs which compensate hospitals for skin grafting operating room
resources. Therefore, the requestor recommended that the cited seven
ICD-10-PCS codes be added to the list of procedure codes for a skin
graft within MS-DRGs 927, 928, and 929.
As noted in the proposed rule, we reviewed this request by
analyzing claims data from the September 2018 update of the FY 2018
MedPAR file for cases reporting any of the above seven procedure codes
in MS-DRGs 746, 747, 907, 908, 909, 957, 958, 959, 987, 988, and 989.
Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.068
As shown in the table above, the overall volume of cases reporting
a skin graft to the perineum procedure is low, with a total of 6 cases
found. In MS-DRG 746, we found a total of 1,344 cases with an average
length of stay of 5 days and average costs of $11,847. The single case
reporting a skin graft to the perineum procedure in MS-DRG 746 had a
length of stay of 2 days and a cost of $10,830. In MS-DRG 907, we found
a total of 7,843 cases with an average length of stay of 10 days and
average costs of $28,919. The single case reporting a skin graft to the
perineum procedure in MS-DRG 907 had a length of stay of 8 days and a
cost of $21,909. In MS-DRG 908, we found a total of 9,286 cases with an
average length of stay of 5.3 days and average costs of $14,601. The
single case reporting a skin graft to the perineum procedure in MS-DRG
908 had a length of stay of 6 days and a cost of $8,410. In MS-DRG 988,
we found a total of 8,391 cases with an average length of stay of 5.7
days and average costs of $12,294. The 2 cases reporting a skin graft
to the perineum procedure in MS-DRG 988 had an average length of stay
of 3 days and average costs of $6,906. In MS-DRG 989, we found a total
of 1,551 cases with an average length of stay of 3.1 days and average
costs of $8,171. The single case reporting a skin graft to the perineum
procedure in MS-DRG 989 had a length of stay of 7 day and a cost of
$14,080. We stated that we found no cases reporting a skin graft to the
perineum procedure in MS-DRG 747, 909, 957, 958, 959, or 987. Further,
we stated that cases reporting a skin graft to the perineum procedure
generally had shorter length of stays and lower average costs than
those of their assigned MS-DRGs overall.
We then analyzed claims data for MS-DRGs 927, 928, and 929 (the MS-
DRGs to which the requestor suggested that these cases group) for all
cases reporting a procedure describing a skin graft to the perineum
listed in the table above to consider how the resources involved in the
cases reporting a procedure describing a skin graft to the perineum
compared to those of all cases in MS-DRGs 927, 928, and 929. Our
findings are shown in the following table.
[[Page 42119]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.069
As shown in the table above, for MS-DRG 927, we found a total of
146 cases with an average length of stay of 30.9 days and average costs
of $147,903; no cases reporting a skin graft to the perineum procedure
were found. For MS-DRG 928, we found a total of 1,149 cases with an
average length of stay of 15.7 days and average costs of $45,523. We
found 5 cases reporting a skin graft to the perineum procedure with an
average length of stay of 39 days and average costs of $64,041. For MS-
DRG 929, we found a total of 296 cases with an average length of stay
of 7.9 days and average costs of $21,474; and no cases reporting a skin
graft to the perineum procedure were found. We noted in the proposed
rule that none of the 5 cases reporting a skin graft to the perineum in
MS-DRGs 927, 928, and 929 reported a skin graft to the perineum
procedure as the only operating room procedure. Therefore, we stated in
the proposed rule that it is not possible to determine how much of the
operating room resources for these 5 cases were attributable to the
skin graft to the perineum procedure.
We further stated that our clinical advisors reviewed the claims
data described above and noted that none of the cases reporting the
seven identified procedure codes that grouped to MS-DRGs 746, 907, 908,
988, and 989 (listed in the table above) had a principal or secondary
diagnosis of a burn, which suggests that these skin grafts were not
performed to treat a burn. We stated that therefore, our clinical
advisors believe that it would not be appropriate for these cases that
report a skin graft to the perineum procedure to group to MS-DRGs 927,
928, and 929, which describe burns. Our clinical advisors state that
the seven ICD-10-PCS procedure codes that describe a skin graft to the
perineum are more clinically aligned with the other procedures in MS-
DRGs 746 and 747, to which they are currently assigned. Therefore, we
did not propose to add the seven identified procedure codes to MS-DRGs
927, 928, and 929 in the proposed rule.
Comment: Commenters did not support the proposal to not add ICD-10-
PCS procedure codes 0HR9X73, 0HR9X74, 0HR9XJ3, 0HR9XJ4, 0HR9XJZ,
0HR9XK3, and 0HR9XK4 that describe a skin graft to the perineum to MS-
DRGs 927, 928 and 929. The commenters noted that in the hypothetical
scenario in which the principal diagnoses code T21.37XA, third degree
burn of (female) perineum, or T21.36XA, third degree burn of the (male)
perineum, is coded as the principal diagnosis in combination with ICD-
10-PCS codes describing skin graft to the perineum, the case would
group to MS-DRG 934 (Full Thickness Burn without Skin Graft or
Inhalation Injury). A commenter stated that since CMS' DRG tables are
referenced nationally by other payers, the GROUPER logic should change
in spite of the fact that CMS's data reflects little or no volume for
these cases.
Response: We appreciate the commenters' feedback.
In response to public comments, our clinical advisors reviewed the
claims data in the September 2018 update of the FY 2018 MedPAR file and
again noted that none of the cases reporting the seven identified
procedure codes that grouped to MS-DRGs 746, 907, 908, 988, and 989 had
a principal or secondary diagnosis of a burn. Therefore, our clinical
advisors continue to believe that it would not be appropriate for these
cases that report a skin graft to the perineum procedure to group to
MS-DRGs 927, 928, and 929, which describe burns, in the absence of
MedPAR data indicating that these skin grafts are performed to treat
burns. Our clinical advisors believe that the seven ICD-10-PCS
procedure codes that describe a skin graft to the perineum are more
clinically aligned with the other procedures in MS-DRGs 746 and 747, to
which they are currently assigned. As additional claims data becomes
available, we can determine if future modifications to the assignment
of these procedure codes are warranted at a later date.
Therefore, after consideration of the public comments we received,
we are finalizing our proposal to maintain the current structure of MS-
DRGs 927, 928 and 929 for FY 2020.
11. MDC 23 (Factors Influencing Health Status and Other Contacts With
Health Services): Assignment of Diagnosis Code R93.89
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19216), we received a request to consider reassignment of ICD-10-CM
diagnosis code R93.89 (Abnormal finding on diagnostic imaging of other
specified body structures) from MDC 5 (Diseases and Disorders of the
Circulatory System) in MS-DRGs 302 and 303 (Atherosclerosis with and
without MCC and Atherosclerosis without MCC, respectively) to MDC 23
(Factors Influencing Health Status and Other Contact with Health
Services), consistent with other diagnosis codes that include abnormal
findings. However, the requestor did not suggest a specific MS-DRG
assignment within MDC 23.
As indicated in the proposed rule, we examined claims data from the
September 2018 update of the FY 2018 MedPAR file for MS-DRGs 302 and
303 and identified cases reporting diagnosis code R93.89. Our findings
are shown in the following table.
[[Page 42120]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.070
As shown in the table, for MS-DRG 302, there was a total of 3,750
cases with an average length of stay of 3.8 days and average costs of
$7,956. Of these 3,750 cases, there were 3 cases reporting abnormal
finding on diagnostic imaging of other specified body structures, with
an average length of stay 7.7 days and average costs of $10,818. For
MS-DRG 303, there was a total of 12,986 cases with an average length of
stay of 2.3 days and average costs of $4,920. Of these 12,986 cases,
there were 10 cases reporting abnormal finding on diagnostic imaging of
other specified body structures, with an average length of stay 2 days
and average costs of $3,416.
We stated in the proposed rule that our clinical advisors reviewed
this request and determined that the assignment of diagnosis code
R93.89 to MDC 5 in MS-DRGs 302 and 303 was a result of replication from
ICD-9-CM diagnosis code 793.2 (Nonspecific (abnormal) findings on
radiological and other examination of other intrathoracic organs),
which was assigned to those MS-DRGs. Therefore, they supported
reassignment of diagnosis code R93.89 to MDC 23. Our clinical advisors
agree this reassignment is clinically appropriate as it is consistent
with other diagnosis codes in MDC 23 that include abnormal findings
from other nonspecified sites. Specifically, we stated in the proposed
rule that our clinical advisors suggested reassignment of diagnosis
code R89.93 to MS-DRGs 947 and 948 (Signs and Symptoms with and without
MCC, respectively). Therefore, we proposed to reassign ICD-10-CM
diagnosis code R93.89 from MDC 5 in MS-DRGs 302 and 303 to MDC 23 in
MS-DRGs 947 and 948.
Comment: Commenters supported our proposed reassignment of ICD-10-
CM diagnosis code R93.89 from MDC 5 to MDC 23.
Response: We thank the commenters for their support. After
consideration of the public comments we received, we are finalizing our
proposal to reassign ICD-10-CM diagnosis code R93.89 from MDC 5 in MS-
DRGs 302 and 303 to MDC 23 in MS-DRGs 947 and 948.
12. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987
Through 989
a. Adding Procedure Codes and Diagnosis Codes Currently Grouping to 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 cases reporting these 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 use this information to
determine which procedure codes and diagnosis codes to examine.
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.
We also consider whether it would be more appropriate to move the
principal diagnosis codes into the MDC to which the procedure is
currently assigned. Based on the results of our review of the claims
data from the September 2018 update of the FY 2018 MedPAR file, in the
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19216 through 19224), we
proposed to move the cases reporting the procedures and/or principal
diagnosis codes described below 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 or procedure is assigned.
(1) Gastrointestinal Stromal Tumors With Excision of Stomach and Small
Intestine
As discussed in the proposed rule, gastrointestinal stromal tumors
(GIST) are tumors of connective tissue, and are currently assigned to
MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue). The ICD-10-CM diagnosis codes describing GIST are
listed in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.071
[[Page 42121]]
We stated in the proposed rule that during our review of cases that
group to MS-DRGs 981 through 983, we noted that when procedures
describing open excision of the stomach or small intestine (ICD-10-PCS
procedure codes 0DB60ZZ (Excision of stomach, open approach) and
0DB80ZZ (Excision of small intestine, open approach)) were reported
with a principal diagnosis of GIST, the cases group to MS-DRGs 981
through 983. These two excision codes are assigned to several MDCs, as
listed in the table below. We stated in the proposed rule that whenever
there is a surgical procedure reported on the claim, which is unrelated
to the MDC to which the case was assigned based on the principal
diagnosis, it results in an MS-DRG assignment to a surgical class
referred to as ``unrelated operating room procedures''.
[GRAPHIC] [TIFF OMITTED] TR16AU19.072
We first examined cases that reported a principal diagnosis of GIST
and ICD-10-PCS procedure code 0DB60ZZ or 0DB80ZZ that currently group
to MS-DRGs 981 through 983, as well as all cases in MS-DRGs 981 through
983. Our findings are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.073
Of the MDCs to which these gastrointestinal excision procedures are
currently assigned, we stated that our clinical advisors indicated that
cases with a principal diagnosis of GIST that also report an open
gastrointestinal excision procedure code would logically be assigned to
MDC 6 (Diseases and Disorders of the Digestive System). Within MDC 6,
ICD-10-PCS procedures codes 0DB60ZZ and 0DB80ZZ are currently assigned
to MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal
Procedures with MCC, CC, and without CC/MCC, respectively). To
understand how the resources associated with the subset of cases
reporting a principal diagnosis of GIST and procedure code 0DB60ZZ or
0DB80ZZ compare to those of cases in MS-DRGs 326, 327, and 328 as a
whole, we examined the average costs and average length of stay for all
cases in MS-DRGs 326, 327, and 328. Our findings are shown in the table
below.
[[Page 42122]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.074
In the proposed rule, we stated that our clinical advisors reviewed
these data and noted that the average length of stay and average costs
of this subset of cases were similar to those of cases in MS-DRGs 326,
327, and 328 in MDC 6. To consider whether it was appropriate to move
the GIST diagnosis codes from MDC 8, we examined the other procedure
codes reported for cases that report a principal diagnosis of GIST and
noted that almost all of the O.R. procedures most frequently reported
were assigned to MDC 6 rather than MDC 8. Further, we stated that our
clinical advisors believe that, given the similarity in resource use
between this subset of cases and cases in MS-DRGs 326, 327, and 328,
and that the GIST diagnosis codes are gastrointestinal in nature, they
would be more appropriately assigned to MS-DRGs 326, 327, and 328 in
MDC 6 than their current assignment in MDC 8. Therefore, we proposed to
move the GIST diagnosis codes listed above from MDC 8 to MDC 6 within
MS-DRGs 326, 327, and 328. We stated that, under our proposal, cases
reporting a principal diagnosis of GIST would group to MS-DRGs 326,
327, and 328.
We note that every diagnosis code is assigned to a medical MS-DRG
to define the logic of the MS-DRG either as a principal or secondary
diagnosis. We also note that, as discussed in section II.F.13.a.,
certain procedure codes may affect the MS-DRG and result in a surgical
MS-DRG assignment. We are clarifying that under this proposal, cases
reporting a principal diagnosis of GIST would group to MS-DRGs 326,
327, and 328 only in the presence of a surgical procedure assigned to
MS-DRGs 326, 327, and 328; in the absence of a surgical procedure,
cases with a principal diagnosis of GIST would group to MS-DRGs 374,
375, and 376 (Digestive Malignancy with MCC, with CC, and without CC/
MCC, respectively), which is the medical MS-DRG that contains digestive
malignancies, and to which they would be assigned within MDC 6. We
refer the reader to the ICD-10 MS-DRG Version 36 Definitions Manual for
complete documentation of the logic for case assignment to surgical MS-
DRGs 326, 327, and 328 and to medical MS-DRGs 374, 375, and 376 (which
is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html).
Comment: Several commenters supported our proposal. A commenter
stated that placing the ICD-10-CM diagnosis codes describing GIST in
the proposed DRGs would better reflect the gastrointestinal nature of
the underlying GIST disease and the resource use associated with this
subset of cases relative to others within the same MDC/DRG groupings.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to move the GIST diagnosis codes listed above
from MDC 8 to MDC 6, with the additional clarification that in the
absence of a surgical procedure, these cases are assigned to the
medical MS-DRGs 374, 375 and 376 under the ICD-10 MS-DRGs Version 37,
effective October 1, 2019. As a result, cases reporting a principal
diagnosis of GIST and a procedure code that is assigned to MS-DRGs 326,
327, and 328 (such as ICD-10-PCS codes 0DB60ZZ and 0DB80ZZ) will group
to MS-DRGs 326, 327, and 328.
(2) Peritoneal Dialysis Catheter Complications
As discussed in the proposed rule, during our review of the cases
currently grouping to MS-DRGs 981-983, we noted that cases reporting a
principal diagnosis of complications of peritoneal dialysis catheters
with procedure codes describing removal, revision, and/or insertion of
new peritoneal dialysis catheters group to MS-DRGs 981 through 983. The
ICD-10-CM diagnosis codes that describe complications of peritoneal
dialysis catheters, listed in the table below, are assigned to MDC 21
(Injuries, Poisonings and Toxic Effects of Drugs). These principal
diagnoses are frequently reported with the procedure codes describing
removal, revision, and/or insertion of new peritoneal dialysis
catheters.
[[Page 42123]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.075
The procedure codes in the table below describe removal, revision,
and/or insertion of new peritoneal dialysis catheters or revision of
synthetic substitutes and are currently assigned to MDC 6 (Diseases and
Disorders of the Digestive System) in MS-DRGs 356, 357, and 358 (Other
Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively).
[GRAPHIC] [TIFF OMITTED] TR16AU19.076
As indicated in the proposed rule, we examined the claims data from
the September 2018 update of the FY 2018 MedPAR file for the average
costs and length of stay for cases that report a principal diagnosis of
complications of peritoneal dialysis catheters with a procedure
describing removal, revision, and/or insertion of new peritoneal
dialysis catheters or revision of synthetic substitutes. Our findings
are shown in the table below. We noted in the proposed rule that we did
not find any such cases in MS-DRG 983.
[GRAPHIC] [TIFF OMITTED] TR16AU19.077
[[Page 42124]]
We stated that our clinical advisors indicated that, within MDC 21,
the procedures describing removal, revision, and/or insertion of new
peritoneal dialysis catheters or revision of synthetic substitutes most
suitably group to MS-DRGs 907, 908, and 909, which contain all
procedures for injuries that are not specific to the hand, skin, and
wound debridement. To determine how the resources for this subset of
cases compared to cases in MS-DRGs 907, 908, and 909 as a whole, we
examined the average costs and length of stay for cases in MS-DRGs 907,
908, and 909. Our findings are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.078
Further, we stated in the proposed rule that our clinical advisors
considered these data and noted that the average costs and length of
stay for this subset of cases, most of which group to MS-DRG 981, are
lower than the average costs and length of stay for cases of the same
severity level in MS-DRGs 907. However, we further stated that our
clinical advisors believe that the procedures describing removal,
revision, and/or insertion of new peritoneal dialysis catheters or
revision of synthetic substitutes are clearly related to the principal
diagnosis codes describing complications of peritoneal dialysis
catheters and, therefore, it is clinically appropriate for the
procedures to group to the same MS-DRGs as the principal diagnoses.
Therefore, we proposed to add the eight procedure codes listed in the
table above that describe removal, revision, and/or insertion of new
peritoneal dialysis catheters or revision of synthetic substitutes to
MDC 21 (Injuries, Poisonings & Toxic Effects of Drugs) in MS-DRGs 907,
908, and 909. As indicated in the proposed rule, under this proposal,
cases reporting a principal diagnosis of complications of peritoneal
dialysis catheters with a procedure describing removal, revision, and/
or insertion of new peritoneal dialysis catheters or revision of
synthetic substitutes would group to MS-DRGs 907, 908, and 909.
Comment: Commenters supported our proposal to add the eight
procedure codes listed in the table above that describe removal,
revision, and/or insertion of new peritoneal dialysis catheters or
revision of synthetic substitutes to MDC 21.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the eight procedure codes listed in the
table above that describe removal, revision, and/or insertion of new
peritoneal dialysis catheters or revision of synthetic substitutes to
MDC 21.
(3) Bone Excision With Pressure Ulcers
As discussed in the proposed rule, during our review of the cases
that group to MS-DRGs 981 through 983, we noted that when procedures
describing excision of the sacrum, pelvic bones, and coccyx (ICD-10-PCS
procedure codes 0QB10ZZ (Excision of sacrum, open approach), 0QB20ZZ
(Excision of right pelvic bone, open approach), 0QB30ZZ (Excision of
left pelvic bone, open approach), and 0QBS0ZZ (Excision of coccyx, open
approach)) are reported with a principal diagnosis of pressure ulcers
in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and
Breast), the cases group to MS-DRGs 981 through 983. As noted in the
proposed rule, the procedures describing excision of the sacrum, pelvic
bones, and coccyx group to several MDCs, which are listed in the table
below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.079
We stated in the proposed rule that, when cases reporting procedure
codes describing excision of the sacrum, pelvic bones, and coccyx
report a principal diagnosis from MDC 9, the ICD-10-CM diagnosis codes
that are most frequently reported as principal diagnoses are listed
below.
[[Page 42125]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.080
As indicated in the proposed rule, we examined the claims data from
the September 2018 update of the FY 2018 MedPAR file for the average
costs and length of stay for cases that report procedures describing
excision of the sacrum, pelvic bones, and coccyx in conjunction with a
principal diagnosis of pressure ulcers.
[GRAPHIC] [TIFF OMITTED] TR16AU19.081
We stated that our clinical advisors indicated that, given the
nature of these procedures, they could not be appropriately assigned to
the specific surgical MS-DRGs within MDC 9, which are: Skin graft; skin
debridement; mastectomy for malignancy; and breast biopsy, local
excision, and other breast procedures. Therefore, we stated in the
proposed rule that our clinical advisors believe that these procedures
would most suitably group to MS-DRGs 579, 580, and 581 (Other Skin,
Subcutaneous Tissue and Breast Procedures with MCC, with CC, and
without CC/MCC, respectively), which contain procedures assigned to MDC
9 that do not fit within the specific surgical MS-DRGs in MDC 9.
Therefore, as indicated in the proposed rule, we examined the claims
data for the average length of stay and average costs for MS-DRGs 579,
580, and 581 in MDC 9. Our findings are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.082
We stated that our clinical advisors reviewed these data and noted
that, in this subset of cases, most cases group to MS-DRGs 981 and 982
and have greater average length of stay and average costs than those
cases of the same severity level in MS-DRGs 579 and 580. We further
stated that the smaller number of cases that group to MS-DRG 983 have
lower average costs than cases in MS-DRG 581. However, we stated that
our clinical advisors believe that the procedure codes describing
excision of the sacrum, pelvic bones, and coccyx are clearly related to
the principal diagnosis codes describing pressure ulcers, as these
procedures would be performed to treat pressure ulcers in the
[[Page 42126]]
sacrum, hip, and buttocks regions. Therefore, we stated in the proposed
rule that our clinical advisors believe that it is clinically
appropriate for the procedures to group to the same MS-DRGs as the
principal diagnoses. Therefore, we proposed to add the ICD-10-PCS
procedure codes describing excision of the sacrum, pelvic bones, and
coccyx to MDC 9 in MS-DRGs 579, 580, and 581. As noted in the proposed
rule, under this proposal, cases reporting a principal diagnosis in MDC
9 (such as pressure ulcers) with a procedure describing excision of the
sacrum, pelvic bones, and coccyx would group to MS-DRGs 579, 580, and
581.
Comment: Commenters did not support our proposal to add the ICD-10-
PCS procedure codes describing excision of the sacrum, pelvic bones,
and coccyx to MDC 9 in MS-DRGs 579, 580, and 581. Commenters stated
that it is not appropriate for procedures performed on muscles to be
grouped to MS-DRGs for skin and subcutaneous tissues. A commenter
stated that once a pressure ulcer extends into the muscle or bone, it
is no longer a disease of the skin and subcutaneous tissue, but a
disease of the musculoskeletal tissue.
Response: We note that all pressure ulcers, including those that
extend to the muscle or bone, are assigned to MDC 9, so that for
purposes of DRG assignment, the GROUPER categorizes all pressure ulcers
as diseases of the skin and subcutaneous tissue. As noted in the
proposed rule, our clinical advisors believe that these procedures
would be performed to treat pressure ulcers in the sacrum, hip, and
buttocks regions. The surgical MS-DRGs within each MDC that include
`other' procedures are intended to encompass procedures that, while not
directly related to the MDC, can and do occur with principal diagnoses
in that MDC with sufficient frequency.
Comment: A commenter stated that they recognize that CMS may have
selected MDC 9 as it includes all pressure ulcers, but recommended that
CMS consider MDC 8 instead. A commenter stated that if the debridement
is performed to the level of the soft tissue, then the case should
group to MS-DRGs 501, 502, and 503 (Soft tissue procedures with MCC,
with CC, and without CC/MCC respectively). The commenter stated that
they believe it should be the procedure that determines the MDC and DRG
to which the case groups.
Response: As explained in the proposed rule, when conducting the
review of procedures producing assignment to MS-DRGs 981 through 983 or
MS-DRGs 987 through 989, the objective is to 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, or to move the principal
diagnosis codes to the MDC in which the procedure falls. During this
analysis, we noted that procedures describing excision of the sacrum,
pelvic bones, and coccyx group to MS-DRGs 981 through 983 when reported
with a principal diagnosis in MDC 9. If we were to add these procedures
to MDC 8, that would not address the matter of these procedures
producing assignment to MS-DRGs 981 through 983. Since our clinical
advisors believe that these procedures are clearly related to the
principal diagnoses assigned to MDC 9, our clinical advisors believe
that it is appropriate to add these procedures to MDC 9. We also note
that, with the exception of the pre-MDC, assignment to MDCs is driven
by the principal diagnosis and not by the procedure. Therefore, it is
inconsistent with GROUPER logic to determine the MDC based on the
procedure.
After consideration of the public comments we received, we are
finalizing our proposal to add the ICD-10-PCS procedure codes
describing excision of the sacrum, pelvic bones, and coccyx to MDC 9 in
MS-DRGs 579, 580, and 581.
(4) Lower Extremity Muscle and Tendon Excision
As discussed in the proposed rule, during the review of the cases
that group to MS-DRGs 981 through 983, we noted that when several ICD-
10-PCS procedure codes describing excision of lower extremity muscles
and tendons are reported in conjunction with ICD-10-CM diagnosis codes
in MDC 10 (Endocrine, Nutritional and Metabolic Diseases and
Disorders), the cases group to MS-DRGs 981 through 983. As indicated in
the proposed rule, these ICD-10-PCS procedure codes are listed in the
table below, and are assigned to several MS-DRGs, which are also listed
below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.083
[[Page 42127]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.084
As noted in the proposed rule, the ICD-10-CM diagnosis codes in MDC
10 that are most frequently reported as the principal diagnosis with a
procedure describing excision of lower extremity muscles and tendons
are listed in the table below. We stated in the proposed rule that the
combination indicates debridement procedures for more complex diabetic
ulcers.
[GRAPHIC] [TIFF OMITTED] TR16AU19.085
To understand the resource use for the subset of cases reporting
procedure codes describing excision of lower extremity muscles and
tendons that are currently grouping to MS-DRGs 981 through 983, as
indicated in the proposed rule, we examined claims data for the average
length of stay and average costs for these cases. Our findings are
shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.086
We stated in the proposed rule that our clinical advisors examined
cases reporting procedures describing excision of lower extremity
muscles and tendons with a principal diagnosis in the MS-DRGs within
MDC 10 and determined that these cases would most suitably group to MS-
DRGs 622, 623, and 624 (Skin Grafts and Wound Debridement for
Endocrine, Nutritional and Metabolic Disorders with MCC, with CC, and
without CC/MCC, respectively). Therefore, we examined the average
length of stay and average costs for cases assigned to MS-DRGs 622,
623, and 624. Our findings are shown in the table below.
[[Page 42128]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.087
As indicated in the proposed rule, our clinical advisors reviewed
these data and noted that most of the cases reporting procedures
describing excision of lower extremity muscles and tendons group to MS-
DRGs 981 and 982. For these cases, the average length of stay and
average costs are lower than those of cases that currently group to MS-
DRGs 622 and 623. However, our clinical advisors believe that these
procedures are clearly related to the principal diagnoses in MDC 10, as
they would be performed to treat skin-related complications of diabetes
and, therefore, it is clinically appropriate for the procedures to
group to the same MS-DRGs as the principal diagnoses. Therefore, we
proposed to add the procedure codes listed previously describing
excision of lower extremity muscles and tendons to MDC 10. We stated in
the proposed rule that, under our proposal, cases reporting these
procedure codes with a principal diagnosis in MDC 10 would group to MS-
DRGs 622, 623, and 624.
Comment: A commenter supported our proposal to add the procedure
codes describing excision of lower extremity muscles and tendons to MDC
10.
Response: We appreciate the commenter's support.
Comment: Other commenters did not support our proposal to add the
procedure codes describing excision of lower extremity muscles and
tendons to MDC 10. Commenters stated that muscle and tendon procedures
are more resource intensive than skin procedures. A commenter stated
that cases involving tendon excisions should group to MS-DRGs 501, 502,
and 503 in MDC 8, and that cases involving excisions of muscle group to
MS-DRGs 515, 516, and 517 in MDC 8. This commenter stated that the
procedure should drive the MDC and DRGs to which the case is assigned.
Response: Our clinical advisors believe that these procedures are
clearly related to the principal diagnoses assigned to MDC 10 with
which they are most frequently reported (that is, codes describing
diabetes with complications), and are therefore appropriately assigned
to MDC 10, and specifically to MS-DRGs 622, 623, and 624, which
describe wound debridement. We also note that, with the exception of
the pre-MDC, assignment to MDCs is driven by the principal diagnosis
and not by the procedure. Therefore, it is inconsistent with the
GROUPER logic to determine the MDC based on the procedure.
After consideration of the public comments we received, we are
finalizing our proposal to add the procedure codes listed previously
describing excision of lower extremity muscles and tendons to MDC 10.
(5) Kidney Transplantation Procedures
As discussed in the proposed rule, during our review of the cases
that group to MS-DRGs 981 through 983, we noted that when procedures
describing transplantation of kidneys (ICD-10-PCS procedure codes
0TY00Z0 (Transplantation of right kidney, allogeneic, open approach)
and 0TY10Z0 (Transplantation of left kidney, allogeneic, open
approach)) are reported in conjunction with ICD-10-CM diagnosis codes
in MDC 5 (Diseases and Disorders of the Circulatory System), the cases
group to MS-DRGs 981 through 983. We stated that the ICD-10-CM
diagnosis codes in MDC 5 that are reported with the kidney
transplantation codes are I13.0 (Hypertensive heart and chronic kidney
disease with heart failure and with stage 1 through stage 4 chronic
kidney disease) and I13.2 (Hypertensive heart and chronic kidney
disease with heart failure and with stage 5 chronic kidney disease),
which group to MDC 5. Procedure codes describing transplantation of
kidneys are assigned to MS-DRG 652 (Kidney Transplant) in MDC 11. As
indicated in the proposed rule, we examined claims data to identify the
average length of stay and average costs for cases reporting procedure
codes describing transplantation of kidneys with a principal diagnosis
in MDC 5, which are currently grouping to MS-DRGs 981 through 983. Our
findings are shown in the table below. We stated in the proposed rule
that we did not find any such cases in MS-DRG 983.
[GRAPHIC] [TIFF OMITTED] TR16AU19.088
We further stated that our clinical advisors examined the MS-DRGs
within MDC 5 and indicated that, given the nature of the procedures
compared to the specific surgical procedures contained in the other
surgical MS-
[[Page 42129]]
DRGs in MDC 5, they could not be appropriately assigned to any of the
specific surgical MS-DRGs. Therefore, they determined that these cases
would most suitably group to MS-DRG 264 (Other Circulatory System O.R.
Procedures), which contains a broader range of procedures related to
MDC 5 diagnoses. As indicated in the proposed rule, we examined claims
data to determine the average length of stay and average costs for
cases assigned to MS-DRG 264. We found a total of 10,073 cases, with an
average length of stay of 9.3 days and average costs of $22,643.
Our clinical advisors reviewed these data and noted that the
average costs for cases reporting transplantation of kidney with a
diagnosis from MDC 5 are similar to the average costs of cases in MS-
DRG 264 ($22,643 in MS-DRG 264 compared to $25,340 in MS-DRG 981),
while the average length of stay is shorter than that of cases in MS-
DRG 264 (9.3 days in MS-DRG 264 compared to 6.8 days for this subset of
cases in MS-DRG 981). We stated in the proposed rule that our clinical
advisors noted that ICD-10-CM diagnosis codes describing hypertensive
heart and chronic kidney disease without heart failure (I13.10
(Hypertensive heart and chronic kidney disease without heart failure,
with stage 1 through stage 4 chronic kidney disease, or unspecified
chronic kidney disease) and I13.11 (Hypertensive heart and chronic
kidney disease without heart failure, with stage 5 chronic kidney
disease, or end stage renal disease group) group to MS-DRG 652 (Kidney
Transplant) in MDC 11 (Diseases and Disorders of the Kidney and Urinary
Tract)). Our clinical advisors also noted that the counterpart codes
describing hypertensive heart and chronic kidney disease with heart
failure are as related to the kidney transplantation codes as the codes
without heart failure, but because the codes with heart failure group
to MDC 5, cases reporting a kidney transplant procedure with a
diagnosis code of hypertensive heart and chronic kidney disease with
heart failure currently group to MS-DRGs 981 through 983. Therefore, we
proposed to add ICD-10-PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS-
DRG 264 in MDC 5. We stated in the proposed rule that, under this
proposal, cases reporting a principal diagnosis in MDC 5 with a
procedure describing kidney transplantation would group to MS-DRG 264
in MDC 5. We also noted in the proposed rule that, because MDC 5 covers
the circulatory system and kidney transplants generally group to MDC
11, we invited public comments on whether the procedure codes should
instead continue to group to MS-DRGs 981 through 983.
Comment: Commenters opposed our proposal to add ICD-10-PCS
procedure codes 0TY00Z0 and 0TY10Z0 to MS-DRG 264 in MDC 5. A commenter
stated that the proposed relative weight for MS-DRG 652, where most
kidney transplant procedures are grouped, is 3.384, while the proposed
weight for MS-DRG 264 is 3.2357. Some commenters stated that this
proposal would reduce the reimbursement for kidney transplantation of
recipients with serious cardiac conditions by 33 percent. Commenters
stated that cases that involve both chronic kidney disease and heart
failure should not be paid less than cases that involve patients
without serious comorbid conditions. Commenters suggested that CMS
instead assign these cases to MDC 652, noting that the length of stay
for the vast majority of kidney transplant cases involving serious
cardiac conditions approximates the length of stay for kidney
transplants in general. Commenters also stated that assigning all
kidney transplant cases to the same MS-DRG simplifies collection of
cost data, stating that when cases are split among several MS-DRG
``families'' it complicates the analysis required to determine whether
additional severity-based MS-DRGs would be appropriate. Commenters
stated that if it was not possible to assign these cases to MS-DRG 652,
then the cases should remain in MS-DRGs 981 through 983. Commenters
disagreed with assigning these cases to a circulatory DRG because the
procedure is performed on the urinary system.
Response: We appreciate the comments and concerns raised on our
proposal. Our clinical advisors generally believe that it is preferable
to assign these cases to a discrete MS-DRG within the GROUPER rather
than allowing them to continue to group to MS-DRGs 981 through 983,
which do not contain a group of clinically coherent principal
diagnoses, but instead consist of cases from various MDCs that are
unrelated to one another. However, we believe it would be appropriate
to take additional time to review the concerns raised by commenters
consistent with the President's recent Executive Order on Advancing
American Kidney Health (see https://www.whitehouse.gov/presidential-actions/executive-order-advancing-american-kidney-health/). Therefore,
after consideration of public comments, we are not finalizing our
proposal to add ICD-10-PCS procedure codes 0TY00Z0 and 0TY10Z0 to MS-
DRG 264 in MDC 5. Accordingly, cases reporting a principal diagnosis in
MDC 5 with a procedure describing kidney transplantation (i.e.,
procedure code 0TY00Z0 or 0TY10Z0) will continue to group to MS-DRGs
981 through 983 under the ICD-10 MS-DRGs Version 37, effective October
1, 2019.
(6) Insertion of Feeding Device
As discussed in the proposed rule, during our review of the cases
that group to MS-DRGs 981 through 983, we noted that when ICD-10-PCS
procedure code 0DH60UZ (Insertion of feeding device into stomach, open
approach) is reported with ICD-10-CM diagnosis codes assigned to MDC 1
(Diseases and Disorders of the Nervous System) or MDC 10 (Endocrine,
Nutritional and Metabolic Diseases and Disorders), the cases group to
MS-DRGs 981 through 983. ICD-10-PCS procedure code 0DH60UZ is currently
assigned to MDC 6 (Diseases and Disorders of the Digestive System) in
MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures)
and MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) in MS-DRGs
907, 908, and 909 (Other O.R. Procedures for Injuries). We stated in
the proposed rule that we also noticed that: (1) When ICD-10-PCS
procedure code 0DH60UZ is reported with a principal diagnosis in MDC 1,
the ICD-10-CM diagnosis codes reported with this procedure code
describe cerebral infarctions of various etiology and anatomic
locations and resulting complications; and (2) when ICD-10-PCS
procedure code 0DH60UZ is reported with a principal diagnosis in MDC
10, the ICD-10-CM diagnosis codes reported with this procedure code
pertain to dehydration, failure to thrive, and various forms of
malnutrition.
As indicated in the proposed rule, we examined claims data to
identify the average length of stay and average costs for cases in MS-
DRGs 981 through 983 reporting ICD-10-PCS procedure code 0DH60UZ in
conjunction with a principal diagnosis from MDC 1 or MDC 10. Our
findings are shown in the table below.
[[Page 42130]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.089
In the proposed rule we stated that our clinical advisors
determined that the feeding tube procedure was related to specific
diagnoses within MDC 1 and MDC 10 and, therefore, could be assigned to
both MDCs. Therefore, they reviewed the MS-DRGs within MDC 1 and MDC
10. We stated that they determined that the most suitable MS-DRG
assignment within MDC 1 would be MS-DRGs 040, 041, and 042 (Peripheral,
Cranial Nerve and Other Nervous System Procedures with MCC, with CC or
Peripheral Neurostimulator, and without CC/MCC, respectively), which
contain procedures assigned to MDC 1 that describe insertion of devices
into anatomical areas that are not part of the nervous system. Our
clinical advisors determined that the most suitable MS-DRG assignment
within MDC 10 would be MS-DRGs 628, 629, and 630 (Other Endocrine,
Nutritional and Metabolic O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively), which contain the most clinically
similar procedures assigned to MDC 10, such as those describing
insertion of infusion pump into subcutaneous tissue and fascia.
Therefore, we examined claims data to identify the average length of
stay and average costs for cases assigned to MDC 1 in MS-DRGs 040, 041,
and 042 and MDC 10 in MS-DRGs 628, 629, and 630. Our findings are shown
in the tables below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.090
[GRAPHIC] [TIFF OMITTED] TR16AU19.091
[[Page 42131]]
Our clinical advisors reviewed these data and noted that the
average length of stay and average costs for the subset of cases
reporting ICD-10-PCS procedure code 0DH60UZ with a principal diagnosis
assigned to MDC 1 are higher than those cases in MS-DRGs 040, 041, and
042. For example, the cases reporting ICD-10-PCS procedure code 0DH60UZ
and a principal diagnosis in MDC 1 that currently group to MS-DRG 981
have an average length of stay of 19.3 days and average costs of
$40,598, while the cases in MS-DRG 040 have an average length of stay
of 10.2 days and average costs of $27,096. We stated in the proposed
rule that our clinical advisors noted that the average length of stay
and average costs for the subset of cases reporting ICD-10-PCS
procedure code 0DH60UZ with a principal diagnosis assigned to MDC 10
are more closely aligned with those cases in MS-DRGs 628, 629, and 630.
We stated that in both cases, our clinical advisors believe that the
insertion of feeding device is clearly related to the principal
diagnoses in MDC 1 and MDC 10 and, therefore, it is clinically
appropriate for the procedures to group to the same MS-DRGs as the
principal diagnoses. Therefore, we proposed to add ICD-10-PCS procedure
code 0DH60UZ to MDC 1 and MDC 10. We stated in the proposed rule that,
under this proposal, cases reporting procedure code 0DH60UZ with a
principal diagnosis in MDC 1 would group to MS-DRGs 040, 041, and 042,
while cases reporting ICD-10-PCS procedure code 0DH60UZ with a
principal diagnosis in MDC 10 would group to MS-DRGs 628, 629, and 630.
Comment: Commenters supported our proposal to add ICD-10-PCS
procedure code 0DH60UZ to MDC 1 and MDC 10.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedure code 0DH60UZ to MDC
1 and MDC 10.
(7) Basilic Vein Reposition in Chronic Kidney Disease
As discussed in the proposed rule, during our review of the cases
that group to MS-DRGs 981 through 983, we noted that when procedures
codes describing reposition of basilic vein (ICD-10-PCS procedure codes
05SB0ZZ (Reposition right basilic vein, open approach), 05SB3ZZ
(Reposition right basilic vein, percutaneous approach), 05SC0ZZ
(Reposition left basilic vein, open approach), and 05SC3ZZ (Reposition
left basilic vein, percutaneous approach)) are reported with a
principal diagnosis in MDC 11 (Diseases and Disorders of the Kidney and
Urinary Tract) (typically describing chronic kidney disease), the cases
group to MS-DRGs 981 through 983. We stated in the proposed rule that
this code combination suggests a revision of an arterio-venous fistula
in a patient on chronic hemodialysis. As indicated in the proposed
rule, we examined claims data to identify the average length of stay
and average costs for cases reporting procedures describing reposition
of basilic vein with a principal diagnosis in MDC 11, which are
currently grouping to MS-DRGs 981 through 983. Our findings are shown
in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.092
We stated in the proposed rule that our clinical advisors examined
claims data for cases in the MS-DRGs within MDC 11 and determined that
cases reporting procedures describing reposition of basilic vein with a
principal diagnosis in MDC 11 would most suitably group to MS-DRGs 673,
674, and 675 (Other Kidney and Urinary Tract Procedures with MCC, with
CC, and without CC/MCC, respectively), to which MDC 11 procedures
describing reposition of veins (other than renal veins) are assigned.
Therefore, we examined claims data to identify the average length of
stay and average costs for cases assigned to MS-DRGs 673, 674, and 675.
Our findings are shown in the table below.
[[Page 42132]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.093
As indicated in the proposed rule, our clinical advisors reviewed
these data and noted that the average length of stay and average costs
for cases reporting procedures describing reposition of basilic vein
with a principal diagnosis in MDC 11 with an MCC are significantly
lower than for those cases in MS-DRG 673. The average length of stay
and average costs are similar for those cases with a CC, while the
single case without a CC or MCC had significantly lower costs than the
average costs of cases in MS-DRG 675. However, we stated that our
clinical advisors believe that when the procedures describing
reposition of basilic vein are reported with a principal diagnosis
describing chronic kidney disease, the procedure is likely related to
arteriovenous fistulas for dialysis associated with the chronic kidney
disease. Therefore, we stated in the proposed rule that our clinical
advisors believe that it is clinically appropriate for the procedures
to group to the same MS-DRGs as the principal diagnoses. Therefore, we
proposed to add ICD-10-PCS procedures codes 05SB0ZZ, 05SB3ZZ, 05SC0ZZ,
and 05SC3ZZ to MDC 11. We stated that, under our proposal, cases
reporting procedure codes describing reposition of basilic vein with a
principal diagnosis in MDC 11 would group to MS-DRGs 673, 674, and 675.
Comment: Commenters supported our proposal to add ICD-10-PCS
procedures codes 05SB0ZZ, 05SB3ZZ, 05SC0ZZ, and 05SC3ZZ to MDC 11.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedures codes 05SB0ZZ,
05SB3ZZ, 05SC0ZZ, and 05SC3ZZ to MDC 11.
(8) Colon Resection With Fistula
As discussed in the proposed rule, during our review of the cases
that group to MS-DRGs 981 through 983, we noted that when ICD-10-PCS
procedure code 0DTN0ZZ (Resection of sigmoid colon, open approach) is
reported with a principal diagnosis in MDC 11 (Diseases and Disorders
of the Kidney and Urinary Tract), the cases group to MS-DRGs 981
through 983. We stated that the principal diagnosis most frequently
reported with ICD-10-PCS procedure code 0DTN0ZZ in MDC 11 is ICD-10-CM
code N32.1 (Vesicointestinal fistula). As indicated in the proposed
rule, ICD-10-PCS procedure code 0DTN0ZZ currently groups to several
MDCs, which are listed in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.094
As we stated in the proposed rule, we examined claims data to
identify the average length of stay and average costs for cases
reporting procedure code 0DTN0ZZ with a principal diagnosis in MDC 11,
which are currently grouping to MS-DRGs 981 through 983. Our findings
are shown in the table below.
[[Page 42133]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.095
Our clinical advisors examined the MS-DRGs within MDC 11 and
determined that the cases reporting procedure code 0DTN0ZZ with a
principal diagnosis in MDC 11 would most suitably group to MS-DRGs 673,
674, and 675, which contain procedures performed on structures other
than kidney and urinary tract anatomy. We note that the claims data
describing the average length of stay and average costs for cases in
these MS-DRGs are included in a table earlier in this section. Because
vesicointestinal fistulas involve both the bladder and the bowel, some
procedures in both MDC 6 (Diseases and Disorders of the Digestive
System) and MDC 11 (Diseases and Disorders of the Kidney and Urinary
Tract) would be expected to be related to a principal diagnosis of
vesicointestinal fistula (ICD-10-CM code N32.1). We stated in the
proposed rule that our clinical advisors observed that procedure code
0DTN0ZZ is the second most common procedure reported in conjunction
with a principal diagnosis of code N32.1, after ICD-10-PCS procedure
code 0TQB0ZZ (Repair bladder, open approach), which is assigned to both
MDC 6 and MDC 11. Our clinical advisors reviewed the data and noted
that the average length of stay and average costs for this subset of
cases are generally higher for this subset of cases than for cases in
MS-DRGs 673, 674, and 675. However, we stated that our clinical
advisors believe that when ICD-10-PCS procedure code 0DTN0ZZ is
reported with a principal diagnosis in MDC 11 (typically
vesicointestinal fistula), the procedure is related to the principal
diagnosis. Therefore, we proposed to add ICD-10-PCS procedure code
0DTN0ZZ to MDC 11. We stated in the proposed rule that, under our
proposal, cases reporting procedure code 0DTN0ZZ with a principal
diagnosis of vesicointestinal fistula (diagnosis code N32.1) in MDC 11
would group to MS-DRGs 673, 674, and 675.
Comment: Some commenters supported our proposal to add ICD-10-PCS
procedure code 0DTN0ZZ to MDC 11.
Response: We appreciate the commenters' support.
Comment: A commenter opposed our proposal to add ICD-10-PCS
procedure code 0DTN0ZZ to MDC 11 in MS-DRGs 673, 674, and 675 because
these MS-DRGs does not account for the organ in which the disease
originates. This commenter stated that the disease process that causes
the formation of a vesicointestinal fistula generally do not originate
in the bladder. This commenter recommended that CMS instead consider
assigning ICD-10-PCS procedure code 0DTN0ZZ to MS-DRGs 329, 330, and
331 (Major small and large bowel procedures with MCC, with CC, and
without CC/MCC, respectively).
Response: As we stated in the proposed rule, ICD-10-PCS procedure
code 0DTN0ZZ is already assigned to MDC 6 in MS-DRGs 329, 330, and 331.
As described above, when conducting the review of procedures producing
assignment to MS-DRGs 981 through 983 or MS-DRGs 987 through 989, the
objective is to 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, or to move the principal diagnosis codes to the MDC in which the
procedure falls. During this analysis, we noted that ICD-10-PCS
procedure code 0DTN0ZZ groups to MS-DRGs 981 through 983 when reported
with a principal diagnosis in MDC 11. Given that the only way to
address this grouping issue is to move or add the diagnosis code and
procedure codes, in this case we proposed to add ICD-10-PCS procedure
code 0DTN0ZZ to MDC 11. While the disease process that causes the
formation of a vesicointestinal fistula may not originate in the
bladder, our clinical advisors believe that when ICD-10-PCS procedure
code 0DTN0ZZ is reported in conjunction with the vesicointestinal
fistula, it is related to the diagnosis.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedure code 0DTN0ZZ to MDC
11.
b. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987
Through 989
We also review the list of ICD-10-PCS procedures that, when in
combination with their principal diagnosis code, result in assignment
to MS-DRGs 981 through 983, or 987 through 989, to ascertain whether
any of those procedures should be reassigned from one of those two
groups of MS-DRGs to the other group of MS-DRGs based on average costs
and the length of stay. We look at the data for trends such as shifts
in treatment practice or reporting practice that would make the
resulting MS-DRG assignment illogical. If we find these shifts, we
would propose to move cases to keep the MS-DRGs clinically similar or
to provide payment for the cases in a similar manner. Generally, we
move only those procedures for which we have an adequate number of
discharges to analyze the data.
Based on the results of our review of claims data in the September
2018 update of the FY 2018 MedPAR file, we did not propose to change
the current structure of MS-DRGs 981 through 983 and MS-DRGs 987
through 989.
We did not receive any public comments on our maintaining the
current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through
989. Therefore, we are finalizing the
[[Page 42134]]
current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through
989 without modification.
c. Additions for Diagnosis and Procedure Codes to MDCs
As we did in the FY 2020 IPPS/LTCH PPS proposed rule, below we
summarize the requests we received to examine cases found to group to
MS-DRGs 981 through 983 or MS-DRGs 987 through 989 to determine if it
would be appropriate to add procedure codes to one of the surgical MS-
DRGs for the MDC into which the principal diagnosis falls or to move
the principal diagnosis to the surgical MS-DRGs to which the procedure
codes are assigned.
(1) Stage 3 Pressure Ulcers of the Hip
We received a request to reassign cases for a stage 3 pressure
ulcer of the left hip when reported with procedures involving excision
of pelvic bone or transfer of hip muscle from MS-DRGs 981, 982, and 983
(Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) to MS-DRG 579 (Other Skin,
Subcutaneous Tissue and Breast Procedures with MCC) in MDC 9. ICD-10-CM
diagnosis code L89.223 (Pressure ulcer left hip, stage 3) is used to
report this condition and is currently assigned to MDC 9 (Diseases and
Disorders of the Skin, Subcutaneous Tissue and Breast). We refer
readers to section II.F.12.a. of the preamble of this final rule, where
we address ICD-10-PCS procedure code 0QB30ZZ (Excision of left pelvic
bone, open approach), which was reviewed as part of our ongoing
analysis of the unrelated MS-DRGs and which we proposed, and are
finalizing, to add to MS-DRGs 579, 580, and 581 in MDC 5. (While the
requestor only referred to base MS-DRG 579, in the proposed rule we
stated that we believe it is appropriate to assign the cases to MS-DRGs
579, 580, and 581 by severity level.) We stated that ICD-10-PCS
procedure codes 0KXP0ZZ (Transfer left hip muscle, open approach) and
0KXN0ZZ (Transfer right hip muscle, open approach) may be reported to
describe transfer of hip muscle procedures and are currently assigned
to MDC 1 (Diseases and Disorders of the Nervous System) and MDC 8
(Diseases and Disorders of the Musculoskeletal System and Connective
Tissue). We included ICD-10-PCS procedure code 0KXN0ZZ in our analysis
because it describes the identical procedure on the right side.
Our analysis of this grouping issue confirmed that, when a stage 3
pressure ulcer of the left hip (ICD-10-CM diagnosis code L89.223) is
reported as a principal diagnosis with ICD-10-PCS procedure code
0KXP0ZZ or 0KXN0ZZ, these cases group to MS-DRGs 981, 982, and 983. The
reason for this grouping is because whenever there is a surgical
procedure reported on a claim that is unrelated to the MDC to which the
case was assigned based on the principal diagnosis, it results in an
MS-DRG assignment to a surgical class referred to as ``unrelated
operating room procedures.'' In the example provided, because ICD-10-CM
diagnosis code L89.223 describing a stage 3 pressure ulcer of left hip
is classified to MDC 9 and because ICD-10-PCS procedure codes 0KXP0ZZ
and 0KXN0ZZ are classified to MDC 1 (Diseases and Disorders of the
Nervous System) in MS-DRGs 040, 041, and 042 (Peripheral, Cranial Nerve
and Other Nervous System Procedures with MCC, with CC or Peripheral
Neurostimulator, and without CC/MCC, respectively) and MDC 8 (Diseases
and Disorders of the Musculoskeletal System and Connective Tissue) in
MS-DRGs 500, 501, and 502 (Soft Tissue Procedures with MCC, with CC,
and without CC/MCC, respectively), the GROUPER logic assigns this case
to the ``unrelated operating room procedures'' set of MS-DRGs.
For our review of this grouping issue and the request to have
procedure code 0KXP0ZZ added to MDC 9, in the proposed rule we examined
claims data for cases reporting procedure code 0KXP0ZZ or 0KXN0ZZ in
conjunction with a diagnosis code that typically groups to MDC 9. Our
findings are shown in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.096
As indicated in the proposed rule and earlier, the requestor
suggested that we move ICD-10-PCS procedure code 0KXP0ZZ to MS-DRG 579.
However, we stated that our clinical advisors believe that, within MDC
9, these procedure codes are more clinically aligned with the procedure
codes assigned to MS-DRGs 573, 574, and 575 (Skin Graft for Skin Ulcer
or Cellulitis with MCC, with CC and without CC/MCC, respectively),
which are more specific to the care of stage 3, 4 and unstageable
pressure ulcers than MS-DRGs 579, 580, and 581. Therefore, as indicated
in the proposed rule, we examined claims data to identify the average
length of stay and average costs for cases assigned to MS-DRGs 573,
574, and 575. Our findings are shown in the table below.
[[Page 42135]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.097
We noted in the proposed rule that the average costs for cases in
MS-DRGs 573 and 574 are higher than the average costs of the subset of
cases with the same severity reporting a hip muscle transfer and a
principal diagnosis in MDC 9, while the average costs of those cases in
MS-DRG 575 are similar to the average costs of those cases that are
currently grouping to MS-DRG 983. However, we stated in the proposed
rule that our clinical advisors believe that the cases of hip muscle
transfer represent a distinct, recognizable clinical group similar to
those cases in MS-DRGs 573, 574, and 575, and that the procedures are
clearly related to the principal diagnosis codes. Therefore, we stated
that they believe that it is clinically appropriate for the procedures
to group to the same MS-DRGs as the principal diagnoses. Therefore, we
proposed to add ICD-10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC
9. We stated in the proposed rule that, under our proposal, cases
reporting ICD-10-PCS procedure code 0KXP0ZZ or 0KXN0ZZ with a principal
diagnosis in MDC 9 would group to MS-DRGs 573, 574, and 575. We are
clarifying that under our proposal, cases reporting ICD-10-PCS codes
0KXP0ZZ or 0KXN0ZZ would also group to MS-DRGs 576, 577, and 578 in the
absence of a principal diagnosis of skin ulcer or cellulitis. The
reason for this additional assignment is that under the GROUPER logic,
all of the procedures assigned to MS-DRGs 573, 574, and 575 are also
assigned to MS-DRGs 576, 577, and 578; the presence or absence of a
principal diagnosis of skin ulcer or cellulitis determines whether the
case groups to MS-DRGs 573, 574, and 575 or to MS-DRGs 576, 577, and
578. We refer the reader to the ICD-10 MS-DRG Version 36 Definitions
Manual for complete documentation of the logic for case assignment to
MS-DRGs 573, 574, 575, 576, 577, and 578 (which is available via the
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html).
Comment: A commenter supported our proposal to add ICD-10-PCS
procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC 9.
Response: We appreciate the commenter's support.
Comment: Other commenters did not support our proposal to add ICD-
10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ to MDC 9. The commenters
stated that it is not appropriate for procedures performed on muscles
to group to MS-DRGs for skin and subcutaneous tissues. These commenters
also stated that transfer procedures are more clinically significant
and resource intensive than grafts to the skin and subcutaneous tissue.
Response: Our clinical advisors agree that procedures performed on
muscles would not generally be expected to group to MS-DRGs for skin
and subcutaneous tissues. However, while they believe that principal
diagnoses from MDC 9 would not be the principal diagnoses most often
reported with ICD-10-PCS procedure codes 0KXP0ZZ and 0KXN0ZZ, the
claims data indicate that there are cases reporting a principal
diagnosis assigned to MDC 9, as identified by the requestor. Our
clinical advisors continue to believe that these cases involving hip
muscle transfer represent a distinct, recognizable clinical group,
which is similar to those cases in MS-DRGs 573, 574, and 575, and that
the procedures are clearly related to the principal diagnosis codes.
With respect to the comment that transfer procedures are more
clinically significant and resource intensive than grafts to the skin
and subcutaneous tissue, our clinical advisors believe that the
transfer procedures are sufficiently similar to procedures involving
grafts to the skin and subcutaneous tissue, particularly given that a
review of the data presented in the proposed rule and described
previously in this section demonstrate that the average costs for MS-
DRGs 573, 574, and 575 are generally greater than those of the subset
of cases involving hip muscle transfer with a diagnosis in MDC 9. Most
of the cases that currently group to MS-DRGs 981 through 983 occur in
MS-DRGs 981 and 982, which have average costs of $25,023 and $17,955
respectively, while the MS-DRGs with the same severity level, MS-DRGs
573 and 574, have average costs of $34,549 and $21,251, respectively.
We also believe it is preferable to assign these cases to a discrete
MS-DRG within the GROUPER logic rather than allowing them to continue
to group to MS-DRGs 981 through 983, which do not contain a group of
clinically coherent principal diagnoses. MS-DRGs 573, 574, 575, 576,
577, and 578, which are specific to the care of conditions that
necessitate skin grafts, represent a group of clinically coherent
principal diagnoses to which procedures describing transfer of muscles
are more appropriately assigned than those in MS-DRGs 981 through 983.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedure codes 0KXP0ZZ and
0KXN0ZZ to MDC 9.
(2) Gastrointestinal Stromal Tumor
We received a request to reassign cases for gastrointestinal
stromal tumor of the stomach when reported with a procedure describing
laparoscopic bypass of the stomach to jejunum from MS-DRGs 981, 982,
and 983 to MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal
Procedures with MCC, with CC, and without CC/MCC, respectively) by
adding ICD-10-PCS procedure code 0D164ZA (Bypass stomach to jejunum,
percutaneous endoscopic approach) to MDC 6. ICD-10-CM diagnosis code
C49.A2 (Gastrointestinal stromal tumor of stomach) is used to report
this condition and is currently assigned to MDC 8. ICD-10-PCS procedure
code 0D164ZA is used to report the stomach bypass procedure and is
currently assigned to MDC 5 (Diseases and Disorders of the Circulatory
System), MDC 6 (Diseases and Disorders of the Digestive System), MDC 7
(Diseases and Disorders of the Hepatobiliary System and Pancreas), MDC
10 (Endocrine, Nutritional and Metabolic Diseases and Disorders), and
MDC 17 (Myeloproliferative Diseases and Disorders, Poorly
Differentiated Neoplasms). We refer readers to section II.F.12.a. of
the preamble of this final rule where we discuss our finalized policy
to move the listed diagnosis
[[Page 42136]]
codes describing gastrointestinal stromal tumors, including ICD-10-CM
diagnosis code C49.A2, into MDC 6. Therefore, in the proposed rule, we
stated that this proposal, if finalized, would address the cases
grouping to MS-DRGs 981 through 983 by instead moving the diagnosis
codes to MDC 6, which would result in the diagnosis code and the
procedure code referenced by the requestor grouping to the same MDC.
We did not receive comments on our proposal to address this
grouping issue by moving the diagnosis codes to MDC 6 rather than
moving the procedure codes as requested. We refer the reader to section
II.F.12.a. of this final rule for the comments regarding our proposal
to move the GIST diagnosis codes to MDC 6, as well as our finalization
of this proposal.
(3) Finger Cellulitis
We received a request to reassign cases for cellulitis of the right
finger when reported with a procedure describing open excision of the
right finger phalanx from MS-DRGs 981, 982, and 983 to MS-DRGs 579,
580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures
with MCC, with CC, and without CC/MCC, respectively). In the proposed
rule, we stated that, currently, ICD-10-CM diagnosis code L03.011
(Cellulitis of right finger) is used to report this condition and is
currently assigned to MDC 09 in MS-DRGs 573, 574, and 575 (Skin Graft
for Skin Ulcer or Cellulitis with MCC, CC, and without CC/MCC,
respectively), 576, 577, and 578 (Skin Graft except for Skin Ulcer or
Cellulitis with MCC, CC, and without CC/MCC, respectively), and 602 and
603 (Cellulitis with MCC and without MCC, respectively). ICD-10-PCS
procedure code 0PBT0ZZ (Excision of right finger phalanx, open
approach) is used to identify the excision procedure, and is currently
assigned to MDC 03 (Diseases and Disorders of the Ear, Nose, Mouth and
Throat) in MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R.
Procedures with CC/MCC, and without CC/MCC, respectively); MDC 08
(Diseases and Disorders of the Musculoskeletal System and Connective
Tissue) in MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and
Connective Tissue O.R. Procedures with MCC, with CC, and without CC/
MCC, respectively); MDC 10 (Endocrine, Nutritional and Metabolic
Diseases and Disorders) in MS-DRGs 628, 629, and 630 (Other Endocrine,
Nutritional and Metabolic O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively); MDC 21 (Injuries, Poisonings and Toxic
Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures
for Injuries with MCC, with CC, and without CC/MCC, respectively); and
MDC 24 (Multiple Significant Trauma) in MS-DRGs 957, 958, and 959
(Other O.R. Procedures for Multiple Significant Trauma with MCC, with
CC, and without CC/MCC, respectively).
Our analysis of this grouping issue confirmed that when a procedure
such as open excision of right finger phalanx (ICD-10-PCS procedure
code 0PBT0ZZ) is reported with a principal diagnosis from MDC 9, such
as cellulitis of the right finger (ICD-10-CM diagnosis code L03.011),
these cases group to MS-DRGs 981, 982, and 983. As we stated in the
proposed rule, during our review of this issue, we also examined claims
data for similar procedures describing excision of phalanges (which are
listed in the table below) and noted the same pattern. We further noted
that the ICD-10-PCS procedure codes describing excision of phalanx
procedures with the diagnostic qualifier ``X'', which are used to
report these procedures when performed for diagnostic purposes, are
already assigned to MS-DRGs 579, 580, and 581 (to which the requestor
suggested these cases group). We stated in the proposed rule that our
clinical advisors also believe that procedures describing resection of
phalanges should be assigned to the same MS-DRG as the excisions,
because the resection procedures would also group to MS-DRGs 981, 982,
and 983 when reported with a principal diagnosis from MDC 9.
[GRAPHIC] [TIFF OMITTED] TR16AU19.098
[[Page 42137]]
As noted in the previous discussion and the proposed rule, whenever
there is a surgical procedure reported on the claim that is unrelated
to the MDC to which the case was assigned based on the principal
diagnosis, it results in an MS-DRG assignment to a surgical class
referred to as ``unrelated operating room procedures''.
We examined the claims data for the three codes describing
cellulitis of the finger (ICD-10-CM diagnosis codes L03.011 (Cellulitis
of the right finger), L03.012 (Cellulitis of left finger), and L03.019
(Cellulitis of unspecified finger)) to identify the average length of
stay and average costs for cases reporting a principal diagnosis of
cellulitis of the finger in conjunction with the excision of phalanx
procedures listed in the table above. We also noted in the proposed
rule that there were no cases reporting a principal diagnosis of
cellulitis of the finger in conjunction with the resection of phalanx
procedures listed in the table above.
[GRAPHIC] [TIFF OMITTED] TR16AU19.099
We also examined the claims data to identify the average length of
stay and average costs for all cases in MS-DRGs 579, 580, and 581. Our
findings are shown in the table in section II.F.12.A.3.of the preamble
of this final rule.
We stated in the proposed rule that while our clinical advisors
noted that the average length of stay and average costs for cases in
MS-DRGs 579, 580, and 581 are generally higher than the average length
of stay and average costs for the subset of cases reporting a principal
diagnosis of cellulitis of the finger and a procedure describing
excision of phalanx, they believe that the procedures are clearly
related to the principal diagnosis codes and, therefore, it is
clinically appropriate for the procedures to group to the same MS-DRGs
as the principal diagnoses, particularly given that procedures
describing excision of phalanx with the diagnostic qualifier ``X'' are
already assigned to these MS-DRGs. In addition, we stated that our
clinical advisors believe it is clinically appropriate for the
procedures describing resection of phalanx to be assigned to MS-DRGs
579, 580, and 581 as well. Therefore, we proposed to add the procedure
codes describing excision and resection of phalanx listed above to MS-
DRGs 579, 580, and 581. We stated that, under this proposal, cases
reporting one of the excision or resection procedures listed in the
table above in conjunction with a principal diagnosis from MDC 9 would
group to MS-DRGs 579, 580, and 581.
Comment: A commenter supported our proposal to add the procedure
codes describing excision and resection of phalanx listed above to MS-
DRGs 579, 580, and 581 in MDC 9.
Response: We appreciate the commenter's support.
Comment: Other commenters did not support our proposal to add the
procedure codes describing excision and resection of phalanx listed
above to MS-DRGs 579, 580, and 581 in MDC 9. Commenters stated that it
does not appear clinically appropriate for bone procedures to be
grouped to skin and subcutaneous tissue MS-DRGs, and that the small
number of cases suggests that this may be a coding issue.
Response: We note that MS-DRGs 579, 580, and 581 already contain
many bone-related procedures, such as those beginning with 0PD, which
describe extraction of bone. In addition, our clinical advisors believe
that it is clinically appropriate for the procedures to group to the
same MS-DRGs as the principal diagnoses, particularly given that
procedures describing excision of phalanx with the diagnostic qualifier
``X'' are already assigned to these MS-DRGs.
After consideration of the public comments we received, we are
finalizing our proposal to add procedure codes describing excision and
resection of phalanx listed above to MS-DRGs 579, 580, and 581 in MDC
9.
(4) Multiple Trauma With Internal Fixation of Joints
We received a request to reassign cases involving multiple
significant trauma with internal fixation of joints from MS-DRGs 981,
982, and 983 to MS-DRGs 957, 958, and 959 (Other O.R. Procedures for
Multiple Significant Trauma with MCC, with CC, and without CC/MCC,
respectively). The requestor provided an example of several ICD-10-CM
diagnosis codes that together described multiple significant trauma in
conjunction with ICD-10-PCS procedure codes in tables 0SH and 0RH that
describe internal fixation of joints. The requestor provided several
suggestions to address this assignment, including: adding all ICD-10-
PCS procedure codes in MDC 8 (Diseases and Disorders of the
Musculoskeletal System and Connective Tissue) with the exception of
codes that group to MS-DRG 956 (Limb Reattachment, Hip and Femur
Procedures for Multiple Significant Trauma) to MS-DRGs 957, 958, and
959; adding codes within the ICD-10-PCS tables 0SH and 0RH to MDC 24;
and adding ICD-10-PCS procedure codes from all MDCs except those that
currently group to MS-DRG 955 (Craniotomy for Multiple Significant
Trauma) or MS-DRG 956 (Limb Reattachment, Hip and Femur Procedures for
Multiple Significant Trauma) to MS-DRGs 957, 958, and 959.
We stated in the proposed rule that, while we understand the
requestor's concern about these multiple significant trauma cases, we
believe any potential reassignment of these cases requires significant
analysis. We further stated that, similar to our analysis of MDC 14
(initially discussed at 81 FR 56854), there are multiple logic lists in
MDC 24 that would need to be reviewed. For example, to satisfy the
logic for multiple significant trauma, the logic requires a diagnosis
code from the significant trauma principal diagnosis list and two
[[Page 42138]]
or more significant trauma diagnoses from different body sites. The
significant trauma logic lists for the other body sites (which include
head, chest, abdominal, kidney, urinary system, pelvis or spine, upper
limb, and lower limb) allow the extensive list of diagnosis codes
included in the logic to be reported as a principal or secondary
diagnosis. The analysis of the reporting of all the codes as a
principal and/or secondary diagnosis within MDC 24, combined with the
analysis of all of the ICD-10-PCS procedure codes within MDC 8, is
anticipated to be a multi-year effort. Therefore, we stated that we
plan to consider this issue for future rulemaking as part of our
ongoing analysis of the unrelated procedure MS-DRGs.
(5) Totally Implantable Vascular Access Devices
We received a request to reassign cases for insertion of totally
implantable vascular access devices (TIVADs) listed in the table below
when reported with principal diagnoses in MDCs other than MDC 9
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast)
and MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)
from MS-DRGs 981 through 983 to a surgical MS-DRG within the
appropriate MDC based on the principal diagnosis. The requestor noted
that the insertion of TIVAD procedures are newly designated as O.R.
procedures, effective October 1, 2018, and are assigned to MDCs 9 and
11. The requestor stated that TIVADs can be placed for a variety of
purposes and are used to treat a wide range of malignancies at various
sites and, therefore, would likely have a relationship to the principal
diagnosis within any MDC. The requestor suggested that procedures
describing the insertion of TIVADs group to surgical MS-DRGs within
every MDC (other than MDCs 2, 20, and 22, which do not contain surgical
MS-DRGs). The requestor further stated that the surgical hierarchy
should assign more significant O.R. procedures within each MDC to a
higher position than procedures describing the insertion of TIVADs
because these procedures consume less O.R. resources than more invasive
procedures.
[GRAPHIC] [TIFF OMITTED] TR16AU19.100
We stated in the proposed rule that, while we agreed that TIVAD
procedures may be performed in connection with a variety of principal
diagnoses, we note that because these procedures are newly designated
as O.R. procedures effective October 1, 2018, we do not yet have
sufficient data to analyze this request. We further stated that we plan
to consider this issue in future rulemaking as part of our ongoing
analysis of the unrelated procedure MS-DRGs.
(6) Gastric Band Procedure Complications or Infections
We received a request to reassign cases for infection or
complications due to gastric band procedures when reported with a
procedure describing revision of or removal of extraluminal device in/
from the stomach from MS-DRGs 987, 988, and 989 (Non-Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without MCC/CC, respectively) to MS-DRGs 326, 327, and 328 (Stomach,
Esophageal, and Duodenal Procedures with MCC, with CC, and without CC/
MCC, respectively). We stated in the proposed rule that ICD-10-CM
diagnosis codes K95.01 (Infection due to gastric band procedure) and
K95.09
[[Page 42139]]
(Other complications of gastric band procedure) are used to report
these conditions and are currently assigned to MDC 6 (Diseases and
Disorders of the Digestive System). ICD-10-PCS procedure codes 0DW64CZ
(Revision of extraluminal device in stomach, percutaneous endoscopic
approach) and 0DP64CZ (Removal of extraluminal device from stomach,
percutaneous endoscopic approach) are used to report the revision of,
or removal of, an extraluminal device in/from the stomach and are
currently assigned to MDC 10 (Endocrine, Nutritional and Metabolic
Diseases and Disorders) in MS-DRGs 619, 620, and 621 (O.R. Procedures
for Obesity with MCC with CC, and without CC/MCC, respectively).
Our analysis of this grouping issue confirmed that when procedures
describing the revision of or removal of an extraluminal device in/from
the stomach are reported with principal diagnoses in MDC 6 (such as
ICD-10-CM diagnosis codes K95.01 and K95.09), in the absence of a
procedure assigned to MDC 6, these cases group to MS-DRGs 987, 988, and
989. As noted in the previous discussion and in the proposed rule,
whenever there is a surgical procedure reported on the claim that is
unrelated to the MDC to which the case was assigned based on the
principal diagnosis, it results in an MS-DRG assignment to a surgical
class referred to as ``unrelated operating room procedures''.
As indicated in the proposed rule, we examined the claims data to
identify cases involving ICD-10-PCS procedure codes 0DW64CZ and 0DP64CZ
reported with a principal diagnosis of K95.01 or K95.09 that are
currently grouping to MS-DRGs 987, 988, and 989. Our findings are shown
in the table below.
[GRAPHIC] [TIFF OMITTED] TR16AU19.101
We also examined the data for cases in MS-DRGs 326, 327, and 328,
and our findings are provided in a table presented in section
II.F.12.a. of the preamble of this final rule. We stated in the
proposed rule that, while our clinical advisors noted that the average
length of stay and average costs of cases in MS-DRGs 326, 327, and 328
are significantly higher than the average length of stay and average
costs for the subset of cases reporting procedure code 0DW64CZ or
0DP64CZ and a principal diagnosis code of K95.01 or K95.09, they
believe that the procedures are clearly related to the principal
diagnosis and, therefore, it is clinically appropriate for the
procedures to group to the same MS-DRGs as the principal diagnoses. In
addition, we stated that our clinical advisors believe that because
these procedures are intended to treat a complication of a procedure
related to obesity, rather than the obesity itself, they are more
appropriately assigned to stomach, esophageal, and duodenal procedures
(MS-DRGs 326, 327, and 328) in MDC 6 than to procedures for obesity
(MS-DRGs 619, 620, and 621) in MDC 10.
Therefore, we proposed to add ICD-10-PCS procedure codes 0DW64CZ
and 0DP64CZ to MDC 6 in MS-DRGs 326, 327, and 328. We stated in the
proposed rule that, under this proposal, cases reporting procedure code
0DW64CZ or 0DP64CZ in conjunction with a principal diagnosis code of
K95.01 or K95.09 would group to MS-DRGs 326, 327, and 328.
Comment: Commenters supported our proposal to add ICD-10-PCS
procedure codes 0DW64CZ and 0DP64CZ to MDC 6 in MS-DRGs 326, 327, and
328.
Response: We appreciate the commenters' support.
After consideration of the public comments received, we are
finalizing our proposal to add ICD-10-PCS procedure codes 0DW64CZ and
0DP64CZ to MDC 6 in MS-DRGs 326, 327, and 328.
(7) Peritoneal Dialysis Catheters
We received a request to reassign cases for complications of
peritoneal dialysis catheters when reported with procedure codes
describing removal, revision, and/or insertion of new peritoneal
dialysis catheters from MS-DRGs 981 through 983 to MS-DRGs 356, 357,
and 358 (Other Digestive System O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively) in MDC 6 by adding the diagnosis codes
describing complications of peritoneal dialysis catheters to MDC 6. We
stated in the proposed rule that our clinical advisors believe it is
more appropriate to add the procedure codes describing removal,
revision, and/or insertion of new peritoneal dialysis catheters to MS-
DRGs 907, 908, and 909 than to move the diagnosis codes describing
complications of peritoneal dialysis catheters to MDC 6 because the
diagnosis codes describe complications, rather than initial placement,
of peritoneal dialysis catheters, and therefore, are most clinically
aligned with the diagnosis codes assigned to MDC 21 (where they are
currently assigned). In section II.F.12.a. of the preamble of the
proposed rule, we proposed, and as discussed in this final rule, are
finalizing, to add procedures
[[Page 42140]]
describing removal, revision, and/or insertion of peritoneal dialysis
catheters to MS-DRGs 907, 908, and 909 in MDC 21. We refer readers to
section II.F.12.a. of the preamble of this final rule in which we
describe our analysis of this issue as part of our broader review of
the unrelated MS-DRGs.
(8) Occlusion of Left Renal Vein
We received a request to reassign cases for varicose veins in the
pelvic region when reported with an embolization procedure from MS-DRGs
981, 982 and 983 (Non-Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) to MS-
DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for
Malignancy with CC/MCC and without CC/MCC, respectively) and MS-DRGs
717 and 718 (Other Male Reproductive System O.R. Procedures Except
Malignancy with CC/MCC and without CC/MCC, respectively) in MDC 12
(Diseases and Disorders of the Male Reproductive System) and to MS-DRGs
749 and 750 (Other Female Reproductive System O.R. Procedures with CC/
MCC and without CC/MCC, respectively) in MDC 13 (Diseases and Disorders
of the Female Reproductive System). We stated in the proposed rule that
ICD-10-CM diagnosis code I86.2 (Pelvic varices) is reported to identify
the condition of varicose veins in the pelvic region and is currently
assigned to MDC 12 and to MDC 13. ICD-10-PCS procedure code 06LB3DZ
(Occlusion of left renal vein with intraluminal device, percutaneous
approach) may be reported to describe an embolization procedure
performed for the treatment of pelvic varices and is currently assigned
to MDC 5 (Diseases and Disorders of the Circulatory System) in MS-DRGs
270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with
CC, and without CC/MCC, respectively), MDC 6 (Diseases and Disorders of
the Digestive System) in MS-DRGs 356, 357, and 358 (Other Digestive
System O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively), MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)
in MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with
MCC, CC, without CC/MCC, respectively), and MDC 24 (Multiple
Significant Trauma) in MS-DRGs 957, 958, 959 (Other O.R. Procedures for
Multiple Significant Trauma with MCC, with CC, and without CC/MCC,
respectively). The requestor also noted that when this procedure is
performed on pelvic veins on the right side, such as the ovarian vein,
(which is reported with ICD-10-PCS code 06L03DZ (Occlusion of inferior
vena cava with intraluminal device, percutaneous approach)) for
varicose veins in the right pelvic region, the case groups to MS-DRGs
715 and 716 and MS-DRGs 717 and 718 in MDC 12 (for male patients) or
MS-DRGs 749 and 750 in MDC 13 (for female patients). We note that there
was an inadvertent error in the proposed rule in which the term ``renal
vein'' was referenced rather than ``pelvic veins on the right side'' or
``ovarian vein''.
Our analysis of this grouping issue confirmed that when ICD-10-CM
diagnosis code I86.2 (Pelvic varices) is reported with ICD-10-PCS
procedure code 06LB3DZ, the case groups to MS-DRGs 981, 982, and 983.
As noted above in previous discussions and in the proposed rule,
whenever there is a surgical procedure reported on the claim that is
unrelated to the MDC to which the case was assigned based on the
principal diagnosis, it results in an MS-DRG assignment to a surgical
class referred to as ``unrelated operating room procedures.''
As indicated in the proposed rule, we examined the claims data to
identify cases involving procedure code 06LB3DZ in MS-DRGs 981, 982,
and 983 reported with a principal diagnosis code of I86.2. We found no
cases in the claims data.
In the absence of data to examine, we indicated that our clinical
advisors reviewed this request and agreed with the requestor that when
the embolization procedure is performed on the left ovarian vein
(reported with ICD-10-PCS procedure code 06LB3DZ), it should group to
the same MS-DRGs as when it is performed on the right ovarian vein.
Therefore, we proposed to add ICD-10-PCS procedure code 06LB3DZ to MDC
12 in MS-DRGs 715, 716, 717, and 718 and to MDC 13 in MS-DRGs 749 and
750. We stated in the proposed rule that, under this proposal, cases
reporting ICD-10-CM diagnosis code I86.2 with ICD-10-PCS procedure code
06LB3DZ would group to MDC 12 (for male patients) or MDC 13 (for female
patients).
Comment: A commenter stated that this issue should be reevaluated,
because 06L03DZ is not the correct code to report procedures done on
the right renal vein; rather, 06L93DZ (Occlusion of right renal vein
with intraluminal device, percutaneous approach) would be reported
instead.
Response: We appreciate the commenter's request for clarification.
We wish to clarify that certain specific pelvic veins do not have their
own body part value in the ICD-10-PCS, and the ICD-10-PCS Body Part Key
instructs coders to assign the inferior vena cava body part for veins
such as the right ovarian vein and the right testicular vein, and to
assign the left renal vein body part for veins such as the left ovarian
vein and the left testicular vein. Therefore, ICD-10-PCS codes 06L03DZ
or 06LB3DZ indeed may be reported to describe an embolization procedure
performed for the treatment of pelvic varices of these respective
sites. As such, our clinical advisors believe that when the
embolization procedure is performed on veins classified to the left
renal vein, such as the left ovarian vein and the left testicular vein,
it should group to the same MS-DRGs as when it is performed on veins
classified to the inferior vena cava, such as the right ovarian vein
and the right testicular vein.
After consideration of the public comments we received, we are
finalizing our proposal to add ICD-10-PCS procedure code 06LB3DZ to MDC
12 in MS-DRGs 715, 716, 717, and 718 and to MDC 13 in MS-DRGs 749 and
750.
13. Operating Room (O.R.) and Non-O.R. Issues
a. Background
Under the IPPS MS-DRGs (and former CMS MS-DRGs), we have a list of
procedure codes that are considered operating room (O.R.) procedures.
Historically, we developed this list using physician panels that
classified each procedure code based on the procedure and its effect on
consumption of hospital resources. For example, generally the presence
of a surgical procedure which required the use of the operating room
would be expected to have a significant effect on the type of hospital
resources (for example, operating room, recovery room, and anesthesia)
used by a patient, and therefore, these patients were considered
surgical. Because the claims data generally available do not precisely
indicate whether a patient was taken to the operating room, surgical
patients were identified based on the procedures that were performed.
Generally, if the procedure was not expected to require the use of the
operating room, the patient would be considered medical (non-O.R.).
Currently, each ICD-10-PCS procedure code has designations that
determine whether and in what way the presence of that procedure on a
claim impacts the MS-DRG assignment. First, each ICD-10-PCS procedure
code is either designated as an O.R. procedure for purposes of MS-DRG
assignment (``O.R. procedures'') or is not designated
[[Page 42141]]
as an O.R. procedure for purposes of MS-DRG assignment (``non-O.R.
procedures''). Second, for each procedure that is designated as an O.R.
procedure, that O.R. procedure is further classified as either
extensive or non-extensive. Third, for each procedure that is
designated as a non-O.R. procedure, that non-O.R. procedure is further
classified as either affecting the MS-DRG assignment or not affecting
the MS-DRG assignment. We refer to these designations that do affect
MS-DRG assignment as ``non-O.R. affecting the MS-DRG.'' For new
procedure codes that have been finalized through the ICD-10
Coordination and Maintenance Committee meeting process and are proposed
to be classified as O.R. procedures or non-O.R. procedures affecting
the MS-DRG, our clinical advisors recommend the MS-DRG assignment which
is then made available in association with the proposed rule (Table
6B.--New Procedure Codes) and subject to public comment. These proposed
assignments are generally based on the assignment of predecessor codes
or the assignment of similar codes. For example, we generally examine
the MS-DRG assignment for similar procedures, such as the other
approaches for that procedure, to determine the most appropriate MS-DRG
assignment for procedures proposed to be newly designated as O.R.
procedures. As discussed in section II.F.15. of the preamble of this
final rule, we are making Table 6B.--New Procedure Codes--FY 2020
available on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. We also refer
readers to the ICD-10 MS-DRG Version 36 Definitions Manual at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for detailed
information regarding the designation of procedures as O.R. or non-O.R.
(affecting the MS-DRG) in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index.
In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that, given
the long period of time that has elapsed since the original O.R.
(extensive and non-extensive) and non-O.R. designations were
established, the incremental changes that have occurred to these O.R.
and non-O.R. procedure code lists, and changes in the way inpatient
care is delivered, we plan to conduct a comprehensive, systematic
review of the ICD-10-PCS procedure codes. This will be a multi-year
project during which we will also review the process for determining
when a procedure is considered an operating room procedure. For
example, we may restructure the current O.R. and non-O.R. designations
for procedures by leveraging the detail that is now available in the
ICD-10 claims data. We refer readers to the discussion regarding the
designation of procedure codes in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38066) where we stated that the determination of when a
procedure code should be designated as an O.R. procedure has become a
much more complex task. This is, in part, due to the number of various
approaches available in the ICD-10-PCS classification, as well as
changes in medical practice. While we have typically evaluated
procedures on the basis of whether or not they would be performed in an
operating room, we believe that there may be other factors to consider
with regard to resource utilization, particularly with the
implementation of ICD-10. Therefore, as we stated in the proposed rule,
we are again soliciting public comments on what factors or criteria to
consider in determining whether a procedure is designated as an O.R.
procedure in the ICD-10-PCS classification system for future
consideration. Commenters should submit their recommendations to the
following email address: [email protected] by
November 1, 2019.
We stated in the proposed rule that, as a result of this planned
review and potential restructuring, procedures that are currently
designated as O.R. procedures may no longer warrant that designation,
and conversely, procedures that are currently designated as non-O.R.
procedures may warrant an O.R. type of designation. We intend to
consider the resources used and how a procedure should affect the MS-
DRG assignment. We may also consider the effect of specific surgical
approaches to evaluate whether to subdivide specific MS-DRGs based on a
specific surgical approach. We plan to utilize our available MedPAR
claims data as a basis for this review and the input of our clinical
advisors. As part of this comprehensive review of the procedure codes,
we also intend to evaluate the MS-DRG assignment of the procedures and
the current surgical hierarchy because both of these factor into the
process of refining the ICD-10 MS-DRGs to better recognize complexity
of service and resource utilization.
We will provide more detail on this analysis and the methodology
for conducting this review in future rulemaking. As we noted in the
proposed rule, as we continue to develop our process and methodology,
as noted above, we are soliciting public comments on other factors to
consider in our refinement efforts to recognize and differentiate
consumption of resources for the ICD-10 MS-DRGs.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19231 through
19235), we addressed requests that we received regarding changing the
designation of specific ICD-10-PCS procedure codes from non-O.R. to
O.R. procedures, or changing the designation from O.R. procedure to
non-O.R. procedure. Below we discuss the process that was utilized for
evaluating the requests that were received for FY 2020 consideration.
For each procedure, our clinical advisors considered:
Whether the procedure would typically require the
resources of an operating room;
Whether it is an extensive or a nonextensive procedure;
and
To which MS-DRGs the procedure should be assigned.
We noted in the proposed rule that many MS-DRGs require the
presence of any O.R. procedure. As a result, cases with a principal
diagnosis associated with a particular MS-DRG would, by default, be
grouped to that MS-DRG. Therefore, we do not list these MS-DRGs in our
discussion below. Instead, we only discuss MS-DRGs that require
explicitly adding the relevant procedures codes to the GROUPER logic in
order for those procedure codes to affect the MS-DRG assignment as
intended. In cases where we proposed to change the designation of
procedure codes from non-O.R. procedures to O.R. procedures, we also
proposed one or more MS-DRGs with which these procedures are clinically
aligned and to which the procedure code would be assigned.
In addition, cases that contain O.R. procedures will map to MS-DRG
981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-
DRG 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) when they do not contain a principal diagnosis that
corresponds to one of the MDCs to which that procedure is assigned.
These procedures need not be assigned to MS-DRGs 981 through 989 in
order for this to occur. Therefore, if requestors included some or all
of MS-DRGs 981 through 989 in their request or included MS-DRGs that
require the presence of any O.R. procedure, we did not specifically
[[Page 42142]]
address that aspect in summarizing their request or our response to the
request in the section below.
For procedures that would not typically require the resources of an
operating room, our clinical advisors determined if the procedure
should affect the MS-DRG assignment.
As indicated in the proposed rule, we received several requests to
change the designation of specific ICD-10-PCS procedure codes from non-
O.R. procedures to O.R. procedures, or to change the designation from
O.R. procedures to non-O.R. procedures. Below, as we did in the
proposed rule, in this final rule, we detail and respond to some of
those requests and, further, summarize and respond to the public
comments we received in response to our proposals, if applicable. With
regard to the remaining requests, as stated in the proposed rule, our
clinical advisors believe it is appropriate to consider these requests
as part of our comprehensive review of the procedure codes discussed
above.
b. O.R. Procedures to Non-O.R. Procedures
(1) Bronchoalveolar Lavage
Bronchoalveolar lavage (BAL) is a diagnostic procedure in which a
bronchoscope is passed through the patient's mouth or nose into the
lungs. A small amount of fluid is squirted into an area of the lung and
then collected for examination. Two requestors identified 13 ICD-10-PCS
procedure codes describing BAL procedures that generally can be
performed at bedside and would not require the resources of an
operating room. In the ICD-10 MS-DRG Version 36 Definitions Manual,
these 13 ICD-10-PCS procedure codes are currently recognized as O.R.
procedures for purposes of MS-DRG assignment.
In the proposed rule, we stated that we agreed with the requestors
that these procedures do not typically require the resources of an
operating room. Therefore, we proposed to remove the following 13
procedure codes from the FY 2020 ICD-10 MS-DRGs Version 37 Definitions
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures. We stated in the proposed rule that,
under this proposal, these procedures would no longer impact MS-DRG
assignment.
[GRAPHIC] [TIFF OMITTED] TR16AU19.102
Comment: Some commenters supported our proposal to designate the 13
procedure codes above as non-O.R. procedures.
Response: We appreciate the commenters' support.
Comment: Other commenters opposed our proposal to designate the 13
procedure codes above as non-O.R. procedures. A commenter stated that
due to the complexity of the procedures being performed, they should
continue to be designated as an O.R. procedure, while another commenter
stated that CMS should not reassign any procedures as O.R. or non-O.R.
until it has completed its comprehensive review.
Response: As indicated in the proposed rule, our clinical advisors
believe that these procedures do not typically require the resources of
an operating room. The commenter did not provide information to the
contrary. We also do not agree with the commenter who stated that we
should not reassign any procedures as O.R. or non-O.R; rather, while
some requests may involve a broader review of additional ranges of ICD-
10-PCS codes, such that we believe they are more appropriately
considered as part of our comprehensive review of procedure codes, we
generally believe it is more accurate to address requests to change the
designation of procedures as OR or non-OR as they arise rather than
waiting for the comprehensive review, which is a multiyear project.
After consideration of the public comments we received, we are
finalizing our policy to designate the 13 codes above as non-O.R.
(2) Percutaneous Drainage of Pelvic Cavity
One requestor identified two ICD-10-PCS procedure codes that
describe procedures involving percutaneous drainage of the pelvic
cavity. The two ICD-10-PCS procedure codes are: 0W9J3ZX (Drainage of
pelvic cavity, percutaneous approach, diagnostic) and 0W9J3ZZ (Drainage
of pelvic cavity, percutaneous approach).
ICD-10-PCS procedure code 0W9J3ZX is currently recognized as an
O.R. procedure for purposes of MS-DRG assignment, while the
nondiagnostic ICD-10-PCS procedure code 0W9J3ZZ is not recognized as an
O.R. procedure
[[Page 42143]]
for purposes of MS-DRG assignment. The requestor stated that
percutaneous drainage procedures of the pelvic cavity for both
diagnostic and nondiagnostic purposes are not complex procedures and
both types of procedures are usually performed in a radiology suite.
The requestor stated that both procedures should be classified as non-
O.R. procedures.
We stated in the proposed rule that we agreed with the requestor
that these procedures do not typically require the resources of an
operating room. Therefore, we proposed to remove procedure code 0W9J3ZX
from the FY 2020 ICD-10 MS-DRG Version 37 Definitions Manual in
Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index
as an O.R. procedure. We stated that, under this proposal, this
procedure would no longer impact MS-DRG assignment.
Comment: Commenters supported the proposal to change the
designation of 0W9J3ZX to a non-O.R. procedure. The commenters stated
that the proposal was reasonable, given the data and information
provided.
A commenter stated that CMS should not consider any requests to
modify the designation of procedures as O.R. or non-O.R. for FY 2020.
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS
plans to conduct a comprehensive systematic review of the ICD-10-PCS
procedure codes. The commenter suggested that reassignment requests
should be held until the review has been completed.
Response: We appreciate the commenters' support. We do not agree
with the commenter who stated that we should not reassign any
procedures as O.R. or non-O.R; rather, while some requests may involve
a broader review of additional ranges of ICD-10-PCS codes, such that we
believe they are more appropriately considered as part of our
comprehensive review of procedure codes, we generally believe it is
more accurate to address requests to change the designation of
procedures as OR or non-OR as they arise rather than waiting for the
comprehensive review, which is a multiyear project. After consideration
of the public comments we received, we are finalizing our proposal to
change the designation of 0W9J3ZX from an O.R. procedure to non-O.R.
procedure, effective October 1, 2019.
(3) Percutaneous Removal of Drainage Device
One requestor identified two ICD-10-PCS procedure codes that
describe procedures involving the percutaneous placement and removal of
drainage devices from the pancreas. These two ICD-10-PCS procedure
codes are: 0FPG30Z (Removal of drainage device from pancreas,
percutaneous approach) and 0F9G30Z (Drainage of pancreas with drainage
device, percutaneous approach). ICD-10-PCS procedure code 0FPG30Z is
currently recognized as an O.R. procedure for purposes of MS-DRG
assignment, while ICD-10-PCS procedure code 0F9G30Z is not recognized
as an O.R. procedure for purposes of MS-DRG assignment. The requestor
stated that percutaneous placement of drains is typically performed in
a radiology suite under image guidance and removal of a drain would not
be more resource intensive than its placement.
We stated in the proposed rule that we agreed with the requestor
that these procedures do not typically require the resources of an
operating room. Therefore, we proposed to remove ICD-10-PCS procedure
code 0FPG30Z from the FY 2020 ICD-10 MS-DRG Version 37 Definitions
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index as an O.R. procedure. We stated that, under this proposal,
this procedure would no longer impact MS-DRG assignment.
Comment: Commenters supported the proposal to change the
designation of 0FPG30Z to a non-O.R. procedure. The commenters stated
that the proposal was reasonable, given the data and information
provided.
A commenter stated that CMS should not consider any requests to
modify the designation of procedures as O.R. or non-O.R. for FY 2020.
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS
plans to conduct a comprehensive systematic review of the ICD-10-PCS
procedure codes. The commenter suggested that reassignment requests
should be held until the review has been completed.
Response: We appreciate the commenters' support. We do not agree
with the commenter who stated that we should not reassign any
procedures as O.R. or non-O.R; rather, while some requests may involve
a broader review of additional ranges of ICD-10-PCS codes, such that we
believe they are more appropriately considered as part of our
comprehensive review of procedure codes, we generally believe it is
more accurate to address requests to change the designation of
procedures as OR or non-OR as they arise rather than waiting for the
comprehensive review, which is a multiyear project. After consideration
of the public comments we received, we are finalizing our proposal to
change the designation of 0FPG30Z from an O.R. procedure to a non-O.R.
procedure, effective October 1, 2019.
c. Non-O.R. Procedures to O.R. Procedures
(1) Percutaneous Occlusion of Gastric Artery
One requestor identified two ICD-10-PCS procedure codes that
describe percutaneous occlusion and restriction of the gastric artery
with intraluminal device, ICD-10-PCS procedure codes 04L23DZ (Occlusion
of gastric artery with intraluminal device, percutaneous approach) and
04V23DZ (Restriction of gastric artery with intraluminal device,
percutaneous approach), that the requestor stated are currently not
recognized as O.R. procedures for purposes of MS-DRG assignment. The
requestor noted that transcatheter endovascular embolization of the
gastric artery with intraluminal devices uses comparable resources to
transcatheter endovascular embolization of the gastroduodenal artery.
The requestor stated that ICD-10-PCS procedure codes 04L33DZ (Occlusion
of hepatic artery with intraluminal device, percutaneous approach) and
04V33DZ (Restriction of hepatic artery with intraluminal device,
percutaneous approach) are recognized as O.R. procedures for purposes
of MS-DRG assignment, and ICD-10-PCS procedure codes 04L23DZ and
04V23DZ should therefore also be recognized as O.R. procedures for
purposes of MS-DRG assignment. We note that, contrary to the
requestor's statement, ICD-10-PCS procedure code 04V23DZ is already
recognized as an O.R. procedure for purposes of MS-DRG assignment.
We stated in the proposed rule that we agreed with the requestor
that ICD-10-PCS procedure code 04L23DZ typically requires the resources
of an operating room. Therefore, we proposed to add this code to the FY
2020 ICD-10 MS-DRG Version 37 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index as an O.R.
procedure assigned to MS-DRGs 270, 271, and 272 (Other Major
Cardiovascular Procedures with MCC, CC, without CC/MCC, respectively)
in MDC 05 (Diseases and Disorders of the Circulatory System); MS-DRGs
356, 357, and 358 (Other Digestive System O.R. Procedures, with MCC,
CC, without CC/MCC, respectively) in MDC 06 (Diseases and Disorders of
the Digestive System); MS-DRGs 907, 908, and 909 (Other O.R. Procedures
for Injuries with MCC, CC, without CC/MCC, respectively) in MDC 21
(Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957,
958, and 959 (Other O.R. Procedures for Multiple Significant Trauma
with MCC,
[[Page 42144]]
CC, without CC/MCC, respectively) in MDC 24 (Multiple Significant
Trauma).
Comment: Commenters supported the proposal to change the
designation of 04L23DZ from a non-O.R. to O.R. procedure. The
commenters stated that the proposal was reasonable, given the data and
information provided. A commenter noted that this change better
reflects the resources required to perform the procedure and better
aligns its designation with the designation of other procedures of
similar technical difficulty.
A commenter stated that CMS should not consider any requests to
modify the designation of procedures as O.R. or non-O.R. for FY 2020.
As stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19230), CMS
plans to conduct a comprehensive systematic review of the ICD-10-PCS
procedure codes. The commenter suggested that reassignment requests
should be held until the review has been completed.
Response: We appreciate the commenters' support. We do not agree
with the commenter who stated that we should not reassign any
procedures as O.R. or non-O.R; rather, while some requests may involve
a broader review of additional ranges of ICD-10-PCS codes, such that we
believe they are more appropriately considered as part of our
comprehensive review of procedure codes, we generally believe it is
more accurate to address requests to change the designation of
procedures as OR or non-OR as they arise rather than waiting for the
comprehensive review, which is a multiyear project. After consideration
of the public comments we received, we are finalizing our proposal to
change the designation of 04L23DZ from non-O.R. procedure to O.R.
procedure, effective October 1, 2019.
(2) Endoscopic Insertion of Endobronchial Valves
As noted in the FY 2020 IPPS/LTCH PPS proposed rule, in the FY 2019
IPPS/LTCH PPS final rule (83 FR 41257), we discussed a comment we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule
regarding eight ICD-10-PCS procedure codes that describe endobronchial
valve procedures that the commenter believed should be designated as
O.R. procedures. The codes are identified in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.103
The commenter stated that these procedures are most commonly
performed in the O.R., given the need for better monitoring and support
through the process of identifying and occluding a prolonged air leak
using endobronchial valve technology. The commenter also noted that
other endobronchial valve procedures have an O.R. designation. We noted
that, in the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS
procedure codes are not recognized as O.R. procedures for purposes of
MS-DRG assignment. The commenter requested that these eight procedure
codes be assigned to MS-DRG 163 (Major Chest Procedures with MCC) due
to similar cost and resource use. As discussed in the FY 2019 IPPS/LTCH
PPS final rule, our clinical advisors disagreed with the commenter that
the eight identified procedures typically require the use of an
operating room, and believed that these procedures would typically be
performed in an endoscopy suite. Therefore, we did not finalize a
change to the eight procedure codes describing endoscopic insertion of
an endobronchial valve listed in the table above for FY 2019 under the
ICD-10 MS-DRGs Version 36.
After publication of the FY 2019 IPPS/LTCH PPS final rule, we
received feedback from several stakeholders expressing continued
concern with the designation of the eight ICD-10-PCS procedure codes
describing the endoscopic insertion of an endobronchial valve listed in
the table
[[Page 42145]]
above, including requests to reconsider the designation of these codes
for FY 2020. Some requestors stated that while they appreciated CMS'
attention to the issue, they believed that important clinical and
financial factors had been overlooked. The requestors noted that while
the site of care is an important consideration for MS-DRG assignment,
there are other clinical factors such as case complexity, patient
health risk and the need for anesthesia that also affect hospital
resource consumption and should influence MS-DRG assignment. With
regard to complexity, the requestors stated that many of these patients
are high-risk, often recovering from major lung surgery and have
significantly compromised respiratory function. According to one
requestor, these patients may have major comorbidities, such as cancer
or emphysema contributing to longer lengths of stay in the hospital.
This requestor acknowledged that procedures performed for the
endoscopic insertion of an endobronchial valve are often, but not
always, performed in the O.R., however, the requestor also noted this
should not preclude the designation of these procedures as O.R.
procedures since there have been other examples of reclassification
requests where the combination of factors, such as treatment
difficulty, resource utilization, patient health status, and anesthesia
administration were considered in the decision to change the
designation for a procedure from non-O.R. to O.R. Another requestor
stated that CMS' current designation of a procedure involving the
endoscopic insertion of an endobronchial valve as a non-O.R. procedure
is not reflective of actual practice and this designation has payment
consequences that may affect access to the treatment for a vulnerable
patient population, with limited treatment options. The requestor
recommended that procedures involving the endoscopic insertion of an
endobronchial valve should be designated as O.R. procedures and
assigned to MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC,
with CC and without CC/MCC, respectively). In addition, a few of the
requestors also conducted their own analyses and indicated that if
procedures involving the endoscopic insertion of an endobronchial valve
were to be assigned to MS-DRGs 163, 164, and 165, the average costs of
the cases reporting a procedure code describing the endoscopic
insertion of an endobronchial valve would still be higher compared to
all the cases in the assigned MS-DRG.
As indicated in the FY 2020 IPPS/LTCH PPS proposed rule, we
examined claims data from the September 2018 update of the FY 2018
MedPAR file for MS-DRGs 163, 164 and 165 to identify cases reporting
any one of the eight procedure codes listed in the above table
describing the endoscopic insertion of an endobronchial valve. We
stated that cases reporting one of these procedure codes would be
assigned to MS-DRG 163, 164, or 165 if at least one other procedure
that is designated as an O.R. procedure and assigned to these MS-DRGs
was also reported on the claim. In addition, cases reporting a
procedure code describing the endoscopic insertion of an endobronchial
valve with a different surgical approach are assigned to MS-DRGs 163,
164, and 165. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.104
We found a total of 10,812 cases in MS-DRG 163 with an average
length of stay of 11.6 days and average costs of $33,433. Of those
10,812 cases, we found 49 cases reporting a procedure for the
endoscopic insertion of an endobronchial valve with an average length
of stay of 21.1 days and average costs of $53,641. For MS-DRG 164, we
found a total of 14,800 cases with an average length of stay of 5.6
days and average costs of $18,202. Of those 14,800 cases, we found 23
cases reporting a procedure for the endoscopic insertion of an
endobronchial valve with an average length of stay of 14 days and
average costs of $37,287. For MS-DRG 165, we found a total of 7,907
cases with an average length of stay of 3.3 days and average costs of
$13,408. Of those 7,907 cases, we found 3 cases reporting a procedure
for the endoscopic insertion of an endobronchial valve with an average
length of stay of 18.3 days and average costs of $39,249.
We also examined claims data to identify any cases reporting any
one of the eight procedure codes listed in the table above describing
the endoscopic insertion of an endobronchial valve within MS-DRGs 166,
167, and 168 (Other Respiratory System O.R. Procedures with MCC, with
CC, and without CC/MCC, respectively). We further stated that cases
reporting one of these procedure codes would be assigned to MS-DRG 166,
167, or 168 if at least one other procedure that is designated as an
O.R. procedure and assigned to these MS-DRGs was also reported on the
claim. In addition, MS-DRGs 166, 167, and 168 are the other
[[Page 42146]]
surgical MS-DRGs where cases reporting a respiratory diagnosis within
MDC 4 would be assigned. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.105
We found a total of 16,050 cases in MS-DRG 166 with an average
length of stay of 10.6 days and average costs of $26,645. Of those
16,050 cases, we found 11 cases reporting a procedure for the
endoscopic insertion of an endobronchial valve with an average length
of stay of 25.7 days and average costs of $71,700. For MS-DRG 167, we
found a total of 8,165 cases with an average length of stay of 5.3 days
and average costs of $13,687. Of those 8,165 cases, we found 4 cases
reporting a procedure for the endoscopic insertion of an endobronchial
valve with an average length of stay of 10 days and average costs of
$28,847. For MS-DRG 168, we found a total of 2,430 cases with an
average length of stay of 2.8 days and average costs of $9,645. Of
those 2,430 cases, we indicated that we did not find any cases
reporting a procedure for the endoscopic insertion of an endobronchial
valve.
The results of our data analysis indicate that cases reporting a
procedure for the endoscopic insertion of an endobronchial valve in MS-
DRGs 163, 164, 165, 166, and 167 have a longer length of stay and
higher average costs when compared to all the cases in their assigned
MS-DRG. We stated in the proposed rule that because the data are based
on surgical MS-DRGs 163, 164, 165, 166 and 167, and the procedure codes
for endoscopic insertion of an endobronchial valve are currently
designated as non-O.R. procedures, there was at least one other O.R.
procedure reported on the claim resulting in case assignment to one of
those MS-DRGs. Our clinical advisors indicated that because there was
another O.R. procedure reported, the insertion of the endobronchial
valve procedure may or may not have been the main determinant of
resource use for those cases. Therefore, we conducted further analysis
to evaluate cases for which no other O.R. procedure was performed with
the endoscopic insertion of an endobronchial valve and case assignment
resulted in a medical MS-DRG. Our findings are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.106
[[Page 42147]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.107
We further stated in the proposed rule that the data indicate that
there is a wide variation in the average length of stay and average
costs for cases reporting a procedure for the endoscopic insertion of
an endobronchial valve, with volume generally low across MS-DRGs. As
shown in the table, for several of the medical MS-DRGs, there was only
one case reporting a procedure for the endoscopic insertion of an
endobronchial valve. The highest volume of cases reporting a procedure
for the endoscopic insertion of an endobronchial valve was found in MS-
DRG 199 (Pneumothorax with MCC) with a total of 28 cases with an
average length of stay of 16.4 days and average costs of $38,384. The
highest average costs and longest average length of stay for cases
reporting a procedure for the endoscopic insertion of an endobronchial
valve was $67,299 in MS-DRG 207 (Respiratory System Diagnosis with
Ventilator Support >96 Hours or Peripheral Extracorporeal Membrane
Oxygenation (ECMO)) where 4 cases were found with an average length of
stay of 20 days. Overall, there was a total of 91 cases reporting the
insertion of an endobronchial valve procedure with an average length of
stay of 13.7 days and average costs of $33,377 across the medical MS-
DRGs.
Our clinical advisors agreed that the subset of patients who
undergo endoscopic insertion of an endobronchial procedure are complex
and may have multiple comorbidities such as severe underlying lung
disease that impact the hospital length of stay. We stated that they
also believe that, as we begin the process of refining how procedure
codes may be classified under ICD-10-PCS, including designation of a
procedure as O.R. or non-O.R., we should take into consideration
whether the procedure is driving resource use for the admission. (We
refer the reader to section II.F.13.a. of the preamble of this final
rule for the discussion of our plans to conduct a comprehensive review
of the ICD-10-PCS procedure codes). Based on the claims data analysis,
which show a wide variation in average costs for cases reporting
endoscopic insertion of an endobronchial valve without an O.R.
procedure, we stated that our clinical advisors are not convinced that
endoscopic insertion of an endobronchial valve is a key contributing
factor to the consumption of resources as reflected in the data. We
stated that they also believe, in review of the procedures that are
currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168, that
further refinement of these MS-DRGs may be warranted. For these
reasons, we stated in the proposed rule that, at this time, our
clinical advisors do not support designating endoscopic insertion of an
endobronchial valve as an O.R. procedure, nor do they support
assignment of these procedures to MS-DRGs 163, 164, and 165 until
additional analyses can be performed for this subset of patients as
part of the comprehensive procedure code review.
For the reasons described above and in the proposed rule, we did
not propose to change the current non-O.R. designation of the eight
ICD-10-PCS procedure codes that describe endoscopic insertion of an
endobronchial valve. However, we stated that because we agreed that
endoscopic insertion of an endobronchial valve procedures are performed
on clinically complex patients, we believe it may be
[[Page 42148]]
appropriate to consider designating these procedures as non-O.R.
affecting specific MS-DRGs for FY 2020. Therefore, we requested public
comment on designating these procedure codes as non-O.R. procedures
affecting the MS-DRG assignment, including the specific MS-DRGs that
cases reporting the endoscopic insertion of an endobronchial valve
should affect for FY 2020. As we noted in the proposed rule, it is not
clear based on the claims data to what degree the endoscopic insertion
of an endobronchial valve is a contributing factor for the consumption
of resources for these clinically complex patients and given the
potential refinement that may be needed for MS-DRGs 163, 164, 165, 166,
167, and 168, we solicited comment on whether cases reporting the
endoscopic insertion of an endobronchial valve should affect any of
these MS-DRGs or other MS-DRGs.
Comment: Several commenters disagreed with our proposal to not
designate the eight procedure codes describing endoscopic insertion of
an endobronchial valve procedure as an O.R. procedure until additional
analyses can be performed as part of the comprehensive procedure code
review. Commenters urged CMS to include the eight procedure codes
discussed above in the GROUPER logic for MS-DRGs 163, 164, and 165
based on the analysis that was presented in the proposed rule effective
FY 2020. A commenter noted that the analysis showed that cases in
surgical MS-DRGs 163, 164, 165, 166 and 167 reporting the endoscopic
insertion of an endobronchial valve had longer length of stays and
higher average costs than other cases in those MS-DRGs. The commenter
stated that the analysis showed that most cases in the medical MS-DRGs
reporting the endoscopic insertion of an endobronchial valve had costs
significantly higher than the relative weights of the medical DRGs.
This commenter also stated that the skill level required for placement,
anesthesia (even if performed outside the O.R.), and the severity level
of the patient increase costs beyond that recognized within the medical
MS-DRGs. The commenter further stated that because CMS's data supports
a higher severity level, higher costs, and longer length of stays for
patients who undergo endoscopic insertion of an endobronchial valve,
they recommended reclassifying the eight procedure codes to O.R. status
effective FY 2020, and grouping to MS-DRGs 163, 164 and 165 within MDC
4, to MS-DRG 853 when sepsis is principal diagnosis, and to MS-DRGs
981, 982, and 983 when there is an unrelated principal diagnosis. The
commenter stated their belief that further delay of a relative weight
increase for these procedures is not warranted nor supported. Another
commenter commended CMS for soliciting comments on whether to consider
any of the eight procedure codes describing the endoscopic insertion of
an endobronchial valve procedure as non-O.R. impacting the MS-DRG
assignment. This commenter recommended assigning all eight procedure
codes identifying the endoscopic insertion of an endobronchial valve
without another O.R. procedure to MS-DRGs 163, 164, and 165 for
clinical coherence. According to the commenter, there are currently no
medical MS-DRGs with clinically similar procedures or costs, therefore,
assignment to MS-DRGs 163, 164 and 165 would ensure adequate payment to
providers for these procedures. This commenter also stated that the
costs associated with the endoscopic insertion of an endobronchial
valve are a significant contributing factor to the higher average costs
and length of stay in comparison to clinically similar cases that do
not involve the endoscopic insertion of an endobronchial valve.
Response: We appreciate the commenters' feedback on the designation
of the eight procedure codes describing the endoscopic insertion of an
endobronchial valve. We agree with the commenter that the analysis in
the proposed rule showed that cases reporting a procedure for the
endoscopic insertion of an endobronchial valve in MS-DRGs 163, 164,
165, 166, and 167 have a longer length of stay and higher average costs
when compared to all the cases in their assigned MS-DRG. As noted
above, we stated in the proposed rule that because the data are based
on surgical MS-DRGs 163, 164, 165, 166 and 167, there was at least one
other O.R. procedure reported on the claim resulting in case assignment
to one of those MS-DRGs. We also acknowledge that the analysis in the
proposed rule showed that most cases in the medical MS-DRGs reporting
the endoscopic insertion of an endobronchial valve demonstrated costs
higher than the relative weights of the medical DRGs. While our
clinical advisors continue to believe it is unclear (based on the
claims data) to what degree the endoscopic insertion of an
endobronchial valve is a contributing factor for the consumption of
resources for these clinically complex patients, they agree, as noted
in the proposed rule, that the subset of patients who undergo
endoscopic insertion of an endobronchial procedure are complex and may
have multiple comorbidities such as severe underlying lung disease that
impact the hospital length of stay. Our clinical advisors also continue
to believe that further refinement of surgical MS-DRGs 163, 164, 165,
166 and 167 may be warranted because there are other procedure codes
describing the insertion of endobronchial valve procedures by various
approaches that are currently assigned to MS-DRGs 163, 164, and 165 and
are designated as O.R. procedures, which our clinical advisors believe
may require further analysis with respect to utilization of resources
and designation as O.R. versus non-O.R. There are also other procedure
codes currently assigned to MS-DRGs 163, 164 and 165 that describe
procedures being performed on body parts other than those related to
the chest. For example, we found codes describing laser interstitial
thermal therapy (LITT) of several gastrointestinal body parts that do
not appear to be clinically coherent. With regard to MS-DRGs 166 and
167, our clinical advisors believe that these MS-DRGs may require
further consideration for potential restructuring in connection with
the ongoing evaluation of severity level designations and also as a
result of the finalized policy (as discussed in section II.F.3. of the
preamble of this final rule) regarding the deletion of several
procedure codes that contain the qualifier ``bifurcation'' which are
currently assigned to MS-DRGs 166 and 167 (as well as MS-DRG 168). For
these reasons, our clinical advisors believe additional analysis of
these surgical MS-DRGs is needed. In response to the commenter who
suggested that cases reporting one of the eight procedure codes
describing the endoscopic insertion of an endobronchial procedure
should group to MS-DRG 853 (Infectious & Parasitic Diseases with O.R.
Procedure with MCC) when sepsis is the principal diagnosis, and to MS-
DRGs 981, 982, and 983 when there is an unrelated principal diagnosis,
we note that, as shown in the proposed rule and above, our analysis of
the cases reporting the endoscopic insertion of an endobronchial valve
in a medical MS-DRG did not result in any cases being found in MS-DRG
853 and our clinical advisors do not agree with assignment of these
procedures to that MS-DRG in the absence of further analysis. We also
note that, because our clinical advisors continue to believe that
endoscopic insertion of an endobronchial valve
[[Page 42149]]
should not be designated as an O.R. procedure, they do not support the
recommendation for assignment to MS-DRGs 981, 982, and 983 as those MS-
DRGs are defined by procedures designated as extensive O.R. procedures.
We refer the reader to section II.F.13.a. of the preamble in this final
rule, for detailed information on how the designation of each ICD-10-
PCS procedure code on a claim impacts the MS-DRG assignment.
In the proposed rule we stated that we agreed that endoscopic
insertion of an endobronchial valve procedures are performed on
clinically complex patients and that we believed it may be appropriate
to consider designating these procedures as non-O.R. affecting specific
MS DRGs for FY 2020. Our clinical advisors support the commenters'
recommendation for the assignment of cases reporting the endoscopic
insertion of an endobronchial valve to MS-DRGs 163, 164, and 165 under
the current structure of the ICD-10 MS-DRGs for clinical coherence with
the other insertion of endobronchial valve procedures currently
assigned to those MS-DRGs and based on the data analysis. Our clinical
advisors acknowledge that the data analysis presented in the proposed
rule demonstrated that cases reporting a procedure for the endoscopic
insertion of an endobronchial valve in MS-DRGs 163, 164, 165, 166, and
167 have a longer length of stay and higher average costs when compared
to all the cases in their assigned MS-DRG, however, the average costs
and length of stay for those cases are more aligned with MS-DRGs 163,
164 and 165 than MS- DRGs 166, 167, and 168 or any other MS-DRGs within
MDC 4 at this time. (As noted in the proposed rule, we did not find any
cases reporting a procedure for the insertion of an endobronchial valve
in MS-DRG 168).
After consideration of the public comments we received and for the
reasons described above, we are finalizing the designation of the eight
procedure codes listed earlier in this section that describe the
endoscopic insertion of an endobronchial valve as non-O.R. affecting
MS-DRGs 163, 164 and 165 (Major Chest Procedures with MCC, with CC and
without CC/MCC, respectively) under the ICD-10 MS-DRGs Version 37,
effective October 1, 2019.
14. Changes to the MS-DRG Diagnosis Codes for FY 2020
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. Overview of Comprehensive CC/MCC Analysis
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described
our process for establishing three different levels of CC severity into
which we would subdivide the diagnosis codes. The categorization of
diagnoses as an MCC, a CC, or a non-CC was accomplished using an
iterative approach in which each diagnosis was evaluated to determine
the extent to which its presence as a secondary diagnosis resulted in
increased hospital resource use. We refer readers to the FY 2008 IPPS/
LTCH PPS final rule (72 FR 47159) for a complete discussion of our
approach. Since this comprehensive analysis was completed for FY 2008,
we have evaluated diagnosis codes individually when receiving requests
to change the severity level of specific diagnosis codes. However,
given the transition to ICD-10-CM and the significant changes that have
occurred to diagnosis codes since this review, we stated in the
proposed rule that we believe it is necessary to conduct a
comprehensive analysis once again. We further stated that we had
completed this analysis and we were discussing our findings in the
proposed rule. We used the same methodology utilized in FY 2008 to
conduct this analysis, as described below.
For each secondary diagnosis, we measured the impact in resource
use for the following three subsets of patients:
(1) Patients with no other secondary diagnosis or with all other
secondary diagnoses that are non-CCs.
(2) Patients with at least one other secondary diagnosis that is a
CC but none that is an MCC.
(3) Patients with at least one other secondary diagnosis that is an
MCC.
Numerical resource impact values were assigned for each diagnosis
as follows:
[GRAPHIC] [TIFF OMITTED] TR16AU19.108
[[Page 42150]]
Each diagnosis for which Medicare data were available was evaluated
to determine its impact on resource use and to determine the most
appropriate CC subclass (non-CC, CC, or MCC) assignment. In order to
make this determination, the average cost for each subset of cases was
compared to the expected cost for cases in that subset. The following
format was used to evaluate each diagnosis:
[GRAPHIC] [TIFF OMITTED] TR16AU19.109
Count (Cnt) is the number of patients in each subset and C1, C2,
and C3 are a measure of the impact on resource use of patients in each
of the subsets. The C1, C2, and C3 values are a measure of the ratio of
average costs for patients with these conditions to the expected
average cost across all cases. The C1 value reflects a patient with no
other secondary diagnosis or with all other secondary diagnoses that
are non-CCs. The C2 value reflects a patient with at least one other
secondary diagnosis that is a CC but none that is a major CC. The C3
value reflects a patient with at least one other secondary diagnosis
that is a major CC. A value close to 1.0 in the C1 field would suggest
that the code produces the same expected value as a non-CC diagnosis.
That is, average costs for the case are similar to the expected average
costs for that subset and the diagnosis is not expected to increase
resource usage. A higher value in the C1 (or C2 and C3) field suggests
more resource usage is associated with the diagnosis and an increased
likelihood that it is more like a CC or major CC than a non-CC. Thus, a
value close to 2.0 suggests the condition is more like a CC than a non-
CC but not as significant in resource usage as an MCC. A value close to
3.0 suggests the condition is expected to consume resources more
similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8
for a secondary diagnosis means that for the subset of patients who
have the secondary diagnosis and have either no other secondary
diagnosis present, or all the other secondary diagnoses present are
non-CCs, the impact on resource use of the secondary diagnoses is
greater than the expected value for a non-CC by an amount equal to 80
percent of the difference between the expected value of a CC and a non-
CC (that is, the impact on resource use of the secondary diagnosis is
closer to a CC than a non-CC).
These mathematical constructs are used as guides in conjunction
with the judgment of our clinical advisors to classify each secondary
diagnosis reviewed as an MCC, a CC, or a non-CC. Our clinical advisors
reviewed the resource use impact reports and suggested modifications to
the initial CC subclass assignments when clinically appropriate.
c. Changes to Severity Levels
(1) General
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19235 through 19246), the diagnosis codes for which we proposed a
change in severity level designation as a result of the analysis
described in that proposed rule were shown in Table 6P.1c. associated
with that proposed rule (which is available via the internet on the CMS
website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). Using the method described above
to perform our comprehensive CC/MCC analysis, our clinical advisors
recommended a change in the severity level designation for 1,492 ICD-
10-CM diagnosis codes. As shown in Table 6P.1c. associated with the FY
2020 IPPS/LTCH PPS proposed rule, the proposed changes to severity
level resulting from our comprehensive analysis moved some diagnosis
codes to a higher severity level designation and other diagnosis codes
to a lower severity level designation, as indicated in the two columns
which display CMS' FY 2019 classification in column C and the proposed
changes for FY 2020 in column D. We refer readers to the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19235 through 19246) for a complete
discussion of our proposals, including a summary of the proposed
changes and illustrations of proposed severity level changes.
We invited public comments on our proposed severity level
designations for the diagnosis codes as shown in Table 6P.1c associated
with the proposed rule. We received many comments on the proposals,
with the majority of commenters requesting that the adoption of the
proposed changes be delayed in order to provide additional time to
evaluate given the broad scope of the proposed changes. As discussed in
more detail below, after consideration of the public comments we
received, we are generally not finalizing our proposed changes to the
severity level designations for the ICD-10-CM diagnosis codes as shown
in Table 6P.1c associated with the proposed rule, with the exception of
the proposed changes to the codes related to antimicrobial resistance
as discussed in greater detail below. Below we provide a summary of the
comments we received and our response.
Comment: Commenters expressed support for a limited number of the
proposed changes in severity level, including the proposed change in
severity level designation for diagnosis codes E83.39 (Other disorders
of phosphorus metabolism), E83.51 (Hypocalcemia), R62.7 (Adult failure
to thrive), R63.3 (Feeding difficulties), Z16.12 (Extended spectrum
beta lactamase (ESBL) resistance), Z16.21 (Resistance to vancomycin),
Z16.24 (Resistance to multiple antibiotics), and Z16.39 (Resistance to
other specified antimicrobial drug) from a non-CC to a CC. Commenters
stated their belief that these proposals were reasonable and reflect
the resource utilization for these diagnoses.
However, many commenters expressed concern with the proposed
severity level designation changes overall and recommended CMS conduct
further analysis prior to finalizing any proposals. Specifically,
commenters expressed concern that the extensive changes proposed to the
severity level designations for the ICD-10-CM diagnosis codes as shown
in Table 6P.1c, the majority of which would be a lower severity level
(for example, CC to a non-CC), would no longer appropriately reflect
resource use for patient care and could have a significant unintended
or improper adverse financial impact. In addition, some commenters
believed there was not sufficient time to review the nearly 1,500
diagnosis codes for which a change to the severity designation was
proposed, noting that CMS engaged in its analysis for over a year
before making any comprehensive proposals, and because there have been
significant changes that have occurred to diagnosis codes since the
transition to ICD-10-CM, in particular the exponential increase in the
number of codes. Other general themes reflected in the comments
included desire for more transparency and stakeholder
[[Page 42151]]
engagement, the belief that clinical severity was not consistently
reflected in the proposed severity level designations, and concern
regarding the impact on Medicaid and private payers, stating such
payers often base their payment amount on Medicare.
Some commenters stated that the information provided was not
sufficient to adequately explain the proposed changes in severity level
designations for certain diagnosis codes or families of codes. Other
commenters were concerned that CMS' stated criteria were not met for
some of the proposed changes to severity designations and specifically
noted instances where diagnoses that appear to be clinically less
severe (and therefore require less resources) were proposed to be
assigned a higher severity level designation than other diagnoses that
they believe require more resources. Another commenter recommended that
any changes be phased in to allow time to assess the impacts such
modifications would have on hospitals and patients.
Response: We thank commenters for their comments on our proposed
changes. After consideration of the public comments we received, and
for the reasons discussed below, we agree it would be premature to
adopt broad changes to the severity designations at this time. We agree
with commenters that there have been significant changes to the scope
and complexity of diagnosis codes since the transition to ICD-10-CM. We
also believe that at this time it would be prudent to further examine
the proposed severity designations to ensure they would appropriately
reflect resource use based on review of the data as well as
consideration of relevant clinical factors (for example, the clinical
nature of each of the secondary diagnoses and the severity level of
clinically similar diagnoses, as explained above) and improve the
overall accuracy of the IPPS payments. Postponing the adoption of
comprehensive changes in severity level designations will allow us to
incorporate review of additional ICD-10 claims data as it becomes
available and to fully consider the technical feedback provided from
the public on the proposed rule. This would also allow further
opportunity to provide additional background to the public on the
methodology utilized and clinical rationale applied across diagnostic
categories to assist the public in its review, such as making a test
GROUPER publicly available to allow for impact testing. In addition, we
can consider further whether it is appropriate to propose to make such
comprehensive changes all at once or in phases, as suggested by some
commenters.
Furthermore, this will afford an opportunity for us to explore
additional means of eliciting feedback on the current severity level
designations after the final rule and prior to the November 1, 2019
deadline for MS-DRG requests, comments and suggestions for FY 2021,
such as holding an open door forum to solicit additional feedback. When
providing additional feedback or comments, we encourage the public to
provide a detailed explanation of why a specific severity level
designation for a diagnosis code would ensure that designation
appropriately reflects resource use. We also invite feedback regarding
other possible ways we can approach the implementation of our proposed
comprehensive changes to severity level designations, such as a phased-
in approach or changes by specific code categories or MDCs. In summary,
for the reasons discussed above, we are generally not finalizing our
proposed changes to the severity designations for the ICD-10-CM
diagnosis codes as shown in Table 6P.1c associated with the proposed
rule, other than the changes to the severity level designations for the
diagnosis codes in category Z16- (Resistance to antimicrobial drugs)
from a non-CC to a CC, as discussed in more detail below.
Comment: As noted above, we received comments supporting our
proposed change in severity level designation for diagnosis codes
related to antimicrobial resistance (that is, Z16.12 (Extended spectrum
beta lactamase (ESBL) resistance), Z16.21 (Resistance to vancomycin),
Z16.24 (Resistance to multiple antibiotics), and Z16.39 (Resistance to
other specified antimicrobial drug) from a non-CC to a CC. These
commenters stated that they agree that patients with an ICD-10-CM
secondary diagnosis code indicating that they were treated for an
infection resistant to antibiotics should be, at a minimum, assigned a
CC severity level designation. They asserted that the resources
required to treat patients suffering from antimicrobial resistant
infections should warrant a higher severity designation, and indicated
that caring for patients with these complications is more resource
intensive, including the need for stronger, different, or extra
antibiotics. Commenters further indicated that the higher resources
required to treat patients suffering from antimicrobial resistant
infections are particularly relevant with respect to Medicare
beneficiaries because they are vulnerable to drug-resistant infections
due to greater exposure to resistant bacteria (e.g., via catheter
infection or from other chronic diseases). These commenters expressed
significant concerns related to the public health crisis represented by
antimicrobial resistance and urged CMS to also apply the change in the
severity level designation from non-CC to CC to the other ICD 10-CM
diagnosis codes specifying antimicrobial drug resistance. A few of
these commenters made recommendations for certain ICD-10-CM diagnosis
codes that specify antimicrobial drug resistance either in addition to
or in lieu of the codes included in our proposal. However, many of
these commenters recommended that we also apply the change in the
severity level designation from non-CC to CC to the other ICD-10-CM
diagnosis codes specifying antimicrobial drug resistance (that is, the
other diagnosis codes in category Z16-(Resistance to antimicrobial
drugs).
Response: We understand the concerns expressed by commenters
related to the public health crisis that antimicrobial resistance
represents. Addressing these concerns is consistent with the
Administration's key priorities, and we have taken into consideration
their statements that it clinically requires greater resources to treat
patients suffering from antimicrobial resistant infections. For
example, antimicrobial resistance results in a substantial number of
additional hospital days for Medicare beneficiaries (estimated to be
more than 600,000 additional days in the hospital each year), resulting
in additional costs and resources to care for these patients.\1\ For
these reasons, while we are continuing to examine the implementation of
broader comprehensive changes to the CC/MCC designations, we believe it
is appropriate to finalize the change in the severity level
designations from non-CC to CC for the ICD-10-CM diagnosis codes
specifying antimicrobial drug resistance. We also agree with the
commenters that the change in severity level designation should also
apply to the other ICD-10-CM diagnosis codes that specify antimicrobial
drug resistance. We believe this would be consistent with our proposal
because these codes, which identify the resistance and non-
responsiveness of a condition to antimicrobial drugs, are in the same
family of codes (Z16) as the previously listed diagnosis codes related
to antimicrobial resistance (that is, Z16.12, Z16.21, Z16.24, and
Z16.39). Therefore, we are finalizing a change to the severity level
designation for all of
[[Page 42152]]
the codes in category Z16- (Resistance to antimicrobial drugs), which
are listed below, from a non-CC to a CC designation.
---------------------------------------------------------------------------
\1\ Internal analysis from the Centers for Disease Control and
Prevention.
[GRAPHIC] [TIFF OMITTED] TR16AU19.110
(We refer readers to sections II.H.8. and II.H.9. of the preamble
of this final rule for a discussion of new technology add-on payment
policies related to antimicrobial resistance.)
d. Requested Changes to Severity Levels
In the FY 2020 IPPS/LTCH PPS proposed rule (19246 through 19250) we
discussed the external requests we received to make changes for the
severity level designations of diagnosis codes in seven specific groups
which included (1) Acute Right Heart Failure, (2) Chronic Right Heart
Failure, (3) Ascites in Alcoholic Liver Disease and Toxic Liver
Disease, (4) Factitious Disorder Imposed on Self, (5) Nonunion and
Malunion of Physeal Metatarsal Fractures, (6) Other Encephalopathy, and
(7) Obstetrics Chapter Codes. As these requests were external requests
we discussed them separately from the comprehensive CC/MCC analysis,
however, we utilized the same approach and methodology, consistent with
our annual process of reviewing requested changes to severity levels.
We note that, for the seven groups of external requests we received, we
did not propose any changes to the severity levels of the diagnosis
codes based on the results of our data analysis and the input of our
clinical advisors, with the exception of group (7) Obstetrics Chapter
Codes. We also note that we solicited comments on, but did not
specifically propose changes for, the diagnosis codes discussed from
group (1) Acute Right Heart Failure.
Some commenters disagreed with our decision not to propose changes
in the severity level designation for certain groups of codes, for
example the acute right heart failure and ascites codes, and
recommended that we finalize changes to the severity levels, stating
that the resources required are similar to the existing codes. Other
commenters specifically recommended that we postpone any decisions
related to the obstetrics chapter codes and work with a panel of
provider stakeholders. As we indicated in the proposed rule, given the
limited number of cases reporting ICD-10-CM obstetrical codes in the
Medicare claims data, we are considering use of datasets other than
MedPAR cost data for future evaluation of severity level designation
for the ICD-10-CM diagnosis codes from the Obstetrics chapter of the
ICD-10-CM classification.
As discussed above, after consideration of the public comments
received, we are generally not finalizing our proposed changes to the
severity level designations for the ICD-10-CM diagnosis codes that were
reviewed as part of the comprehensive CC/MCC analysis and shown in
Table 6P.1c associated with the proposed rule. Similarly, we are not
finalizing any proposed changes to the obstetric chapter diagnosis
codes for FY 2020, to allow for further consideration of these codes as
part of our comprehensive analysis as well as further consideration of
the use of additional data sets for these particular codes, given the
limited number of cases reported in the Medicare claims data. We are
also finalizing our proposals to maintain the current severity level
designations for the remaining six groups of diagnosis codes listed
above for FY 2020. We will continue to consider the public comments
received on the external requests for changes to severity level
designations as we review and consider the public comments on our
comprehensive CC/MCC analysis.
e. Additions and Deletions to the Diagnosis Code Severity Levels for FY
2020
The following tables identify the additions and deletions to the
diagnosis code MCC severity levels list and the
[[Page 42153]]
additions and deletions to the diagnosis code CC severity levels list
for FY 2020 and are available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
Table 6I.1--Additions to the MCC List--FY 2020;
Table 6I.2--Deletions to the MCC List--FY 2020;
Table 6J.1--Additions to the CC List--FY 2020; and
Table 6J.2--Deletions to the CC List--FY 2020.
f. CC Exclusions List for FY 2020
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.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another;
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another;
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another;
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another; 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. We
refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541
through 50544) for detailed information regarding revisions that were
made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.
The ICD-10 MS-DRGs Version 36 CC Exclusion List is included as
Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html, and includes two lists identified as
Part 1 and Part 2. Part 1 is the list of all diagnosis codes that are
defined as a CC or MCC when reported as a secondary diagnosis. If the
code designated as a CC or MCC is allowed with all principal diagnoses,
the phrase ``NoExcl'' (for no exclusions) follows the CC or MCC
designation. For example, ICD-10-CM diagnosis code A17.83 (Tuberculous
neuritis) has this ``NoExcl'' entry. For all other diagnosis codes on
the list, a link is provided to a collection of diagnosis codes which,
when used as the principal diagnosis, would cause the CC or MCC
diagnosis to be considered as a non-CC. Part 2 is the list of diagnosis
codes designated as a MCC only for patients discharged alive;
otherwise, they are assigned as a non-CC. After publication of the
proposed rule, we found inconsistencies in the assignment of this
``NoExcl'' entry to the diagnoses designated as a CC or MCC. Generally,
each CC or MCC diagnosis excludes itself from acting as a CC or MCC
diagnosis, however, there are approximately 229 diagnosis codes we
identified in Appendix C that have the phrase ``NoExcl'' and should
instead contain a link to exclude themselves from acting as a CC or
MCC. Therefore, we have corrected the list of diagnosis codes for the
ICD-10 MS-DRG Definitions Manual Version 37, Appendix C--Complications
or Comorbidities Exclusion List by providing a link to a collection of
diagnosis codes which, when used as the principal diagnosis, will cause
the CC or MCC to be considered as only a non-CC, for each of the 229
diagnosis codes identified. We have also removed the sentence that
states, ``If the CC or MCC is allowed with all principal diagnoses,
then the phrase NoExcl follows the CC/MCC indicator'' as there are no
longer any entries for which this phrase applies. We note that these
corrections to Appendix C do not represent a change in MS-DRG
assignment (or IPPS payment) and are being made to conform the appendix
and tables to current policy. We also note these corrections are
reflected for Table 6K.--Complete List of CC Exclusions--FY 2020.
In the FY 2020 IPPS/LTCH PPS proposed rule, for FY 2020, we
proposed changes to the ICD-10 MS-DRGs Version 37 CC Exclusion List.
Therefore, we developed Table 6G.1.--Proposed Secondary Diagnosis Order
Additions to the CC Exclusions List--FY 2020; Table 6G.2.--Proposed
Principal Diagnosis Order Additions to the CC Exclusions List--FY 2020;
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC
Exclusions List--FY 2020; and Table 6H.2.--Proposed Principal Diagnosis
Order Deletions to the CC Exclusions List--FY 2020. For Table 6G.1,
each secondary diagnosis code proposed for addition to the CC Exclusion
List is shown with an asterisk and the principal diagnoses proposed to
exclude the secondary diagnosis code are provided in the indented
column immediately following it. For Table 6G.2, each of the principal
diagnosis codes for which there is a CC exclusion is shown with an
asterisk and the conditions proposed for addition to the CC Exclusion
List that will not count as a CC are provided in an indented column
immediately following the affected principal diagnosis. For Table 6H.1,
each secondary diagnosis code proposed for deletion from the CC
Exclusion List is shown with an asterisk followed by the principal
diagnosis codes that currently exclude it. For Table 6H.2, each of the
principal diagnosis codes is shown with an asterisk and the proposed
deletions to the CC Exclusions List are provided in an indented column
immediately following the affected principal diagnosis. Tables 6G.1.,
6G.2., 6H.1., and 6H.2. associated with the proposed rule are available
via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
The proposed CC Exclusions for a subset of the diagnosis codes as
set forth in Tables 6G.1, 6G.2, 6H.1 and 6H.2 associated with the FY
2020 IPPS/LTCH PPS proposed rule reflected the proposed severity level
designations as discussed in section II.F.14.c.1. of the preamble of
the proposed rule which were based on our comprehensive CC/MCC
analysis. As discussed in section II.F.14.c.1. of the preamble of this
final rule, we are not finalizing the proposed changes to the severity
level designations after consideration of the public comments received
(with the exception of the specified ICD-10-CM diagnosis codes in
category Z16-Resistance to antimicrobial drugs). Therefore, the
finalized CC Exclusions List as displayed in Tables 6G.1, 6G.2,
[[Page 42154]]
6H.1, 6H.2. and 6K. associated with this final rule reflect the
severity levels under Version 36 of the ICD-10 MS-DRGs for a subset of
the diagnosis codes.
15. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2020, we have 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 Code Titles for this final rule.
These tables are not published in the Addendum to the proposed rule
or final rule, but are available via the internet on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the
Addendum to this final rule. As discussed in section II.F.18. of the
preamble of this final rule, the code titles are adopted as part of the
ICD-10 (previously ICD-9-CM) Coordination and Maintenance 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.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19250) we
proposed the MDC and MS-DRG assignments for the new diagnosis codes and
procedure codes as set forth in Table 6A.--New Diagnosis Codes and
Table 6B.--New Procedure Codes. We also stated that the proposed
severity level designations for the new diagnosis codes were set forth
in Table 6A. and the proposed O.R. status for the new procedure codes
were set forth in Table 6B.
Comment: A commenter expressed support for the proposed MS-DRG
assignments under MDC 5 (Diseases and Disorders of the Circulatory
System) for new procedure codes describing the insertion, removal, and
revision of subcutaneous defibrillator leads via open and percutaneous
approaches as reflected in Table 6B.--New Procedure Codes, that was
associated with the proposed rule. However, the commenter stated it was
not clear why MS-DRGs 040 (Peripheral, Cranial Nerve and Other Nervous
System Procedures with MCC), 041 (Peripheral, Cranial Nerve and Other
Nervous System Procedures with CC or Peripheral Neurostimulator), and
042 (Peripheral, Cranial Nerve and Other Nervous System Procedures
without CC/MCC) under MDC 1 (Diseases and Disorders of the Nervous
System) were also proposed as MS-DRG assignments for the procedures
describing removal and revision of subcutaneous defibrillator lead. The
commenter requested that CMS provide information in the FY 2020 IPPS/
LTCH PPS final rule regarding those proposed MS-DRG assignments,
including the diagnosis and procedure codes that would result in
assignment to those MS-DRGs. The commenter provided the following table
to display the proposed MS-DRG assignments as reflected in Table 6B-
New Procedure Codes that was associated with the proposed rule.
[GRAPHIC] [TIFF OMITTED] TR16AU19.111
Response: We thank the commenter for their support. With regard to
why MS-DRGs 040, 041, and 042 under MDC 1 were also proposed as MS-DRG
assignments for the procedures describing removal and revision of
subcutaneous defibrillator lead, we note that, as described in section
II.F.2.a. of the preamble of this final rule, consistent with our
annual process of assigning new procedure codes to MDCs and MS-DRGs,
and designating a procedure as an O.R. or non-O.R. procedure, we
reviewed the predecessor procedure code assignment. The predecessor
procedure codes for the above listed removal and revision of
subcutaneous defibrillator lead procedure codes are procedure codes
0JPT0PZ (Removal of cardiac rhythm related device from trunk
subcutaneous
[[Page 42155]]
tissue and fascia, open approach), 0JPT3PZ (Removal of cardiac rhythm
related device from trunk subcutaneous tissue and fascia, percutaneous
approach), 0JWT0PZ (Revision of cardiac rhythm related device in trunk
subcutaneous tissue and fascia, open approach) and 0JWT3PZ (Revision of
cardiac rhythm related device in trunk subcutaneous tissue and fascia,
percutaneous approach) which are currently assigned to MS-DRGs 040,
041, and 042 under MDC 1. We also note that, in each MDC there is
usually a medical and a surgical class referred to as ``other medical
diseases'' and ``other surgical procedures,'' respectively. The
``other'' medical and surgical classes are not as precisely defined
from a clinical perspective. The other classes would include diagnoses
or procedures which were infrequently encountered or not well defined
clinically. The ``other'' surgical category contains surgical
procedures which, while infrequent, could still reasonably be expected
to be performed for a patient in the particular MDC. Within MDC 1, MS-
DRGs 040, 041, and 042 are defined as a set of the ``other'' surgical
classes as indicated in their MS-DRG titles with the ``Other Nervous
System Procedures'' terminology. With regard to the diagnosis codes, we
note that the diagnoses in each MDC correspond to a single organ system
or etiology and in general are associated with a particular medical
specialty. As such, the diagnoses assigned to MDC 1 correspond to the
central nervous system. While we agree that it would be rare for a
diagnosis related to a disease or disorder of the nervous system to be
reported with a procedure that involves the removal or revision of a
subcutaneous defibrillator lead, we note that, as discussed and
displayed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41184), cases
with procedure codes that identify the insertion of a cardiac rhythm
related device (the predecessor code for insertion of subcutaneous
defibrillator lead procedures) were previously assigned to MS-DRGs 040,
041, and 042 and a small number of cases were found to be reported in
those MS-DRGs, thus indicating that the combination of a diagnosis code
from MDC 1 and one of the procedures describing the insertion of a
cardiac rhythm related device did occur. While we did not specifically
conduct analysis of claims data for the procedures describing a removal
or revision of a cardiac rhythm related device, our clinical advisors
continue to support assignment of the new procedure codes describing
removal and revision of subcutaneous defibrillator lead procedures to
MS-DRGs 040, 041, and 042 as reflected in Table 6B. New Procedure
Codes, associated with this final rule.
Additionally, as discussed in section II.F.2.a. of the preamble of
this final rule, in our discussion of the annual process for assigning
new procedure codes to MS-DRGs, a similar process is also utilized for
assigning new diagnosis codes to MS-DRGs that involves review of the
predecessor diagnosis code's MDC and MS-DRG assignment and severity
level designation. However, this process does not automatically result
in the new diagnosis code being assigned (or proposed for assignment)
to the same severity level and/or MS-DRG and MDC as the predecessor
code. There are several factors to consider during this process that
our clinical advisors take into account.
The proposed severity level designations for a subset of the new
diagnosis codes as set forth in Table 6A associated with the FY 2020
IPPS/LTCH PPS proposed rule reflected the proposed severity level
designations as discussed in section II.F.14.c.1. of the preamble of
the proposed rule which were based on our comprehensive CC/MCC
analysis. For example, new diagnosis codes in the category L89- series
describing pressure-induced deep tissue damage of various anatomical
sites were proposed to be designated at a CC severity level. However,
as discussed in section II.F.14.c.1. of the preamble of this final
rule, we are not finalizing the proposed changes to the severity level
designations based on our comprehensive CC/MCC analysis after
consideration of the public comments received (with the exception of
the specified ICD-10-CM diagnosis codes in category Z16-Resistance to
antimicrobial drugs). Therefore, consistent with our annual process for
assigning new diagnosis codes to MDCs and MS-DRGs and designating a new
diagnosis code as an MCC, a CC or a non-CC, we reviewed the predecessor
code MDC and MS-DRG assignments and the severity level designations for
for these new codes and determined the appropriate severity level
designation for these codes is the same severity level as the
predecessor code under Version 36 of the ICD-10 MS-DRGs. The finalized
severity level designations for these new diagnosis codes as set forth
in Table 6A associated with this final rule therefore reflect the same
severity level as the predecessor code under Version 36 of the ICD-10
MS-DRGs.
We also note that after publication of the proposed rule we
identified procedures identified by procedure codes beginning with the
prefix 0D1 describing bypass procedures of the small and large
intestines in Table 6B.--New Procedure Codes that were inadvertently
proposed for assignment to MS-DRGs 829 and 830 (Myeloproliferative
Disorders Or Poorly Differentiated Neoplasms with Other Procedure with
CC/MCC and without CC/MCC, respectively). Assignment of these
procedures to MS-DRGs 829 and 830 is not applicable because the
procedures would not result in assignment to these MS-DRGs due to the
logic of the surgical hierarchy. Therefore, we have removed MS-DRGs 829
and 830 from the list of MS-DRGs to which these bypass procedures of
the small and large intestine are assigned for FY 2020 as reflected in
Table 6B.--New Procedure Codes associated with this final rule.
We are finalizing the MDC and MS-DRG assignments for the new
diagnosis and procedure codes as set forth in Table 6A.--New Diagnosis
Codes and Table 6B.--New Procedure Codes. In addition, the finalized
O.R. status for the new procedure codes are set forth in Table 6B. We
are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html
the following tables associated with this final rule:
Table 6A.--New Diagnosis Codes-FY 2020;
Table 6B.--New Procedure Codes-FY 2020;
Table 6C.--Invalid Diagnosis Codes-FY 2020;
Table 6D.--Invalid Procedure Codes-FY 2020;
Table 6E.--Revised Diagnosis Code Titles-FY 2020;
Table 6F.--Revised Procedure Code Titles-FY 2020;
Table 6G.1.--Secondary Diagnosis Order Additions to the CC
Exclusions List-FY 2020;
Table 6G.2.--Principal Diagnosis Order Additions to the CC
Exclusions List-FY 2020;
Table 6H.1.--Secondary Diagnosis Order Deletions to the CC
Exclusions List-FY 2020;
Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List-FY 2020;
Table 6I.--Complete MCC List-FY 2020;
Table 6I.1.--Additions to the MCC List-FY 2020;
Table 6I.2.-Deletions to the MCC List-FY 2020;
Table 6J.--Complete CC List-FY 2020;
Table 6J.1.--Additions to the CC List-FY 2020;
[[Page 42156]]
Table 6J.2.--Deletions to the CC List-FY 2020; and
Table 6K.--Complete List of CC Exclusions-FY 2020
16. Changes to the Medicare Code Editor (MCE)
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 the FY 2019 IPPS/LTCH PPS final rule (83 FR 41220),
we made available the FY 2019 ICD-10 MCE Version 36 manual file. The
link to this MCE manual file, along with the link to the mainframe and
computer software for the MCE Version 36 (and ICD-10 MS-DRGs) are
posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
In the FY 2020 IPPS/LTCH PPS proposed rule, we addressed the MCE
requests we received by the November 1, 2018 deadline. We also
discussed the proposals we were making based on internal review and
analysis. In this FY 2020 IPPS/LTCH PPS final rule, we present a
summation of the comments we received in response to the MCE requests
and proposals presented based on internal reviews and analyses in the
proposed rule, our responses to those comments, and our finalized
policies.
In addition, as a result of new and modified code updates approved
after the annual spring ICD-10 Coordination and Maintenance Committee
meeting, we routinely make changes to the MCE. In the past, in both the
IPPS proposed and final rules, we have only provided the list of
changes to the MCE that were brought to our attention after the prior
year's final rule. We historically have not listed the changes we have
made to the MCE as a result of the new and modified codes approved
after the annual spring ICD-10 Coordination and Maintenance Committee
meeting. These changes are approved too late in the rulemaking schedule
for inclusion in the proposed rule. Furthermore, although our MCE
policies have been described in our proposed and final rules, we have
not provided the detail of each new or modified diagnosis and procedure
code edit in the final rule. However, we make available the finalized
Definitions of Medicare Code Edits (MCE) file. Therefore, we are making
available the FY 2020 ICD-10 MCE Version 37 Manual file, along with the
link to the mainframe and computer software for the MCE Version 37 (and
ICD-10 MS-DRGs), on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html.
a. Age Conflict Edit: Maternity Diagnoses
In the MCE, the Age conflict edit exists to detect inconsistencies
between a patient's age and any diagnosis on the patient's record; for
example, a 5-year-old patient with benign prostatic hypertrophy or a
78-year-old patient coded with a delivery. In these cases, the
diagnosis is clinically and virtually impossible for a patient of the
stated age. Therefore, either the diagnosis or the age is presumed to
be incorrect. Currently, in the MCE, the following four age diagnosis
categories appear under the Age conflict edit and are listed in the
manual and written in the software program:
Perinatal/Newborn--Age of 0 years only; a subset of
diagnoses which will only occur during the perinatal or newborn period
of age 0 (for example, tetanus neonatorum, health examination for
newborn under 8 days old).
Pediatric--Age is 0-17 years inclusive (for example,
Reye's syndrome, routine child health exam).
Maternity--Age range is 12-55 years inclusive (for
example, diabetes in pregnancy, antepartum pulmonary complication).
Adult--Age range is 15-124 years inclusive (for example,
senile delirium, mature cataract).
Under the ICD-10 MCE, the maternity diagnoses category for the Age
conflict edit considers the age range of 12 to 55 years inclusive. For
that reason, the diagnosis codes on this Age conflict edit list would
be expected to apply to conditions or disorders specific to that age
group only.
We stated in the proposed rule that we received a request to
reconsider the age range associated with the maternity diagnoses
category for the Age conflict edit. According to the requestor,
pregnancies can and do occur prior to age 12 and after age 55. The
requestor suggested that a more appropriate age range would be from age
9 to age 64 for the maternity diagnoses category.
We agreed with the requestor that pregnancies can and do occur
prior to the age of 12 and after the age of 55. We further stated in
the proposed rule that we also agreed that the suggested range, age 9
to age 64, is an appropriate age range. Therefore, we proposed to
revise the maternity diagnoses category for the Age conflict edit to
consider the new age range of 9 to 64 years inclusive.
Comment: Commenters agreed with CMS' proposal to revise the
maternity diagnoses category for the Age conflict edit by expanding the
age range.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to revise the maternity diagnoses category for
the Age conflict edit to consider the new age range of 9 to 64 years
inclusive under the ICD-10 MCE Version 37, effective October 1, 2019.
b. Sex Conflict Edit: Diagnoses for Females Only Edit
In the MCE, the Sex conflict edit detects inconsistencies between a
patient's sex and any diagnosis or procedure on the patient's record;
for example, a male patient with cervical cancer (diagnosis) or a
female patient with a prostatectomy (procedure). In both instances, the
indicated diagnosis or the procedure conflicts with the stated sex of
the patient. Therefore, the patient's diagnosis, procedure, or sex is
presumed to be incorrect.
As discussed in section II.F.15. of the preamble of this final
rule, Table 6A.--New Diagnosis Codes which is associated with this
final rule (and is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have
been approved to date which will be effective with discharges on and
after October 1, 2019. We stated in the proposed rule that ICD-10-CM
diagnosis code N99.85 (Post endometrial ablation syndrome) is a new
code that describes a condition consistent with the female sex. We
proposed to add this diagnosis code to the Diagnoses for Females Only
edit code list under the Sex conflict edit.
Comment: Commenters agreed with the proposal to add diagnosis code
N99.85 to the Diagnoses for Females Only edit code list under the Sex
conflict edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add diagnosis code N99.85 (Post endometrial
ablation syndrome) to the Diagnoses for Females Only edit code list
under the Sex conflict edit under the ICD-10 MCE Version 37, effective
October 1, 2019.
[[Page 42157]]
c. Unacceptable Principal Diagnosis Edit
In the MCE, there are select codes that describe a circumstance
that influences an individual's health status but does not actually
describe a current illness or injury. There also are codes that are not
specific manifestations but may be due to an underlying cause. These
codes are considered unacceptable as a principal diagnosis. In limited
situations, there are a few codes on the MCE Unacceptable Principal
Diagnosis edit code list that are considered ``acceptable'' when a
specified secondary diagnosis is also coded and reported on the claim.
In the proposed rule we stated that ICD-10-CM diagnosis codes I46.2
(Cardiac arrest due to underlying cardiac condition) and I46.8 (Cardiac
arrest due to other underlying condition) are codes that clearly
specify cardiac arrest as being due to an underlying condition. Also,
in the ICD-10-CM Tabular List, there are instructional notes to ``Code
first underlying cardiac condition'' at ICD-10-CM diagnosis code I46.2
and to ``Code first underlying condition'' at ICD-10-CM diagnosis code
I46.8. Therefore, we proposed to add ICD-10-CM diagnosis codes I46.2
and I46.8 to the Unacceptable Principal Diagnosis Category edit code
list.
As discussed in section II.F.15. of the preamble of this final
rule, Table 6A.--New Diagnosis Codes associated with this final rule
(which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have
been approved to date that will be effective with discharges occurring
on and after October 1, 2019.
As indicated in the proposed rule, we proposed to add the new ICD-
10-CM diagnosis codes listed in the following table to the Unacceptable
Principal Diagnosis Category edit code list, as these codes are
consistent with other ICD-10-CM diagnosis codes currently included on
the Unacceptable Principal Diagnosis Category edit code list.
[GRAPHIC] [TIFF OMITTED] TR16AU19.112
Comment: Commenters agreed with our proposal to add diagnosis codes
I46.2 and I46.8, as well as the new ICD-10-CM diagnosis codes listed in
the table above, to the Unacceptable Principal Diagnosis Category edit
code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add diagnosis codes I46.2 and I46.8 to the
Unacceptable Principal Diagnosis Category edit code list. We are also
finalizing our proposal to add the new ICD-10-CM diagnosis codes
previously listed in the table to the Unacceptable Principal Diagnosis
Category edit code list under the ICD-10 MCE Version 37, effective
October 1, 2019.
[[Page 42158]]
d. Non-Covered Procedure Edit
In the MCE, the Non-Covered Procedure edit identifies procedures
for which Medicare does not provide payment. Payment is not provided
due to specific criteria that are established in the National Coverage
Determination (NCD) process. We refer readers to the website at:
https://www.cms.gov/Medicare/Coverage/DeterminationProcess/howtorequestanNCD.html for additional information on this process. In
addition, there are procedures that would normally not be paid by
Medicare but, due to the presence of certain diagnoses, are paid.
As discussed in section II.F.15. of the preamble of this final
rule, Table 6D.--Invalid Procedure Codes associated with this final
rule (which is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the procedure codes that are no
longer effective as of October 1, 2019. Included in this table are the
following ICD-10-PCS procedure codes listed on the Non-Covered
Procedure edit code list.
[GRAPHIC] [TIFF OMITTED] TR16AU19.113
In the proposed rule, we proposed to remove these codes from the
Non-Covered Procedure edit code list.
In addition, as discussed in section II.F.2.b. of the preamble of
the proposed rule, a number of ICD-10-PCS procedure codes describing
bone marrow transplant procedures were the subject of a proposal
discussed at the March 5-6, 2019 ICD-10 Coordination and Maintenance
Committee meeting, to be deleted effective October 1, 2019. We proposed
that if the applicable proposal is finalized, we would delete the
subset of those ICD-10-PCS procedure codes that are currently listed on
the Non-Covered Procedure edit code list as shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.114
Comment: Commenters agreed with our proposal to remove the ICD-10-
PCS procedure codes previously listed in the tables from the Non-
Covered Procedure edit code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove the ICD-10-PCS procedure codes
previously listed in the tables that are no longer valid from the Non-
Covered Procedure edit code list within the ICD-10 MCE Version 37
effective October 1, 2019. We note that the proposal involving ICD-10-
PCS procedure codes describing bone marrow transplant procedures was
finalized after the March 5-6, 2019 ICD-10 Coordination and Maintenance
Committee meeting, as reflected in Table 6D.--Invalid Procedure Codes
associated with this final rule (which is available via the internet on
the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).
e. Future Enhancement
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through
38054), we noted the importance of ensuring accuracy of the coded data
from the reporting, collection, processing, coverage, payment, and
analysis aspects. We have engaged a contractor to assist in the review
of the limited coverage and noncovered procedure edits in the MCE that
may also be present in other claims processing systems that are
utilized by our MACs. The MACs must adhere to criteria specified within
the National Coverage Determinations (NCDs) and may implement their own
edits in addition to what are already incorporated into the MCE,
resulting in duplicate edits. The objective of this review is to
identify where duplicate edits may exist and to determine what the
impact might be if these edits were to be removed from the MCE.
We have noted that the purpose of the MCE is to ensure that errors
and inconsistencies in the coded data are recognized during Medicare
claims
[[Page 42159]]
processing. As we indicated in the FY 2019 IPPS/LTCH PPS final rule (83
FR 41228), we are considering whether the inclusion of coverage edits
in the MCE necessarily aligns with that specific goal because the focus
of coverage edits is on whether or not a particular service is covered
for payment purposes and not whether it was coded correctly.
As we continue to evaluate the purpose and function of the MCE with
respect to ICD-10, we encourage public input for future discussion. As
we have discussed in prior rulemaking, we recognize a need to further
examine the current list of edits and the definitions of those edits.
As noted in the FY 2020 IPPS/LTCH PPS proposed rule, we continue to
encourage public comments on whether there are additional concerns with
the current edits, including specific edits or language that should be
removed or revised, edits that should be combined, or new edits that
should be added to assist in detecting errors or inaccuracies in the
coded data. Comments should be directed to the MS-DRG Classification
Change Mailbox located at: [email protected] by
November 1, 2019 for FY 2021 rulemaking.
17. 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.
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-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 in
this final rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients 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 higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we proposed to make in the FY 2020 IPPS/
LTCH PPS proposed rule, as discussed in section II.F.5.a. of the
preamble of this final rule, in the proposed rule we proposed to revise
the surgical hierarchy for MDC 5 (Diseases and Disorders of the
Circulatory System) as follows: In MDC 5, we proposed to sequence
proposed new MS-DRGs 319 and 320 (Other Endovascular Cardiac Valve
Procedures with and without MCC, respectively) above MS-DRGs 222, 223,
224, 225, 226, and 227 (Cardiac Defibrillator Implant with and without
Cardiac Catheterization with and without AMI/HF/Shock with and without
MCC, respectively) and below MS-DRGs 266 and 267 (Endovascular Cardiac
Valve Replacement with and without MCC, respectively). We also note
that, as discussed in section II.F.5.a. of the preamble of this final
rule, we proposed to revise the titles for MS-DRGs 266 and 267 to
``Endovascular Cardiac Valve Replacement and Supplement Procedures with
MCC'' and ``Endovascular Cardiac Valve Replacement and Supplement
Procedures without MCC'', respectively.
Our proposal for Appendix D--MS-DRG Surgical Hierarchy by MDC and
MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 37 is
illustrated in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.115
[[Page 42160]]
Comment: Commenters supported our proposal to sequence proposed new
MS-DRGs 319 and 320 above MS-DRGs 222, 223, 224, 225, 226, and 227, and
below MS- DRGs 266 and 267. However, a commenter proposed an alternate
option upon reviewing Table 5.--List Of Medicare Severity Diagnosis-
Related Groups (MS-DRGs), Relative Weighting Factors, And Geometric And
Arithmetic Mean Length Of Stay--FY 2020 associated with the proposed
rule. The commenter noted that because multiple procedures may be
performed during an encounter and MS-DRGs 215, 216, 217, 218, 219, 220,
221, 222, 223, 224, 225, 226, 227, 228, 229, 231, 232, 233, 234, 235,
and 236 (MS-DRG 230 was deleted effective FY 2017) are weighted higher
than the proposed new MS-DRGs 319 and 320, sequencing proposed new MS-
DRGs 319 and 320 above MS-DRGs 239, 240, and 241 (Amputation for
Circulatory System Disorders except Upper Limb & Toe with MCC, with CC,
and without CC/MCC, respectively) and below MS-DRG 270, 271 and 272
(Other Major Cardiovascular Procedures with MCC, with CC, and without
CC/MCC, respectively) appeared more appropriate to result in the most
resource intensive MS-DRG assignment when multiple cardiac procedures
are performed.
Response: We thank the commenters for their support. As discussed
in section II.F.5.a. of the preamble of this final rule, we are
finalizing our proposal to create new MS-DRGs 319 and 320. In response
to the commenter's suggestion that we sequence new MS-DRGs 319 and 320
above MS-DRGs 239, 240, and 241 and below MS-DRGs 270, 271 and 272, we
reviewed the surgical hierarchy once again. Upon our review, we agree
that the initial proposed sequencing did not adequately account for the
most resource intensive MS-DRG assignment. However, our clinical
advisors also did not completely agree with the suggested alternative
option offered by the commenter and recommended that new MS-DRGs 319
and 320 be sequenced above MS-DRGs 270, 271 and 272 and below MS-DRGs
268 and 269 (Aortic and Heart Assist Procedures Except Pulsation
Balloon with and without MCC, respectively) because they believe this
sequencing more appropriately reflects resource utilization when
multiple cardiac procedures are performed and will result in the most
suitable MS-DRG assignment.
After consideration of the public comments we received and the
input of our clinical advisors, we are finalizing the below changes to
the surgical hierarchy for new MS-DRGs 319 and 320 within Appendix D--
MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG
Definitions Manual Version 37 as illustrated in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.116
As with other MS-DRG related issues, we encourage commenters to
submit requests to examine ICD-10 claims pertaining to the surgical
hierarchy via the CMS MS-DRG Classification Change Request Mailbox
located at: [email protected] by November 1, 2019
for consideration for FY 2021.
18. Maintenance of the ICD-10-CM and ICD-10-PCS Coding Systems
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 (CDC), and CMS, charged with
maintaining and updating the ICD-9-CM system. The final update to ICD-
9-CM codes was 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 addresses updates to the ICD-10-
CM and ICD-10-PCS 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 promoting the use of Federal and non-
Federal educational programs and other communication techniques with a
view toward standardizing coding applications and upgrading the quality
of the classification system.
The official list of ICD-9-CM diagnosis and procedure codes by
fiscal year can be found on the CMS website 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 website
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 previously mentioned
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
[[Page 42161]]
recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2020 at a public meeting held on September 11-12,
2018, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 13, 2018.
The Committee held its 2019 meeting on March 5-6, 2019. The
deadline for submitting comments on these code proposals was April 5,
2019. It was announced at this meeting that any new diagnosis and
procedure codes for which there was consensus of public support and for
which complete tabular and indexing changes would be made by May 2019
would be included in the October 1, 2019 update to the ICD-10-CM
diagnosis and ICD-10-PCS procedure code sets. As discussed in earlier
sections of the preamble of this final rule, there are new, revised,
and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes
that are captured in 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 Code Titles for this final rule, which are
available via the internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
The code titles are adopted as part of the ICD-10 (previously ICD-9-CM)
Coordination and Maintenance Committee process. Therefore, although we
make the code titles available for the IPPS proposed rule, they are not
subject to comment in the proposed rule. Because of the length of these
tables, they are not published in the Addendum to the proposed rule.
Rather, they are available via the internet as discussed in section VI.
of the Addendum to the proposed rule.
Live Webcast recordings of the discussions of the diagnosis and
procedure codes at the Committee's September 11-12, 2018 meeting can be
obtained from the CMS website at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The live webcast
recordings of the discussions of the diagnosis and procedure codes at
the Committee's March 5-6, 2019 meeting can be obtained from the CMS
website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html.
The materials for the discussions relating to diagnosis codes at
the September 11-12, 2018 meeting and March 5-6, 2019 meeting can be
found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These
websites 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, Co-Chairperson, 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
submitted via 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 diagnosis and procedure 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
by providing information on these new technologies at an earlier date.
Data will be available 6 months earlier than would be possible with
updates occurring only once a year on October 1.
While section 1886(d)(5)(K)(vii) of the Act states that the
addition of new diagnosis and procedure codes on April 1 of each year
shall not require the Secretary to adjust the payment, or DRG
classification, under section 1886(d) of the Act until the fiscal year
that begins after such date, we have to update the DRG software and
other systems in order to recognize and accept the new codes. We also
publicize the code changes and the need for a mid-year systems update
by providers to identify the new codes. Hospitals also have to obtain
the new code books and encoder updates, and make other system changes
in order to identify and report the new codes.
The ICD-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 3 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 website. A complete addendum
describing details of all diagnosis and procedure coding changes, both
tabular and index, is published on the CMS and NCHS websites in June 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 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 requestor at the Committee's public
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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 materials and
live webcast 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. We indicated in the proposed rule that there were not
any requests approved for an expedited April l, 2019 implementation of
a code at the September 11-12, 2018 Committee meeting. Therefore, there
were not any new codes for implementation on April 1, 2019.
ICD-9-CM addendum and code title information is published on the
CMS website at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and
ICD-10-PCS addendum and code title information is published on the CMS
website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. CMS
also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its
Medicare contractors for use in updating their systems and providing
education to providers.
Information on ICD-10-CM diagnosis codes, along with the Official
ICD-10-CM Coding Guidelines, can also be found on the CDC website at:
http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on
new, revised, and deleted ICD-10-CM diagnosis and ICD-10-PCS procedure
codes is provided to the AHA for publication in the Coding Clinic for
ICD-10. AHA also distributes coding update information to publishers
and software vendors.
The following chart shows the number of ICD-10-CM and ICD-10-PCS
codes and code changes since FY 2016 when ICD-10 was implemented.
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As mentioned previously, 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.
19. Replaced Devices Offered Without Cost or With a Credit
a. Background
In the FY 2008 IPPS final rule with comment period (72 FR 47246
through 47251), we discussed the topic of Medicare payment for devices
that are replaced without cost or where credit for a replaced device is
furnished to the hospital. We implemented a policy to reduce a
hospital's IPPS payment for certain MS-DRGs where the implantation of a
device that subsequently failed or was recalled determined the base MS-
DRG assignment. At that time, we specified that we will reduce a
hospital's IPPS payment for those MS-DRGs where the hospital received a
credit for a replaced device equal to 50 percent or more of the cost of
the device.
In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through
51557), we clarified this policy to state that the policy applies if
the hospital received a credit equal to 50 percent or more of the cost
of the replacement device and issued instructions to hospitals
accordingly.
b. Changes for FY 2020
As discussed in the FY 2020 IPPS/LTCH proposed rule (84 FR 19255
through 19257), for FY 2020, we proposed to create new MS-DRGs 319 and
320 (Other Endovascular Cardiac Valve Procedures with and without MCC,
respectively) and to revise the title for MS-DRG 266 from
``Endovascular Cardiac Valve Replacement with MCC'' to ``Endovascular
Cardiac Valve Replacement and Supplement Procedures with MCC'' and the
title for MS-DRG 267 from ``Endovascular Cardiac Valve Replacement
without MCC'' to ``Endovascular Cardiac Valve
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Replacement and Supplement Procedures without MCC''.
We noted in the proposed rule, as stated in the FY 2016 IPPS/LTCH
PPS proposed rule (80 FR 24409), we generally map new MS-DRGs onto the
list when they are formed from procedures previously assigned to MS-
DRGs that are already on the list. Currently, MS-DRGs 216 through 221
are on the list of MS-DRGs subject to the policy for payment under the
IPPS for replaced devices offered without cost or with a credit as
shown in the table below. A subset of the procedures currently assigned
to MS-DRGs 216 through 221 was proposed for assignment to proposed new
MS-DRGs 319 and 320. Therefore, we proposed that if the applicable
proposed MS-DRG changes are finalized, we also would add proposed new
MS-DRGs 319 and 320 to the list of MS-DRGs subject to the policy for
payment under the IPPS for replaced devices offered without cost or
with a credit and make conforming changes to the titles of MS-DRGs 266
and 267 as reflected in the table below. We also proposed to continue
to include the existing MS-DRGs currently subject to the policy as also
displayed in the table below.
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As discussed in section II.F.5.a. of the preamble of this final
rule, we are finalizing our proposal to add new MS-DRGs 319 and 320. We
did not receive any public comments opposing our proposal to add MS-
DRGs 319 and 320 to the policy for replaced devices offered without
cost or with credit, make conforming changes to the titles of MS-DRGs
266 and 267 as reflected in the table above or to continue to include
the existing MS-DRGs currently subject to the policy. Therefore, we are
finalizing the list of MS-DRGs in the table included in the proposed
rule and above that will be subject to the replaced devices offered
without cost or with a credit policy effective October 1, 2019.
The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will also be issued to
providers in the form of a Change Request (CR).
20. Out of Scope Public Comments Received
We received public comments regarding a number of MS-DRG and
related issues that were outside the scope of the proposals included in
the FY 2020 IPPS/LTCH PPS proposed rule.
Because we consider these public comments to be outside the scope
of the proposed rule, we are not addressing them in this final rule. As
stated in section II.F.1.b. of the preamble of this final rule, we
encourage individuals with comments about MS-DRG classification to
submit these comments no later than November 1 of each year so that
they can be considered for possible inclusion in the annual proposed
rule. We will consider these public comments for possible proposals in
future rulemaking as part of our annual review process.
G. Recalibration of the FY 2020 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
In developing the FY 2020 system of weights, we proposed to use 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 2018 MedPAR data used in this final rule include
discharges occurring on October 1, 2017, through September 30, 2018,
based on bills received by CMS through March 31, 2019, 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). The FY
2018 MedPAR file used in calculating the relative weights includes data
for approximately 9,514,788 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 December 31, 2018 update of the FY 2018 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 2020
also excludes claims with claim type values not equal
[[Page 42166]]
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 2020 relative weights are based on the ICD-10-CM diagnosis
codes and ICD-10-PCS procedure codes from the FY 2018 MedPAR claims
data, grouped through the ICD-10 version of the FY 2020 GROUPER
(Version 37).
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,
2018 update of the FY 2017 HCRIS for calculating the FY 2020 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 calculated the FY 2020 relative weights based on 19 CCRs, as
we did for FY 2019. The methodology we proposed to use to calculate the
FY 2020 MS-DRG cost-based relative weights based on claims data in the
FY 2018 MedPAR file and data from the FY 2017 Medicare cost reports is
as follows:
To the extent possible, all the claims were regrouped
using the FY 2020 MS-DRG classifications discussed in sections II.B.
and II.F. 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 Medicare-approved transplant centers that have
cases in the FY 2018 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 $30.00 from the sum of
the routine day charges, intensive care charges, pharmacy charges,
implantable devices charges, supplies and equipment charges, therapy
services charges, operating room charges, cardiology charges,
laboratory charges, radiology charges, other service charges, labor and
delivery charges, inhalation therapy charges, emergency room charges,
blood and blood products charges, anesthesia charges, cardiac
catheterization charges, CT scan charges, and MRI charges were also
deleted.
At least 92.3 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.
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 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.
In addition, 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 Bundled Payments for Care Improvement (BPCI)
initiative the same as prior fiscal years for the IPPS payment modeling
and ratesetting process without regard to hospitals' participation
within these bundled payment models (77 FR 53341 through 53343).
Specifically, because acute care hospitals participating in the BPCI
Initiative still receive IPPS payments under section 1886(d) of the
Act, we include all applicable data from these subsection (d) hospitals
in our IPPS payment modeling and ratesetting calculations as if the
hospitals were not participating in those models under the BPCI
initiative. 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. For additional information on the BPCI initiative, we refer
readers to the CMS' Center for Medicare and Medicaid Innovation's
website at: http://innovation.cms.gov/initiatives/Bundled-Payments/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).
[[Page 42167]]
The participation of hospitals in the BPCI initiative concluded on
September 30, 2018. The participation of hospitals in the Bundled
Payments for Care Improvement (BPCI) Advanced model started on October
1, 2018. The BPCI Advanced model, tested under the authority of section
3021 of the Affordable Care Act (codified at section 1115A of the Act),
is comprised of a single payment and risk track, which bundles payments
for multiple services beneficiaries receive during a Clinical Episode.
Acute care hospitals may participate in BPCI Advanced in one of two
capacities: As a model Participant or as a downstream Episode
Initiator. Regardless of the capacity in which they participate in the
BPCI Advanced model, participating acute care hospitals will continue
to receive IPPS payments under section 1886(d) of the Act. Acute care
hospitals that are Participants also assume financial and quality
performance accountability for Clinical Episodes in the form of a
reconciliation payment. For additional information on the BPCI Advanced
model, we refer readers to the BPCI Advanced web page on the CMS Center
for Medicare and Medicaid Innovation's website at: https://innovation.cms.gov/initiatives/bpci-advanced/. As noted in the proposed
rule, consistent with our policy for FY 2019, and consistent with how
we have treated hospitals that participated in the BPCI Initiative, for
FY 2020, we continue to believe it is appropriate to include all
applicable data from the subsection (d) hospitals participating in the
BPCI Advanced model in our IPPS payment modeling and ratesetting
calculations because, as noted above, these hospitals are still
receiving IPPS payments under section 1886(d) of the Act.
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-of-living 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. Statistical outliers were then removed. These charges were then
adjusted to cost by applying the national average CCRs developed from
the FY 2017 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. We stated in the proposed rule that, if
stakeholders had comments about the groupings in this table, we may
consider those comments as we finalize our policy. However, we did not
receive any comments on the groupings in this table, and therefore, we
are finalizing the groupings as proposed.
We invited public comments on our proposals related to
recalibration of the FY 2020 relative weights and the changes in
relative weights from FY 2019.
Comment: Several commenters expressed concern about significant
reductions to the relative weight for MS-DRG 215. Commenters stated
that the reduction in the proposed relative weight was 29 percent,
which is the largest decrease of any MS-DRG; commenters also noted that
the cumulative decrease to the relative weight for MS-DRG 215 would be
43% since FY 2017. Commenters stated that the proposed relative weights
would result in significant underpayments to facilities, which would in
turn limit access to heart assist devices.
Some commenters specifically referenced the Impella[supreg], one of
the heart assist devices used to provide ventricular support.
Commenters also stated that the proposed reduction in the relative
weight resulted from several coding changes and a new FDA indication
for the Impella[supreg], for the treatment of cardiomyopathy with
cardiogenic shock. The commenters stated that these changes in coding
guidance are still not reflected in claims for the FY 2020 proposed
rule, and that 68% of claims for procedures utilizing the
Impella[supreg] device did not have a charge for the Impella[supreg] in
the Other Implants revenue center. Other commenters stated that 22% of
claims did not have a charge for the device. Some commenters stated
that they expect the future claims data to result in an increase to the
relative weight for MS-DRG 215 for FY 2021.
Commenters requested that CMS maintain the relative weight at the
FY 2018 relative weight for any MS-DRG that was held harmless last year
and continues to face a 20% or greater reduction from its FY 2018
relative weight. Commenters stated that a hold harmless policy is
consistent with prior rulemaking, in which CMS provided for transition
periods for changes that have significant payment implications.
Response: As we indicated in the FY 2018 IPPS/LTCH final rule (82
FR 38103), and in response to similar comments in the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41273), we do not believe it is normally
appropriate to address relative weight fluctuations that appear to be
driven by changes in the underlying data. Nevertheless, after reviewing
the comments received and the data used in our ratesetting
calculations, we acknowledge an outlier circumstance where the weight
for an MS-DRG is seeing a significant reduction for each of the 3 years
since CMS began using the ICD-10 data in calculating the relative
weights. While we would ordinarily consider this weight change to be
appropriately driven by the underlying data, given the comments
received and the potential for these declines to be associated with the
implementation of ICD-10, we are adopting a temporary one-time measure
for FY 2020 for an MS-DRG where the FY 2018 relative weight declined by
20 percent from the FY 2017 relative weight and the FY 2020 relative
weight would have declined by 20 percent or more from the FY 2019
relative weight, which was maintained at the FY 2018 relative weight.
Specifically, for an MS-DRG meeting this criterion, we will continue
the current policy of maintaining the relative weight at the FY 2018
level. In other words, the FY 2020 relative weight will be set equal to
the FY 2019 relative weight, which was in turn set equal to the FY 2018
relative weight.
We believe this policy is consistent with our general authority to
assign and update appropriate weighting factors under sections
1886(d)(4)(B) and (C) of the Act. We also believe that it appropriately
addresses the situation in which the reduction to the FY 2020 relative
weights may potentially continue to be associated with the
implementation of ICD-10. We continue to believe that changes in
relative weights that are not of this outlier magnitude over the 3
years since we first incorporated the ICD-10 data in our ratesetting
are appropriately being driven by the underlying data and not
associated with the implementation of ICD-10.
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3. Development of National Average CCRs
We developed the national average CCRs as follows:
Using the FY 2017 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
[[Page 42179]]
standard deviation for the log of that cost center CCR. Once the cost
report data were trimmed, we calculated a Medicare-specific CCR. The
Medicare-specific CCR was determined by taking the Medicare charges for
each line item from Worksheet D-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 2020 cost-based relative weights were then normalized by an
adjustment factor of 1.789031 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 2020 are as follows:
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Since FY 2009, the relative weights have been based on 100 percent
cost weights based on our MS-DRG grouping system.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We proposed to use that same case
threshold in recalibrating the MS-DRG relative weights for FY 2020.
Using data from the FY 2018 MedPAR file, there were 8 MS-DRGs that
contain fewer than 10 cases. For FY 2020, because we do not have
sufficient MedPAR data to set accurate and stable cost relative weights
for these low-volume MS-DRGs, we proposed to compute relative weights
for the low-volume MS-DRGs by adjusting their final FY 2019 relative
weights by the percentage change in the average weight of the cases in
other MS-DRGs from FY 2019 to FY 2020. The crosswalk table is shown
below.
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After consideration of the comments we received, we are finalizing
our proposals, with the modification for recalibrating the relative
weights for FY 2020 for an MS-DRG where the FY 2018 relative weight
declined by 20 percent from the FY 2017 relative weight and the FY 2020
relative weight would have declined by 20 percent or more from the FY
2019 relative weight, which was maintained at the FY 2018 relative
weight.
H. Add-On Payments for New Services and Technologies for FY 2020
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies (sometimes collectively referred to in this section as
``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the
Act specifies that a medical service or technology will be considered
new if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that a new medical service or technology may be considered
for new technology add-on payment if, based on the estimated costs
incurred with respect to discharges involving such service or
technology, the DRG prospective payment rate otherwise applicable to
such discharges under this subsection is inadequate. We note that,
beginning with 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. In this final rule, 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 Sec. 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 medical product receives a
[[Page 42181]]
new FDA approval or clearance, it may not necessarily be considered
``new'' for purposes of new technology add-on payments if it is
``substantially similar'' to another medical product that was approved
or cleared by FDA and has been on the market for more than 2 to 3
years. 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 these criteria, it would be considered
substantially similar to an existing technology and would not be
considered ``new'' for purposes of new technology add-on payments. For
a detailed discussion of the criteria for substantial similarity, we
refer readers to the FY 2006 IPPS final rule (70 FR 47351 through
47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through
43814).
Under the second criterion, Sec. 412.87(b)(3) further provides
that, to be eligible for the add-on payment for new medical services or
technologies, the MS-DRG prospective payment rate otherwise applicable
to discharges involving the new medical service or technology must be
assessed for adequacy. Under the cost criterion, consistent with the
formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, 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.
The MS-DRG threshold amounts used in evaluating new technology add-on
payment applications for FY 2020 are presented in a data file that is
available, along with the other data files associated with the FY 2019
IPPS/LTCH PPS final rule and correction notice, on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2019-IPPS-Final-Rule-Home-Page-Items/FY2019-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. As
finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41275),
beginning with FY 2020, we include the thresholds applicable to the
next fiscal year (previously included in Table 10 of the annual IPPS/
LTCH PPS proposed and final rules) in the data files associated with
the prior fiscal year. Accordingly, the final thresholds for
applications for new technology add-on payments for FY 2021 are
presented in a data file that is available on the CMS website, along
with the other data files associated with this FY 2020 final rule, by
clicking on the FY 2020 IPPS Final Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
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 medical
service or 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, Sec. 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). We
also refer readers to section II.H.8. of the preamble of this final
rule for a discussion of our final policy regarding an alternative
inpatient new technology add-on payment pathway for transformative new
devices. We also refer readers to section II.H.10. of the preamble of
this final rule for a discussion of our final policy regarding an
alternative inpatient new technology add-on payment pathway for certain
antimicrobials.)
The new medical service or technology add-on payment policy under
the IPPS provides additional payments for cases with relatively high
costs involving eligible new medical services or technologies, while
preserving some of the incentives inherent under an average-based
prospective payment system. The payment mechanism is based on the cost
to hospitals for the new medical service or technology. Under Sec.
412.88, if the costs of the discharge (determined by applying cost-to-
charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full
DRG payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 50 percent of the estimated costs of the new technology or medical
service (if the estimated costs for the case including the new
technology or medical service 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 or medical service. We refer readers to section II.H.9.
of the preamble of this final rule for a discussion of our final policy
regarding the change to the calculation of the new technology add-on
payment beginning in FY 2020, including our finalized amendments to
Sec. 412.88 of the regulations.
Section 503(d)(2) of Public Law 108-173 provides that there shall
be no reduction or adjustment in aggregate payments under the IPPS due
to add-on payments for new medical services and technologies.
Therefore, in accordance with section 503(d)(2) of Public Law 108-173,
add-on payments for new medical services or technologies for FY 2005
and later years have not been subjected to budget neutrality.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
modified our regulations at Sec. 412.87 to codify our 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 amended Sec. 412.87(c) to specify that all applicants
for new technology add-on payments must have FDA approval or clearance
by July 1 of the year prior to the beginning of the fiscal year for
which 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
[[Page 42182]]
procedures, including new drug therapies, as well as promoting the
exchange of information on new technologies and medical services
between CMS and other entities. The CTI, composed of senior CMS staff
and clinicians, was established under section 942(a) of Public Law 108-
173. The Council is co-chaired by the Director of the Center for
Clinical Standards and Quality (CCSQ) and the Director of the Center
for 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 Medicare Administrative
Contractors (MACs) (in the case of local coverage and payment
decisions). The CTI supplements, rather than replaces, these processes
by working to assure that all of these activities reflect the agency-
wide priority to promote high-quality, innovative care. At the same
time, the CTI also works to streamline, accelerate, and improve
coordination of these processes to ensure that they remain up to date
as new issues arise. To achieve its goals, the CTI works to streamline
and create a more transparent coding and payment process, improve the
quality of medical decisions, and speed patient access to effective new
treatments. It is also dedicated to supporting better decisions by
patients and doctors in using Medicare-covered services through the
promotion of better evidence development, which is critical for
improving the quality of care for Medicare beneficiaries.
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 website, in a user
friendly format. This guide was published in 2010 and is available on
the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invite any product developers or manufacturers of new medical services
or 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].
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19274), we noted
that applicants for add-on payments for new medical services or
technologies for FY 2021 must submit a formal request, including a full
description of the clinical applications of the medical service or
technology and, as applicable, 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 on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/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 2021, the CMS website also
will post the tracking forms completed by each applicant. We note that
the burden associated with this information collection requirement is
the time and effort required to collect and submit the data in the
formal request for add-on payments for new medical services and
technologies to CMS. The aforementioned burden is subject to the PRA;
it is currently being revised based on the finalized policies discussed
in this section of the final rule and approved under OMB control number
0938-1347, which expires on December 31, 2020.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Public Law 108-173, provides for a mechanism for public
input before publication of a notice of proposed rulemaking regarding
whether a medical service or technology represents a substantial
clinical improvement or advancement. The process for evaluating new
medical service and technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries;
Make public and periodically update a list of the services
and technologies for which applications for add-on payments are
pending;
Accept comments, recommendations, and data from the public
regarding whether a service or technology represents a substantial
clinical improvement; and
Provide, before publication of a proposed rule, for a
meeting at which organizations representing hospitals, physicians,
manufacturers, and any other interested party may present comments,
recommendations, and data regarding whether a new medical service or
technology represents a substantial clinical improvement to the
clinical staff of CMS.
In order to provide an opportunity for public input regarding add-
on payments for new medical services and technologies for FY 2020 prior
to publication of the FY 2020 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on October 5, 2018 (83 FR 50379), and
held a town hall meeting at the CMS Headquarters Office in Baltimore,
MD, on December 4, 2018. In the announcement notice for the meeting, we
stated that the opinions and presentations 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 2020 new medical service and technology add-on payment
applications before the publication of the FY 2020 IPPS/LTCH PPS
proposed rule.
We stated in the FY 2020 IPPS/LTCH PPS proposed rule that
approximately 100 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 morning and afternoon sessions of the town hall on the CMS YouTube
web page at: https://www.youtube.com/watch?v=4z1AhEuGHqQ and https://www.youtube.com/watch?v=m26Xj1EzbIY, respectively. 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 December 14, 2018, in our evaluation of the new
technology add-on payment applications for FY 2020 in the
[[Page 42183]]
development of the FY 2020 IPPS/LTCH PPS proposed rule.
In response to the published notice and the December 4, 2018 New
Technology Town Hall meeting, we received written comments regarding
the applications for FY 2020 new technology add-on payments. (We refer
readers to section II.H.2. of the preamble of the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19275) for summaries of the comments we received
in response to the published notice and the New Technology Town Hall
meeting and our responses.) We also noted in the FY 2020 IPPS/LTCH PPS
proposed rule that we do not summarize comments that are unrelated to
the ``substantial clinical improvement'' criterion. As explained
earlier and in the Federal Register notice announcing the New
Technology Town Hall meeting (83 FR 50379 through 50381), 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 2020. Therefore, we did not summarize those
written comments in the proposed rule that are unrelated to the
substantial clinical improvement criterion. In section II.H.5. of the
preamble of the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19284
through 19367), we summarized comments regarding individual
applications, or, if applicable, indicated that there were no comments
received in response to the New Technology Town Hall meeting notice or
New Technology Town Hall meeting, at the end of each discussion of the
individual applications.
3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and
Technologies
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434),
the ICD-10-PCS includes a new section containing the new Section ``X''
codes, which began being used with discharges occurring on or after
October 1, 2015. Decisions regarding changes to ICD-10-PCS Section
``X'' codes will be handled in the same manner as the decisions for all
of the other ICD-10-PCS code changes. That is, proposals to create,
delete, or revise Section ``X'' codes under the ICD-10-PCS structure
will be referred to the ICD-10 Coordination and Maintenance Committee.
In addition, several of the new medical services and technologies that
have been, or may be, approved for new technology add-on payments may
now, and in the future, be assigned a Section ``X'' code within the
structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS
website at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes.
We encourage providers to view the material provided on ICD-10-PCS
Section ``X'' codes.
4. FY 2020 Status of Technologies Approved for FY 2019 New Technology
Add-On Payments
a. Defitelio[supreg] (Defibrotide)
Jazz Pharmaceuticals submitted an application for new technology
add-on payments for FY 2017 for defibrotide (Defitelio[supreg]), a
treatment for patients who have been diagnosed with hepatic veno-
occlusive disease (VOD) with evidence of multi-organ dysfunction. VOD,
also known as sinusoidal obstruction syndrome (SOS), is a potentially
life-threatening complication of hematopoietic stem cell
transplantation (HSCT), with an incidence rate of 8 percent to 15
percent. Diagnoses of VOD range in severity from what has been
classically defined as a disease limited to the liver (mild) and
reversible, to a severe syndrome associated with multi-organ
dysfunction or failure and death. Patients who have received treatment
involving HSCT who develop VOD with multi-organ failure face an
immediate risk of death, with a mortality rate of more than 80 percent
when only supportive care is used. The applicant asserted that
Defitelio[supreg] improves the survival rate of patients who have been
diagnosed with VOD with multi-organ failure by 23 percent.
Defitelio[supreg] received Orphan Drug Designation for the
treatment of VOD in 2003 and for the prevention of VOD in 2007. It has
been available to patients as an investigational drug through an
Expanded Access Program since 2006. The applicant's New Drug
Application (NDA) for Defitelio[supreg] received FDA approval on March
30, 2016. The applicant confirmed that Defitelio[supreg] was not
available on the U.S. market as of the FDA NDA approval date of March
30, 2016. According to the applicant, commercial packaging could not be
completed until the label for Defitelio[supreg] was finalized with FDA
approval, and that commercial shipments of Defitelio[supreg] to
hospitals and treatment centers began on April 4, 2016. Therefore, we
agreed that, based on this information, the newness period for
Defitelio[supreg] begins on April 4, 2016, the date of its first
commercial availability.
The applicant received approval to use unique ICD-10-PCS procedure
codes to describe the use of Defitelio[supreg], with an effective date
of October 1, 2016. The approved ICD-10-PCS procedure codes are:
XW03392 (Introduction of defibrotide sodium anticoagulant into
peripheral vein, percutaneous approach); and XW04392 (Introduction of
defibrotide sodium anticoagulant into central vein, percutaneous
approach).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Defitelio[supreg] and consideration of the public comments we received
in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved
Defitelio[supreg] for new technology add-on payments for FY 2017 (81 FR
56906). With the new technology add-on payment application, the
applicant estimated that the average Medicare beneficiary would require
a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The
recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion
every 6 hours. Dosing should be based on a patient's baseline body
weight, which is assumed to be 70 kg for an average adult patient. All
vials contain 200 mg at a cost of $825 per vial. Therefore, we
determined that cases involving the use of the Defitelio[supreg]
technology would incur an average cost per case of $151,800 (70 kg
adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial =
184 vials per patient x $825 per vial = $151,800). Under existing Sec.
412.88(a)(2), we limit new technology add-on payments 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 amount for a case involving the
use of Defitelio[supreg] is $75,900 for FY 2019.
Our policy is that a medical service or technology may continue to
be considered ``new'' for purposes of new technology add-on payments
within 2 or 3 years after the point at which data begin to become
available reflecting the inpatient hospital code assigned to the new
service or technology. 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 new technology add-on payments for an additional
year only if the 3-year anniversary date of the product's entry onto
the U.S. market occurs in the latter half of the fiscal year (70 FR
47362).
With regard to the newness criterion for Defitelio[supreg], we
considered the
[[Page 42184]]
beginning of the newness period to commence on the first day
Defitelio[supreg] was commercially available (April 4, 2016). Because
the 3-year anniversary date of the entry of the Defitelio[supreg] onto
the U.S. market (April 4, 2019) would occur during FY 2019, in the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19276), we proposed to
discontinue new technology add-on payments for this technology for FY
2020. We invited public comments on our proposal to discontinue new
technology add-on payments for Defitelio[supreg] for FY 2020.
Comment: A commenter supported CMS' proposal to discontinue new
technology add-on payments for FY 2020 for Defitelio[supreg].
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to discontinue new technology add-on payments for
Defitelio[supreg] for FY 2020.
b. Ustekinumab (Stelara[supreg])
Janssen Biotech submitted an application for new technology add-on
payments for the Stelara[supreg] induction therapy for FY 2018.
Stelara[supreg] received FDA approval on September 23, 2016 as an
intravenous (IV) infusion treatment for adult patients who have been
diagnosed with moderately to severely active Crohn's disease (CD) who
have failed or were intolerant to treatment using immunomodulators or
corticosteroids, but never failed a tumor necrosis factor (TNF)
blocker, or failed or were intolerant to treatment using one or more
TNF blockers. Stelara[supreg] IV is intended for induction--
subcutaneous prefilled syringes are intended for maintenance dosing.
Stelara[supreg] must be administered intravenously by a health care
professional in either an inpatient hospital setting or an outpatient
hospital setting.
Stelara[supreg] for IV infusion is packaged in single 130 mg vials.
Induction therapy consists of a single IV infusion dose using the
following weight-based dosing regimen: Patients weighing 55 kg or less
than (<) 55 kg are administered 260 mg of Stelara[supreg] (2 vials);
patients weighing more than (>) 55 kg, but 85 kg or less than (<) 85 kg
are administered 390 mg of Stelara[supreg] (3 vials); and patients
weighing more than (>) 85 kg are administered 520 mg of Stelara[supreg]
(4 vials). An average dose of Stelara[supreg] administered through IV
infusion is 390 mg (3 vials). Maintenance doses of Stelara[supreg] are
administered at 90 mg, subcutaneously, at 8-week intervals and may
occur in the outpatient hospital setting.
CD is an inflammatory bowel disease of unknown etiology,
characterized by transmural inflammation of the gastrointestinal (GI)
tract. Symptoms of CD may include fatigue, prolonged diarrhea with or
without bleeding, abdominal pain, weight loss and fever. CD can affect
any part of the GI tract including the mouth, esophagus, stomach, small
intestine, and large intestine. Most commonly used pharmacologic
treatments for CD include antibiotics, mesalamines, corticosteroids,
immunomodulators, tumor necrosis alpha (TNF[alpha]) inhibitors, and
anti-integrin agents. Surgery may be necessary for some patients who
have been diagnosed with CD in which conventional therapies have
failed.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
Stelara[supreg] and consideration of the public comments we received in
response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved
Stelara[supreg] for new technology add-on payments for FY 2018 (82 FR
38129). Cases involving Stelara[supreg] that are eligible for new
technology add-on payments are identified by ICD-10-PCS procedure code
XW033F3 (Introduction of other New Technology therapeutic substance
into peripheral vein, percutaneous approach, new technology group 3).
With the new technology add-on payment application, the applicant
estimated that the average Medicare beneficiary would require a dosage
of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial
(for a total of $4,800). Under existing Sec. 412.88(a)(2), we limit
new technology add-on payments 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 amount for a case involving the use of
Stelara[supreg] is $2,400 for FY 2019.
With regard to the newness criterion for Stelara[supreg], we
considered the beginning of the newness period to commence when
Stelara[supreg] received FDA approval as an IV infusion treatment for
Crohn's disease (CD) on September 23, 2016. Because the 3-year
anniversary date of the entry of Stelara[supreg] onto the U.S. market
(September 23, 2019) will occur during FY 2019, in the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19276 through 19277), we proposed to
discontinue new technology add-on payments for this technology for FY
2020. We invited public comments on our proposal to discontinue new
technology add-on payments for Stelara[supreg] for FY 2020.
Comment: A commenter supported CMS' proposal to discontinue new
technology add-on payments for FY 2020 for Stelara[supreg].
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to discontinue new technology add-on payments for
Stelara[supreg] for FY 2020.
c. Bezlotoxumab (ZINPLAVATM)
Merck & Co., Inc. submitted an application for new technology add-
on payments for ZINPLAVATM for FY 2018.
ZINPLAVATM is indicated as a treatment to reduce recurrence
of Clostridium difficile infection (CDI) in adult patients who are
receiving antibacterial drug treatment for a diagnosis of CDI and who
are at high risk for CDI recurrence. ZINPLAVATM is not
indicated for the treatment of the presenting episode of CDI and is not
an antibacterial drug. ZINPLAVATM should only be used in
conjunction with an antibacterial drug treatment for CDI.
Clostridium difficile (C-diff) is a disease-causing anaerobic,
spore forming bacterium that affects the gastrointestinal (GI) tract.
Some people carry the C-diff bacterium in their intestines, but never
develop symptoms of an infection. The difference between asymptomatic
colonization and disease is caused primarily by the production of an
enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of
either or both toxins can lead to symptomatic CDI, which is defined as
the acute onset of diarrhea with a documented infection with toxigenic
C-diff. The GI tract contains millions of bacteria, commonly referred
to as ``normal flora'' or ``good bacteria,'' which play a role in
protecting the body from infection. Antibiotics can kill these good
bacteria and allow C-diff to multiply and release toxins that damage
the cells lining the intestinal wall, resulting in a CDI. CDI is a
leading cause of hospital-associated gastrointestinal illnesses.
Persons at increased risk for CDI include people who are currently on
or who have recently been treated with antibiotics, people who have
encountered current or recent hospitalization, people who are older
than 65 years, immunocompromised patients, and people who have recently
had a diagnosis of CDI. CDI symptoms include, but are not limited to,
diarrhea, abdominal pain, and fever. CDI symptoms range in severity
from mild (abdominal discomfort, loose stools) to severe (profuse,
watery diarrhea, severe abdominal pain, and high fevers). Severe CDI
can be life-threatening and,
[[Page 42185]]
in rare cases, can cause bowel rupture, sepsis and organ failure. CDI
is responsible for 14,000 deaths per year in the United States.
C-diff produces two virulent, pro-inflammatory toxins, Toxin A and
Toxin B, which target host colonic endothelial cells by binding to
endothelial cell surface receptors via combined repetitive oligopeptide
(CROP) domains. These toxins cause the release of inflammatory
cytokines leading to intestinal fluid secretion and intestinal
inflammation. The applicant asserted that ZINPLAVATM targets
Toxin B sites within the CROP domain rather than the C-diff organism
itself. According to the applicant, by targeting C-diff Toxin B,
ZINPLAVATM neutralizes Toxin B, prevents large intestine
endothelial cell inflammation, symptoms associated with CDI, and
reduces the recurrence of CDI.
ZINPLAVATM received FDA approval on October 21, 2016, as
a treatment to reduce the recurrence of CDI in adult patients receiving
antibacterial drug treatment for CDI and who are at high risk of CDI
recurrence. As previously stated, ZINPLAVATM is not
indicated for the treatment of CDI. ZINPLAVATM is not an
antibacterial drug, and should only be used in conjunction with an
antibacterial drug treatment for CDI. ZINPLAVATM became
commercially available on February 10, 2017. Therefore, the newness
period for ZINPLAVATM began on February 10, 2017. The
applicant submitted a request for a unique ICD-10-PCS procedure code
and was granted approval for the following procedure codes: XW033A3
(Introduction of bezlotoxumab monoclonal antibody, into peripheral
vein, percutaneous approach, new technology group 3) and XW043A3
(Introduction of bezlotoxumab monoclonal antibody, into central vein,
percutaneous approach, new technology group 3).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
ZINPLAVATM and consideration of the public comments we
received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we
approved ZINPLAVATM for new technology add-on payments for
FY 2018 (82 FR 38119). With the new technology add-on payment
application, the applicant estimated that the average Medicare
beneficiary would require a dosage of 10 mg/kg of ZINPLAVATM
administered as an IV infusion over 60 minutes as a single dose.
According to the applicant, the WAC for one dose is $3,800. Under
existing Sec. 412.88(a)(2), we limit new technology add-on payments 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 amount for a case
involving the use of ZINPLAVATM is $1,900 for FY 2019.
With regard to the newness criterion for ZINPLAVATM, we
considered the beginning of the newness period to commence on February
10, 2017. As discussed previously in this section, in general, we
extend new technology add-on payments for an additional year only if
the 3-year anniversary date of the product's entry onto the U.S. market
occurs in the latter half of the upcoming fiscal year. Because the 3-
year anniversary date of the entry of ZINPLAVATM onto the
U.S. market (February 10, 2020) will occur in the first half of FY
2020, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19277), we
proposed to discontinue new technology add-on payments for this
technology for FY 2020. We invited public comments on our proposal to
discontinue new technology add-on payments for ZINPLAVATM
technology for FY 2020.
Comment: A commenter supported CMS' proposal to discontinue new
technology add-on payments for FY 2020 for ZINPLAVATM.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to discontinue new technology add-on payments for
ZINPLAVATM for FY 2020.
d. KYMRIAH[supreg] (Tisagenlecleucel) and YESCARTA[supreg]
(Axicabtagene Ciloleucel)
Two manufacturers, Novartis Pharmaceuticals Corporation and Kite
Pharma, Inc., submitted separate applications for new technology add-on
payments for FY 2019 for KYMRIAH[supreg] (tisagenlecleucel) and
YESCARTA[supreg] (axicabtagene ciloleucel), respectively. Both of these
technologies are CD-19-directed T-cell immunotherapies used for the
purposes of treating patients with aggressive variants of non-Hodgkin
lymphoma (NHL).
On May 1, 2018, Novartis Pharmaceuticals Corporation received FDA
approval for KYMRIAH[supreg]'s second indication, the treatment of
adult patients with relapsed or refractory (r/r) large B-cell lymphoma
after two or more lines of systemic therapy including diffuse large B-
cell lymphoma (DLBCL) not otherwise specified, high grade B-cell
lymphoma and DLBCL arising from follicular lymphoma. On October 18,
2017, Kite Pharma, Inc. received FDA approval for the use of
YESCARTA[supreg] indicated for the treatment of adult patients with r/r
large B-cell lymphoma after two or more lines of systemic therapy,
including DLBCL not otherwise specified, primary mediastinal large B-
cell lymphoma, high grade B-cell lymphoma, and DLBCL arising from
follicular lymphoma.
Procedures involving the KYMRIAH[supreg] and YESCARTA[supreg]
therapies are both reported using the following ICD-10-PCS procedure
codes: XW033C3 (Introduction of engineered autologous chimeric antigen
receptor t-cell immunotherapy into peripheral vein, percutaneous
approach, new technology group 3); and XW043C3 (Introduction of
engineered autologous chimeric antigen receptor t-cell immunotherapy
into central vein, percutaneous approach, new technology group 3). In
the FY 2019 IPPS/LTCH PPS final rule, we finalized our proposal to
assign cases reporting these ICD-10-PCS procedure codes to Pre-MDC MS-
DRG 016 for FY 2019 and to revise the title of this MS-DRG to
Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy.
We refer readers to section II.F.2.d. of the preamble of the FY 2019
IPPS/LTCH PPS final rule for a complete discussion of these final
policies (83 FR 41172 through 41174).
With respect to the newness criterion, according to both
applicants, KYMRIAH[supreg] and YESCARTA[supreg] are the first CAR T-
cell immunotherapies of their kind. As discussed in the FY 2019 IPPS/
LTCH PPS proposed and final rules, because potential cases representing
patients who may be eligible for treatment using KYMRIAH[supreg] and
YESCARTA[supreg] would group to the same MS-DRGs (because the same ICD-
10-CM diagnosis codes and ICD-10-PCS procedures codes are used to
report treatment using either KYMRIAH[supreg] or YESCARTA[supreg]), and
we believed that these technologies are intended to treat the same or
similar disease in the same or similar patient population, and are
purposed to achieve the same therapeutic outcome using the same or
similar mechanism of action, we believed these two technologies are
substantially similar to each other and that it was appropriate to
evaluate both technologies as one application for new technology add-on
payments under the IPPS. For these reasons, we stated that we intended
to make one determination regarding approval for new technology add-on
payments that would apply to both applications, and in accordance with
our policy, would use the earliest market availability date submitted
as the beginning of the newness period for both KYMRIAH[supreg] and
YESCARTA[supreg].
[[Page 42186]]
As summarized in the FY 2019 IPPS/LTCH PPS final rule, we received
comments from the applicants for KYMRIAH[supreg] and YESCARTA[supreg]
regarding whether KYMRIAH[supreg] and YESCARTA[supreg] were
substantially similar to each other. The applicant for YESCARTA[supreg]
stated that it believed each technology consists of notable differences
in the construction, as well as manufacturing processes and successes
that may lead to differences in activity. The applicant encouraged CMS
to evaluate YESCARTA[supreg] as a separate new technology add-on
payment application and approve separate new technology add-on payments
for YESCARTA[supreg], effective October 1, 2018, and to not move
forward with a single new technology add-on payment evaluation
determination that covers both CAR T-cell therapies, YESCARTA[supreg]
and KYMRIAH[supreg]. The applicant for KYMRIAH[supreg] indicated that,
based on FDA's approval, it agreed with CMS that KYMRIAH[supreg] is
substantially similar to YESCARTA[supreg], as defined by the new
technology add-on payment application evaluation criteria. We refer
readers to the FY 2019 IPPS/LTCH PPS final rule for a more detailed
summary of these and other public comments we received regarding
substantial similarity for KYMRIAH[supreg] and YESCARTA[supreg].
After consideration of the public comments we received and for the
reasons discussed in the FY 2019 IPPS/LTCH PPS final rule, we stated
that we believed that KYMRIAH[supreg] and YESCARTA[supreg] are
substantially similar to one another. We also noted that for FY 2019,
there was no payment impact regarding this determination of substantial
similarity because the cost of the technologies is the same. However,
we stated that we welcomed additional comments in future rulemaking
regarding whether KYMRIAH[supreg] and YESCARTA[supreg] are
substantially similar and intended to revisit this issue in the FY 2020
IPPS/LTCH PPS proposed rule. As stated in the FY 2020 IPPS/LTCH PPS
proposed rule, for the reasons discussed in the FY 2019 IPPS/LTCH PPS
final rule, we continue to believe that KYMRIAH[supreg] and
YESCARTA[supreg] are substantially similar to each other for purposes
of new technology add-on payments under the IPPS. As we noted in the FY
2020 IPPS/LTCH PPS proposed rule, for FY 2020, the pricing for
KYMRIAH[supreg] and YESCARTA[supreg] remains the same and, therefore,
for FY 2020, there would continue to be no payment impact regarding the
determination that the two technologies are substantially similar to
each other for purposes of new technology add-on payments under the
IPPS. In the proposed rule, similar to last year, we welcomed public
comments regarding whether KYMRIAH[supreg] and YESCARTA[supreg] are
substantially similar to each other. We refer readers to the FY 2019
IPPS/LTCH PPS final rule for a complete discussion on newness and
substantial similarity regarding KYMRIAH[supreg] and YESCARTA[supreg].
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
KYMRIAH[supreg] and YESCARTA[supreg] and consideration of the public
comments we received in response to the FY 2019 IPPS/LTCH PPS proposed
rule, we approved new technology add-on payments for KYMRIAH[supreg]
and YESCARTA[supreg] for FY 2019 (83 FR 41299). Cases involving
KYMRIAH[supreg] or YESCARTA[supreg] that are eligible for new
technology add-on payments are identified by ICD-10-PCS procedure codes
XW033C3 or XW043C3. The applicants for both KYMRIAH[supreg] and
YESCARTA[supreg] estimated that the average cost for an administered
dose of KYMRIAH[supreg] or YESCARTA[supreg] is $373,000. Under existing
Sec. 412.88(a)(2), we limit new technology add-on payments 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, for FY 2019, the maximum new technology add-on payment for a
case involving the use of KYMRIAH[supreg] or YESCARTA[supreg] is
$186,500.
As previously stated, our policy is that a medical service or
technology may continue to be considered ``new'' for purposes of new
technology add-on payments within 2 or 3 years after the point at which
data begin to become available reflecting the inpatient hospital code
assigned to the new service or technology. With regard to the newness
criterion for KYMRIAH[supreg] and YESCARTA[supreg], as discussed in the
FY 2019 IPPS/LTCH PPS final rule, according to the applicant for
YESCARTA[supreg], the first commercial shipment of YESCARTA[supreg] was
received by a certified treatment center on November 22, 2017. As
previously stated, we use the earliest market availability date
submitted as the beginning of the newness period for both
KYMRIAH[supreg] and YESCARTA[supreg]. Therefore, we consider the
beginning of the newness period for both KYMRIAH[supreg] and
YESCARTA[supreg] to commence November 22, 2017.
Because the 3-year anniversary date of the entry of the technology
onto the U.S. market (November 22, 2020) will occur after FY 2020, in
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19278 through 19279), we
proposed to continue new technology add-on payments for KYMRIAH[supreg]
and YESCARTA[supreg] for FY 2020. In addition, under the proposed
change to the calculation of the new technology add-on payment amount
discussed in section II.H.9. of the preamble of the proposed rule (84
FR 19373), we proposed that the maximum new technology add-on payment
amount for a case involving the use of KYMRIAH[supreg] and
YESCARTA[supreg] would be increased to $242,450 for FY 2020; that is,
65 percent of the average cost of the technology. However, we stated
that if we did not finalize the proposed change to the calculation of
the new technology add-on payment amount, we were proposing that the
maximum new technology add-on payment for a case involving
KYMRIAH[supreg] or YESCARTA[supreg] would remain at $186,500 for FY
2020.
For the reasons discussed in section II.F.2.c. of the proposed rule
(84 FR 19180 through 19182), we proposed not to modify the current MS-
DRG assignment for cases reporting CAR T-cell therapies for FY 2020.
Alternatively, we stated that we were seeking public comments on
payment alternatives for CAR-T cell therapies. We also invited public
comments on how these payment alternatives would affect access to care,
as well as how they affect incentives to encourage lower drug prices,
which is a high priority for this Administration. As discussed in the
FY 2019 IPPS/LTCH PPS final rule (83 FR 41172 through 41174), we are
considering approaches and authorities to encourage value-based care
and lower drug prices. We solicited public comments on how the
effective dates of any potential payment methodology alternatives, if
any were to be adopted, may intersect and affect future participation
in any such alternative approaches. In the proposed rule, we stated
that such payment alternatives could include adjusting the CCRs used to
calculate new technology add-on payments for cases involving the use of
KYMRIAH[supreg] and YESCARTA[supreg]. We noted that we also considered
this payment alternative for FY 2019, as discussed in the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41172 through 41174), and are revisiting
this approach given the additional experience with CAR T-cell therapy
being provided in hospitals paid under the IPPS and in IPPS-excluded
cancer hospitals. We also requested public comments on other payment
alternatives for these cases, including eliminating the use of CCRs in
calculating the new technology add-on payments for cases involving the
use of
[[Page 42187]]
KYMRIAH[supreg] and YESCARTA[supreg] by making a uniform add-on payment
that equals the proposed maximum add-on payment, that is, 65 percent of
the cost of the technology (in accordance with the proposed increase in
the calculation of the maximum new technology add-on payment amount),
which in this instance would be $242,450; and/or using a higher
percentage than the proposed 65 percent to calculate the maximum new
technology add-on payment amount. We stated in the proposed rule that,
if we were to finalize any such changes to the new technology add-on
payment for cases involving the use of KYMRIAH[supreg] and
YESCARTA[supreg], we would also revise our proposed amendments to Sec.
412.88 accordingly.
We refer readers to section II.F.2.c. of this final rule for
discussion of the comments we received in response to the proposals and
solicitations for public comment above.
After consideration of the public comments we received, we are
finalizing our proposal to continue new technology add-on payments for
KYMRIAH[supreg] and YESCARTA[supreg]. Under the revised calculation of
the new technology add-on payment amount discussed in section II.H.9.
of the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of KYMRIAH[supreg] and
YESCARTA[supreg] will be $242,450 for FY 2020; that is, 65 percent of
the average cost of the technology. (As discussed in section II.H.9. of
the preamble of this final rule, we are revising the maximum new
technology add-on payment to 65 percent, or 75 percent for certain
antimicrobial products, of the average cost of the technology.)
e. VYXEOSTM (Cytarabine and Daunorubicin Liposome for
Injection)
Jazz Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for the VYXEOSTM technology for
FY 2019. VYXEOSTM was approved by FDA on August 3, 2017, for
the treatment of adults with newly diagnosed therapy-related acute
myeloid leukemia (t-AML) or AML with myelodysplasia-related changes
(AML-MRC).
Treatment of AML diagnoses usually consists of two phases;
remission induction and post-remission therapy. Phase one, remission
induction, is aimed at eliminating as many myeloblasts as possible. The
most common used remission induction regimens for AML diagnoses are the
``7+3'' regimens using an antineoplastic and an anthracycline.
Cytarabine and daunorubicin are two commonly used drugs for ``7+3''
remission induction therapy. Cytarabine is continuously administered
intravenously over the course of 7 days, while daunorubicin is
intermittently administered intravenously for the first 3 days. The
``7+3'' regimen typically achieves a 70 to 80 percent complete
remission (CR) rate in most patients under 60 years of age.
VYXEOSTM is a nano-scale liposomal formulation
containing a fixed combination of cytarabine and daunorubicin in a 5:1
molar ratio. This formulation was developed by the applicant using a
proprietary system known as CombiPlex. According to the applicant,
CombiPlex addresses several fundamental shortcomings of conventional
combination regimens, specifically the conventional ``7+3'' free drug
dosing, as well as the challenges inherent in combination drug
development, by identifying the most effective synergistic molar ratio
of the drugs being combined in vitro, and fixing this ratio in a nano-
scale drug delivery complex to maintain the optimized combination after
administration and ensuring exposure of this ratio to the tumor.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
VYXEOSTM and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved VYXEOSTM for new technology add-on payments for FY
2019 (83 FR 41304). Cases involving VYXEOSTM that are
eligible for new technology add-on payments are identified by ICD-10-
PCS procedure codes XW033B3 (Introduction of cytarabine and
caunorubicin liposome antineoplastic into peripheral vein, percutaneous
approach, new technology group 3) or XW043B3 (Introduction of
cytarabine and daunorubicin liposome antineoplastic into central vein,
percutaneous approach, new technology group 3). In its application, the
applicant estimated that the average cost of a single vial for
VYXEOSTM is $7,750 (daunorubicin 44 mg/m\2\ and cytarabine
100 mg/m\2\). As discussed in the FY 2019 IPPS/LTCH PPS final rule (83
FR 41305), we computed a maximum average of 9.4 vials used in the
inpatient hospital setting with the maximum average cost for
VYXEOSTM used in the inpatient hospital setting equaling
$72,850 ($7,750 cost per vial * 9.4 vials). Under existing Sec.
412.88(a)(2), we limit new technology add-on payments 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 a case involving the use of
VYXEOSTM is $36,425 for FY 2019.
With regard to the newness criterion for VYXEOSTM, we
consider the beginning of the newness period to commence when
VYXEOSTM was approved by the FDA (August 3, 2017). As
discussed previously in this section, in general, we extend new
technology add-on payments for an additional year only if the 3-year
anniversary date of the product's entry onto the U.S. market occurs in
the latter half of the upcoming fiscal year. Because the 3-year
anniversary date of the entry of the VYXEOSTM onto the U.S.
market (August 3, 2020) will occur in the second half of FY 2020, in
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19279 through 19280), we
proposed to continue new technology add-on payments for this technology
for FY 2020. In addition, under the proposed change to the calculation
of the new technology add-on payment amount discussed in section
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed
that the maximum new technology add-on payment amount for a case
involving the use of VYXEOSTM would be $47,353.50 for FY
2020; that is, 65 percent of the average cost of the technology.
However, we stated that if we did not finalize the proposed change to
the calculation of the new technology add-on payment amount, we were
proposing that the maximum new technology add-on payment for a case
involving VYXEOSTM would remain at $36,425 for FY 2020. We
invited public comments on our proposals to continue new technology
add-on payments for VYXEOSTM for FY 2020.
Comment: A commenter supported CMS' proposal to continue new
technology add-on payments for FY 2020 for VYXEOSTM.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for
VYXEOSTM for FY 2020. Under the revised calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of VYXEOSTM will
be $47,352.50 for FY 2020; that is, 65 percent of the average cost of
the technology. (As discussed in section II.H.9. of the preamble of
this final rule, we are revising the maximum new technology add-on
payment to 65
[[Page 42188]]
percent, or 75 percent for certain antimicrobial products, of the
average cost of the technology.)
f. VABOMERETM (meropenem-vaborbactam)
Melinta Therapeutics, Inc., submitted an application for new
technology add-on payments for VABOMERETM for FY 2019.
VABOMERETM is indicated for use in the treatment of adult
patients who have been diagnosed with complicated urinary tract
infections (cUTIs), including pyelonephritis, caused by designated
susceptible bacteria. VABOMERETM received FDA approval on
August 29, 2017.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
VABOMERETM and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved VABOMERETM for new technology add-on payments for
FY 2019 (83 FR 41311). We noted in the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41311) that the applicant did not request approval for the use
of a unique ICD-10-PCS procedure code for VABOMERETM for FY
2019 and that as a result, hospitals would be unable to uniquely
identify the use of VABOMERETM on an inpatient claim using
the typical coding of an ICD-10-PCS procedure code. We noted that in
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53352), with regard to the
oral drug DIFICIDTM, we revised our policy to allow for the
use of an alternative code set to identify oral medications where no
inpatient procedure is associated for the purposes of new technology
add-on payments. We established the use of a NDC as the alternative
code set for this purpose and described our rationale for this
particular code set. This change was effective for payments for
discharges occurring on or after October 1, 2012. In the FY 2019 IPPS/
LTCH PPS final rule, we acknowledged that VABOMERETM is not
an oral drug and is administered by IV infusion, but it was the first
approved new technology aside from an oral drug with no uniquely
assigned inpatient procedure code. Therefore, we believed that the
circumstances with respect to the identification of eligible cases
using VABOMERETM are similar to those addressed in the FY
2013 IPPS/LTCH PPS final rule with regard to DIFICIDTM
because we did not have current ICD-10-PCS code(s) to uniquely identify
the use of VABOMERETM to make the new technology add-on
payment. We stated that because we have determined that
VABOMERETM has met all of the new technology add-on payment
criteria and cases involving the use of VABOMERETM would be
eligible for such payments for FY 2019, we needed to use an alternative
coding method to identify these cases and make the new technology add-
on payment for use of VABOMERETM in FY 2019. Therefore, for
the reasons discussed in the FY 2019 IPPS/LTCH PPS final rule and
similar to the policy in the FY 2013 IPPS/LTCH PPS final rule, cases
involving VABOMERETM that are eligible for new technology
add-on payments for FY 2019 are identified by National Drug Codes (NDC)
65293-0009-01 or 70842-0120-01 (VABOMERETM Meropenem-
Vaborbactam Vial).
According to the applicant, the cost of VABOMERETM is
$165 per vial. A patient receives two vials per dose and three doses
per day. Therefore, the per-day cost of VABOMERETM is $990
per patient. The duration of therapy, consistent with the Prescribing
Information, is up to 14 days. Therefore, the estimated cost of
VABOMERETM to the hospital, per patient, is $13,860. We
stated in the FY 2019 IPPS/LTCH PPS final rule that based on the
limited data from the product's launch, approximately 80 percent of
VABOMERETM's usage would be in the inpatient hospital
setting, and approximately 20 percent of VABOMERETM's usage
may take place outside of the inpatient hospital setting. Therefore,
the average number of days of VABOMERETM administration in
the inpatient hospital setting is estimated at 80 percent of 14 days,
or approximately 11.2 days. As a result, the total inpatient cost for
VABOMERETM is $11,088 ($990 * 11.2 days). Under existing
Sec. 412.88(a)(2), we limit new technology add-on payments 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 a case involving
the use of VABOMERETM is $5,544 for FY 2019.
With regard to the newness criterion for VABOMERETM, we
consider the beginning of the newness period to commence when
VABOMERETM received FDA approval (August 29, 2017). As
discussed previously in this section, in general, we extend new
technology add-on payments for an additional year only if the 3-year
anniversary date of the product's entry onto the U.S. market occurs in
the latter half of the upcoming fiscal year. Because the 3-year
anniversary date of the entry of VABOMERETM onto the U.S.
market (August 29, 2020) will occur during the second half of FY 2020,
in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19280 through 19281),
we proposed to continue new technology add-on payments for this
technology for FY 2020. In addition, under the proposed change to the
calculation of the new technology add-on payment amount discussed in
section II.H.9. of the preamble of the proposed rule (84 FR 19373), we
proposed that the maximum new technology add-on payment amount for a
case involving the use of VABOMERETM would be $7,207.20 for
FY 2020; that is, 65 percent of the average cost of the technology.
However, we stated that if we did not finalize the proposed change to
the calculation of the new technology add-on payment amount, we were
proposing that the maximum new technology add-on payment for a case
involving VABOMERETM would remain at $5,544 for FY 2020.
As we previously noted in this rule and in the proposed rule,
because there was no ICD-10-PCS code(s) to uniquely identify the use of
VABOMERETM, we indicated in the FY 2019 IPPS/LTCH PPS final
rule that FY 2019 cases involving the use of VABOMERETM that
are eligible for the FY 2019 new technology add-on payments would be
identified using an NDC code. Subsequent to the issuance of that final
rule, new ICD-10-PCS codes XW033N5 (Introduction of Meropenem-
vaborbactam Anti-infective into Peripheral Vein, Percutaneous Approach,
New Technology Group 5) and XW043N5 (Introduction of Meropenem-
vaborbactam Anti-infective into Central Vein, Percutaneous Approach,
New Technology Group 5) were finalized to identify cases involving the
use of VABOMERETM, effective October 1, 2019, as shown in
Table 6B--New Procedure Codes, associated with the FY 2020 IPPS final
rule and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html and then clicking on the link on the left
titled ``FY 2022 IPPS Final Rule Home Page''. Therefore, we stated in
the proposed rule that, for FY 2020, we will use these two ICD-10-PCS
codes (XW033N5 and XW043N5) to identify cases involving the use of
VABOMERETM that are eligible for the new technology add-on
payments.
While these newly approved ICD-10-PCS procedure codes can be used
to uniquely identify cases involving the use of VABOMERETM
for FY 2020, we stated in the proposed rule that we are concerned that
limiting new technology add-on payments only to cases reporting
[[Page 42189]]
these new ICD-10-PCS codes for FY 2020 could cause confusion because it
is possible that some providers may inadvertently continue to bill some
claims with the NDC codes rather than the new ICD-10-PCS codes.
Therefore, for FY 2020, we proposed that in addition to using the new
ICD-10-PCS codes to identify cases involving the use of
VABOMERETM, we would also continue to use the NDC codes to
identify cases and make the new technology add-on payments. As a
result, we proposed that cases involving the use of
VABOMERETM that are eligible for new technology add-on
payments for FY 2020 would be identified by ICD-10-PCS codes XW033N5 or
XW043N5 or NDCs 65293-0009-01 or 70842-0120-01. We invited public
comments on our proposal to continue new technology add-on payments for
VABOMERETM for FY 2020 and our proposals for identifying and
making new technology add-on payments for cases involving the use of
VABOMERETM.
Comment: A commenter supported CMS' proposal to continue new
technology add-on payments for FY 2020 for VABOMERETM. This
commenter also supported CMS' proposal to identify cases involving the
use of VABOMERETM that are eligible for new technology add-
on payments for FY 2020 using ICD-10-PCS codes XW033N5 or XW043N5 or
NDCs 65293-0009-01 or 70842-0120-01.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for
VABOMERETM for FY 2020, as well as our proposal to identify
cases involving the use of VABOMERETM that are eligible for
new technology add-on payments for FY 2020 using ICD-10-PCS codes
XW033N5 or XW043N5 or NDCs 65293-0009-01 or 70842-0120-01. Under the
revised calculation of the new technology add-on payment amount
discussed in section II.H.9. of the preamble of this final rule, the
maximum new technology add-on payment amount for a case involving the
use of VABOMERETM will be $8,316 for FY 2020; that is, 75
percent of the average cost of the technology. (As discussed in section
II.H.9. of the preamble of this final rule, we are revising the maximum
new technology add-on payment to 65 percent, or 75 percent for certain
antimicrobial products, of the average cost of the technology.)
g. remed[emacr][supreg] System
Respicardia, Inc. submitted an application for new technology add-
on payments for the remed[emacr][supreg] System for FY 2019. According
to the applicant, the remed[emacr][supreg] System is indicated for use
as a transvenous phrenic nerve stimulator in the treatment of adult
patients who have been diagnosed with moderate to severe central sleep
apnea (CSA). The remed[emacr][supreg] System consists of an implantable
pulse generator, and a stimulation and sensing lead. The pulse
generator is placed under the skin, in either the right or left side of
the chest, and it functions to monitor the patient's respiratory
signals. A transvenous lead for unilateral stimulation of the phrenic
nerve is placed either in the left pericardiophrenic vein or the right
brachiocephalic vein, and a second lead to sense respiration is placed
in the azygos vein. Both leads, in combination with the pulse
generator, function to sense respiration and, when appropriate,
generate an electrical stimulation to the left or right phrenic nerve
to restore regular breathing patterns.
On October 6, 2017, the remed[emacr][supreg] System was approved by
the FDA as an implantable phrenic nerve stimulator indicated for the
use in the treatment of adult patients who have been diagnosed with
moderate to severe CSA. The device was available commercially upon FDA
approval. Therefore, the newness period for the remed[emacr][supreg]
System is considered to begin on October 6, 2017.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
remed[emacr][supreg] System and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved the remed[emacr][supreg] System for new technology add-on
payments for FY 2019. Cases involving the use of the
remed[emacr][supreg] System that are eligible for new technology add-on
payments are identified by ICD-10-PCS procedures codes 0JH60DZ and
05H33MZ in combination with procedure code 05H03MZ (Insertion of
neurostimulator lead into right innominate vein, percutaneous approach)
or 05H43MZ (Insertion of neurostimulator lead into left innominate
vein, percutaneous approach). According to the application, the cost of
the remed[emacr][supreg] System is $34,500 per patient. Under existing
Sec. 412.88(a)(2), we limit new technology add-on payments 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 a case involving
the use of the remed[emacr][supreg] System is $17,250 for FY 2019 (83
FR 41320).
With regard to the newness criterion for the remed[emacr][supreg]
System, we consider the beginning of the newness period to commence
when the remed[emacr][supreg] System was approved by the FDA on October
6, 2017. Because the 3-year anniversary date of the entry of the
remed[emacr][supreg] System onto the U.S. market (October 6, 2020) will
occur after FY 2020, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19281), we proposed to continue new technology add-on payments for this
technology for FY 2020. In addition, under the proposed change to the
calculation of the new technology add-on payment amount discussed in
section II.H.9. of the preamble of the proposed rule (84 FR 19373), we
proposed that the maximum new technology add-on payment amount for a
case involving the use of the remed[emacr][supreg] System would be
$22,425 for FY 2020; that is, 65 percent of the average cost of the
technology. However, we stated that if we did not finalize the proposed
change to the calculation of the new technology add-on payment amount,
we were proposing that the maximum new technology add-on payment for a
case involving the remed[emacr][supreg] System would remain at $17,250
for FY 2020. We invited public comments on our proposals to continue
new technology add-on payments for the remed[emacr][supreg] System for
FY 2020.
Comment: Several commenters supported CMS' proposal to continue new
technology add-on payments for FY 2020 for the remed[emacr][supreg]
System. A commenter, who was also the applicant, believed that the
newness period for the remed[emacr][supreg] System should start on
February 1, 2018 instead of the FDA approval date of October 6, 2017.
The commenter stated that due to the required build out of operational
and commercial capabilities, the remed[emacr][supreg] System was not
commercially available upon FDA approval and the first case involving
its use did not occur until February 1, 2018. The commenter asserted
that the date of the first implant should mark the start of the newness
period as before that the technology was not commercially available.
Several commenters asserted that the descriptor of one of the ICD-
10-PCS procedure codes used to uniquely identify cases involving the
use of the remed[emacr][supreg] System is incorrect. Per the
commenters, CMS indicated in the proposed rule that cases involving the
use of the remed[emacr][supreg] System that are eligible for new
technology add-on payments are identified by ICD-10-PCS
[[Page 42190]]
procedure codes 0JH60DZ and 05H33MZ in combination with procedure code
05H03MZ (Insertion of neurostimulator lead into right innominate vein,
percutaneous approach) or 05H43MZ (Insertion of neurostimulator lead
into left innominate vein, percutaneous approach). The commenters
asserted that the descriptor of the code 05H03MZ was incorrectly stated
in the proposed rule as involving the right innominate vein, whereas
the correct body part for this code is the azygos vein.
Furthermore, the commenters noted that the codes listed for the
remed[emacr][supreg] System in the proposed rule do not match the
advice that was published in the Fourth Quarter 2016 issue of Coding
Clinic for ICD-10-CM/PCS regarding insertion of a phrenic
neurostimulator. Per the commenters, the Coding Clinic advised
assigning code 0JH60MZ for insertion of the stimulator generator into
the chest subcutaneous tissue and fascia and code 05H032Z for the
insertion of monitoring device into the azygos vein, plus the
appropriate code for insertion of neurostimulator lead into either the
left or right innominate vein. The commenters asserted that the device
values for both the code for the stimulator generator and the code for
the insertion of the lead in the azygos vein in the Coding Clinic
advice were different than the ones indicated by CMS in the proposed
rule. Commenters indicated that, according to Coding Clinic, for coding
purposes, the sensing lead is designated as a monitoring device to
differentiate between the sensing lead that monitors the respiratory
activity and the electrode that delivers the electrical stimulation.
The commenters requested that CMS revisit this topic and revise as
applicable the stated codes to identify placement of the
remed[emacr][supreg] System to be consistent with the advice published
in Coding Clinic for ICD-10-CM/PCS. A commenter requested that CMS also
make the appropriate retroactive payments consistent with the revised
codes.
Response: We appreciate the commenters' support. Regarding newness,
we will consider the additional information the applicant provided when
proposing whether to continue new technology add-on payments for the
remed[emacr][supreg] System for FY 2021.
Regarding codes, we acknowledge the error in our description of the
ICD-10-PCS procedure code 05H03MZ in the Proposed Rule and agree with
the commenters that the correct body part for this code is the azygos
vein, not the innominate vein as stated in the Proposed Rule. We also
acknowledge that the finalized codes used to identify cases involving
the remed[emacr][supreg] System that are eligible for the add-on
payment differ from those that were published in the Fourth Quarter
2016 issue of Coding Clinic for ICD-10-CM/PCS regarding insertion of a
phrenic neurostimulator. However, we believe that the finalized codes
from the March 2018 Coordination & Maintenance Committee meeting
supercede the Coding Clinic advice for the technology. Therefore, cases
involving the remed[emacr][supreg] System that are eligible for the
add-on payment will continue to be identified with the procedure codes
0JH60DZ (Insertion of multiple array stimulator generator into chest
subcutaneous tissue and fascia, open approach) and 05H03MZ (Insertion
of neurostimulator lead into azygos vein, percutaneous approach) in
combination with procedure code 05H33MZ (Insertion of neurostimulator
lead into right innominate vein, percutaneous approach) or 05H43MZ
(Insertion of neurostimulator lead into left innominate vein,
percutaneous approach).
After consideration of the public comments we received, we are
finalizing our proposal to continue new technology add-on payments for
the remed[emacr][supreg] System for FY 2020. Under the revised
calculation of the new technology add-on payment amount discussed in
section II.H.9. of the preamble of this final rule, the maximum new
technology add-on payment amount for a case involving the use of the
remed[emacr][supreg] System will be $22,425 for FY 2020; that is, 65
percent of the average cost of the technology. (As discussed in section
II.H.9. of the preamble of this final rule, we are revising the maximum
new technology add-on payment to 65 percent, or 75 percent for certain
antimicrobial products, of the average cost of the technology.)
h. ZEMDRITM (Plazomicin)
Achaogen, Inc. submitted an application for new technology add-on
payments for ZEMDRITM (Plazomicin) for FY 2019. According to
the applicant, ZEMDRITM (Plazomicin) is a next-generation
aminoglycoside antibiotic, which has been found in vitro to have
enhanced activity against many multi-drug resistant (MDR) gram-negative
bacteria. The applicant received approval from the FDA on June 25,
2018, for use in the treatment of adults who have been diagnosed with
cUTIs, including pyelonephritis.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
ZEMDRITM and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved ZEMDRITM for new technology add-on payments for FY
2019 (83 FR 41334). Cases involving ZEMDRITM that are
eligible for new technology add-on payments are identified by ICD-10-
PCS procedure codes XW033G4 (Introduction of Plazomicin anti-infective
into peripheral vein, percutaneous approach, new technology group 4) or
XW043G4 (Introduction of Plazomicin anti-infective into central vein,
percutaneous approach, new technology group 4). In its application, the
applicant estimated that the average Medicare beneficiary would require
a dosage of 15 mg/kg administered as an IV infusion as a single dose.
According to the applicant, the WAC for one dose is $330, and patients
will typically require 3 vials for the course of treatment with
ZEMDRITM per day for an average duration of 5.5 days.
Therefore, the total cost of ZEMDRITM per patient is $5,445.
Under existing Sec. 412.88(a)(2), we limit new technology add-on
payments 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 a case involving the use of ZEMDRITM is $2,722.50 for FY
2019.
With regard to the newness criterion for ZEMDRITM, we
consider the beginning of the newness period to commence when
ZEMDRITM was approved by the FDA on June 25, 2018. Because
the 3-year anniversary date of the entry of ZEMDRITM onto
the U.S. market (June 25, 2021) will occur after FY 2020, in the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19281 through 19282), we
proposed to continue new technology add-on payments for this technology
for FY 2020. In addition, under the proposed change to the calculation
of the new technology add-on payment amount discussed in section
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed
that the maximum new technology add-on payment amount for a case
involving the use of ZEMDRITM would be $3,539.25 for FY
2020; that is, 65 percent of the average cost of the technology.
However, we stated that if we did not finalize the proposed change to
the calculation of the new technology add-on payment amount, we were
proposing that the maximum new technology add-on payment for a case
involving ZEMDRITM would remain at $2,722.50 for FY 2020.
[[Page 42191]]
We invited public comments on our proposals to continue new technology
add-on payments for ZEMDRITM for FY 2020.
Comment: A commenter supported CMS' proposal to continue new
technology add-on payments for FY 2020 for ZEMDRITM.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for
ZEMDRITM for FY 2020. Under the revised calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of ZEMDRITM will
be $4,083.75 for FY 2020; that is, 75 percent of the average cost of
the technology. (As discussed in section II.H.9. of the preamble of
this final rule, we are revising the maximum new technology add-on
payment to 65 percent, or 75 percent for certain antimicrobial
products, of the average cost of the technology.)
i. GIAPREZATM
The La Jolla Pharmaceutical Company submitted an application for
new technology add-on payments for GIAPREZATM for FY 2019.
GIAPREZATM, a synthetic human angiotensin II, is
administered through intravenous infusion to raise blood pressure in
adult patients who have been diagnosed with septic or other
distributive shock.
GIAPREZATM was granted a Priority Review designation
under FDA's expedited program and received FDA approval on December 21,
2017, for the use in the treatment of adults who have been diagnosed
with septic or other distributive shock as an intravenous infusion to
increase blood pressure.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
GIAPREZATM and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved GIAPREZATM for new technology add-on payments for
FY 2019 (83 FR 41342). Cases involving GIAPREZATM that are
eligible for new technology add-on payments are identified by ICD-10-
PCS procedure codes XW033H4 (Introduction of synthetic human
angiotensin II into peripheral vein, percutaneous approach, new
technology, group 4) or XW043H4 (Introduction of synthetic human
angiotensin II into central vein, percutaneous approach, new technology
group 4). In its application, the applicant estimated that the average
Medicare beneficiary would require a dosage of 20 ng/kg/min
administered as an IV infusion over 48 hours, which would require 2
vials. The applicant explained that the WAC for one vial is $1,500,
with each episode-of-care costing $3,000 per patient. Under existing
Sec. 412.88(a)(2), we limit new technology add-on payments 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 a case involving
the use of GIAPREZATM is $1,500 for FY 2019.
With regard to the newness criterion for GIAPREZATM, we
consider the beginning of the newness period to commence when
GIAPREZATM was approved by the FDA (December 21, 2017).
Because the 3-year anniversary date of the entry of
GIAPREZATM onto the U.S. market (December 21, 2020) would
occur after FY 2020, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19282), we proposed to continue new technology add-on payments for this
technology for FY 2020. In addition, under the proposed change to the
calculation of the new technology add-on payment discussed in section
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed
that the maximum new technology add-on payment amount for a case
involving the use of GIAPREZATM would be $1,950 for FY 2020;
that is, 65 percent of the average cost of the technology. However, we
stated that if we did not finalize the proposed change to the
calculation of the new technology add-on payment amount, we were
proposing that the maximum new technology add-on payment for a case
involving GIAPREZATM would remain at $1,500 for FY 2020. We
invited public comments on our proposals to continue new technology
add-on payments for GIAPREZATM for FY 2020.
Comment: A commenter supported CMS' proposal to continue new
technology add-on payments for FY 2020 for GIAPREZATM.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for
GIAPREZATM for FY 2020. Under the revised calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of GIAPREZATM
will be $4,083.75 for FY 2020; that is, 65 percent of the average cost
of the technology. (As discussed in section II.H.9. of the preamble of
this final rule, we are revising the maximum new technology add-on
payment to 65 percent, or 75 percent for certain antimicrobial
products, of the average cost of the technology.)
j. Cerebral Protection System (Sentinel[supreg] Cerebral Protection
System)
Claret Medical, Inc. submitted an application for new technology
add-on payments for the Cerebral Protection System (Sentinel[supreg]
Cerebral Protection System) for FY 2019. According to the applicant,
the Sentinel Cerebral Protection System is indicated for the use as an
embolic protection (EP) device to capture and remove thrombus and
debris while performing transcatheter aortic valve replacement (TAVR)
procedures. The device is percutaneously delivered via the right radial
artery and is removed upon completion of the TAVR procedure. The De
Novo request for the Sentinel[supreg] Cerebral Protection System was
granted by FDA on June 1, 2017 (DEN160043).
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
Sentinel[supreg] Cerebral Protection System and consideration of the
public comments we received in response to the FY 2019 IPPS/LTCH PPS
proposed rule, we approved the Sentinel[supreg] Cerebral Protection
System for new technology add-on payments for FY 2019 (83 FR 41348).
Cases involving the Sentinel[supreg] Cerebral Protection System that
are eligible for new technology add-on payments are identified by ICD-
10-PCS code X2A5312 (Cerebral embolic filtration, dual filter in
innominate artery and left common carotid artery, percutaneous
approach). In its application, the applicant estimated that the cost of
the Sentinel[supreg] Cerebral Protection System is $2,800. Under
existing Sec. 412.88(a)(2), we limit new technology add-on payments 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 a case involving
the use of the Sentinel[supreg] Cerebral Protection System is $1,400
for FY 2019.
With regard to the newness criterion for the Sentinel[supreg]
Cerebral Protection System, we consider the beginning of the newness
period to commence when the FDA granted the De Novo request for the
Sentinel[supreg] Cerebral Protection System (June 1, 2017). As
discussed
[[Page 42192]]
previously in this section, in general, we extend new technology add-on
payments for an additional year only if the 3-year anniversary date of
the product's entry onto the U.S. market occurs in the latter half of
the upcoming fiscal year. Because the 3-year anniversary date of the
entry of the Sentinel[supreg] Cerebral Protection System onto the U.S.
market (June 1, 2020) will occur in the second half of FY 2020, in the
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19282 through 19283), we
proposed to continue new technology add-on payments for this technology
for FY 2020. In addition, under the proposed change to the calculation
of the new technology add-on payment amount discussed in section
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed
that the maximum new technology add-on payment amount for a case
involving the use of the Sentinel[supreg] Cerebral Protection System
would be $1,820 for FY 2020; that is, 65 percent of the average cost of
the technology. However, we stated that if we did not finalize the
proposed change to the calculation of the new technology add-on payment
amount, we were proposing that the maximum new technology add-on
payment for a case involving the Sentinel[supreg] Cerebral Protection
System would remain at $1,400 for FY 2020. We invited public comments
on our proposals to continue new technology add-on payments for the
Sentinel[supreg] Cerebral Protection System for FY 2020.
Comment: Several commenters supported CMS' proposal to continue new
technology add-on payments for FY 2020 for the Sentinel[supreg]
Cerebral Protection System.
Response: We appreciate the commenters' support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for the
Sentinel[supreg] Cerebral Protection System for FY 2020. Under the
revised calculation of the new technology add-on payment amount
discussed in section II.H.9. of the preamble of this final rule, the
maximum new technology add-on payment amount for a case involving the
use of the Sentinel[supreg] Cerebral Protection System will be $1,820
for FY 2020; that is, 65 percent of the average cost of the technology.
(As discussed in section II.H.9. of the preamble of this final rule, we
are revising the maximum new technology add-on payment to 65 percent,
or 75 percent for certain antimicrobial products, of the average cost
of the technology.)
k. The AQUABEAM System (Aquablation)
PROCEPT BioRobotics Corporation submitted an application for new
technology add-on payments for the AQUABEAM System (Aquablation) for FY
2019. According to the applicant, the AQUABEAM System is indicated for
the use in the treatment of patients experiencing lower urinary tract
symptoms caused by a diagnosis of benign prostatic hyperplasia (BPH).
The AQUABEAM System consists of three main components: A console with
two high-pressure pumps, a conformal surgical planning unit with trans-
rectal ultrasound imaging, and a single-use robotic hand-piece. The
applicant reported that the AQUABEAM System provides the operating
surgeon a multi-dimensional view, using both ultrasound image guidance
and endoscopic visualization, to clearly identify the prostatic adenoma
and plan the surgical resection area. The applicant stated that, based
on the planning inputs from the surgeon, the system's robot delivers
Aquablation, an autonomous waterjet ablation therapy that enables
targeted, controlled, heat-free and immediate removal of prostate
tissue used for the purpose of treating lower urinary tract symptoms
caused by a diagnosis of BPH. Per the applicant, the combination of
surgical mapping and robotically-controlled resection of the prostate
is designed to offer predictable and reproducible outcomes, independent
of prostate size, prostate shape or surgeon experience.
The FDA granted the AQUABEAM System's De Novo request on December
21, 2017, for use in the resection and removal of prostate tissue in
males suffering from lower urinary tract symptoms (LUTS) due to benign
prostatic hyperplasia. The applicant stated that the AQUABEAM System
was made available on the U.S. market immediately after the FDA granted
the De Novo request.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for the
AQUABEAM System and consideration of the public comments we received in
response to the FY 2019 IPPS/LTCH PPS proposed rule, we approved the
AQUABEAM System for new technology add-on payments for FY 2019 (83 FR
41355). Cases involving the AQUABEAM System that are eligible for new
technology add-on payments are identified by ICD-10-PCS code XV508A4
(Destruction of prostate using robotic waterjet ablation, via natural
or artificial opening endoscopic, new technology group 4). The
applicant estimated that the average Medicare beneficiary would require
the transurethral procedure of one AQUABEAM System per patient.
According to the application, the cost of the AQUABEAM System is $2,500
per procedure. Under existing Sec. 412.88(a)(2), we limit new
technology add-on payments 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 a case involving the use of the AQUABEAM System's
Aquablation System is $1,250 for FY 2019.
With regard to the newness criterion for the AQUABEAM System, we
consider the beginning of the newness period to commence on the date
the FDA granted the De Novo request (December 21, 2017). As noted
previously and in the FY 2019 rulemaking, the applicant stated that the
AQUABEAM System was made available on the U.S. market immediately after
the FDA granted the De Novo request.
We note that in the FY 2019 IPPS/LTCH PPS final rule, we
inadvertently misstated the newness period beginning date as April 19,
2018 (83 FR 41351). As discussed in the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41350), in its public comment in response to the FY 2019
IPPS/LTCH PPS proposed rule, the applicant explained that, while the
AQUABEAM System received approval from the FDA for its De Novo request
on December 21, 2017, local non-coverage determinations in the Medicare
population resulted in the first case being delayed until April 19,
2018. Therefore, the applicant believed that the newness period should
begin on April 19, 2018, instead of the date FDA granted the De Novo
request. In the final rule, we responded that with regard to the
beginning of the technology's newness period, 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 begins when
data begin to become available. While local non-coverage determinations
may limit the use of a technology in different regions in the country,
a technology may be available in regions where no local non-coverage
decision existed (with data beginning to become available). We also
explained that under our historical policy we do not consider how
frequently the medical service or technology has been used in the
Medicare population in our determination of newness (as discussed
[[Page 42193]]
in the FY 2006 IPPS final rule (70 FR 47349)). We stated in the FY 2019
IPPS/LTCH PPS proposed rule that consistent with this response, and as
indicated in the FY 2019 proposed rule and elsewhere in the final rule,
we believe the beginning of the newness period to commence on the first
day the AQUABEAM System was commercially available (December 21, 2017).
As noted, the later statement that the newness period beginning date
for the AQUABEAM System is April 19, 2018 was an inadvertent error. We
stated in the FY 2020 IPPS/LTCH PPS proposed rule that, as we indicated
in the FY 2019 IPPS/LTCH PPS final rule, we welcomed further
information from the applicant for consideration regarding the
beginning of the newness period.
Because the 3-year anniversary date of the entry of the AQUABEAM
System onto the U.S. market (December 21, 2020) will occur after FY
2020, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19283), we
proposed to continue new technology add-on payments for this technology
for FY 2020. In addition, under the proposed change to the calculation
of the new technology add on payment amount discussed in section
II.H.9. of the preamble of the proposed rule (84 FR 19373), we proposed
that the maximum new technology add-on payment amount for a case
involving the use of the AQUABEAM System would be $1,625 for FY 2020;
that is, 65 percent of the average cost of the technology. However, we
stated that if we did not finalize the proposed change to the
calculation of the new technology add-on payment amount, we were
proposing that the maximum new technology add-on payment for a case
involving the AQUABEAM System would remain at $1,250 for FY 2020. We
invited public comments on our proposals to continue new technology
add-on payments for the AQUABEAM System for FY 2020.
Comment: A few commenters supported CMS' proposal to continue new
technology add-on payments for the AQUABEAM System for FY 2020.
Several commenters disagreed with CMS' belief that the newness
period for the AQUABEAM System commenced on December 21, 2017, the day
that FDA granted the De Novo request for the AQUABEAM System. These
commenters, including the applicant, asserted that the American Medical
Association assigned Aquablation therapy to a Category III CPT code
prior to FDA clearance, and as a result Aquablation therapy was non-
covered by all Medicare Administrative Contractors prior to the date of
FDA clearance through to the present day. Per the commenters, this is
equivalent to a uniform, non-coverage policy for the entire nation. The
commenters further stated that CMS has consistently recognized that the
start of the newness period can occur months after FDA approval if
there are delays in availability--including nationwide non-coverage--as
indicated in the FY 2005 IPPS Final Rule, the FY 2006 IPPS Final Rule,
and the CY 2016 OPPS Final Rule. The commenters asserted that based on
longstanding rules and policy statements, the appropriate beginning of
the newness period for the AQUABEAM System should be April 19, 2018, or
the date of the first procedure in a commercially-insured patient.
Response: We appreciate the commenters' support. With regard to
newness, we note that Category III CPT codes are not recognized on
inpatient claims. We continue to consider the beginning of the newness
period for the AQUABEAM System to commence on December 21, 2017, or the
date the FDA granted the applicant's De Novo request.
After consideration of the public comments we received, we are
finalizing our proposal to continue new technology add-on payments for
the AQUABEAM System for FY 2020. Under the revised calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of the AQUABEAM System will
be $1,625 for FY 2020; that is, 65 percent of the average cost of the
technology. (As discussed in section II.H.9. of the preamble of this
final rule, we are revising the maximum new technology add-on payment
to 65 percent, or 75 percent for certain antimicrobial products, of the
average cost of the technology.)
l. AndexXaTM (Andexanet alfa)
Portola Pharmaceuticals, Inc. (Portola) submitted an application
for new technology add-on payments for FY 2019 for the use of
AndexXaTM (Andexanet alfa).
AndexXaTM received FDA approval on May 3, 2018, and is
indicated for use in the treatment of patients who are receiving
treatment with rivaroxaban and apixaban, when reversal of
anticoagulation is needed due to life-threatening or uncontrolled
bleeding.
After evaluation of the newness, costs, and substantial clinical
improvement criteria for new technology add-on payments for
AndexXaTM and consideration of the public comments we
received in response to the FY 2019 IPPS/LTCH PPS proposed rule, we
approved AndexXaTM for new technology add-on payments for FY
2019 (83 FR 41362). Cases involving the use of AndexXaTM
that are eligible for new technology add-on payments are identified by
ICD-10-PCS procedure codes XW03372 (Introduction of Andexanet alfa,
Factor Xa inhibitor reversal agent into peripheral vein, percutaneous
approach, new technology group 2) or XW04372 (Introduction of Andexanet
alfa, Factor Xa inhibitor reversal agent into central vein,
percutaneous approach, new technology group 2). The applicant explained
that the WAC for 1 vial is $2,750, with the use of an average of 10
vials for the low dose and 18 vials for the high dose. The applicant
noted that per the clinical trial data, 90 percent of cases were
administered a low dose and 10 percent of cases were administered the
high dose. The weighted average between the low and high dose is an
average of 10.22727 vials. Therefore, the cost of a standard dosage of
AndexXaTM is $28,125 ($2,750 x 10.22727). Under existing
Sec. 412.88(a)(2), we limit new technology add-on payments 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 a case involving
the use of AndexXaTM is $14,062.50 for FY 2019.
With regard to the newness criterion for AndexXaTM, we
consider the beginning of the newness period to commence when
AndexXaTM received FDA approval (May 3, 2018). Because the
3-year anniversary date of the entry of AndexXaTM onto the
U.S. market (May 3, 2021) will occur after FY 2020, in the FY 2020
IPPS/LTCH PPS proposed rule (84 FR 19283 through 19284), we proposed to
continue new technology add-on payments for this technology for FY
2020. In addition, under the proposed change to the calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of the proposed rule (84 FR 19373), we proposed that the
maximum new technology add-on payment amount for a case involving the
use of AndexXaTM would be $18,281.25 for FY 2020; that is,
65 percent of the average cost of the technology. However, we stated
that if we did not finalize the proposed change to the calculation of
the new technology add-on payment amount, we were proposing that the
maximum new technology add-on payment for a case involving
AndexXaTM would remain at $14,062.50 for FY 2020. We invited
public comments on our proposals to
[[Page 42194]]
continue new technology add-on payments for AndexXaTM for FY
2020.
Comment: A commenter supported CMS' proposal to continue new
technology add-on payments for FY 2020 for AndexXaTM.
Response: We appreciate the commenter's support. After
consideration of the public comments we received, we are finalizing our
proposal to continue new technology add-on payments for
AndexXaTM for FY 2020. Under the revised calculation of the
new technology add-on payment amount discussed in section II.H.9. of
the preamble of this final rule, the maximum new technology add-on
payment amount for a case involving the use of AndexXaTM
will be $18,281.25 for FY 2020; that is, 65 percent of the average cost
of the technology. (As discussed in section II.H.9. of the preamble of
this final rule, we are revising the maximum new technology add-on
payment to 65 percent, or 75 percent for certain antimicrobial
products, of the average cost of the technology.)
5. FY 2020 Applications for New Technology Add-On Payments
We received 18 applications for new technology add-on payments for
FY 2020. In accordance with the regulations under Sec. 412.87(c),
applicants for new technology add-on payments must have FDA approval or
clearance by July 1 of the year prior to the beginning of the fiscal
year for which the application is being considered. One applicant
withdrew its application prior to the issuance of the proposed rule.
Since the issuance of the FY 2020 IPPS/LTCH PPS proposed rule,
three applicants, AbbVie Pharmaceuticals, Inc. (the applicant for
VENCLEXTA[supreg]), Somahlution, Inc. (the applicant for
DURAGRAFT[supreg]), and Nabriva Therapeutics U.S., Inc. (the applicant
for CONTEPOTM), withdrew their applications. One applicant,
Merck & Co., Inc (the applicant for Imipenem, Cilastatin, and
Relebactam (IMI/REL) Injection), did not meet the deadline of July 1
for FDA approval or clearance of the technology and, therefore, the
technology is not eligible for consideration for new technology add-on
payments for FY 2020. A discussion of the remaining 13 applications is
presented in this final rule.
a. AZEDRA[supreg] (Ultratrace[supreg] iobenguane Iodine-131) Solution
Progenics Pharmaceuticals, Inc. submitted an application for new
technology add-on payments for AZEDRA[supreg] (Ultratrace[supreg]
iobenguane Iodine-131) for FY 2020. (We note that Progenics
Pharmaceuticals, Inc. previously submitted an application for new
technology add-on payments for AZEDRA[supreg] for FY 2019, which was
withdrawn prior to the issuance of the FY 2019 IPPS/LTCH PPS final
rule.) AZEDRA[supreg] is a drug solution formulated for intravenous
(IV) use in the treatment of patients who have been diagnosed with
obenguane avid malignant and/or recurrent and/or unresectable
pheochromocytoma and paraganglioma (PPGL). AZEDRA[supreg] contains a
small molecule ligand consisting of meta-iodobenzylguanidine (MIBG) and
\131\Iodine (\131\I) (hereafter referred to as ``\131\I-MIBG''). The
applicant noted that iobenguane Iodine-131 is also known as \131\I-
MIBG.
The applicant reported that PPGLs are rare tumors with an incidence
of approximately 2 to 8 people per million per year.2 3 Both
tumors are catecholamine-secreting neuroendocrine tumors, with
pheochromocytomas being the more common of the two and comprising 80 to
85 percent of cases. While 10 percent of pheochromocytomas are
malignant, whereby ``malignant'' is defined by the World Health
Organization (WHO) as ``the presence of distant metastases,''
paragangliomas have a malignancy frequency of 25 percent.4 5
Approximately one-half of malignant tumors are pronounced at diagnosis,
while other malignant tumors develop slowly within 5 years.\6\
Pheochromocytomas and paragangliomas tend to be indistinguishable at
the cellular level and frequently at the clinical level. For example
catecholamine-secreting paragangliomas often present clinically like
pheochromocytomas with hypertension, episodic headache, sweating,
tremor, and forceful palpitations.\7\ Although pheochromocytomas and
paragangliomas can share overlapping histopathology, epidemiology, and
molecular pathobiology characteristics, there are differences between
these two neuroendocrine tumors in clinical behavior, aggressiveness
and metastatic potential, biochemical findings and association with
inherited genetic syndrome differences, highlighting the importance of
distinguishing between the presence of malignant pheochromocytoma and
the presence of malignant paraganglioma. At this time, there is no
curative treatment for malignant pheochromocytomas and paragangliomas.
Successful management of these malignancies requires a
multidisciplinary approach of decreasing tumor burden, controlling
endocrine activity, and treating debilitating symptoms. According to
the applicant, decreasing metastatic tumor burden would address the
leading cause of mortality in this patient population, where the 5-year
survival rate is 50 percent for patients with untreated malignant
pheochromocytomas and paragangliomas.\8\ The applicant stated that
controlling catecholamine hypersecretion (for example, severe
paroxysmal or sustained hypertension, palpitations and arrhythmias)
would also mean decreasing morbidity associated with hypertension (for
example, risk of stroke, myocardial infarction and renal failure), and
begin to address the 30-percent cardiovascular mortality rate
associated with malignant pheochromocytomas and paragangliomas.
---------------------------------------------------------------------------
\2\ Beard, C.M., Sheps, S.G., Kurland, L.T., Carney, J.A., Lie,
J.T., ``Occurrence of pheochromocytoma in Rochester, Minnesota'',
pp. 1950-1979.
\3\ Stenstr[ouml]m, G., Sv[auml]rdsudd, K., ``Pheochromocytoma
in Sweden 1958-1981. An analysis of the National Cancer Registry
Data,'' Acta Medica Scandinavica, 1986, vol. 220(3), pp. 225-232.
\4\ Fishbein, Lauren, ``Pheochromocytoma and Paraganglioma,''
Hematology/Oncology Clinics 30, no. 1, 2016, pp. 135-150.
\5\ Lloyd, R.V., Osamura, R.Y., Kl[ouml]ppel, G., & Rosai, J.
(2017). World Health Organization (WHO) Classification of Tumours of
Endocrine Organs. Lyon, France: International Agency for Research on
Center (IARC).
\6\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma and
paraganglioma.'' Progress in Brain Research., 2010, vol. 182, pp.
343-373.
\7\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
\8\ Kantorovich, Vitaly, and Karel Pacak. ``Pheochromocytoma and
paraganglioma.'' Progress in Brain Research., 2010, vol. 182, pp.
343-373.
---------------------------------------------------------------------------
The applicant reported that, prior to the introduction of
AZEDRA[supreg], controlling catecholamine activity in pheochromocytomas
and paragangliomas was medically achieved with administration of
combined alpha and beta-adrenergic blockade, and surgically with tumor
tissue reduction. Because there is no curative treatment for malignant
pheochromocytomas and paragangliomas, resecting both primary and
metastatic lesions whenever possible to decrease tumor burden \9\
provides a methodology for controlling catecholamine activity and
lowering cardiovascular mortality risk. Besides surgical removal of
tumor tissue for lowering tumor burden, there are other
[[Page 42195]]
treatment options that depend upon tumor type (that is,
pheochromocytoma tumors versus paraganglioma tumors), anatomic
location, and the number and size of the metastatic tumors. These
treatment options include: (1) Radiation therapy; (2) nonsurgical local
ablative therapy with radiofrequency ablation, cryoablation, and
percutaneous ethanol injection; (3) transarterial chemoembolization for
liver metastases; and (4) radionuclide therapy using
metaiodobenzylguanidine (MIBG) or somatostatin. Regardless of the
method to reduce local tumor burden, periprocedural medical care is
needed to prevent massive catecholamine secretion and hypertensive
crisis.\10\
---------------------------------------------------------------------------
\9\ Noda, T., Nagano, H., Miyamoto, A., et al., ``Successful
outcome after resection of liver metastasis arising from an
extraadrenal retroperitoneal paraganglioma that appeared 9 years
after surgical excision of the primary lesion,'' Int J Clin Oncol,
2009, vol. 14, pp. 473.
\10\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
---------------------------------------------------------------------------
The applicant stated that AZEDRA[supreg] specifically targets
neuroendocrine tumors arising from chromaffin cells of the adrenal
medulla (in the case of pheochromocytomas) and from neuroendocrine
cells of the extra-adrenal autonomic paraganglia (in the case of
paragangliomas).\11\ According to the applicant, AZEDRA[supreg] is a
more consistent form of \131\I-MIBG compared to compounded formulations
of \131\I-MIBG that are not approved by the FDA. AZEDRA[supreg]
(iobenguane I 131) (AZEDRA) was approved by the FDA on July 30, 2018,
and according to the applicant, is the first and only drug indicated
for the treatment of adult and pediatric patients 12 years and older
who have been diagnosed with iobenguane scan positive, unresectable,
locally advanced or metastatic pheochromocytoma or paraganglioma who
require systemic anticancer therapy. Among local tumor tissue reduction
options, use of external beam radiation therapy (EBRT) at doses greater
than 40 Gy can provide local pheochromocytoma and paraganglioma tumor
control and relief of symptoms for tumors at a variety of sites,
including the soft tissues of the skull base and neck, abdomen, and
thorax, as well as painful bone metastases.\12\ However, the applicant
stated that EBRT irradiated tissues are unresponsive to subsequent
treatment with \131\I- MIBG radionuclide.\13\ MIBG was initially used
for the imaging of paragangliomas and pheochromocytomas because of its
similarity to noradrenaline, which is taken up by chromaffin cells.
Conventional MIBG used in imaging expanded to off-label use in patients
who had been diagnosed with malignant pheochromocytomas and
paragangliomas. Because \131\I-MIBG is sequestered within
pheochromocytoma and paraganglioma tumors, subsequent malignant cell
death occurs from radioactivity. Approximately 50 percent of tumors are
eligible for treatment involving \131\I-MIBG therapy based on having
MIBG uptake with diagnostic imaging. According to the applicant,
despite uptake by tumors, studies have also found that \131\I-MIBG
therapy has been limited by total radiation dose, hematologic side
effects, and hypertension. While the pathophysiology of total radiation
dose and hematologic side effects are more readily understandable,
hypertension is believed to be precipitated by large quantities of non-
iodinated MIBG or ``cold'' MIBG being introduced along with radioactive
\131\I-MIBG therapy.\14\ The ``cold'' MIBG blocks synaptic reuptake of
norepinephrine, which can lead to tachycardia and paroxysmal
hypertension within the first 24 hours, the majority of which occur
within 30 minutes of administration and can be dose-limiting.\15\
---------------------------------------------------------------------------
\11\ Ibid.
\12\ Ibid.
\13\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al.,
``Malignant pheochromocytomas and paragangliomas: a phase II study
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG),'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
\14\ Loh, K.C., Fitzgerald, P.A., Matthay, K.K., Yeo, P.P.,
Price, D.C., ``The treatment of malignant pheochromocytoma with
iodine-131 metaiodobenzylguanidine (\131\I-MIBG): a comprehensive
review of 116 reported patients,'' J Endocrinol Invest, 1997, vol.
20(11), pp. 648-658.
\15\ Gonias, S, et. al., ``Phase II Study of High-Dose [\131\I
]Metaiodobenzylguanidine Therapy for Patients With Metastatic
Pheochromocytoma and Paraganglioma,'' J of Clin Onc, July 27, 2009.
---------------------------------------------------------------------------
The applicant asserted that its new proprietary manufacturing
process called Ultratrace[supreg] allows AZEDRA[supreg] to be
manufactured without the inclusion of unlabeled or ``cold'' MIBG in the
final formulation. The applicant also noted that targeted radionuclide
MIBG therapy to reduce tumor burden is one of two treatments that have
been studied the most. The other treatment is cytotoxic chemotherapy
and, specifically, Carboplatin, Vincristine, and Dacarbazine (CVD). The
applicant stated that cytotoxic chemotherapy is an option for patients
who experience symptoms with rapidly progressive, non-resectable, high
tumor burden, and that cytotoxic chemotherapy is another option for a
large number of metastatic bone lesions.\16\ According to the
applicant, CVD was believed to have an effect on malignant
pheochromocytomas and paragangliomas due to the embryonic origin being
similar to neuroblastomas. The response rates to CVD have been variable
between 25 percent and 50 percent.17 18 These patients
experience side effects consistent with chemotherapeutic treatment with
CVD, with the added concern of the precipitation of hormonal
complications such as hypertensive crisis, thereby requiring close
monitoring during cytotoxic chemotherapy.\19\ According to the
applicant, use of CVD relative to other tumor burden reduction options
is not an ideal treatment because of nearly 100 percent recurrence
rates, and the need for chemotherapy cycles to be continually
readministered at the risk of increased systemic toxicities and
eventual development of resistance. Finally, there is a subgroup of
patients that are asymptomatic and have slower progressing tumors where
frequent follow-up is an option for care.\20\ Therefore, the applicant
believed that AZEDRA[supreg] offers cytotoxic radioactive therapy for
the indicated population that avoids harmful side effects that
typically result from use of low-specific activity products.
---------------------------------------------------------------------------
\16\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
\17\ Niemeijer, N.D., Alblas, G., Hulsteijn, L.T., Dekkers, O.M.
and Corssmit, E.P.M., ``Chemotherapy with cyclophosphamide,
vincristine and dacarbazine for malignant paraganglioma and
pheochromocytoma: systematic review and meta[hyphen]analysis,''
Clinical endocrinology, 2014, vol 81(5), pp. 642-651.
\18\ Ayala-Ramirez, Montserrat, et al., ``Clinical Benefits of
Systemic Chemotherapy for Patients with Metastatic Pheochromocytomas
or Sympathetic Extra-Adrenal Paragangliomas: Insights from the
Largest Single Institutional Experience,'' Cancer, 2012, vol.
118(11), pp. 2804-2812.
\19\ Wu, L.T., Dicpinigaitis, P., Bruckner, H., et al.,
``Hypertensive crises induced by treatment of malignant
pheochromocytoma with a combination of cyclophosphamide,
vincristine, and dacarbazine,'' Med Pediatr Oncol, 1994, vol. 22(6),
pp. 389-392.
\20\ Carty, S.E., Young, W.F., Elfky, A., ``Paraganglioma and
pheochromocytoma: Management of malignant disease,'' UpToDate.
Available at: https://www.uptodate.com/contents/paraganglioma-and-pheochromocytoma-management-of-malignant-disease.
---------------------------------------------------------------------------
The applicant reported that the recommended AZEDRA[supreg] dosage
and frequency for patients receiving treatment involving \131\I-MIBG
therapy for a diagnosis of avid malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma tumors is:
Dosimetric Dosing--5 to 6 micro curies (mCi) (185 to 222
MBq) for a patient weighing more than or equal to 50 kg, and 0.1 mCi/kg
(3.7 MBq/kg) for patients weighing less than 50 kg. Each
[[Page 42196]]
recommended dosimetric dose is administered as an IV injection.
Therapeutic Dosing--500 mCi (18.5 GBq) for patients
weighing more than 62.5 kg, and 8 mCi/kg (296 MBq/kg) for patients
weighing less than or equal to 62.5 kg. Therapeutic doses are
administered by IV infusion, in ~50 mL over a period of ~30 minutes
(100 mL/hour), administered approximately 90 days apart.
With respect to the newness criterion, the applicant indicated that
FDA granted Orphan Drug designation for AZEDRA[supreg] on January 18,
2006, followed by Fast Track designation on March 8, 2006, and
Breakthrough Therapy designation on July 26, 2015. The applicant's New
Drug Application (NDA) proceeded on a rolling basis, and was completed
on November 2, 2017. AZEDRA[supreg] was approved by the FDA on July 30,
2018, for the treatment of adult and pediatric patients 12 years and
older who have been diagnosed with iobenguane scan positive,
unresectable, locally advanced or metastatic pheochromocytoma or
paraganglioma who require systemic anticancer therapy through a New
Drug Approval (NDA) filed under Section 505(b)(1) of the Federal Food,
Drug and Cosmetic Act and 21 CFR 314.50. Currently, there are no
approved ICD-10-PCS procedure codes to uniquely identify procedures
involving the administration of AZEDRA[supreg]. In the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19286), we noted that the applicant
submitted a request for approval for a unique ICD-10-PCS code for the
administration of AZEDRA[supreg] beginning in FY 2020. The following
ICD-10-PCS codes are now assigned for the use of AZEDRA[supreg]:
XW033S5 (Introduction of Iobenguane I-131 Antineoplastic into
Peripheral Vein, Percutaneous Approach, New Technology Group 5), and
XW043S5 (Introduction of Iobenguane I-131 Antineoplastic into Central
Vein, Percutaneous Approach, New Technology Group 5).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or similar mechanism of action, the applicant stated that while
AZEDRA[supreg] and low-specific activity conventional I-131 MIBG both
target the same transporter sites on the tumor cell surface, the
therapies' safety and efficacy outcomes are different. These
differences in outcomes are because AZEDRA[supreg] is manufactured
using the proprietary Ultratrace[supreg] technology, which maximizes
the molecules that carry the tumoricidal component (I-131 MIBG) and
minimizes the extraneous unlabeled component (MIBG, free ligands),
which could cause cardiovascular side effects. Therefore, according to
the applicant, AZEDRA[supreg] is designed to increase efficacy and
decrease safety risks, whereas conventional I-131 MIBG uses existing
technologies and results in a product that overwhelms the normal
reuptake system with excess free ligands, which leads to safety issues
as well as decreasing the probability of the \131\I-MIBG binding to the
tumor cells.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant noted that there are
no specific MS-DRGs for the assignment of cases involving the treatment
of patients who have been diagnosed with pheochromocytoma and
paraganglioma. We stated in the proposed rule that we believed
potential cases representing patients who may be eligible for treatment
involving the administration of AZEDRA[supreg] would be assigned to the
same MS-DRGs as cases representing patients who receive treatment for a
diagnosis of iobenguane avid malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma. We also refer readers
to the cost criterion discussion in this final rule, which includes the
applicant's list of the MS-DRGs to which potential cases involving
treatment with the administration of AZEDRA[supreg] most likely would
map.
With regard to the third criterion, 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, according to the
applicant, AZEDRA[supreg] is the only FDA-approved drug indicated for
use in the treatment of patients who have been diagnosed with malignant
pheochromocytoma and paraganglioma tumors that avidly take up \131\I-
MIBG and are recurrent and/or unresectable. The applicant stated that
these patients face serious mortality and morbidity risks if left
untreated, as well as potentially suffer from side effects if treated
by available off-label therapies.
The applicant also contended that AZEDRA[supreg] can be
distinguished from other currently available treatments because it
potentially provides the following advantages:
AZEDRA[supreg] will have a very limited impact on normal
norepinephrine reuptake due to the negligible amount of unlabeled MIBG
present in the dose. Therefore, AZEDRA[supreg] is expected to pose a
much lower risk of acute drug-induced hypertension.
There is minimal unlabeled MIBG to compete for the
norepinephrine transporter binding sites in the tumor, resulting in
more effective delivery of radioactivity.
Current off-label therapeutic use of \131\I is compounded
by individual pharmacies with varied quality and conformance standards.
Because of its higher specific activity (the activity of a
given radioisotope per unit mass), AZEDRA[supreg] infusion times are
significantly shorter than conventional \131\I administrations.
Therefore, with these potential advantages, the applicant
maintained that AZEDRA[supreg] represents an option for the treatment
of patients who have been diagnosed with malignant and/or recurrent
and/or unresectable pheochromocytoma and paraganglioma tumors, where
there is a clear, unmet medical need.
For the reasons cited earlier, the applicant believed that
AZEDRA[supreg] is not substantially similar to other currently
available therapies and/or technologies and meets the ``newness''
criterion. We invited public comments on whether AZEDRA[supreg] is
substantially similar to other currently available therapies and/or
technologies and meets the ``newness'' criterion.
Comment: We received multiple comments in support of applicant's
assertion that AZEDRA[supreg] is not substantially similar to other
currently available therapies and/or technologies. A commenter
described AZEDRA[supreg] as highly unique technology that is unlike any
pre-existing treatment with a structure unlike any pre-existing
treatment option given the use of the proprietary Ultratrace[supreg]
technology, leading to increases in efficacy due to its unique
``carrier-free'' structure with less non-radioactive drug to compete
for uptake by tumors. Commenters mentioned that prior to
AZEDRA[supreg]'s approval, there was no FDA-approved drug treatment for
advanced pheochromocytomas and paragangliomas patients. Commenters
asserted that compared to other off-label treatments, AZEDRA provides
an important new option with substantial clinical improvement in terms
of both safety and efficacy for patients with metastatic and/or
recurrent and/or unresectable PPGL.
Response: We thank commenters for their input. After consideration
of the comments received, we agree that AZEDRA[supreg] utilizes a new
mechanism of action from prior therapeutic uses of MIBG and therefore
is not substantially
[[Page 42197]]
similar to an existing technology and meets the criteria for
``newness.''
With regard to the cost criterion, the applicant conducted an
analysis using FY 2015 MedPAR data to demonstrate that AZEDRA[supreg]
meets the cost criterion. The applicant searched for potential cases
representing patients who may be eligible for treatment involving
AZEDRA[supreg] that had one of the following ICD-9-CM diagnosis codes
(which the applicant believed is indicative of diagnosis appropriate
for treatment involving AZEDRA[supreg]): 194.0 (Malignant neoplasm of
adrenal gland), 194.6 (Malignant neoplasm of aortic body and other
paraganglia), 209.29 (Malignant carcinoid tumor of other sites), 209.30
(Malignant poorly differentiated neuroendocrine carcinoma, any site),
227.0 (Benign neoplasm of adrenal gland), 237.3 (Neoplasm of uncertain
behavior of paraganglia)--in combination with one of the following ICD-
9-CM procedure codes describing the administration of a
radiopharmaceutical: 00.15 (High-dose infusion interleukin-2); 92.20
(Infusion of liquid brachytherapy radioisotope); 92.23 (Radioisotopic
teleradiotherapy); 92.27 (Implantation or insertion of radioactive
elements); 92.28 (Injection or instillation of radioisotopes). The
applicant reported that the potential cases used for this analysis
mapped to MS-DRGs 054 and 055 (Nervous System Neoplasms with and
without MCC, respectively), MS-DRG 271 (Other Major Cardiovascular
Procedures with CC), MS-DRG 436 (Malignancy of Hepatobiliary System or
Pancreas with CC), MS-DRG 827 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Major O.R. Procedure with CC), and MS-DRG
843 (Other Myeloproliferative Disorders or Poorly Differentiated
Neoplastic Diagnosis with MCC). Due to patient privacy concerns,
because the number of cases under each MS-DRG was less than 11 in
total, the applicant assumed an equal distribution between these 6 MS-
DRGs. Based on the FY 2019 IPPS/LTCH PPS final rule correction notice
data file thresholds, the average case-weighted threshold amount was
$60,136. Using the identified cases, the applicant determined that the
average unstandardized charge per case ranged from $21,958 to $152,238
for the 6 evaluated MS-DRGs. After removing charges estimated to be
associated with precursor agents, the applicant used a 3-year inflation
factor of 1.1436 (a yearly inflation factor of 1.04574 applied over 3
years), based on the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), to
inflate the charges from FY 2015 to FY 2018. The applicant provided an
estimated average of $151,000 per therapeutic dose per patient, based
on the wholesale acquisition cost of the drug and the average dosage
amount for most patients, with a total cost per patient estimated to be
approximately $980,000. After including the cost of the technology, the
applicant determined an inflated average case-weighted standardized
charge per case of $1,078,631.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19287), we stated
that we were concerned with the limited number of cases the applicant
analyzed. However, we acknowledged the difficulty in obtaining cost
data for such a rare condition. We invited public comments on whether
the AZEDRA[supreg] technology meets the cost criterion.
Comment: The applicant submitted a comment in response to CMS's
concern, stating that although the number of cases under each MS-DRG
identified for its analysis included fewer than 11 total cases, the
information provided a meaningful and workable data set based on the
MedPAR files and is consistent with a product used to treat an ultra-
rare disease. Furthermore, the applicant stated that the cost
information and analysis submitted with the application demonstrated
that AZEDRA[supreg] will significantly exceed the relevant cost
threshold for the MS-DRGs to which cases map, both in the aggregate
(based on case-weighted threshold amounts), and for each individual MS-
DRG.
Response: We appreciate the applicant's comment in response to our
concerns. After consideration of the public comments we received, we
believe that AZEDRA[supreg] meets the cost criterion.
With regard to substantial clinical improvement, the applicant
maintained that the use of AZEDRA[supreg] has been shown to reduce the
incidence of hypertensive episodes and use of antihypertensive
medications, reduce tumor size, improve blood pressure control, and
reduce secretion of tumor biomarkers. In addition, the applicant
asserted that AZEDRA[supreg] provides a treatment option for those
outlined in its indication patient population. The applicant asserted
that AZEDRA[supreg] meets the substantial clinical improvement
criterion based on the results from two clinical studies: (1) MIP-IB12
(IB12): A Phase I Study of Iobenguane (MIBG) I-131 in Patients With
Malignant Pheochromocytoma/Paraganglioma; \21\ and (2) MIP-IB12B
(IB12B): A Study Evaluating Ultratrace[supreg] Iobenguane I-131 in
Patients With Malignant Relapsed/Refractory Pheochromocytoma/
Paraganglioma. The applicant explained that the IB12B study is similar
to the IB12 study in that both studies evaluated two open-label,
single-arm studies. The applicant reported that both studies included
patients who had been diagnosed with malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma tumors, and both
studies assessed objective tumor response, biochemical tumor response,
overall survival rates, occurrence of hypertensive crisis, and the
long-term benefit of AZEDRA[supreg] treatment relative to the need for
antihypertensives. However, according to the applicant, the study
designs differed in dose regimens (1 dose administered to patients in
the IB12 study, and 2 doses administered to patients in the IB12B
study) and primary study endpoints. Differences in the designs of the
studies prevented direct comparison of study endpoints and pooling of
the data. In addition, the applicant stated that results from safety
data from the IB12 study and the IB12B study were pooled and used to
support substantial clinical improvement assertions. In the proposed
rule, we noted that neither the IB12 study nor the IB12B study compared
the effects of the use of AZEDRA[supreg] to any of the other treatment
options to decrease tumor burden (for example, cytotoxic chemotherapy,
radiation therapy, and surgical debulking).
---------------------------------------------------------------------------
\21\ Noto, Richard B., et al., ``Phase 1 Study of High-Specific-
Activity I-131 MIBG for Metastatic and/or Recurrent Pheochromocytoma
or Paraganglioma (IB12 Phase 1 Study),'' J Clin Endocrinol Metab,
vol. 103(1), pp. 213-220.
---------------------------------------------------------------------------
Regarding the data results from the IB12 study, the applicant
asserted that, based on the reported safety and tolerability, and
primary endpoint of radiological response at 12 months, high-specific-
activity I-131 MIBG may be an effective alternative therapeutic option
for patients who have been diagnosed with iobenguane-avid, metastatic
and/or recurrent pheochromocytoma and paraganglioma tumors for whom
there are no other approved therapies and for those patients who have
failed available treatment options. In addition, the applicant used the
exploratory finding of decreased or discontinuation of anti-
hypertensive medications relative to baseline medications as evidence
that AZEDRA[supreg] has clinical benefit and positive impact on the
long-term effects of hypertension induced norepinephrine producing
malignant pheochromocytoma and paraganglioma tumors. In the proposed
rule, we stated that we understand that the applicant used
antihypertensive medications as a
[[Page 42198]]
proxy to assess the long-term effects of hypertension such as renal,
myocardial, and cerebral end organ damage. The applicant reported that
it studied 15 of the original IB12 study's 21-patient cohort, and found
33 percent (n=5) had decreased or discontinuation of antihypertensive
medications during the 12 months of follow-up. However, the applicant
did not provide additional data on the incidence of renal
insufficiency/failure, myocardial ischemic/infarction events, or
transient ischemic attacks or strokes. Therefore, in the proposed rule,
we stated that it is unclear to us if these five patients also had
decreased urine metanephrines, changed their diet, lost significant
weight, or if other underlying comorbidities that influence
hypertension were resolved, making it difficult to understand the
significance of this exploratory finding.
Regarding the applicant's assertion that the use of AZEDRA[supreg]
is safer and more effective than alternative therapies, in the proposed
rule we noted that the IB12 study was a dose-escalating study and did
not compare current therapies with the use of AZEDRA[supreg]. We also
noted the following: (1) The average age of the 21 enrolled patients in
the IB12 study was 50.4 years old (a range of 30 to 72 years old); (2)
the gender distribution was 61.9 percent (n=13) male and 38.1 percent
(n=8) female; and (3) 76.2 percent (n=16) were white, 14.3 percent
(n=3) were black or African American, and 9.5 percent (n=2) were Asian.
We agreed with the study's conductor \22\ that the size of the study is
a limitation, and with a younger, predominately white, male patient
population, generalization of study results to a more diverse
population may be difficult. The applicant reported that one other
aspect of the patient population indicated that all 21 patients
received prior anti-cancer therapy for treatment of malignant
pheochromocytoma and paraganglioma tumors, which included the
following: 57.1 percent (n=12) received radiation therapy including
external beam radiation and conventional MIBG; 28.6 percent (n=6)
received cytotoxic chemotherapy (for example, CVD and other
chemotherapeutic agents); and 14.3 percent (n=3) received
Octreotide.\23\ Although this study's patient population illustrates a
population that has failed some of the currently available therapy
options, which may potentially support a finding of substantial
clinical improvement for those with no other treatment options, we
stated in the proposed rule that we were unclear which patients
benefited from treatment involving AZEDRA[supreg], especially in view
of the finding of a Fitzgerald, et al. study cited earlier \24\ that
concluded tissues previously irradiated by EBRT were found to be
unresponsive to subsequent treatment with \131\I-MIBG radionuclide. It
was not clear in the application how previously EBRT-treated patients
who failed EBRT fared with the Response Evaluation Criteria in Solid
Tumors (RECIST) scores, biotumor marker results, and reduction in
antihypertensive medications. We stated that we also lacked information
to draw the same correlation between previously CVD-treated patients
and their RECIST scores, biotumor marker results, and reduction in
antihypertensive medications.
---------------------------------------------------------------------------
\22\ Noto, Richard B., et al., ``Phase 1 Study of High-Specific-
Activity I-131 MIBG for Metastatic and/or Recurrent Pheochromocytoma
or Paraganglioma (IB12 Phase 1 Study),'' J Clin Endocrinol Metab,
vol. 103(1), pp. 213-220.
\23\ Ibid.
\24\ Fitzgerald, P.A., Goldsby, R.E., Huberty, J.P., et al.,
``Malignant pheochromocytomas and paragangliomas: a phase II study
of therapy with high-dose 131I-metaiodobenzylguanidine (131I-
MIBG).'' Ann N Y Acad Sci, 2006, vol. 1073, pp. 465.
---------------------------------------------------------------------------
The applicant asserted that the use of AZEDRA[supreg] reduces tumor
size and reduces the secretion of tumor biomarkers, thereby providing
important clinical benefits to patients. The IB12 study assessed the
overall best tumor response based on RECIST.\25\ Tumor biomarker
response was assessed as complete or partial response for serum
chromogranin A and total metanephrines in 80 percent and 64 percent of
patients, respectively. The applicant noted that both the overall best
tumor response based on RECIST and tumor biomarker response favorable
results are at doses higher than 500 mCi. In the proposed rule, we
stated that we noticed that tumor burden improvement, as measured by
RECIST criteria, showed that none of the 21 patients achieved a
complete response. In addition, although 4 patients showed partial
response, these 4 patients also experienced dose-limiting toxicity with
hematological events, and all 4 patients received administered doses
greater than 18.5 GBq (500mCi). We also noted that, regardless of total
administered activity (for example, greater than or less than 18.5 GBq
(500mCi)), 61.9 percent (n=13) of the 21 patients enrolled in the study
had stable disease and 14.3 percent (n=2) of the 14 patients who
received greater than administered doses of 18.5 GBq (500mCi) had
progressive disease. Finally, we also stated that we noticed that, for
most tumor biomarkers, there were no dose relationship trends. We
stated that while we appreciate the applicant's contention that there
is no other FDA-approved drug therapy for patients who have been
diagnosed with \131\I-MIBG avid malignant and/or recurrent and/or
unresectable pheochromocytoma and paraganglioma tumors, we had
questions as to whether the overall tumor best response and overall
best tumor biomarker data results from the IB12 study support a finding
that the use of the AZEDRA[supreg] technology represents a substantial
clinical improvement.
---------------------------------------------------------------------------
\25\ Therasse, P., Arbuck, S.G., Eisenhauer, J.W., Kaplan, R.S.,
Rubinsten, L., Verweij, J., Van Blabbeke, M., Van Oosterom, A.T.,
Christian, M.D., and Gwyther, S.G., ``New guidelines to evaluate the
response to treatment in solid tumors,'' J Natl Cancer Inst, 2000,
vol. 92(3), pp. 205-16. Available at: http://www.eortc.be/Services/Doc/RECIST.pdf.
---------------------------------------------------------------------------
Finally, regarding the applicant's assertion that, based on the
IB12 study data, AZEDRA[supreg] provides a safe alternative therapy for
those patients who have failed other currently available treatment
therapies, we stated in the proposed rule that we noted none of the
patients experienced hypertensive crisis, and that 76 percent (n=16) of
the 21 patients enrolled in the study experienced Grade III or IV
adverse events. Although the applicant indicated the adverse events
were related to the study drug, the applicant also noted that there was
no statistically significant difference between the greater than or
less than 18.5 GBq administered doses; both groups had adverse events
rates greater than 75 percent. Specifically, 5 of 7 patients (76
percent) who received less than or equal to 18.5 GBq administered
doses, and 11 of 14 patients (79 percent) who received greater than
18.5 GBq administered doses experienced Grade III or IV adverse
advents. The most common (greater than or equal to 10 percent) Grade
III and IV adverse events were neutropenia, leukopenia,
thrombocytopenia, nausea, and vomiting. We also noted that: (1) There
were 5 deaths during the study that occurred from approximately 2.5
months up to 22 months after treatment and there was no detailed data
regarding the 5 deaths, especially related to the total activity
received during the study; (2) there was no information about which
patients received prior radiation therapy with EBRT and/or conventional
MIBG relative to those who experienced Grade III or IV adverse events;
and (3) the total lifetime radiation dose was not provided by the
applicant.
The applicant provided study data results from the IB12B study
(MIP-IB12B), an open-label, prospective 5-year follow-up, single-arm,
multi-center,
[[Page 42199]]
Phase II pivotal study to evaluate the safety and efficacy of the use
of AZEDRA[supreg] for the treatment of patients who have been diagnosed
with malignant and/or recurrent pheochromocytoma and paraganglioma
tumors to support the assertion of substantial clinical improvement.
The applicant reported that the IB12B's primary endpoint is the
proportion of patients with a reduction (including discontinuation) of
all anti-hypertensive medication by at least 50 percent for at least 6
months. Seventy-four patients who received at least 1 dosimetric dose
of AZEDRA[supreg] were evaluated for safety and 68 patients who
received at least 1 therapeutic dose of AZEDRA[supreg], each at 500 mCi
(or 8 mCi/kg for patients weighing less than or equal to 62.5 kg), were
assessed for specific clinical outcomes. The applicant asserted that
results from this prospective study met the primary endpoint (reduction
or discontinuation of anti-hypertensive medications), as well as
demonstrated strong supportive evidence from key secondary endpoints
(overall tumor response, tumor biomarker response, and overall survival
rates) that confers important clinical relevance to patients who have
been diagnosed with malignant pheochromocytoma and paraganglioma
tumors. The applicant also indicated that the use of AZEDRA[supreg] was
shown to be generally well tolerated at doses administered at 8 mCi/kg.
In the proposed rule, we stated that we noted the data results from the
IB12B study did not have a comparator arm, making it difficult to
interpret the clinical outcome data relative to other currently
available therapies.
As discussed for the IB12 study, the applicant reported that
antihypertension treatment was a proxy for effectiveness of the use of
AZEDRA[supreg] on norepinephrine induced hypertension producing tumors.
In the IB12B study, 25 percent (17/68) of patients met the primary
endpoint of having a greater than 50 percent reduction in anti-
hypertensive agents for at least 6 months. The applicant further
indicated that an additional 16 patients showed a greater than 50
percent reduction in anti-hypertensive agents for less than 6 months,
and by pooling data results from these 33 patients the applicant
concluded that 49 percent (33/68) of patients achieved a greater than
50 percent reduction at any time during the study's 12-month follow-up
period. The study's primary endpoint data also revealed that 11 percent
of the 88 patients who received a therapeutic dose of AZEDRA[supreg]
experienced a worsening of preexisting hypertension defined as an
increase in systolic blood pressure to >=160 mmHg with an increase of
20 mmHg or an increase in diastolic blood pressure >=100 mmHg with an
increase of 10 mmHg. All changes in blood pressure occurred within the
first 24 hours post infusion. The applicant further compared its data
results from the IB12B study regarding antihypertension medication and
the frequency of post-infusion hypertension with published studies on
MIBG and CVD therapy. The applicant noted a retrospective analysis of
CVD therapy of 52 patients who had been diagnosed with metastatic
pheochromocytoma and paraganglioma tumors that found only 15 percent of
CVD-treated patients achieved a 50-percent reduction in anti-
hypertensive agents. The applicant also compared its data results for
post-infusion hypertension with literature reporting on MIBG and found
14 and 19 percent (depending on the study) of patients receiving MIBG
experience hypertension within 24 hours of infusion. Comparatively, the
applicant stated that the use of AZEDRA[supreg] had no acute events of
hypertension following infusion.
Regarding reduction in tumor burden (as defined by RECIST scores),
the applicant indicated that at the conclusion of the IB12B study's 12-
month follow-up period, 23.4 percent (n=15) of the 68 patients showed a
partial response, 68.8 percent (n=44) of the 68 patients achieved
stable disease, and 4.7 percent (n=3) of the 68 patients showed
progressive disease. None of the patients showed completed response.
The applicant maintained that achieving stable disease is important for
patients who have been treated for malignant pheochromocytoma and
paraganglioma tumors because this is a progressive disease without a
cure at this time. The applicant also indicated that literature shows
that stable disease is maintained in approximately 47 percent of
treatment na[iuml]ve patients who have been diagnosed with metastatic
pheochromocytoma and paraganglioma tumors at 1 year due to the indolent
nature of the disease.\26\ In the IB12B study, the data results equated
to 23 percent of patients achieving partial response and 69 percent of
patients achieving stable disease. According to the applicant, this
compares favorably to treatment with both conventional radiolabeled
MIBG and CVD chemotherapy.
---------------------------------------------------------------------------
\26\ Hescot, S., Leboulleux, S., Amar, L., Vezzosi, D., Borget,
I., Bournaud-Salinas, C., de la Fouchardiere, C., Lib[eacute], R.,
Do Cao, C., Niccoli, P., Tabarin, A., ``One-year progression-free
survival of therapy-naive patients with malignant pheochromocytoma
and paraganglioma,'' The J Clin Endocrinol Metab, 2013, vol. 98(10),
pp. 4006-4012.
---------------------------------------------------------------------------
The applicant stated that the data results demonstrated effective
tumor response rates. The applicant reported that the IB12 and IB12B
study data showed overall tumor response rates of 80 percent and 92
percent, respectively. In addition, the applicant contended that the
study data across both trials show that patients demonstrated improved
blood pressure control, reductions in tumor biomarker secretion, and
strong evidence in overall survival rates. The overall median time to
death from the first dose was 36.7 months in all treated patients.
Patients who received 2 therapeutic doses had an overall median
survival rate of 48.7 months, compared to 17.5 months for patients who
only received a single dose. In the proposed rule, we stated that we
noted the IB12B study reported 12-month Kaplan-Meier estimate of
survival of 91 percent, while the drug dosing study IB12 reported
overall subject survival of 86 percent at 12 months, 62 percent at 24
months, 38 percent at 36 months, and 4.8 percent at 48 months. We also
noted that only 45 of 68 patients who received at least 1 therapeutic
dose completed the 12-month efficacy phase.
The applicant indicated that comparison of the IB12B study data
regarding overall survival rate with historical data is difficult due
to the differences in the retrospective nature of the published
clinical studies and heterogeneous patient characteristics, especially
when overall survival is calculated from the time of initial diagnosis.
In the proposed rule, we stated that we agreed with the applicant
regarding the difficulties in comparing the results of the published
clinical studies, and also believed that the differences in these
studies may make it more difficult to evaluate whether the use of the
AZEDRA[supreg] technology improves overall survival rates relative to
other therapies.
We stated that we acknowledge the challenges with constructing
robust clinical studies due to the extremely rare occurrence of
patients who have been diagnosed with pheochromocytoma and
paraganglioma tumors. However, in the proposed rule, we stated we were
concerned that because the data for both of these studies is mainly
based upon retrospective studies and small, heterogeneous patient
cohorts, it is difficult to draw precise conclusions regarding
efficacy. We stated that only very limited nonpublished data from two,
single-arm, noncomparative studies were available to evaluate the
safety and
[[Page 42200]]
effectiveness of AZEDRA[supreg], leading to a comparison of outcomes
with historical controls.
We invited public comments on whether the use of the AZEDRA[supreg]
technology meets the substantial clinical improvement criterion,
including with respect to the specific concerns we had raised, which
included whether the safety data profile from the IB12 study supports a
finding that the use of AZEDRA[supreg] represents a substantial
clinical improvement for patients who received treatment with \131\I-
MIBG for a diagnosis of avid malignant and/or recurrent and/or
unresectable PPGL tumors, and whether the data results regarding
hypertension support a finding that the use of the AZEDRA[supreg]
technology represents a substantial clinical improvement, and if anti-
hypertensive medication reduction is an adequate proxy for improvement
in renal, cerebral, and myocardial end organ damage.
Comment: We received multiple comments in support of
AZEDRA[supreg]'s meeting the substantial clinical improvement
criterion. Commenters stated that the clinical data demonstrates
important benefits and meaningful clinical improvements for patients
compared to other treatments that may be unavailable to patients with
advanced PPGL. Commenters stated that certain drug treatments have been
used that are not specifically approved by FDA, such as certain
chemotherapy regimens or low specific-activity iobenguane I-131, are
not effective and frequently lead to serious and harmful side effects,
including chemical toxicity and acute hypertensive crisis. Another
commenter encouraged CMS to consider the very rare nature of advanced
PPGL when considering the sizes of the clinical study patient
populations and other aspects of the information relating to
AZEDRA[supreg]'s application, particularly when a therapy is for an
orphan condition and/or is the first and only FDA approved treatment
option for the relevant patient population.
The applicant also provided comments regarding substantial clinical
improvement. The applicant highlighted AZEDRA[supreg]'s FDA
``Breakthrough Therapy'', ``Fast Track'', ``Priority Review'', and
``Orphan Drug'' designations to demonstrate the meaningful efficacy and
safety criteria that a product must meet to obtain these statuses. The
applicant also reiterated its contention that AZEDRA[supreg] represents
a substantial clinical improvement over currently available treatments
because it (1) offers a treatment option for a patient population that
is unresponsive to or ineligible for currently available treatments for
advanced disease and (2) significantly improves clinical outcomes
compared to existing treatments for patients who have advanced PPGL and
require systemic anticancer treatment. The applicant also responded to
some specific issues raised by CMS in the proposed rule. The applicant
pointed out that at one point, CMS incorrectly described the IB12B and
IB12 as ``retrospective'' studies, when in fact they were prospective
in nature. The applicant clarified that, consistent with prospectively
designed clinical trials, the protocol for IB12B included pre-specified
endpoints that were statistically powered to demonstrate clinical
benefit for patients with advanced PPGL. These endpoints and
statistical analyses were used to define the study's success criteria
prior to collecting any subject data to prevent the possibility of
bias. As such, Study IB12B was a prospective study, specifically
designed to demonstrate that AZEDRA[supreg] offers a treatment option
for a patient population that is unresponsive to or ineligible for
currently available treatments. The applicant also provided background
to support its claim that the number of patients enrolled in IB12B was
statistically meaningful and noteworthy for a last-line therapy study
for an ultra-rare disease state.
In response to CMS's concern whether safety data from the IB12
study could provide relevant clinical improvement data, the applicant
stated that while the IB12 study was prospectively designed to assess
the safety, dosimetry, and preliminary efficacy for AZEDRA[supreg] in
patients with advanced PPGL, it included several secondary efficacy
endpoints that provide preliminary data such as overall tumor response
(RECIST), biochemical tumor response, and survival time. The applicant
stated that the overall tumor response endpoints were included in FDA's
consideration of AZEDRA[supreg]'s efficacy, although it was not
included in the final AZEDRA[supreg] prescribing information.
The applicant stated the primary endpoint of reduction in
antihypertension medication was selected because a more traditional
endpoint, such as overall survival, was not practical or possible given
the nature of PPGL. The applicant stated: ``PPGL may progress slowly,
and overall have a variable natural history, which makes the use of a
traditional endpoint such as overall survival difficult and time-
consuming.'' According to the applicant, the endpoint was chosen to
evaluate a key cause of morbidity in PPGL and thereby reflect direct
clinical benefit.
Response: We appreciate the additional information provided by the
applicant, and the input from all commenters. After a review of the
public comments we received, and upon review of all information
provided by the applicant and review of the FDA Evaluation and Review
of AZEDRA[supreg]'s NDA/BLA 209607 (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf), we
believe the technology offers a treatment option for the FDA indicated
approved population for whom no other FDA approved treatment is
available. Additionally, we note that, per the FDA's Multidisciplinary
Evaluation and Review, use of the technology suggested a durable
response in the reduction of hypertension as measured by the primary
endpoint plus the confirmed overall tumor response measures of direct
clinical benefit in this population of patients with serious, life
threatening and rare disease (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf pages 12,
20). CMS also notes FDA's adverse events of cytopenias, sialoadenitis
and renal failure in those who received two doses of 131I-MIBG, as well
as the most common adverse reactions of Myelosuppression and
Gastrointestinal related adverse events. CMS notes FDA's postmarketing
requirement (PMR) for the applicant to fully characterize the risk of
developing secondary malignancies (i.e., development of myelodysplastic
syndrome, acute leukemia, and other secondary malignancies) in patients
treated with \131\I-MIBG. Risk management will also include product
labeling and routine pharmacovigilance to ensure the safe and effective
use of \131\I-MIBG (https://www.accessdata.fda.gov/drugsatfda_docs/nda/2019/021200Orig1s015MultidisciplineR.pdf page 21). Also, CMS will
monitor any additional data as it becomes available.
In summary, we have determined that AZEDRA[supreg] meets all of the
criteria for approval of new technology add-on payments, and we are
approving new technology add-on payments for FY 2020.
Cases involving AZEDRA[supreg] that are eligible for new technology
add-on payments will be identified by ICD-10-PCS code XW033S5 and
XW043S5. In its application, the applicant stated that the price of
AZEDRA (Wholesale Acquisition Cost) is $302.00 per millicurie (mCi)
prescribed. Most patients (i.e., those weighing 62.5 kg or more)
receive a therapeutic dose of 500
[[Page 42201]]
mCi. Accordingly, the applicant estimated an average cost of $302/mCi
times 500 mCi, or approximately $151,000. Therefore, according to the
applicant, the cost of AZEDRA[supreg] is $151,000. Under Sec.
412.88(a)(2) (revised as discussed in this final rule), we limit new
technology add-on payments to the lesser of 65 percent of the average
cost of the technology, or 65 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 a case involving the use of AZEDRA[supreg] is $98,150
for FY 2020.
b. CABLIVI[supreg] (caplacizumab-yhdp)
The Sanofi Company submitted an application for new technology add-
on payments for CABLIVI[supreg] (caplacizumab-yhdp) for FY 2020. The
applicant described CABLIVI[supreg] as a humanized bivalent nanobody
consisting of two identical building blocks joined by a tri alanine
linker, which is administered through intravenous and subcutaneous
injection to inhibit microclot formation in adult patients who have
been diagnosed with acquired thrombotic thrombocytopenic purpura
(aTTP). The applicant stated that aTTP is a life-threatening, immune-
mediated thrombotic microangiopathy characterized by severe
thrombocytopenia, hemolytic anemia, and organ ischemia with an
estimated 3 to 11 cases per million per year in the U.K. and
U.S.27 28 29 Further, the applicant stated that aTTP is an
ultra-orphan disease caused by inhibitory autoantibodies to von
Willebrand Factor-cleaving protease (vWFCP) also known as ``a
disintegrin and metalloprotease with thrombospondin type 1 motif,
member 13 (ADAMTS13),'' resulting in a severe deficiency in WFCP. The
applicant further explained that von Willebrand Factor (vWF) is a key
protein in hemostasis and is an adhesive, multimeric plasma
glycoprotein with a pivotal role in the recruitment of platelets to
sites of vascular injury. According to the applicant, more than 90
percent of circulating vWF is expressed by endothelial cells and
secreted into the systemic circulation as ultra-large von Willebrand
Factor (ULvWF) multimers. The applicant stated that decreased ADAMTS13
activity leads to an accumulation of ULvWF multimers, which bind to
platelets and induce platelet aggregation. According to the applicant,
the consumption of platelets in these microthrombi causes severe
thrombocytopenia, tissue ischemia and organ dysfunction (commonly
involving the brain, heart, and kidneys) and may result in acute
thromboembolic events such as stroke, myocardial infarction, venous
thrombosis, and early death. The applicant indicated that the
aforementioned tissue and organ damage resulting from the ischemia
leads to increased levels of lactate dehydrogenase (LDH), troponins,
and creatinine (organ damage markers) and that faster normalization of
these organ damage markers and platelet counts is believed to be linked
with faster resolution of the ongoing microthrombotic process and the
associated tissue ischemia. According to the applicant, in diagnoses of
aTTP there is no consensual, validated surrogate marker that defines
the subpopulation at greatest risk of death or significant morbidity.
Therefore, the applicant stated that all patients who have been
diagnosed with aTTP should be considered severe cases and treated in
order to prevent death and significant morbidity.
---------------------------------------------------------------------------
\27\ Scully, M., et al., ``Regional UK TTP registry: correlation
with laboratory ADAMTS 13 analysis and clinical Features,'' Br. J.
Haematol., 2008, vol. 142(5), pp. 819-26.
\28\ Reese, J.A., et al., ``Children and adults with thrombotic
thrombocytopenic purpura associated with severe, acquired Adamts13
deficiency: comparison of incidence, demographic and clinical
features,'' Pediatr. Blood Cancer, 2013, vol. 60(10), pp. 1676-82.
\29\ Terrell, D.R., et al., ``The incidence of thrombotic
thrombocytopenic purpura-hemolytic uremic syndrome: all patients,
idiopathic patients, and patients with severe ADAMTS-13
deficiency,'' J. Thromb. Haemost., 2005, vol. 3(7), pp. 1432-6.
---------------------------------------------------------------------------
The applicant explained that the two standard-of-care (SOC)
treatment options for a diagnosis of aTTP are plasma exchange (PE), in
which a patient's blood plasma is removed through apheresis and is
replaced with donor plasma, and immunosuppression (for example,
corticosteroids and increasingly also rituximab), which is often
administered as adjunct to plasma exchange in the treatment for a
diagnosis of aTTP.30 31 According to the applicant, despite
the current SOC treatment options, acute aTTP episodes are still
associated with a mortality rate of up to 20 percent, which generally
occurs within the first weeks of diagnosis. The applicant asserted
that, although the 20-percent mortality rate reflects substantial
improvement because of PE treatment, in spite of greater understanding
of disease pathogenesis and the use of newer immunosuppressants, the
mortality rate has not been further
improved.32 33 34 35 36 37 The applicant also noted that
another important limitation of the currently available therapies (PE
and immunosuppression) is the delayed onset of effect of days to weeks
of these therapies because such therapies do not directly address the
pathophysiological platelet aggregation that leads to the formation of
microthrombi, which is ultimately associated with death or with the
severe outcomes reported with diagnoses of aTTP. The applicant
explained that despite current treatment, exacerbation and relapse
occur and frequently lead to hospitalization and the need to restart
daily PE treatment and optimize immunosuppression. In addition, the
applicant noted that patients may experience exacerbations after
discontinuing plasma exchange treatment due to continuing formation of
microthrombi as a result of unresolved underlying autoimmune disease,
and patients remain at risk of thrombotic complications or early death
until the episode is completely resolved.\38\
---------------------------------------------------------------------------
\30\ Scully, M., et al., ``Guidelines on the diagnosis and
management of thrombotic thrombocytopenic purpura and other
thrombotic microangiopathies,'' Br. J. Haematol., 2012, vol. 158(3),
pp. 323-35.
\31\ George, J.N., ``Corticosteroids and rituximab as adjunctive
treatments for thrombotic thrombocytopenic Purpura,'' Am. J.
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
\32\ Form for Notification of a Compassionate Use Programme to
the Paul-Ehrlich-Institut.
\33\ Benhamou, Y., et al., ``Cardiac troponin-I on diagnosis
predicts early death and refractoriness in acquired thrombotic
thrombocytopenic purpura. Experience of the French Thrombotic
Microangiopathies Reference Center,'' J. Thromb. Haemost., 2015,
vol. 13(2), pp. 293-302.
\34\ Han, B., et al., ``Depression and cognitive impairment
following recovery from thrombotic thrombocytopenic purpura,'' Am.
J. of Hematol., 2015, vol. 90(8), pp. 709-14.
\35\ Rajan, S.K., ``BMJ Best Practice; Thrombotic
thrombocyopenic purpura,'' May 27, 2016.
\36\ Goel, R., et al., ``Prognostic risk-stratified score for
predicting mortality in hospitalized patients with thrombotic
thrombocytopenic purpura: nationally representative data from 2007
to 2012,'' Transfusion, 2016, vol. 56(6), pp. 1451-8.
\37\ Rock, G.A., Shumak, K.H., Buskard, N.A., et al.,
``Comparison of plasma exchange with plasma infusion in the
treatment of thrombotic thrombocytopenic purpura. Canadian Apheresis
Study Group,'' N Engl J Med, 1991, vol. 325, pp. 393-397.
\38\ Goel, R., et al., ``Prognostic risk-stratified score for
predicting mortality in hospitalized patients with thrombotic
thrombocytopenic purpura: nationally representative data from 2007
to 2012,'' Transfusion, 2016, vol. 56(6), pp. 1451-8.
---------------------------------------------------------------------------
According to the information provided by the applicant,
CABLIVI[supreg] is administered as an adjunct to PE treatment and
immunosuppressive therapy immediately upon diagnosis of aTTP through a
bolus intraveneous injection for the first dose and subcutaneous
injection for all subsequent doses. The recommended treatment regimen
and dosage of CABLIVI[supreg] consists of administering 10 mg on the
first day of treatment via intravenous injection prior to the
[[Page 42202]]
standard plasma exchange treatment. After completion of PE treatment on
the first day, a 10 mg subcutaneous injection is administered. After
the first day, and for the rest of the plasma exchange treatment
period, a daily 10 mg subcutaneous injection is administered following
each day's PE treatment. After the PE treatment period is completed, a
daily 10 mg subcutaneous injection is administered for 30 days. If the
underlying immunological disease (aTTP) is not resolved, the treatment
period should be extended beyond 30 days and be accompanied by
optimization of immunosuppression (another SOC treatment option, in
addition to PE treatment). According to the applicant and as discussed
later, the use of CABLIVI[supreg] produces faster normalization of
platelet count response compared to that of SOC treatment options
alone. The applicant indicated that this contributes to a decrease in
the length of the SOC treatment period with respect to the number of
days of PE treatment, the mean length of intensive care unit stays, and
the mean length of hospitalizations.
With respect to the newness criterion, CABLIVI[supreg] received FDA
approval on February 6, 2019, for the treatment of adult patients who
have been diagnosed with aTTP, in combination with plasma exchange and
immunosuppressive therapy. According to information provided by the
applicant, CABLIVI[supreg] was previously granted Fast Track and Orphan
Drug designations in the United States for the treatment of aTTP by the
FDA and Orphan Drug designation in Europe for the treatment of aTTP.
Currently, there are no ICD-10-PCS procedure codes to uniquely identify
procedures involving CABLIVI[supreg]. In the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19291), we noted that the applicant submitted a
request for approval for a unique ICD-10-PCS procedure code for the
administration of CABLIVI[supreg] beginning in FY 2020. The applicant
was granted approval for the following procedure codes: XW013W5
(Introduction of Caplacizumab into Subcutaneous Tissue, Percutaneous
Approach, New Technology Group 5), XW033W5 (Introduction of
Caplacizumab into Peripheral Vein, Percutaneous Approach, New
Technology Group 5) and XW043W5 (Introduction of Caplacizumab into
Central Vein, Percutaneous Approach, New Technology Group 5).
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, CABLIVI[supreg] is a first-in-class therapy
with an innovative mechanism of action. The applicant explained that
CABLIVI[supreg] binds to the A1 domain of vWF and specifically inhibits
the interaction between vWF and platelets. Furthermore, the applicant
indicated that in patients who have been diagnosed with aTTP,
proteolysis of ULvWF multimers by ADAMTS13 is impaired due to the
presence of inhibiting or clearing anti-ADAMTS13 auto-antibodies,
resulting in the persistence of the constitutively active A1 domain
and, as a consequence, platelets spontaneously bind to ULvWF and
generate microvascular blood clots in high shear blood vessels. The
applicant noted that CABLIVI[supreg] is able to interact with vWF in
both its active (that is, ULvWF multimers or normal multimers activated
through immobilization or shear stress) and inactive forms (that is,
multimers prior to conformational change of the A1 domain), thereby
immediately blocking the interaction of vWF with the platelet receptor
(GPIb-IX-V) and further preventing spontaneous interaction of ULvWF
with platelets that would lead to platelet microthrombi formation in
the microvasculature, local schemia and platelet consumption. The
applicant highlighted that this immediate platelet-protective effect
differentiates CABLIVI[supreg] from slower-acting therapies, such as PE
and immunosuppressants, which need days to exert their effect. The
applicant explained that PE acts by removing ULvWF and the circulating
auto-antibodies against ADAMTS13, thereby replenishing blood levels of
ADAMTS13, while immunosuppressants aim to stop or reduce the formation
of auto-antibodies against ADAMTS13.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant believed that
potential cases representing patients who may be eligible for treatment
involving CABLIVI[supreg] would be assigned to the same MS- DRGs as
cases representing patients who receive SOC treatment for a diagnosis
of aTTP. As explained in this final rule in the discussion of the cost
criterion, the applicant believed that potential cases representing
patients who may be eligible for treatment involving CABLIVI[supreg]
would be assigned to MS-DRGs that contain cases representing patients
who were diagnosed with aTTP and received therapeutic PE procedures
during hospitalization.
With respect to the third criterion, 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, according to the
applicant, there are no other specific therapies approved for the
treatment of patients diagnosed with aTTP. As stated earlier, according
to the applicant, patients who have been diagnosed with aTTP have two
currently available SOC treatment options: PE, in which a patient's
blood plasma is removed through apheresis and is replaced with donor
plasma, and immunosuppression (for example, corticosteroids and
increasingly rituximab), which is administered as an adjunct to PE in
the treatment of aTTP. The applicant further explained that
immunosuppression consisting of glucocorticoids is often administered
as adjunct to PE in the initial treatment of a diagnosis of
aTTP,39 40 but their use is based on historical evidence
that some patients with limited symptoms might respond to
corticosteroids alone.41 42 The applicant noted that there
have been no studies specifically comparing treatment involving the
combination of PE with corticosteroids, versus PE alone; that they are
not specifically approved for the treatment of a diagnosis of aTTP, and
that other immunosuppressive agents used to treat a diagnosis of aTTP,
such as rituximab, have not been studied in properly controlled,
double-blind studies. The applicant also noted that rituximab, aside
from not being licensed for the treatment of a diagnosis of aTTP, is
not fully effective during the first 2 weeks of treatment, with a
reported delay of onset of its effect that may extend up to 27 days,
with at least 3 to 7 days needed to achieve adequate B-cell depletion
(given the B-cells may also contain ADAMTS13 antibodies),
[[Page 42203]]
and even longer to restore ADAMTS13 activity levels.43 44
---------------------------------------------------------------------------
\39\ Scully, M., et al., ``Guidelines on the diagnosis and
management of thrombotic thrombocytopenic purpura and other
thrombotic microangiopathies,'' Br. J. Haematol., 2012, vol. 158(3),
pp. 323-35.
\40\ George, J.N., ``Corticosteroids and rituximab as adjunctive
treatments for thrombotic thrombocytopenic Purpura,'' Am. J.
Hematol., 2012, vol. 87 Suppl 1, pp. S88-91.
\41\ Bell, W.R., et al., ``Improved survival in thrombotic
thrombocytopenic purpura-hemolytic uremic Syndrome. Clinical
experience in 108 patients,'' N. Engl. J. Med., 1991, vol. 325(6),
pp. 398-403.
\42\ Phillips, E.H., et al., ``The role of ADAMTS-13 activity
and complement mutational analysis in differentiating acute
thrombotic microangiopathies,'' J. Thromb. Haemost., 2016, vol.
14(1), pp. 175-85.
\43\ Coppo, P., ``Management of thrombotic thrombocytopenic
purpura,'' Transfus Clin Biol., Sep 2017, vol. 24(3), pp. 148-153.
\44\ Froissart, A., et al., ``Rituximab in autoimmune thrombotic
thrombocytopenic purpura: A success story,'' Eur. J. Intern. Med.,
2015, vol. 26(9), pp. 659-65.
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Based on the applicant's statements as previously summarized, the
applicant believes that CABLIVI[supreg] provides a new treatment option
for patients who have been diagnosed with aTTP. However, we stated in
the proposed rule that it is not clear that CABLIVI[supreg] would
involve the treatment of a different type of disease or a different
patient population. As stated earlier, according to the applicant,
patients who have been diagnosed with aTTP have two SOC treatment
options for a diagnosis of aTTP: PE, in which a patient's blood plasma
is removed through apheresis and is replaced with donor plasma, and
immunosuppression (for example, corticosteroids and increasingly also
rituximab), which is administered as an adjunct to PE in the initial
treatment for a diagnosis of aTTP. We stated that therefore, it appears
that CABLIVI[supreg] is used to treat the same or similar type of
disease (a diagnosis of aTTP) and a similar patient population as
currently available treatment options.
We invited public comments on whether CABLIVI[supreg] is
substantially similar to other technologies and whether CABLIVI[supreg]
meets the newness criterion.
Comment: Several commenters stated that CABLIVI[supreg] is not
substantially similar to other technologies and meets the newness
criterion. Commenters stated that CABLIVI[supreg] is the only FDA
approved therapy for aTTP and is a novel technological approach to the
disease. Other commenters stated that CABLIVI[supreg] is a unique anti-
vWF blocking nanobody and the first of its kind in treating acute TTP
that should be used at the earliest possible time after presentation of
patients with immune-mediated TTP. The commenters stated that they
believe CABLIVI[supreg] to be potentially lifesaving because no other
treatment modalities act in this specific manner. A commenter stated
that CABLIVI[supreg] differs from the treatments currently available
for aTTP because it immediately prevents platelets from binding to the
abnormally large vWF molecules, a key abnormality of TTP. A commenter
stated that CABLIVI[supreg] is a nanobody that directly and
specifically targets the pathophysiologic interaction between vWF and
platelets, thus rapidly halting the life-threatening process that
causes morbidity and mortality in those with aTTP. According to this
commenter, no other drug is capable of doing this. Finally, this
commenter stated that CABLIVI[supreg] is a novel therapy against a rare
but potentially fatal autoimmune disease, aTTP that has not had
significant short-term developments in almost 30 years.
The applicant commented that CABLIVI[supreg] has been approved for
the treatment of aTTP in a similar patient population as currently
available treatment options. However the applicant also stated that
CABLIVI[supreg] is a very different technology consisting of a
different mode of action that results in improved outcomes with respect
to platelet count response, recurrence, and other pre-specified
clinical outcome endpoints. The applicant stated that CABLIVI[supreg]
is the only FDA-approved therapy for treating aTTP in conjunction with
PE and immunosuppressive therapy.
The applicant also re-iterated information previously submitted
with its application, and previously summarized in this final rule,
that CABLIVI[supreg] is the only therapeutic agent that is designed to
rapidly and specifically reduce the microthrombi formation via
reduction in platelet aggregation for patients with an acute aTTP
episode. According to the applicant, CABLIVI[supreg]'s novel mechanism
of action works by targeting the A1 domain of vWF, thus preventing the
interaction between vWF and platelets and thereby reducing the
subsequent microvascular thrombosis. Regarding the current SOC, the
applicant stated that as no randomized controlled prospective clinical
studies have been performed to evaluate the efficacy and safety of the
immunosuppressive therapies currently used to treat aTTP, the safe and
effective dosing regimens of these agents are not known. The applicant
further stated that while PE can provide rapid replenishment of new
platelets and new ADAMTS 13 to reduce large platelet string formation,
it is suboptimal in efficacy with a remaining mortality of up to 20
percent and substantial patient burden and side effects.
Response: We appreciate the commenters' input and the additional
detail regarding whether CABLIVI[supreg] is substantially similar to
existing technologies.
After consideration of the public comments we received and
information submitted by the applicant in its application, we believe
that while potential cases representing patients who may be eligible
for treatment involving CABLIVI[supreg] would be assigned to the same
MS- DRGs as cases representing patients who receive SOC treatment for a
diagnosis of aTTP, and that CABLIVI[supreg] is used to treat the same
or similar type of disease (a diagnosis of aTTP) and a similar patient
population as currently available treatment options, we agree with the
applicant that CABLIVI[supreg] does not use the same or similar
mechanism of action as other technologies used for the treatment of
aTTP. We believe that CABLIVI[supreg]'s mechanism of action, which
targets the A1 domain of vWF, thus preventing the interaction between
vWF and platelets and thereby reducing the subsequent microvascular
thrombosis, is unique and distinct from other available forms of
treatment for aTTP and, therefore, we believe that CABLIVI[supreg]
meets the newness criterion. We consider the beginning of the newness
period to commence when CABLIVI[supreg] was approved by the FDA on
February 6, 2019.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs that cases
representing potential patients who may be eligible for treatment using
CABLIVI[supreg] may map to, the applicant identified all MS- DRGs for
patients who had been hospitalized for a diagnosis of aTTP.
Specifically, the applicant searched the FY 2017 MedPAR file for
Medicare fee-for-service inpatient hospital claims submitted between
October 1, 2016 and September 30, 2017, and identified potential cases
by ICD-10-CM diagnosis code M31.1 (Thrombotic microangiopathy) and ICD-
10-PCS procedure codes 6A550Z3 (Pheresis of plasma, single) and 6A551Z3
(Pheresis of plasma, multiple). The applicant noted that it excluded
cases with an ICD-10-CM diagnosis code of D59.3 (Hemolytic-uremic
syndrome).
This resulted in 360 cases spanning 61 MS-DRGs, with approximately
67.2 percent of all potential cases mapping to the following 5 MS-DRGs:
[[Page 42204]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.133
Using the 242 identified cases that mapped to the top 5 MS-DRGs
previously described, the applicant determined that the average case-
weighted unstandardized charge per case was $188,765. The applicant
then standardized the charges and then removed historic charges for
items that are expected to be avoided for patients who receive
treatment involving CABLIVI[supreg]. The applicant determined that 31
percent of historical routine bed charges, 65 percent of historical ICU
charges, and 38 percent of historical blood administration charges
(which includes charges for therapeutic PE) would be reduced because of
the use of CABLIVI[supreg], based on the findings from the Phase III
clinical study HERCULES. The applicant indicated it used the FY 2017
MedPAR file to determine the appropriate amount of charges to remove.
The applicant then inflated the adjusted standardized charges by 8.864
percent utilizing the 2-year inflation factor published by CMS in the
FY 2019 IPPS/LTCH PPS final rule to adjust the outlier threshold (83 FR
41722). (In the FY 2020 IPPS/LTCH PPS proposed rule, we noted that this
figure was revised in the FY 2019 IPPS/LTCH PPS final rule correction
notice. The corrected final 2-year inflation factor is 1.08986 (83 FR
49844). We further noted that even when using the corrected final rule
values to inflate the charges, the average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount.)
The applicant explained that the anticipated price for
CABLIVI[supreg]'s indication for the treatment of patients who have
been diagnosed with aTTP, in combination with plasma exchange and
immunosuppressive therapy, has yet to be determined and, therefore, no
charges for CABLIVI[supreg] were added in the analysis. Based on the FY
2019 IPPS/LTCH PPS final rule correction notice data file thresholds
for FY 2020, the applicant determined the average case-weighted
threshold amount was $49,904. The final inflated average case-weighted
standardized charge per case was $145,543. Because the final inflated
average case-weighted standardized charge per case exceeds the average
case-weighted threshold amount, the applicant maintained that the
technology meets the cost criterion. We invited public comments on
whether CABLIVI[supreg] meets the cost criterion.
Comment: The applicant submitted a revised analysis using the 2-
year inflation factor of 1.08986 from the FY 2019 IPPS correction
notice to inflate charges from FY 2017 to FY 2019. The applicant also
added charges to reflect the current wholesale acquisition cost (WAC)
price for CABLIVI[supreg]. According to the applicant, after changing
the 2-year inflation factor from 8.864 percent to 8.986 percent and
adding charges for the new technology, the inflated average case-
weighted standardized charge per case was $413,246. Based on this
analysis, the applicant determined that the inflated average case-
weighted standardized charge per case for CABLIVI[supreg] exceeded the
threshold amount of $49,904 and that CABLIVI[supreg] meets the cost
criterion.
Response: We appreciate the applicant's input and revised analysis.
After consideration of the public comments we received, we believe that
CABLIVI[supreg] meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that it believes that CABLIVI[supreg] represents a
substantial clinical improvement compared to the use of currently
available treatments (PE and immunosuppressants) because it: (1)
Significantly reduces time to platelet count response, which is
consistent with the halting of platelet consumption in microthrombi;
(2) significantly reduces the number of patients with aTTP-related
death, recurrence of aTTP-related episodes, or a major thromboembolic
event; (3) reduces mortality; (4) reduces the proportion of patients
with recurrence of aTTP diagnoses; (5) reduces the proportion of
patients who develop refractory disease; (6) reduces the number of days
of PE; (7) reduces the mean length of intensive care unit stay and the
mean length of hospitalization; and (8) shows a trend of more rapid
normalization of organ damage markers. The applicant provided further
detail regarding these assertions, referencing the results of Phase II
and Phase III studies and an integrated efficacy analysis of both
studies.
The applicant reported that the Phase II study was a randomized,
single-blind, placebo controlled study entitled ALX-0681-2.1/10 (TITAN)
that examined the efficacy and safety of the use of CABLIVI[supreg]
compared to a placebo, with the primary endpoint being achievement of a
statistically significant reduction in time to platelet count response.
Seventy-five patients, 66 of which were white, (19 to 72 years old,
with a mean of 41.6 years old; 44 women and 31 men) with an episode of
aTTP were randomized 1:1 to receive either CABLIVI[supreg] (n = 36) or
placebo (n = 39), in addition to daily PE.\45\ Patients received their
first dose of CABLIVI[supreg] administered through intravenous
injection prior to the first PE, followed by daily doses administered
subcutaneously after each PE. After discontinuing PE, daily doses of
CABLIVI[supreg] administered through subcutaneous injection were
continued for 30 days. The median treatment duration with
CABLIVI[supreg] was 36 days.
---------------------------------------------------------------------------
\45\ Peyvandi, F., Scully, M., Kremer Hovinga, J.A., Cataland,
S., Kn[ouml]bl, P., Wu, H., Artoni, A., Westwood, J.P., Mansouri
Taleghani, M., Jilma, B., Callewaert, F., Ulrichts, H., Duby, C.,
Tersago, D., TITAN Investigators, ``Caplacizumab for Acquired
Thrombotic Thrombocytopenic Purpura,'' N Engl J Med., February 11,
2016, vol. 374(6), pp. 511-22. PMID: 26863353.
---------------------------------------------------------------------------
According to the applicant, significantly more patients in the
treatment arm met the primary endpoint [95 percent Confidence Interval
(CI) (3.78, 1.28)]. The applicant indicated that the time to platelet
count response improvement constitutes a significant substantial
clinical improvement because it demonstrated that patients treated with
CABLIVI[supreg] were 2.2 times more likely to achieve an acceptable
time to platelet count response than patients receiving treatment with
the placebo. Additionally, the applicant noted that exacerbation of
aTTP occurred in fewer patients who were treated with CABLIVI[supreg]
(8.3 percent) than placebo (28.2 percent). During the 1-month follow-up
period, 8 relapses (defined as a recurrence more than 30 days after
discontinuing PE) occurred in the CABLIVI[supreg] group with 7 of the
[[Page 42205]]
relapses occurring within 10 days of discontinuing the study drug. In
all seven of the relapses, ADAMTS13 activity was still severely
suppressed at the end of the treatment period, evidence of ongoing
underlying immunological disease and indicating an imminent risk of
another relapse. The applicant explained that according to post-hoc
analyses, the group of patients who were treated with CABLIVI[supreg]
compared to placebo showed a decrease in the percentage of patients
with refractory disease (0 percent versus 10.8 percent), a reduction in
the number of days of PE (7.7 days versus 11.7 days) and a trend to
more rapid normalization of organ damage markers (lactate
dehydrogenase, cardiac troponin I and serum creatinine). Finally, the
applicant noted that there were no deaths in the group of patients who
were treated with CABLIVI[supreg]. However, 2 of the 39 placebo-treated
patients (5.1 percent) died.
The applicant explained that the Phase III study was a randomized,
double-blind, placebo controlled study entitled ALX0681-C301 (HERCULES)
that examined the efficacy and safety of the use of CABLIVI[supreg]
compared to a placebo, with the primary endpoint being achievement of a
statistically significant reduction in time to platelet count response.
One hundred forty-five patients (18 to 79 years old, with a mean of 46
years old, 100 women and 45 men), with an episode of aTTP were
randomized 1:1 to receive either CABLIVI[supreg] (n=72) or placebo
(n=73) in addition to daily PE and immunosuppression.\46\ The applicant
explained that patients received a single 10 mg CABLIVI[supreg]
intravenous injection or placebo prior to the first PE, followed by a
daily CABLIVI[supreg] 10 mg subcutaneous injection or placebo after
completion of PE, for the duration of the daily PE treatment period and
for 30 days thereafter. According to the applicant, if at the end of
this treatment period (daily PE treatment period and 30 days after)
there was evidence of persistent underlying immunological disease
activity (indicative of an imminent risk for recurrence), treatment
could be extended weekly for a maximum of 4 weeks, together with
optimization of immunosuppression. The applicant indicated that
patients who experienced a recurrence while undergoing study drug
treatment were switched to open-label CABLIVI[supreg] and they were
again treated for the duration of daily PE treatment and for 30 days
thereafter. If at the end of this treatment period (daily PE treatment
period and 30 days after) there was evidence of ongoing underlying
immunological disease, open-label treatment with CABLIVI[supreg] could
be extended weekly for a maximum of 4 weeks, together with optimization
of immunosuppression. Patients were followed for 28 days after
discontinuation of treatment. Upon recurrence during the follow-up
period (that is, after all study drug treatment had been discontinued),
there was no re-initiation of the study drug because recurrence at this
point was treated according to the SOC. The median treatment duration
with CABLIVI[supreg] in the double-blind period was 35 days.
---------------------------------------------------------------------------
\46\ Scully, M., et al., ``Treatment of Acquired Thrombotic
Thrombocytopenic Purpura with Caplacizumab,'' N. Engl. J. Med., (In
Press).
---------------------------------------------------------------------------
According to the applicant, patients in the treatment arm were more
likely to achieve platelet count response at any given time point,
compared to the placebo [95 percent CI (1.1, 2.2)]. The applicant
believed that this constitutes a significant substantial clinical
improvement because patients who were treated with CABLIVI[supreg] were
1.55 times more likely to achieve platelet count response at any given
time point, compared to placebo. The applicant also indicated that,
compared to placebo, treatment with CABLIVI[supreg] resulted in a 74
percent reduction in the number of patients with aTTP-related death,
recurrence of aTTP diagnosis, or a major thromboembolic event, during
the study drug treatment period (p<0.0001).
The applicant noted that the proportion of patients with a
recurrence of an aTTP diagnosis in the Phase III study period (that is,
the drug treatment period plus the 28-day follow-up after
discontinuation of the drug treatment) was 67 percent lower in the
CABLIVI[supreg] group (12.7 percent) compared to the placebo group
(38.4 percent) (p<0.001). The applicant also indicated that in all 6
patients in the CABLIVI[supreg] group who experienced a recurrence of
an aTTP diagnosis during the follow-up period (that is, a relapse),
ADAMTS13 activity levels were less than 10 percent at the end of the
study drug treatment, indicating that the underlying immunological
disease was still active at the time CABLIVI[supreg] was discontinued.
Furthermore, the applicant stated that there were no patients who were
treated with CABLIVI[supreg] that had refractory disease (defined as
absence of platelet count doubling after 4 days of standard treatment
and elevated LDH), compared to 3 patients (4.2 percent) who had
refractory disease that were treated with placebo. The applicant also
explained that a trend to faster normalization of the organ damage
markers lactate dehydrogenase, cardiac troponin I and serum creatinine
was observed in patients who were treated with CABLIVI[supreg]. The
applicant noted that during the study drug treatment, there were no
deaths in patients who were treated with CABLIVI[supreg], while 3 of
the 73 placebo-treated patients (4.1 percent) died. Finally, the
applicant stated that during the Phase III study drug treatment period,
treatment with CABLIVI[supreg] resulted in a 38 percent reduction in
the mean number of PE treatment days versus placebo (reduction of 3.6
days) and a 41 percent reduction in the mean volume of PE (reduction of
14.6L). Furthermore, treatment with CABLIVI[supreg] resulted in a 65
percent reduction in the mean length of ICU stay (reduction of 6.3
days) and a 31 percent reduction in the mean length of hospitalization
(reduction of 4.5 days) during the Phase III study drug treatment
period.
The applicant submitted integrated data from the blinded periods of
the Phase II and Phase III studies that show a statistically
significant difference in favor of CABLIVI[supreg] (n=108) in time to
platelet count response compared to placebo (n=112). The applicant
indicated that patients who were treated with CABLIVI[supreg] were 1.65
times more likely to achieve platelet count response at any given time
point during the blinded period than patients who were treated with
placebo (95 percent CI: 1.23, 2.20; p<0.001). Additionally, according
to the applicant, integrated data from the blinded periods of the Phase
II and Phase III studies showed that compared to placebo, treatment
with CABLIVI[supreg] resulted in a 72.6 percent reduction in the
percentage of patients with aTTP-related death, a recurrence of a aTTP
diagnosis, or at least one treatment-emergent major thromboembolic
event during the blinded treatment period (p<0.0001). More
specifically, the applicant indicated that during the blinded treatment
period no aTTP-related deaths occurred in the CABLIVI[supreg] group
compared to 4 aTTP-related deaths in the placebo group (p<0.05),
treatment with CABLIVI[supreg] resulted in an 84.0 percent reduction in
the proportion of patients with a recurrence of a aTTP diagnosis
(exacerbation, relapse) during the blinded treatment period (p<0.0001),
and treatment with CABLIVI[supreg] resulted in a reduction of 40.8
percent in the proportion of patients with at least one treatment-
emergent major thromboembolic event during the blinded treatment
period.
According to the applicant, pooled data from the two studies showed
that none of the patients who were treated with CABLIVI[supreg]
developed refractory disease (that is, absence of platelet
[[Page 42206]]
count doubling after 4 days of standard treatment and elevated LDH)
compared to 7 patients (6.3 percent; 7/112) who were treated with
placebo during the blinded period (p<0.01). Finally, the applicant
noted that across both studies, treatment with CABLIVI[supreg] resulted
in a 37.5 percent reduction in the mean number of days of PE treatment
(reduction of 3.9 days).
In the FY 2020 IPPS/LTCH PPS proposed rule, we stated that although
the applicant asserts that CABLIVI[supreg] represents a substantial
clinical improvement compared to the use of currently available
treatments (PE and immunosuppressants), we were concerned that the
Phase II TITAN and Phase III HERCULES studies may not provide enough
evidence to support that the use of CABLIVI[supreg] represents a
substantial clinical improvement.
Regarding the Phase II TITAN study, we stated that we were
concerned that because 66 of the 75 patients in the study population
were white, the results of the study may not be generalizable to a more
diverse population that may be at risk for diagnosis of aTTP.
Additionally, we noted that CABLIVI[supreg] was associated with fewer
aTTP exacerbations during therapy, but was associated with more aTTP
exacerbations after therapy was discontinued, suggesting a lack of
effect on long-term anti-ADAMTS13 antibody levels. Although this is
consistent with CABLIVI[supreg]'s mechanism of action, we stated our
concern in the proposed rule that without long-term data to determine
the impact of adjunct use of CABLIVI[supreg] on exacerbations and
relapse it may be difficult to determine if the use of CABLIVI[supreg]
represents a substantial clinical improvement over existing therapy.
Based on data from the Oklahoma TTP-HUS Registry, the incidence of
aTTP is approximately three cases per 1 million adults per year.\47\
Additionally, the median age for a diagnosis of aTTP is 41, with a wide
range between 9 years old and 78 years old. In the proposed rule, we
acknowledged the challenges of constructing robust clinical studies due
to the extremely rare occurrence of patients who have been diagnosed
with aTTP. However, we stated that we were nonetheless concerned that
the study population in the Phase III HERCULES study was small, 145
people. Additionally, we indicated that it was unclear if the response
rate may differ in those who have a de novo diagnosis versus those with
recurrent disease. We noted that PE treatment alone has been attributed
to an 80 percent survival rate,\48\ and because CABLIVI[supreg] is
given in combination with or after SOC therapies, we stated in the
proposed rule that we were concerned that we may not have sufficient
information to determine the extent to which the study results were
attributable to the use of CABLIVI[supreg]. Furthermore, we stated that
with the follow-up period for the Phase III HERCULES study being only
28 days, we were concerned that there is a lack of long-term data. We
further stated that, in the absence of long-term data, we were
concerned about the impact of the use of CABLIVI[supreg] on the relapse
rate beyond the overall study period, including the 28-day follow-up
period.
---------------------------------------------------------------------------
\47\ Reese, J.A., Muthurajah, D.S., Kremer-Hovinga, J.A.,
Vesely, S.K., Terrell, D.R., George, J.N., ``Children and adults
with thrombotic thrombocytopenic purpura associated with severe,
acquired Adamts13 deficiency: comparison of incidence, demographic
and clinical features,'' Pediatr Blood Cancer, October 2013, vol.
60(10), pp. 1676-82, Epub June 1, 2013.
\48\ Rock, G.A., Shumak, K.H., Buskard, N.A., et al.,
``Comparison of plasma exchange with plasma infusion in the
treatment of thrombotic thrombocytopenic purpura. Canadian Apheresis
Study Group,'' N Engl J Med, 1991, vol. 325, pp. 393-397.
---------------------------------------------------------------------------
Finally, although both the Phase II and III studies consisted of
key secondary endpoints such as death or major thromboembolic events,
in the proposed rule we indicated that we were concerned these
endpoints were not clearly defined. We also stated that we were
concerned the studies did not appear to account for other clearly
defined endpoints such as heart attack, stroke, a bleeding episode, and
power calculations for the expected differences in such endpoints that
would be biologically important.
We invited public comments on whether CABLIVI[supreg] meets the
substantial clinical improvement criterion.
Comment: Several commenters provided comments in support of
CABLIVI[supreg]. A commenter stated that CABLIVI[supreg] utilizes a
monoclonal antibody that binds to vWF, causing platelets to clump and
clog up the microcirculation of patients and thereby reducing the
number of plasma exchanges required to bring patients back to normal
platelet counts. The commenter stated that the clinical benefit of
reducing the amount of plasma exchanges include lowering the amount of
plasma required to maintain the blood bank's supply, lessening the
chance of TRALI, reducing time spent in the intensive care unit,
reducing time in hospitalization, replacing many hours of expensive
plasma exchange in the inpatient and outpatient settings with a
subcutaneous injection, and tremendous increase in patient satisfaction
in their overall care.
A commenter stated that CABLIVI[supreg] has the potential to save
the lives of those individuals who do not respond to current
conventional treatment, plasma exchange, corticosteroids, and
rituximab. The commenter stated that without bound platelets, the
thrombosis is prevented. Finally, the commenter stated that
CABLIVI[supreg] blocks the tissue injury, but corticosteroids,
rituximab, and plasma exchange are still needed to affect the cause of
the disease.
Another commenter stated that with the pathophysiology of aTTP
rapidly and durably crippled as long as CABLIVI[supreg] is
administered, immunosuppression and other therapies such as plasma
exchange can be provided to these patients to help obtain a prolonged
remission after cessation of CABLIVI[supreg]. The commenter stated that
CABLIVI[supreg] is a valuable tool for the treatment of aTTP that
provides significantly improved clinical care compared to the current
standard of care. According to the commenter, by creating a window
period during CABLIVI[supreg] administration in which the
pathophysiology of aTTP is crippled in a targeted fashion, patients
with aTTP can be treated for existing organ damage (for example,
injuries to heart, brain, gut, RBCs) and have an earlier opportunity
for immunosuppression to begin working against this dangerous
autoimmune disease. The commenter stated that in two randomized
controlled trials, CABLIVI[supreg] has demonstrated the ability to
rapidly normalize platelet count in a sustained manner while drug is
being administered, as well as decrease the composite endpoint of
death, disease recurrence, and thromboembolic events.
The applicant provided information in response to CMS' concerns
regarding whether CABLIVI[supreg] meets the substantial clinical
improvement criterion. The information provided by the applicant was in
response to CMS' concerns regarding whether CABLIVI[supreg] meets the
overall substantial clinical improvement criterion, the demographics of
the Phase II TITAN study patient population, the need for longer-term
studies to identify the effect of CABLIVI[supreg] on exacerbations and
relapse, the small sample size included in the Phase III HERCULES study
and the clinical trial design of the Phase II TITAN and Phase III
HERCULES studies due to short follow-up period, unclear defined
secondary endpoints and inclusion of biologically important endpoints.
The applicant stated that the multi-discipline review of
CABLIVI[supreg] by the
[[Page 42207]]
FDA concluded that the Phase III HERCULES study provided substantial
evidence of CABLIVI[supreg]'s effectiveness when added to daily PE and
immunosuppression compared to PE and immunosuppression alone. The
applicant stated that the primary endpoint of the Phase III HERCULES
study was time to platelet response in which the study produced a
median time to platelet response of 2.7 days in the CABLIVI[supreg]
treatment group compared to 2.9 days in the placebo treatment group.
According to the applicant, other equally important clinical outcomes
consist of the proportion of patients with aTTP-related death,
recurrence of aTTP or at least one treatment emergent major
thromboembolic event (a composite endpoint). The applicant stated that
these outcomes were significantly lower in the CABLIVI[supreg]
treatment group (9/72 (13 percent) compared to the placebo treatment
group 36/73 (49 percent) (p<0.0001). The applicant further stated that
the proportion of patients with a recurrence of aTTP in the overall
study period was significantly lower in the CABLIVI[supreg] treatment
group (9/72 (13 percent) patients) compared to the placebo treatment
group (28/73 (38 percent) patients) (p<0.001). The applicant noted that
in the 6 patients treated with CABLIVI[supreg] who experienced a
recurrence of aTTP during the follow-up period (that is, a relapse
defined as recurrent thrombocytopenia after initial recovery of
platelet count (platelet count 2: 150,000/[mu]L) that required re-
initiation of daily plasma exchange, occurring after the 30-day post
daily plasma exchange period), ADAMTS13 activity levels were <10
percent at the end of the study drug treatment suggesting that the
underlying immunological disease was still active at the time
CABLIVI[supreg] was stopped.
The applicant also stated that during the overall study drug
treatment period, which included, for all patients, the period on
double-blind treatment, as well as, for patients who had an
exacerbation and were switched, the period on open-label
CABLIVI[supreg]-treatment resulted in a 38 percent reduction in the
number of PE days (average reduction 3.6 days) and a 41 percent
reduction in the volume of plasma exchanged (average reduction 15 L).
The applicant also stated that there was a 65 percent reduction in
length of intensive care unit (ICU) stay (average reduction 6.3 days)
and a 31 percent reduction in length of hospitalization (average
reduction 4.5 days).
In response to CMS's concerns regarding the patient population
demographics of the Phase II TITAN trial, the applicant stated that the
FDA assessed the substantial clinical improvement of CABLIVI[supreg]
based on the Phase III HERCULES study, whereas the Phase II TITAN trial
was considered supportive evidence. The applicant also noted that it is
important to understand that both the Phase II TITAN and Phase III
HERCULES studies included US sites (8 sites/15 patients in TITAN and 10
sites/32 patients in HERCULES). According to the applicant the Phase
III HERCULES study is the pivotal study for efficacy evaluation and was
a study in which US patients represented overall 22 percent of the
overall patient population. Also, the applicant stated that in the
Phase III HERCULES study, 28 patients were black or African American
(21.1 percent of the overall aTTP population and only 13.8 percent of
the US population) and as such the applicant considers the results of
the studies applicable to the US population. The applicant also stated
that the FDA did not raise any concerns related to the demographics of
the patient population during the Biologics License Application (BLA)
review process.
Regarding the CMS concern on the need for longer-term studies to
identify the effect of CABLIVI[supreg] on exacerbations and relapse the
applicant re-iterated information previously submitted with its
application and previously summarized. The applicant stated that the
trial results show the proportion of patients with a recurrence of aTTP
in the overall study period was significantly lower in the
CABLIVI[supreg] group (9/72 (13 percent) patients) compared to the
placebo group (28/73 (38 percent) patients) (p<0.001) and that in the 6
patients treated with CABLIVI[supreg] who experienced a recurrence of
aTTP during the follow-up period, ADAMTS13 activity levels were <10
percent at the end of the study drug treatment suggesting that the
underlying immunological disease was still active at the time
CABLIVI[supreg] was stopped.
The applicant also acknowledged that long-term studies and clinical
experiences are needed to better understand CABLIVI[supreg]'s
effectiveness in preventing recurrences of aTTP episodes and as such it
is conducting a 3 year follow-up study for those patients enrolled in
the Phase III HERCULES study in which data will be available in the
near future. In addition, the applicant stated they are working with
the medical community to explore real world data generation
opportunities, including registries.
In response to CMS' concerns regarding the small sample size
included in the Phase III HERCULES study, the applicant stated that as
aTTP is an ultra-rare blood disorder with a reported incidence of 4 to
5 cases per million in the US, enrolling a large number of patients in
a clinical study is challenging. Furthermore, the applicant explained
that the sample size calculation of the Phase III HERCULES study was
assessed in the BLA review process by the FDA and described accurately
as being based on superiority testing of CABLIVI[supreg] over placebo
with respect to time to platelet response and satisfying the following
criteria:
80 percent power;
Log-rank test at 2-sided a = 0.05;
Accrual period lasting 2.5 years;
Time-to-event period set at 45 days (note: for the primary
endpoint, a patient is censored if there is no platelet response by day
45);
40 percent reduction in time-platelet response. Assuming a
median time-to-response of 7 days among placebo, this is tantamount to
a median time-to-response of 4.2 days in the CABLIVI[supreg] arm; and
Expected dropout rate of 10 percent in the first 10 days
after first administration of study drug.
The applicant stated that under these criteria, 121 events are
required resulting in a sample size of 132 patients and that the actual
number of patients randomized in the study exceeded this threshold at
145. Also, according to the applicant, the FDA did not have any major
comments or concerns about the sample size of Phase III HERCULES study,
endpoint definition or other relevant methodological questions or
concerns during the BLA review process. The applicant also stated that
the Phase III HERCULES study was the largest study ever conducted in
this rare condition in which the results were recently published in the
New England Journal of Medicine with no significant questions or
remarks from the editors on the sample size, endpoint definition or any
other relevant methodological questions raised by journal editors or
reviewers.
In response to CMS' concerns regarding the clinical trial design of
the Phase II TITAN and Phase III HERCULES studies due to short follow-
up period, the applicant stated that the 1-month follow-up period was
defined based on current evidence that this is the period for which
patients are at higher risk of recurrence for the presenting episode of
a TTP. The applicant re-iterated information previously submitted with
its application and previously summarized in this final rule stating
that the proportion of patients with a recurrence of aTTP in the
overall study period was
[[Page 42208]]
significantly lower in the CABLIVI[supreg] group (9/72 (13 percent)
patients) compared to the placebo group (28/73 (38 percent) patients)
(p<0.001). Again, the applicant indicated that in the 6 patients
treated with CABLIVI[supreg] who experienced a recurrence of aTTP
during the follow-up period, ADAMTS13 activity levels were <10 percent
at the end of the study drug treatment suggesting that the underlying
immunological disease was still active at the time CABLIVI[supreg] was
stopped.
In response to CMS' concerns regarding clinical trial design of the
Phase II TITAN and Phase III HERCULES studies due to unclear defined
secondary endpoints and inclusion of biologically important endpoints,
the applicant stated that the Phase III HERCULES study was designed to
understand the potential role of CABLIVI[supreg] in the treatment of
aTTP by comparing CABLIVI[supreg] with placebo with respect to time to
normalization of platelet count (primary endpoint) and the risk of
death and complications caused by thrombotic events and organ damage
(secondary and other endpoints). According to the applicant, the trial
also evaluated the potential of CABLIVI[supreg] to reduce the risk of
recurrence by allowing for treatment to continue until
immunosuppressive therapy resolved the underlying autoimmune disease.
The applicant noted that the endpoints of this study were defined a
priori and detailed in the clinical study protocol.
The applicant re-iterated information previously submitted with its
application and previously summarized in this final rule stating that
primary outcome of the studies was the time to a response, which was
defined as the time from the first intravenous administration of
CABLIVI[supreg] or placebo to normalization of the platelet count (that
is, a platelet count of at least 150,000 per cubic millimeter), with
discontinuation of daily plasma exchange within 5 days thereafter.
According to the applicant, the results showed a statistically
significant shorter median time to normalization of platelet count in
CABLIVI[supreg] group (p=0.01) comparing to placebo.
The applicant also referenced four key secondary outcomes of the
studies, which were hierarchically ranked on the basis of clinical
relevance, as the following:
1. A composite of TTP-related death, recurrence of TTP, or a major
thromboembolic event (for example, myocardial infarction, stroke,
bleeding episodes) during the trial treatment period. Results were
statistically significant favoring CABLIVI[supreg] arm (p<0.001);
2. Recurrence of TTP at any time during the trial, including the
follow-up period. Results were statistically significant favoring
CABLIVI[supreg] arm (p<0.001);
3. Refractory TTP (defined by the lack of a doubling of the
platelet count after 4 days of treatment and a lactate dehydrogenase
level that remained above the upper limit of the normal range). Results
were not statistically significant (p=0.06); and
4. The time to normalization (that is, to a level below the defined
upper limit of the normal range) of three organ-damage markers (lactate
dehydrogenase, cardiac troponin I, and serum creatinine). Not tested
for statistical significance as prior endpoint was not statistically
significant.
The applicant stated that a recurrence was defined as a new
decrease in the platelet count that necessitated the re-initiation of
plasma exchange after normalization of the platelet count had occurred,
an exacerbation was defined as a recurrence that occurred within 30
days after the last plasma exchange and a relapse was defined as a
recurrence that occurred more than 30 days after cessation of plasma
exchange. Furthermore, the applicant conveyed that outcomes that were
not part of the hierarchy included the number of days of PE and the
volume of plasma exchanged, the duration of stay in an ICU and in the
hospital, mortality rate, pharmacodynamic and pharmacokinetic
variables, and immunogenicity. Finally, according to the applicant,
safety assessments were performed throughout the course of the trial
and included evaluation of vital signs, physical examinations, clinical
laboratory testing, and 12-lead electrocardiography.
Response: We appreciate all the comments received related to
CABLIVI[supreg], including the applicant's submission of additional
information to address the concerns presented in the proposed rule.
After consideration of the public comments we received, we believe
that the applicant has addressed our concerns regarding whether
CABLIVI[supreg] meets the substantial clinical improvement criterion,
and that CABLIVI[supreg] represents a substantial clinical improvement
over existing technologies (PE and immunosuppression alone) based on
the results of the Phase II TITAN and Phase III HERCULES studies with
respect to time to platelet count response, which is consistent with
the halting of platelet consumption in microthrombi; the number of
patients with aTTP-related death and recurrence of aTTP-related
episodes or a major thromboembolic event, and mortality. Additionally,
we note that CABLIVI[supreg] is the only FDA-approved therapy for
treating aTTP in conjunction with PE and immunosuppressive therapy.
In summary, we have determined that CABLIVI[supreg] meets all of
the criteria for approval of new technology add-on payments. Therefore,
we are approving new technology add-on payments for CABLIVI[supreg] for
FY 2020. Cases involving CABLIVI[supreg] that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
codes XW013W5, XW033W5 and XW043W5. In its application and subsequent
public comment, the applicant estimated that the average Medicare
beneficiary would require a dosage of 11 mg/kg administered as an
intravenous injection as a single dose and of 10 mg/kg administered as
a subcutaneous injection as a single dose. According to the applicant,
the WAC for one dose of 10 mg/kg is $7,300, and patients will typically
require 1.16 vials for the course of treatment with CABLIVI[supreg] per
day for an average duration of 6 days for an average total of 7 vials.
Therefore, the total cost of CABLIVI[supreg] per patient is $51,100.
Under Sec. 412.88(a)(2) (revised as discussed in this final rule), we
limit new technology add-on payments to the lesser of 65 percent of the
average cost of the technology, or 65 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 a case involving the use of
CABLIVI[supreg] is $33,215 for FY 2020.
c. CivaSheet[supreg]
CivaTech Oncology, Inc. submitted an application for new technology
add-on payments for CivaSheet[supreg] for FY 2020. CivaSheet[supreg]
received FDA clearance of a 510(k) premarket notification on August 29,
2014. CivaSheet[supreg] was approved as a ``sealed source'' by the
Nuclear Regulatory Commission (NRC) and added to the Registry of
Radioactive Sealed Source and Devices on October 24, 2014. On May 9,
2018, CivaSheet[supreg] was registered by the American Association of
Physicists in Medicine (AAPM) on the ``Joint AAPM/IROC Houston Registry
of Brachytherapy Sources Complying with AAPM Dosimetric
Prerequisites.'' According to the applicant, inclusion on this AAPM
registry is a long-standing requirement imposed on brachytherapy
sources used in all National Cancer Institute clinical trials and that
all other available brachytherapy sources are included on
[[Page 42209]]
this registry. According to the applicant, CivaSheet[supreg] was not
commercially distributed among IPPS hospitals until May 2018, after
meeting the requirements for inclusion in the AAPM registry. Therefore,
according to the applicant the ``newness'' period for the
CivaSheet[supreg], if approved for FY 2020 new technology add-on
payments, should commence on May 9, 2018. Based on this information, in
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19295), we stated that
we believe the newness period for CivaSheet[supreg] would begin on May
9, 2018. However, we invited public comments on whether inclusion on
the AAPM registry is an appropriate indicator of the first availability
of the CivaSheet[supreg] brachytherapy sources on the U.S. market and
whether the date of inclusion on the AAPM registry is appropriate to
consider as the beginning of the newness period for CivaSheet[supreg].
Comment: The applicant submitted public comments reiterating that
CivaSheet was registered by the American Association of Physicists in
Medicine (AAPM) on the Joint AAPM/IROC Houston Registry of
Brachytherapy Sources Complying with AAPM Dosimetric Prerequisites. The
applicant reiterated that while the CivaSheet was cleared by the Food
and Drug Administration and approved by the Nuclear Regulatory
Commission as a ``sealed source'' somewhat earlier, inclusion of a
brachytherapy source on this Registry is essentially a prerequisite for
commercial acceptance of such a source. For acceptance of a new
brachytherapy source outside of essentially experimental contexts,
completion of dosimetric studies is necessary. The applicant indicated
that it is the AAPM's validation that the results of these studies
indicate compliance with its prerequisites, rather than FDA clearance,
that appropriately marks the readiness of a source for the market and
the CivaSheet[supreg] was added to the registry, May 9, 2018.
Response: We appreciate the applicant's comments. After
consideration of the comments we received, it appears that
CivaSheet[supreg] was not commercially distributed among IPPS hospitals
until May 2018, after meeting the requirements for inclusion in the
AAPM registry. As we have stated in prior rulemaking (69 FR 28237), the
2-year to 3-year period of newness for a technology or medical service
would ordinarily begin with FDA approval, unless there was some
documented delay in bringing the product onto the market after that
approval. Therefore, we believe that the newness period for the
CivaSheet[supreg] would begin May 9, 2018. CivaSheet[supreg] is
intended for medical purposes to be placed into a body cavity or tissue
as a source for the delivery of radiation therapy. CivaSheet[supreg] is
indicated for use as a permanent interstitial brachytherapy source for
the treatment of selected localized tumors. The device may be used
either for primary treatment or for the treatment of residual disease
after excision of the primary tumor. CivaSheet[supreg] may be used
concurrently, or sequentially, with other treatment modalities, such as
external beam radiation therapy or chemotherapy. In the proposed rule,
we noted that the applicant had submitted a request for approval for a
unique ICD-10-PCS procedure code to describe procedures involving the
use of the CivaSheet[supreg] device, beginning in FY 2020. Approval was
granted for the following procedure codes effective October 1, 2019:
[[Page 42210]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.134
[[Page 42211]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.135
[[Page 42212]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.136
As discussed previously, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and, therefore, would not be
considered ``new'' for
[[Page 42213]]
purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, CivaSheet[supreg] does not have a similar
mechanism of action in comparison to existing brachytherapy
technologies. The applicant asserted that the unique construction and
configuration of the CivaSheet[supreg] device permits delivery of
radiation intra-operatively in a highly targeted fashion. The applicant
explained that the CivaSheet[supreg] is cut to size in the operation
room (OR) and conformed to the patient's anatomy and surgical site,
which allows radiation to be delivered to the resected tumor bed
margins at the time of the original surgery. The applicant further
explained that, it is generally believed that ``hot'' spots should be
avoided in the delivery of radiotherapy because they lead to
complications, citing the finding that ``[i]n brachytherapy, dose
homogeneity is difficult to achieve, but efforts to minimize ``hot''
spots have been regarded as virtuous and implant-planning guidelines
were developed to assist in this regard.'' \49\ The applicant stated
that implants are rarely geometrically perfect and, to avoid under-
dosing some parts of the target volume, it may be necessary to create
``hot spots'' in other parts of the anatomy. However, as a result, a
``hotter'' dose compared to that achievable with external beam
technologies can be delivered to the intended area. In contrast, the
applicant indicated that CivaSheet[supreg]'s unidirectional
configuration substantially reduces the dose delivered to neighboring
radiosensitive structures. The applicant further stated that other
forms of radiation delivery do not have these capabilities, and no
other shielded low-dose radiation (LDR) sources are currently available
on the market. According to the applicant, external beam radiation
generally cannot be delivered intra-operatively, partly because dosage
requirements make this impractical and potentially risky and because
appropriate aiming cannot be computed in the timeframe of a performed
surgery.
---------------------------------------------------------------------------
\49\ Bhadrasain, M.D., Vikram, Shivaji, Ph.D., Deore, Beitler,
M.D., Jonathan J., Sood, M.D., Brij, Mullokandov, Ph.D., Eduard,
Kapulsky, Ph.D., Alexander, Fontenla, Ph,d, Doracy P, ``The
relationship between dose heterogeneity (``hot'' spots) and
complications following high-dose rate brachytherapy,'' Int. J.
Radiation Oncology Biol. Phys., 1999, vol. 43, no. 5, pp. 983-987.
---------------------------------------------------------------------------
The applicant believed that, in the absence of the use of the
CivaSheet[supreg] device, a patient requiring radiation therapy to
accompany surgery would most likely receive radiation therapy as an
outpatient service following the inpatient hospitalization after
surgery. Moreover, the applicant stated that not only does this
typically require multiple, fractionated treatments, in some cases,
outpatient external beam radiation may not be possible due to excessive
toxicity to normal surrounding tissues. According to the applicant,
radiation therapy can be delivered intra-operatively directly to
surgical margins through use of a linear accelerator. However, the
applicant stated that these technologies deliver radiation in a single
``flash,'' whereas the CivaSheet[supreg] device enables the delivery of
radiation over time, increasing the efficacy of the radiation therapy.
Further, the applicant stated that external beam radiation devices
have a fixed ball or cone-shaped applicator, which does not necessarily
conform well to the irregular shapes of surgical cavities or permit
effective screening of adjacent tissues. Additionally, the applicant
stated that this form of radiation therapy requires a specialized
linear accelerator and a specially shielded operating room, which the
applicant believes restricts its use to IPPS-exempt cancer centers.
The applicant further stated that, in the past, cylindrical
brachytherapy seeds have been used with various mesh products as a form
of intra-operative radiation therapy (IORT). However, according to the
applicant, the use of cylindrical brachytherapy seeds used with various
mesh products has not developed as part of standard clinical practice.
According to the applicant, patients treated with previous cylindrical
brachytherapy seeds faced considerable challenges with toxicity from
the unfocused, unshielded seed sources when placed in proximity of
sensitive organs.\50\ Additionally the surgical meshes previously used
were not designed to maximize source orientation and spacing, and also
ran the risk of source dispersion as the mesh degraded.\51\ The
applicant maintains that the CivaSheet[supreg] is the first low-dose
radiation (LDR) brachytherapy device designed specifically for the
delivery of IORT. CivaSheet[supreg]'s individual brachytherapy sources
are flat with a gold shielding on one side of the seed, a design that
focuses radiation in one direction, in contrast to the cylindrical
shape of LDR brachytherapy seeds, which emit radiation in all
directions. According to the applicant, properties of the flat, gold-
shielded sources and the bioabsorbable polymer encapsulation make the
CivaSheet[supreg] uniquely suited for intra-operative delivery. As
such, the applicant asserted that the CivaSheet[supreg] does not have a
similar mechanism of action when compared to existing LDR
brachytherapies.
---------------------------------------------------------------------------
\50\ Rivard, Mark J., ``Low energy brachytherapy sources for
pelvic sidewall treatment,'' abstract presented at the ABS 2016
Annual Meeting.
\51\ Seneviratne, Danushka, et al., ``The CivaSheet: The new
frontier of intraoperative radiation therapy or a pricer alternative
to LDR brachytherapy,'' Advances in Radiation Oncology, 2018, vol.
3, pp. 87-91.
---------------------------------------------------------------------------
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant asserted that patients
who may be eligible for treatment using the CivaSheet[supreg] include
hospitalized patients having tumors removed from the pancreas, colon
and anus, pelvic area, head and neck, soft tissue sarcomas, non-small-
cell lung cancer, ocular melanoma, atypical meningioma and
retroperitoneum and that cases involving the use of the
CivaSheet[supreg] would map primarily into the following MS-DRGs listed
below. In the proposed rule, we indicated that we believe that cases
involving the use of existing technologies would be assigned to these
same MS-DRGs as previously listed.
[[Page 42214]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.137
[GRAPHIC] [TIFF OMITTED] TR16AU19.246
[[Page 42215]]
With regard to the third criterion, whether the use of the
technology involves the treatment of the same or similar type of
disease and the same or similar patient population, according to the
applicant, clinical conditions that may require use of the
CivaSheet[supreg] include treatment of the same patient population as
those who have been diagnosed with a variety of types of cancer,
including pancreatic cancer, colorectal cancer, anal cancer, pelvic
area/gynecological cancer, retroperitoneal sarcoma and head and neck
cancers.
The applicant asserted that the CivaSheet[supreg] device is not
substantially similar to any existing technology because it uses a
unique mechanism of action, when compared to existing LDR brachytherapy
technologies, to achieve a therapeutic outcome and, therefore, meets
the newness criterion.
We invited public comments on whether the CivaSheet[supreg] device
meets the newness criterion.
Comment: The applicant submitted public comments stating that it
believes that the CivaSheet[supreg] meets CMS' newness criterion. The
applicant stated that in particular, the CivaSheet[supreg] enables
intraoperative delivery of radiation in circumstances where this was
not previously possible, whether using brachytherapy or other forms of
radiation, without adverse effects on neighboring, radiosensitive
tissue. The applicant stated that the capability for one-directional
delivery of radiation, attributable to the gold shielding on each
source and the persisting matrix in which the sources are embedded and
which maintains their orientation within the body as the surgical wound
is closed and heals, is unique. The applicant further stated that the
customizable, conformable, planar design allows positional stability,
homogenous distribution of radiation in the surgical cavity, features
not available in radioactive seed technology previously available.
Response: We appreciate the applicant's comments with regard to the
newness criterion. After consideration of the comments we received, we
believe the mechanism of action of the CivaSheet[supreg] is unique from
other brachytherapy technologies because of. the unidirectional
delivery of intraoperatively applied radiation due to its shielded gold
layer. Therefore, we believe the CivaSheet[supreg] is not substantially
similar to existing technology and that it meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. To determine the MS-DRGs that potential cases representing
patients who may be eligible for treatment involving CivaSheet[supreg]
would map to, the applicant identified all MS-DRGs for cases that
included ICD-10-CM diagnosis codes for either pancreatic cancer,
colorectal cancer, anal cancer, pelvic area/gynecological cancer,
retroperitoneal sarcoma and head and neck cancers as a primary or
secondary diagnosis. Based on the FY 2017 MedPAR Hospital Limited Data
Set (LDS), the applicant identified a total of 22,835 potential cases.
The applicant limited its analyses to the most relevant 32 MS-DRGs,
which represented 80 percent of all the cases. The applicant excluded
the following cases: statistical outliers which the applicant defined
as 3 standard deviations from the geometric mean, HMO cases and claims
submitted only for graduate medical education payments and cases at
hospitals that were not included in the FY 2019 IPPS/LTCH PPS final
rule impact file (the applicant noted that these are predominately
cancer hospitals not subject to the IPPS). After applying the trims as
previously described, the applicant identified 17,173 remaining cases.
Using the 17,173 cases, the applicant determined an average case-
weighted unstandardized charge per case of $122,565. The applicant
standardized the charges for each case and inflated each case's charges
from FY 2017 to FY 2019 by applying the outlier charge inflation factor
of 1.085868 from the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20581).
The applicant indicated that the current average cost of the
CivaSheet[supreg] device is $24,132.86. The applicant then added
charges for CivaSheet[supreg] by taking the cost of the device and
converting it to a charge by dividing the costs by the national average
CCR of 0.309 for implants from the FY 2019 IPPS/LTCH PPS final rule (83
FR 41273). The applicant calculated an average case-weighted
standardized charge per case of $188,897 using the percent distribution
of MS-DRGs as case weights. Based on this analysis, the applicant
determined that the final inflated average case-weighted standardized
charge per case for CivaSheet[supreg] exceeded the average case-
weighted threshold amount of $87,446 by $101,451.
In the proposed rule, we noted that the inflation factor used by
the applicant was the proposed 2-year inflation factor, which was
discussed in the FY 2019 IPPS/LTCH PPS final rule summation of the
calculation of the FY 2019 IPPS outlier charge inflation factor for the
proposed rule (83 FR 41718 through 41722). The final 2-year inflation
factor published in the FY 2019 IPPS/LTCH PPS final rule was 1.08864
(83 FR 41722), which was revised in the FY 2019 IPPS/LTCH PPS final
rule correction notice to 1.08986 (83 FR 49844). However, we noted that
even when using either the final rule values or the corrected final
rule values published in the correction notice to inflate the charges,
the final inflated average case-weighted standardized charge per case
for CivaSheet[supreg] would exceed the average case-weighted threshold
amount. We invited public comments on whether the CivaSheet[supreg]
meets the cost criterion.
Comment: The applicant submitted public comments reiterating its
previously submitted cost analysis. The applicant further stated that
it believes the technology meets the cost criterion.
Response: After consideration of the public comments we received,
we agree that the CivaSheet[supreg] meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that CivaSheet[supreg] represents a substantial
clinical improvement over existing technologies because it provides the
following: (1) Improved local control of different cancers; \52\ (2)
reduced rate of device-related complications; \53\ (3) reduced rate of
radiation toxicity; \54\ (4) decreased future hospitalizations; \55\
(5) decreased rate of subsequent therapeutic interventions; \56\ (6)
improvement in back pain and appetite in pancreatic cancer patients
\57\ and (7) improved local control for pancreatic cancer patients.\58\
---------------------------------------------------------------------------
\52\ Castaneda SA, Emrich J, Bowne WB, Kemmerer EJ, Sangani R,
Khalili M, Rivard MJ, Poli J. ``Clinical outcomes using a novel
directional Pd-103 brachytherapy device: 20-month report of a
patient with leiomyosarcoma of the pelvic sidewall.'' ACRO 2018
Annual Meeting.
\53\ Seneviratne, D., McLaughlin, C., Todor, D., Kaplan, B.,
Fields, E., ``The CivaSheet: The new frontier of intraoperative
radiation therapy or a pricier alternative to LDR brachytherapy?,''
Advances in Radiation Oncology, 2018, vol. 3, pp. 87-91.
\54\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial
Clinical Experience with Directional LDR Brachytherapy for
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys,
2018.
\55\ Cavanaugh, S.X., Rothley, D.J., Richman, C., ``Directional
LDR Intraoperative Brachytherapy for Head and Neck Cancer,''
Presented at ABS 2017 Annual Meeting.
\56\ On file at CivaTech.
\57\ Ibid.
\58\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields,
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
---------------------------------------------------------------------------
With regard to improved local control of different cancers, the
applicant provided the clinical outcomes results
[[Page 42216]]
of a 20-month report of a patient who had been diagnosed with
leiomyosarcoma of the pelvic sidewall.\59\ According to the report, the
purpose of the report was to document the experience of using the
CivaSheet[supreg] implant as adjuvant intraoperative treatment in a
patient who had been diagnosed with locally advanced leiomyosarcoma of
the lateral pelvic sidewall. The patient analyzed in this report is a
62-year-old African American male who was found to have a mass
incidentally in the left pelvic sidewall. The patient presented with
lower abdominal pain, hematuria, and lower left flank pain radiating to
the left groin. A CT scan revealed a mass in the left pelvic sidewall
that measured 8.1 x 6.4 x 3.7 cm, with encasement of the left common
iliac vein and no distant metastasis. A biopsy revealed a high-grade
leiomyosarcoma. Given his advanced clinical stage and iliac vein
encasement, neoadjuvant pelvic radiotherapy with IMRT, surgical
resection with reconstruction, and a boost with intraoperative LDR
brachytherapy were performed. The patient was treated with pelvic IMRT
(50.4 Gy/28 fractions). The patient then underwent gross total
resection and the CivaSheet[supreg] was implanted intraoperatively. The
patient recovered well from the interventions, according to the report.
At 20 months after implantation of the LDR brachytherapy device,
clinical evaluations and CT imaging surveillance demonstrated no
evidence of residual disease, according to the report.
---------------------------------------------------------------------------
\59\ Castaneda, S.A., Emrich, J., Bowne, W.B., Kemmerer, E.J.,
Sangani, R., Khalili, M., Rivard, M.J., Poli, J., ``Clinical
outcomes using a novel directional Pd-103 brachytherapy device: 20-
month report of a patient with leiomyosarcoma of the pelvic
sidewall,'' ACRO 2018 Annual Meeting.
---------------------------------------------------------------------------
With regard to reducing the rate of device-related complications,
the applicant summarized four case series. In the four case series, the
CivaSheet[supreg] device was used to treat: (1) Axillary squamous cell
carcinoma; \60\ (2) retroperitoneal sarcoma; 61 62 63 (3)
gastric signet ring adenocarcinoma; (4) pancreatic cancer; and (5)
other abdominal malignancies. There were 13 patients associated with
these 4 case series.
---------------------------------------------------------------------------
\60\ Seneviratne, D., McLaughlin, C., Todor, D., Kaplan, B.,
Fields, E., ``The CivaSheet: The new frontier of intraoperative
radiation therapy or a pricier alternative to LDR brachytherapy?,''
Advances in Radiation Oncology, 2018, vol. 3, pp. 87-91.
\61\ Zhen, H., Turian, J.V., Sen, N., et al.,''Initial clinical
experience using a novel Pd-103 surface applicator for the treatment
of retroperitoneal and abdominal wall malignancies,'' Advances in
Radiation Oncology, 2018, vol. 3, pp. 216-220.
\62\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial
Clinical Experience with Directional LDR Brachytherapy for
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys,
2018.
\63\ Turian, J.V., ``Emerging Technologies for IORT:
Unidirectional Planar Brachytherapy Sources,'' Presented at AAPM
2017 Annual Meeting.
---------------------------------------------------------------------------
Seneviratne, et al.'s case series report documented experience with
the use of the CivaSheet[supreg] device in a 78 year old male patient
who had been diagnosed with axillary squamous cell carcinoma. According
to the case series report, prior to surgery a dose of 58 Gy, prescribed
to the 95 percent isodose line (5 percent), was delivered
in 2 Gy fractions with 3-dimensional conformal EBRT with concurrent
weekly administration of cisplatin 40 mg/m2 at an outside
facility. Magnetic resonance imaging scans obtained 3 months post-
treatment revealed that the mass had decreased in size to 3.8 cm x 2.5
cm x 3.9 cm, but maintained encasement of the axillary artery, axillary
vein, and several inferior branches of the brachial plexus. Concerns
with regard to increased toxicity to the axillary structures
discouraged further EBRT, and the CivaSheet[supreg] device was
implanted immediately post tumor resection. Given that microscopic
disease within formerly irradiated tissue was being treated, a
prescription dose of 20 Gy at 5 mm from the surface of the mesh was
considered adequate because of its delivery of a biologically effective
dose (BED)-10 of 39.8 Gy and equivalent dose (EQD)-2 of 33.2 Gy to the
tumor bed, while limiting the D2cc for the brachial plexus to a BED3 of
27.9 Gy and EQD2 of 16.7 Gy, based on post implant analysis. According
to the Seneviratne, et al. analysis, this approach allowed for a
significantly limited dose to be delivered to the brachial plexus. A
composite dose constraint of D2cc of 75 Gy was selected on the basis of
recent data showing elevated clinical brachial plexopathy rates beyond
this threshold. This constraint was met with an estimated composite
EQD2 of 74.7 Gy, which, according to the applicant, would not have been
obtainable with EBRT to a tumor bed EQD2 of greater than or equal to 30
Gy. The patient was discharged on the same day with instructions on
wound care and radiation safety. According to the applicant, the
incision healed well, with no signs of infection, seroma, or
lymphadenopathy during monthly follow-up visits. At the 8-month follow-
up visit, the patient was documented to only have minor shoulder pain.
Seneviratne, et al., also discussed their views on the advantages of
the use of the CivaSheet[supreg] device, which include its bio-
absorbability, ease of visualization with imaging, potential for intra-
operative customization, ability to complement various treatment
approaches including EBRT and surgical resection, and ease of
implantation with minimal training.
To further substantiate its assertions of a reduced rate of device-
related complications regarding the CivaSheet[supreg] device, the
applicant stated that its malleability is likely to be particularly
useful in treating irregularly shaped surgical cavities, such as those
created after breast lumpectomies or pelvic side wall resections.
According to the applicant, the CivaSheet[supreg] device also overcomes
several shortcomings observed even among those LDR mesh devices that
use the same isotope. According to the applicant, as the vicryl sutures
of traditional LDR mesh devices bend and curve around irregular
surfaces during placement, the spacing and orientation of the
radioactive seeds may be altered, leading to unpredictable variations
in isodose geometry. The applicant stated that, in contrast, the
polymer encapsulation of the Pd-103 Civa seeds before embedding within
the membrane allows the sources to maintain their orientation in space
and deliver radiation in accordance with the predetermined geometry.
According to the applicant, additionally, unlike older LDR mesh devices
that run the risk of source dispersion after mesh degradation, the
polymer encapsulation allows the seeds to maintain their placement even
as the membrane is absorbed over time. In this same case study,
Seneviratne, et al., stated that a 3-month post implantation imaging of
the CivaSheet[supreg] device demonstrated that the radioactive source
geometry had remained stable since the initial implantation.
The applicant also provided Howell, et al.'s case series results of
six patients diagnosed with recurrent retroperitoneal sarcoma who had
been treated with the use of the CivaSheet[supreg] device to support
its claims of reduced rate of toxicity and improved local control.
Similar to the Seneviratne, et al. case series report, Howell, et al.'s
case series' report also noted concerns regarding prior EBRT, costs
associated with intra-operative radiation therapy both for the patient
and the hospital, and concerns of at-risk surrounding anatomic
structures. Given these concerns, Howell, et al.'s case series report
also investigated LDR brachytherapy using CivaSheet[supreg]. Amongst
the six patients observed, five patients had diagnoses of recurrent
disease in the retroperitoneum or pelvic side wall; one patient had a
diagnosis of locally-advanced leiomyosarcoma with no previous
treatment. Regarding prior treatment, two patients had prior EBRT
[[Page 42217]]
at first diagnosis. Four patients received neoadjuvant EBRT prior to
surgery in addition to treatment involving CivaSheet[supreg]
brachytherapy. The LDR brachytherapy dose was determined using
radiobiological calculations of biological effective dose (BED) based
on the linear-quadratic model and EQD2 values. An LDR brachytherapy
dose of 20 to 60 Gy (36 Gy mean) was administered, corresponding to BED
values of 15 to 53 Gy (29 Gy mean) and EQD2 values of 12 to 43 Gy (23
Gy mean). Because the goal was to provide a conformal radiation boost
for an additional 15 to 20 Gy EQD2, the prescribed absorbed doses were
considered appropriate. All patients were followed by CT scan to assess
implant migration, observed radiation-related toxicities, and evidence
for local recurrence between 2.5 weeks and 3 months. No evidence of
implant migration or radiation-related toxicities was found. Based on
these results, the study concluded that LDR directional brachytherapy
delivered a targeted dose distribution that was successfully used to
treat retroperitoneal sarcoma, and that the utilized device is an
important option for the treatment of patients who have been diagnosed
with retroperitoneal sarcoma having close/positive surgical margins
and/or in combination with EBRT to optimize local control.
Two other case series, by Zhen, H. et al.,\64\ and Turian, et
al.,\65\ were submitted by the applicant to support the assertion of
reduced rate of device-related complications. Both case series assessed
the use of LDR brachytherapy using the CivaSheet[supreg] device in the
tumor bed given the same clinical challenges outlined in case series
observed and investigated in the Seneviratne, et al., and Howell, et
al. analyses in patients previously treated with chemoradiation
protocols and in patients who had been diagnosed with recurrent tumors
close to important functional tissues. Both case series assessed LDR
brachytherapy using the CivaSheet[supreg] device in the treatment of
different cancers like retroperitoneal sarcomas, pancreatic cancers,
and gastric singnet ring adenocarcinoma or other abdominal carcinomas.
Both case series followed the patients with CT imaging sometime between
2.5 weeks and 86 weeks. Both case series' study concluded that LDR
brachytherapy with the use of the CivaSheet[supreg] device was a
feasible alternative treatment modality for the cancers treated in each
case series. According to Zhen, et al., an advantage of using the
CivaSheet[supreg] device is that the CivaDot sheets can be easily cut
to any size and shape at the time of implant. The author further stated
that the CivaDot sheet is malleable and can conform to curved surfaces.
This device characteristic, according to the author, gives the
physician more flexibility to treat tumor beds with irregular shapes
and surface curvatures compared with electron beam cylindrical
applicators, thereby reducing the rate of device-related complications.
However, the analysis by Zhen, et al. also indicated that a limitation
in dosimetric evaluation using CT imaging is related to the inability
to identify the orientation of the individual CivaDot mainly because of
limited resolution and metal artifact caused by the gold plating.
CivaDot orientation is inferred from the fact that all dots are
embedded in a membrane that is sutured to the tumor bed and because the
post-implant CT scan shows the shape of the CivaSheet[supreg] seeds
being maintained. Also, Zhen, et al. noted that surgical clips could be
mistakenly identified as CivaDots. The analysis by Zhen, et al.
recommended that the use of surgical clips should be minimized.
---------------------------------------------------------------------------
\64\ Zhen, H., Turian, J.V., Sen, N., et al.,''Initial clinical
experience using a novel Pd-103 surface applicator for the treatment
of retroperitoneal and abdominal wall malignancies'', Advances in
Radiation Oncology, 2018, vol. 3, pp. 216-220.
\65\ Turian, J.V., ``Emerging Technologies for IORT:
Unidirectional Planar Brachytherapy Sources,'' Presented at AAPM
2017 Annual Meeting.
---------------------------------------------------------------------------
With regard to the reduced rate of toxicity, the applicant provided
a clinical case series by Howell, et al.\66\ to show that shielding
healthy tissues while irradiating the tumor bed after surgical
resection was achieved by providing a conformal radiotherapy, a novel
Pd-103 low-dose rate (LDR) brachytherapy device. Methods and materials
of the case include the following: the LDR brachytherapy device was
considered for patients who had been diagnosed with recurrent
retroperitoneal sarcoma, had received prior radiotherapy to the area,
and/or had anatomy concerning for high-risk margins predicted for
recurrence after resection. The case series included the clinical
conclusions for five patients who had been diagnosed with recurrent
disease in the retroperitoneum or pelvic side wall, one patient who had
been diagnosed with locally-advanced leiomyosarcoma with no previous
treatment, two patients who had prior EBRT at first diagnosis, and four
patients who received neoadjuvant EBRT prior to surgery in combination
with brachytherapy. The LDR brachytherapy dose was determined using
radiobiological calculations of biological effective dose (BED) based
on the linear-quadratic model and EQD2 values. An LDR brachytherapy
dose of 20 to 60 Gy (36 Gy mean) was administered, corresponding to BED
values of 15 to 53 Gy (29 Gy mean) and EQD2 values of 12 to 43 Gy (23
Gy mean). Because the goal was to provide a conformal radiation boost
for an additional 15 to 20 Gy EQD2, the prescribed absorbed doses were
considered appropriate. According to the applicant, results showed that
radiation was delivered to the at-risk tissues with minimal irradiation
of adjacent healthy structures or structures occupying the surgical
cavity after tumor resection. According to the applicant, clinical
outcomes indicated feasibility for surgical implantation and promising
results in comparison to current standards-of-care. The device did not
migrate over the course of follow-up and there were no observed
radiation-related toxicities.
---------------------------------------------------------------------------
\66\ Howell, K.J., Meyer, J.E.,Rivard, M.J. et al., ``Initial
Clinical Experiences with Directional LDR Brachytherapy for
Retroperitoneal Sarcomo, submitted to Int J of Rad Onc Biol Phys,
2018.
---------------------------------------------------------------------------
The Howell, et al. clinical case series concluded that LDR
directional brachytherapy delivered a targeted dose distribution that
was successfully used to treat retroperitoneal sarcoma and that the
utilized device is an important option for the treatment of patients
who have been diagnosed with retroperitoneal sarcoma having close/
positive surgical margins and/or in combination with EBRT to optimize
local control.
The applicant also cited three additional case series to support
their assertions of reduced rate of device-related complications and
reduced rate of radiation toxicity. The first is on file at CivaTech in
which they indicated that more than 60 patients, since 2015, had
CivaSheet[supreg] implanted with no reported device-related toxicity in
patients previously treated with maximal EBRT. No other details were
provided by the applicant. The second case series by Taunk, et al.\67\
assessed the use of CivaSheet[supreg] in three patients who had been
diagnosed with colorectal adenocarcinoma who had undergone prior
induction chemotherapy and neoadjuvant chemoradiation.
CivaSheet[supreg] was placed in the tumor bed and patients were
followed with CT imaging to assess implant migration, 30- and 90-day
radiation toxicity and local recurrence. One patient was deemed not a
feasible candidate because the
[[Page 42218]]
CivaSheet[supreg] could not be uniformly opposed to the sacrum due to
the degree of concavity. The other two patients underwent successful
CivaSheet[supreg] implantation, and at 30 days showed stability of the
device and no apparent toxicity. In the final additional case series
from Rivard, et al.,\68\ a single patient who had been diagnosed with
pelvic side wall cancer (type not indicated) was implanted with
CivaSheet[supreg] and the CivaSheet[supreg] dose distributions were
compared to those of conventional low-dose rate, low-energy photon-
emitting brachytherapy seeds (that is, palladium 103, Iodine-125, and
Cesium-131). According to the applicant, results suggest gold-shielding
CivaDots attenuate radiation for directional brachytherapy and
CivaSheet[supreg] provides a therapeutic target dose, while
substantially minimizing critical structure doses. In this specific
case study, the applicant stated that the use of CivaSheet[supreg]
showed decreased radiation to adjacent organs, such as the bowel and
the bladder.
---------------------------------------------------------------------------
\67\ Taunk, N.K., Cohen, G., Taggar, A.S., et al., ``Preliminary
Clinical Experience from a Phase I Feasibility Study of a Novel
Permanent Unidirectional Intraoperative Brachytherapy Device,'' ABS
2017 Annual Meeting.
\68\ Rivard, M.J., ``Low-energy brachytherapy sources for pelvic
sidewall treatment,'' Presented at ABS 2016 Annual Meeting.
---------------------------------------------------------------------------
With regard to decreasing the number of future hospital visits, the
applicant provided a poster presentation presented at the American
Brachytherapy Society 2017 Annual Meeting. The purpose of this study
was to investigate the feasibility of using intra-operative directional
brachytherapy for the treatment of squamous cell carcinoma of the
oropharynx. The study included a single patient who had received a
prior course of external beam radiation therapy of 70 Gy in 2015. Due
to positive margins near the carotid after the resection, and the
increased risk of additional external radiation, brachytherapy was
considered as a treatment option. CivaSheet[supreg] was used for the
implant. The Pd-103 sources were spaced 8 mm apart on a rectangular
grid. Unidirectional dose was achieved by a 0.05 mm thick gold disk-
shaped foil on the reverse side of each source. A dose of 120 Gy at 5
mm depth was prescribed. After the resection, the entire polymer sheet
was placed on the treatment area to determine the needed dimensions.
The CivaSheet[supreg] device was then removed and cut to size with
scissors leaving 26 Pd-103 sources remaining. The surgeon used 3.0
vicryl sutures for attachment in a concave shape over the carotid
artery, where there was a positive margin. The gold foil was positioned
to protect the neck flap and closure. The surgical team completed the
procedure and the patient recovered without any complications.
Results of the study showed that the sources remained in position
in a concave array pattern. Due to the dose fall-off of Pd-103, the
calculated dose to critical structures was minimized. Because the
surgical implant of the CivaDot sheet proceeded as expected with no
complications and the post-implant plan indicated that the
CivaSheet[supreg] remained in position with the radioactive side
contacting the treatment area, the applicant asserts that future
hospital visits will be decreased because the patient will not return
for EBRT.
With regard to decreases in the rate of subsequent therapeutic
interventions, the applicant stated that the standard-of-care for most
patients undergoing surgery is typically preceded or followed by a form
of external beam radiation therapy. A typical course of intensity
modulated radiation therapy (IMRT) is 25 to 30 fractions (separate
treatments) delivered over the course of 3 to 6 weeks. The applicant
stated that, for some patients, CivaSheet[supreg] will be the only form
of radiation therapy they will receive. CivaSheet[supreg] is implanted
in one procedure and radiation is locally delivered over the course of
several weeks, while the sources provide a continuous dose and later
decay. The device is not removed and no additional follow-up visits are
required for the patient to receive therapeutic intervention. According
to the applicant, use of CivaSheet[supreg] can avoid the time and
expense of dozens of radiation therapy visits over the course of
several weeks as compared to EBRT. The applicant further stated that
the published clinical data provided with its application \69\ shows
that the use of CivaSheet[supreg] is an effective and safe
combinational treatment to external beam radiation therapy. According
to the applicant, radiation oncologists can use CivaSheet[supreg] to
increase the dose of radiation that can be delivered to a tumor margin,
without increasing toxicity and that this may reduce the odds that a
patient experiences cancer recurrence.70 71 72 The applicant
also asserted that the targeted radiation approach has demonstrated no
toxic effects for patients. The applicant further stated that other
forms of radiation have a known rate of complications and toxicity that
result in the need for additional therapies and interventions (for
example, topical creams for skin reddening, and medicine for pain). The
applicant indicated that there has been no change in concomitant
medications prescribed because of the use of the CivaSheet[supreg]
implant either on or off trial. The applicant did not link these claims
to any of the studies provided with its application. In addition, the
applicant asserts that, of the case studies they provided, there have
been no instances of therapeutic interventions to resolve an issue that
was induced by the use of the CivaSheet[supreg] device to deliver
radiation.73 74 75
---------------------------------------------------------------------------
\69\ Taunk, N.K., Cohen, G., Taggar, A.S., et al., ``Preliminary
Clinical Experience from a Phase I Feasibility Study of a Novel
Permanent Unidirectional Intraoperative Brachytherapy Device,'' ABS
2017 Annual Meeting.
\70\ Rivard, Mark J., ``Low energy brachytherapy sources for
pelvic sidewall treatment,'' abstract presented at the ABS 2016
Annual Meeting.
\71\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields,
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
\72\ Howell, K.J., Meyer, J.E., Rivard, M.J., et al., ``Initial
Clinical Experience with Directional LDR Brachytherapy for
Retroperitoneal Sarcoma,'' submitted Int J of Rad Onc Biol Phys,
2018.
\73\ Ibid.
\74\ Rivard, Mark J., ``Low energy brachytherapy sources for
pelvic sidewall treatment,'' abstract presented at the ABS 2016
Annual Meeting.
\75\ Yoo, S.S., Todor, D.A., Myers, J.M., Kaplan, B.J., Fields,
E.C., ``Widening the therapeutic window using an implantable, uni-
directional LDR brachytherapy sheet as a boost in pancreatic
cancer,'' ASTRO 2018 Annual Meeting San Antonio, TX.
---------------------------------------------------------------------------
With regard to improvement in back pain and appetite (compared to
baseline) in pancreatic cancer patients, the applicant asserted that
patients answered standardized, international questionnaire EORTC QLQ-
C30 and PANC26 and that these results are on file at CivaTech. The
applicant provided the baseline, 70 days post-operative and 98 days
postoperative patient responses to ``Have you ever had back pain?''
Baseline response: 1.5; 70 days post-operative response: 1.0 and 98
days post-operative response: 1.0. The applicant also provided
baseline, 70 days post-operative and 98 days post-operative patient
responses to ``Were you restricted in the amounts of food you could eat
as a result of your disease or treatment?'' Baseline response: 2.5; 70
days postoperative response: 1.0 and 98 days postoperative response:
1.0. (Response Values: 1.0 = ``Not at all''; 2.0 = ``A little''; 3.0 =
``Quite a bit''; 4.0 = ``Very much'').
With regard to improved local control for pancreatic cancer
patients, the applicant provided the results of a dosimetric study
entitled, ``Widening the Therapeutic Window Using an Implantable, Uni-
directional LDR Brachytherapy Sheet as a Boost in Pancreatic Cancer
Case Series,'' a poster
[[Page 42219]]
presented at the ASTRO 2018 Annual Meeting. According to background
information in the applicant's poster, pancreatic patients often
undergo neoadjuvant chemotherapy and chemoradiation in preparation for
surgical resection of the tumor. In addition, oftentimes after
neoadjuvant therapy there are inflammatory changes that, unfortunately,
hinder pre-operative imaging and create the potential for unreliable
determination of tumor resection. Accompanying the potentially
unreliable determination of tumor resectability are patient concerns
when positive retroperitoneal margins have close proximity to major
vasculature. The applicant noted that additional EBRT boost, initiated
post operatively, is an option, but difficult given bowel constraints
and the difficulty in identifying the area at highest risk. Given these
constraints associated with treating pancreatic cancers, the purpose of
this study was to demonstrate the ability of the LDR brachytherapy
CivaSheet[supreg] device to deliver a focal high-dose boost, targeted
to the area at highest risk in patients who received neoadjuvant
chemoradiation. This dosimetric case series consisted of four patients
who had been diagnosed with borderline resectable pancreatic cancer who
received neoadjuvant FOLFIRINOX followed by gemcitabine-
based chemoradiotherapy (chemoRT) to 50.4 Gy in 28 fractions with dose
prescribed to the gross tumor plus a 1 cm margin. According to the
poster provided by the applicant, after neoadjuvant therapy, the
multidisciplinary team was concerned for close or positive margin
resection. Using the CivaSheet[supreg] device, a 38 Gy EQD2 dose to 5
mm depth was implanted in these patients and a total dose of 88.4 Gy
was delivered to the targeted tissue. Post-operatively, patients had a
CT scan to identify the tumor bed contour, as well as the contour of
surrounding at-risk organs; the small bowel (SB) was contoured as the
bowel bag and included the entire peritoneal cavity. Following the CT
scan, brachytherapy plans, as well as EBRT boost plans, were created
for each patient. A dose-volume histogram (DVH) from initial 3D
treatment plans for all patients showed the SB volume receiving 45 Gy
(V45) was a median of 78.2 cc (range 61.7-107.1 ccs) and maximum bowel
doses were a median of 53.2 Gy, range 53.1-53.6 Gy. According to the
applicant, the V45 for SB should be less than 195 cc, with a maximum of
less than or equal to 58 Gy to prevent SB obstruction, fistula and
perforation. According to the applicant, with the CivaSheet[supreg]
device, the boost dose was dramatically increased while SB exposure was
marginal at about 1/10th of the prescription dose. For the target, the
CivaSheet[supreg] delivered the prescription dose to 5 mm depth with a
large inhomogeneous dose throughout the tumor bed with the minimum dose
of 38 Gy. Dosimetric comparison of a CivaSheet[supreg] tumor bed boost
and a Stereotactic Body Radiation Therapy (SBRT) tumor bed boost to the
SB was 9.6 Gy compared to 24 Gy for external beam plan. According to
the applicant, the conclusions from this case series are that applying
a brachytherapy uni-directional source to the area at highest risk can
serve to improve the therapeutic index by improving the local control
and minimizing toxicities in pancreatic cancer patients after
neoadjuvant therapy.
With regard to whether CivaSheet[supreg] represents a substantial
clinical improvement relative to other brachytherapy technologies
currently available, in the proposed rule we stated that we were
concerned that all of the supporting data appear to be feasibility
studies substantiating the use of the CivaSheet[supreg] in different
cancers and difficult anatomic locations. We also we stated that we
were concerned that there do not appear to be any comparisons to other
current treatments, nor any long-term follow-up with comparisons to
currently available therapies. We invited public comments on whether
CivaSheet[supreg] meets the substantial clinical improvement criterion.
Comment: The applicant submitted public comments regarding CMS'
concerns. With regard to our concern that the supporting data provided
by the applicant appear to be feasibility studies, the applicant stated
that the feasibility studies substantiate the experience with such
uses. The applicant further stated that it believes that CMS'
characterization fails to reflect other aspects of these studies as
they are not limited to investigating whether intraoperative radiation
therapy can be delivered with the CivaSheet[supreg], but also show
positive outcomes, including providing information following patients
for periods that range up to 24 or even 35 months. The applicant
further stated that in the case of radiation therapy, the likely
effects in the body of specific doses on target tumors and on healthy
tissues are well known and can be quantified with well-developed
treatment planning systems. The applicant stated that the major
research questions at this stage of the product's development are not
focused on either the safety or efficacy of the treatment (since the
product is already cleared by the FDA) but on whether physicians in
clinical practice can position it appropriately in the surgical field
and on the effects of the localized, unidirectional delivery of
intraoperatively applied radiation that CivaSheet[supreg] provides on
outcomes of interest, including indications of toxicity and recurrence.
With regard to CMS' concern that there do not appear to be any
comparisons to other current treatments, or any long-term follow-up
with comparison to currently available therapies, the applicant stated
that it believes that the results detailed in the following categories
for CivaSheet[supreg] patients compare favorably with the results
presented in the clinical literature regarding the toxicity rates for
EBRT and with historical recurrence rates for patients receiving common
adjunctive therapies:
Reduced radiation toxicity--None of the patients in the
associated clinical literature whose treatments have included
CivaSheet[supreg] have suffered nausea, vomiting, diarrhea,
constipation or fatigue, all side effects that are common with other
forms of radiation therapy, due to the CivaSheet[supreg] treatment. The
applicant stated that the company keeps records of all patients
treated, and to date has not received any reports or complaints of
acute or chronic radiation toxicity attributable to the
CivaSheet[supreg] in any of the 78 patients who have received the
therapy. The applicant believes this record compares favorably with the
rates for toxicity for EBRT.
Fewer therapeutic interventions and hospitalizations--The
applicant stated that for the same group of patients, the local
recurrence rate for disease in the treatment field of the device for
patients treated with CivaSheet[supreg] is none, regardless of site of
the cancer treated. The applicant stated that comparison with
information drawn from the clinical literature regarding the local
recurrence rate by site that would be expected if the patient were
treated by the existing standards of care following surgery, including
the common adjunctive procedures, external beam radiation and
chemotherapy, reveals the extent of local recurrence is more favorable
for CivaSheet[supreg] patients. The applicant believes that because of
the absence of local recurrence in the treatment fields, patients have
not required additional procedures following the primary cancer
surgery, on either outpatient or inpatient basis, related to treating
disease recurrence in the area treated by CivaSheet[supreg]. The
applicant further stated that in addition, patients have not
[[Page 42220]]
required further interventions or hospitalizations to treat radiation
related side effects, as none have been recorded.
The applicant also provided information, by indication, to studies
involving CivaSheet[supreg] and on which they have information on file.
These include the literature cited in their FY 2020 new technology add-
on payment application and the ongoing clinical trials. The applicant
also provided an appendix summarizing key information for comparison
available in the clinical literature. For each cancer type treated with
CivaSheet, the applicant displayed the toxicity rates for EBRT, the
most common and widely available alternative, with references cited.
These range from 1.1 percent (gastrointestinal following prostatectomy)
to as high as 80 percent for retroperitoneal sarcoma. According to the
applicant, the comparative rates for CivaSheet treatments are zero in
the published literature presented to CMS, and the company has received
no reports of local recurrence or toxicity for patients treated outside
of a clinical trial setting. The appendix also showed similar
information for local recurrence rates. According to the applicant, in
the literature, these range from 6 percent for breast cancer to as high
as 60 percent for gynecogical cancers.
The applicant provided a second appendix, Appendix 2, to provide
links of the claims noted in the studies provided with its application.
Appendix 2 presented information, by indication, to studies involving
CivaSheet[supreg] and on which the applicant has information on file to
include the literature cited in its application and the ongoing
clinical trials.
The applicant believes that the data it provided demonstrates a
substantial clinical improvement for the treatment of Medicare patients
with cancer.
We also received a public comment stating that CivaSheet provides a
targeted and high enough dose to the surgical margin to control local
disease without inducing side effect and that CivaSheet[supreg] has
benefits for pancreatic, sarcoma and colorectal patients. The commenter
did not provide additional data in support of these statements.
Response: We appreciate the public comments we received regarding
whether the CivaSheet meets the substantial clinical improvement
criterion, including the comments submitted by the applicant. While the
applicant provided additional references and a summary of the clinical
trials underway, we believe the data remains limited as most of the
clinical trials will not complete enrollment until 2020. Further, the
majority of the evidence submitted to date still focuses on limited
numbers of patients who participated in feasibility studies with no
comparator arms nor clinical outcome results. Finally, the single
clinical trial that has been completed is not anticipated to have data
available until third quarter 2019. For these reasons, we are unable to
determine that the CivaSheet[supreg] represents a substantial clinical
improvement over existing therapies. Therefore, we are not approving
new technology add-on payments for the CivaSheet[supreg] for FY 2020.
d. EluviaTM Drug-Eluting Vascular Stent System
Boston Scientific Corporation submitted an application for new
technology add-on payments for the EluviaTM Drug-Eluting
Vascular Stent System for FY 2020. EluviaTM, a drug-eluting
stent for the treatment of lesions in the femoropopliteal arteries,
received FDA premarket approval (PMA) on September 18, 2018.
According to the applicant, the EluviaTM system is a
sustained-release drug-eluting stent indicated for improving luminal
diameter in the treatment of peripheral artery disease (PAD) with
symptomatic de novo or restenotic lesions in the native superficial
femoral artery (SFA) and or proximal popliteal artery (PPA) with
reference vessel diameters (RVD) ranging from 4.0 to 6.0 mm and total
lesion lengths up to 190 mm.
The applicant stated that PAD is a circulatory condition in which
narrowed arteries reduce blood flow to the limbs, usually in the legs.
Symptoms of PAD may include lower extremity pain due to varying degrees
of ischemia, claudication which is characterized by pain induced by
exercise and relieved with rest. According to the applicant, risk
factors for PAD include individuals who are age 70 years old and older;
individuals who are between the ages of 50 years old and 69 years old
with a history of smoking or diabetes; individuals who are between the
ages of 40 years old and 49 years old with diabetes and at least one
other risk factor for atherosclerosis; leg symptoms suggestive of
claudication with exertion, or ischemic pain at rest; abnormal lower
extremity pulse examination; known atherosclerosis at other sites (for
example, coronary, carotid, renal artery disease); smoking;
hypertension, hyperlipidemia, and homocysteinemia.\76\ PAD is primarily
caused by atherosclerosis--the buildup of fatty plaque in the arteries.
PAD can occur in any blood vessel, but it is more common in the legs
than the arms. Approximately 8.5 million people in the United States
have PAD, including 12 to 20 percent of individuals who are age 60
years old and older.\77\
---------------------------------------------------------------------------
\76\ Neschis, David G. & MD, Golden, M., ``Clinical features and
diagnosis of lower extremity peripheral artery disease.'' Available
at: https://www.uptodate.com/contents/clinical-features-and-diagnosis-of-lower-extremity-peripheral-artery-disease.
\77\ Centers for Disease Control and Prevention, ``Peripheral
Arterial Disease (PAD) Fact Sheet,'' 2018, Retrieved from https://www.cdc.gov/DHDSP/data_statistics/fact_sheets/fs_PAD.htm.
---------------------------------------------------------------------------
A diagnosis of PAD is established with the measurement of an ankle-
brachial index (ABI) less than or equal to 0.9. The ABI is a comparison
of the resting systolic blood pressure at the ankle to the higher
systolic brachial pressure. Duplex ultrasonography is commonly used, in
conjunction with the ABI, to identify the location and severity of
arterial obstruction.\78\
---------------------------------------------------------------------------
\78\ Berger, J. & Davies, M, ``Overview of lower extremity
peripheral artery disease,'' Retrieved October 29, 2018, from
https://www.uptodate.com/contents/overview-of-lower-extremity-peripheral-artery-disease.
---------------------------------------------------------------------------
Management of the disease is aimed at improving symptoms, improving
functional capacity, and preventing amputations and death. Management
of patients who have been diagnosed with lower extremity PAD may
include medical therapies to reduce the risk for future cardiovascular
events related to atherosclerosis, such as myocardial infarction,
stroke, and peripheral arterial thrombosis. Such therapies may include
antiplatelet therapy, smoking cessation, lipid-lowering therapy, and
treatment of diabetes and hypertension. For patients with significant
or disabling symptoms unresponsive to lifestyle adjustment and
pharmacologic therapy, intervention (percutaneous, surgical) may be
needed. Surgical intervention includes angioplasty, a procedure in
which a balloon-tip catheter is inserted into the artery and inflated
to dilate the narrowed artery lumen. The balloon is then deflated and
removed with the catheter. For patients with limb-threatening ischemia
(for example, pain while at rest and or ulceration), revascularization
is a priority to reestablish arterial blood flow. According to the
applicant, treatment of the SFA is problematic due to multiple issues
including high rate of restenosis and significant forces of
compression.
The applicant describes EluviaTM Drug-Eluting Vascular
Stent System as a sustained-release drug-eluting self-expanding, nickel
titanium alloy (nitinol) mesh stent used to reestablish blood flow to
stenotic arteries.
[[Page 42221]]
According to the applicant, the EluviaTM stent is coated
with the drug paclitaxel, which helps prevent the artery from
restenosis. The applicant stated that EluviaTM's polymer-
based drug delivery system is uniquely designed to sustain the release
of paclitaxel beyond 1 year to match the restenotic process in the SFA.
According to the applicant, the EluviaTM Stent System is
comprised of: (1) The implantable endoprosthesis; and (2) the stent
delivery system (SDS). On both the proximal and distal ends of the
stent, radiopaque markers made of tantalum increase visibility of the
stent to aid in placement. The tri-axial designed delivery system
consists of an outer shaft to stabilize the stent delivery system, a
middle shaft to protect and constrain the stent, and an inner shaft to
provide a guide wire lumen. The delivery system is compatible with
0.035 in (0.89 mm) guide wires. The EluviaTM stent is
available in a variety of diameters and lengths. The delivery system is
offered in 2 working lengths (75 cm and 130 cm).
As discussed previously, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would, therefore, not be
considered ``new'' for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, EluviaTM uses a unique mechanism
of action which has not been utilized by previously available medical
devices for treating stenotic lesions in the SFA. The applicant
asserted that the EluviaTM Drug-Eluting Vascular Stent
System is a device/drug combination product composed of an implantable
stent, combined with a polybutyl methacrylate (PBMA) primer layer, a
paclitaxel/polyvinylidene difluoride (PVDF) polymer, and a stent
delivery system. According to the applicant, the polymer carries and
protects the drug before and during the procedure and ensures that the
drug is released into the tissue in a controlled, sustained manner to
prevent restenosis of the vessel. According to the applicant, the
EluviaTM system continues to deliver paclitaxel to combat
restenosis for 12 to 15 months, which involves a novel and distinct
mechanism of action different than other drug-coated balloons or drug-
coated stents that only deliver the drug to the artery for about 2
months. According to the applicant, the PBMA polymer is clinically
proven to permit the sustained release of paclitaxel to achieve a
therapeutic outcome. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19313), we noted that, the applicant submitted a request for
consideration for approval at the March 2019 ICD-10 Coordination and
Maintenance Committee Meeting for a unique ICD-10-PCS procedure code to
describe procedures which use the EluviaTM stent system.
Approval was granted for the following procedure codes effective
October 1, 2019:
[[Page 42222]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.138
[[Page 42223]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.139
[[Page 42224]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.140
[[Page 42225]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.244
With regard to the second criterion, whether a technology is
assigned to the same or a different MS-DRG, the applicant asserted that
patients who may be eligible for treatment using the
EluviaTM system include hospitalized patients who have been
diagnosed with PAD. According to the applicant, these potential cases
may map to multiple MS-DRGs, the most likely being MS-DRGs 252 (Other
Vascular Procedures With MCC), 253 (Other Vascular Procedures With CC)
and 254 (Other Vascular Procedures Without CC/MCC). In the proposed
rule, we stated that potential cases representing patients who may be
eligible for treatment using the EluviaTM system would be
assigned to the same MS-DRGs as cases representing hospitalized
patients who have been diagnosed with PAD and treated with currently
available technologies.
With regard to the third criterion, 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 when compared to an
existing technology, according to the applicant, clinical conditions
that may require use of the EluviaTM stent system include
treatment of the same patient population as cases identified with a
variety of diagnosis codes from the ICD-10-CM category I70
(Atherosclerosis) as listed in this table:
[[Page 42226]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.141
[[Page 42227]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.142
The applicant asserted that the Eluvia\TM\ stent is not
substantially similar to any existing technology because it uses a
unique mechanism of action, when compared to existing technologies to
achieve a therapeutic outcome and, therefore, meets the newness
criterion.
In the proposed rule, we stated that we were concerned as to
whether the polymer drug carrier system that the Eluvia\TM\ system uses
is, in fact, a new mechanism of action as compared to stents that
contain paclitaxel without the carrier polymer. We stated that we were
concerned that the Eluvia\TM\ device may have a mechanism of action
similar to the paclitaxel-coated Zilver[supreg] Drug-Eluting Peripheral
Stent, which is indicated for improving luminal diameter for the
treatment of de novo or restenotic symptomatic lesions in native
vascular disease of the above-the-knee femoropopliteal arteries having
reference vessel diameter from 4 mm to 7 mm and total lesion lengths up
to 300 mm per patient. We invited public comments on whether the
Eluvia\TM\ system is substantially similar to existing technology and
whether it meets the newness criterion, including with respect to the
concerns we raised.
Comment: The applicant commented that the Eluvia\TM\ device's
mechanism of action is different from that of the paclitaxel-coated
Zilver PTX (Zilver[supreg] Drug-Eluting Peripheral Stent) because the
Eluvia\TM\ device's polymer matrix layer allows for targeted,
localized, sustained, low-dose amorphous paclitaxel delivery to
peripheral artery lesions over the course of the peripheral restenotic
cascade with minimal systemic distribution or particulate loss. The
applicant provided a comparison of the polymer matrix stent vs. the
paclitaxel-coated stent. According to the applicant, the polymer matrix
stent is encased in a polymer matrix, the paclitaxel-coated stent is
not. The dose density of paclitaxel for the polymer matrix vs the
paclitaxel coated stent is 0.167ug/mm\2\ vs 3ug/mm\2\. Paclitaxel is
delivered to the lesion via a diffusion gradient with the polymer
matrix stent whereas the paclitaxel-coated stent has no diffusion
gradient. Paclitaxel is released directly to the target lesion with the
polymer matrix stent. Paclitaxel release is non-specific to the target
lesion with paclitaxel-coated stent. Paclitaxel is released over
approximately 12-15 months with the polymer matrix stent. Paclitaxel
release is complete at two months with paclitaxel coated stents.
Response: We appreciate the applicant's comments and comparison of
the polymer matrix Eluvia\TM\ vs the paclitaxel-coated Zilver PTX with
regard to the mechanism of action. After consideration of the
applicant's comments, we believe that the Eluvia\TM\ device uses a
unique mechanism of action to achieve a therapeutic outcome when
compared to existing technologies such as the paclitaxel-coated stent.
Therefore the Eluvia\TM\ device meets the newness criterion.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion.
As noted in the proposed rule and earlier, the applicant asserted
that cases involving the treatment of PAD, involving treatment of
lesions in the femoropopliteal arteries typically, map to MS-DRGs 252,
253, and 254. The applicant searched the FY 2017 MedPAR data file in
MS-DRGs 252, 253 and 254 for cases reporting an ICD-10-PCS procedure
code for the treatment of Peripheral BMS or DES, which the applicant
believed would represent cases potentially eligible for the use of the
EluviaTM stent system. The applicant identified 109,747
claims for cases representing patients who may be eligible for
treatment involving the EluviaTM stent system. The applicant
applied the following trims: Claims paid under GHO (that is, Medicare
beneficiaries enrolled in a Medicare Advantage managed care plan),
claims for CAHs, IPFs, IRFs, LTCHs, Children's, Cancer, and RHNCI
hospitals excluding Maryland acute-care hospitals, claims with total
charges or lengths-of-stay of less than or equal to zero, claims with
total charge differing from sum of charges of the 19 cost groups by
greater than $30, providers that do not have charges greater than $0
for at least 14 of the 19 cost groups, claims with total charges for
the MS-DRG +/- 3 standard deviations from the log mean total charges or
charges per day, ``IME only'' claims submitted by a teaching hospital
on behalf of a beneficiary enrolled in a Medicare Advantage plan,
claims with claim types ``61 to 64'' (that is, claim types that refer
to encounter claims, Medicare Advantage IME, and HMO no-pay
[[Page 42228]]
claims), and claims for which the applicant was unable to calculate
standardized charges (because the Provider Number associated with the
claim does not appear in the FY 2017 impact file). This resulted in
73,861 claims across MS-DRGs 252, 253, and 254.
Using the 73,861 claims, the applicant determined an average case-
weighted unstandardized charge per case of $96,232. The applicant
removed all device-related charges and then standardized the charges
for each case and inflated each case's charges by applying the FY 2019
IPPS/LTCH PPS final rule outlier charge inflation factor of 1.08864 (83
FR 41722). (In the proposed rule, we noted that the 2-year charge
inflation factor was revised in the FY 2019 IPPS/LTCH PPS final rule
correction notice to 1.08986 (83 FR 49844). We further noted that even
when using the corrected final rule values to inflate the charges, the
average case-weighted standardized charge per case for each scenario
exceeded the average case-weighted threshold amount.) The applicant
then added charges for EluviaTM by taking the cost of the
device and converting it to a charge by dividing the costs by the
national average CCR of 0.309 for devices from the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41273). The applicant calculated an average case-
weighted standardized charge per case of $86,950 using the percent
distribution of MS-DRGs as case-weights. Based on this analysis, the
applicant determined that the final inflated average case-weighted
standardized charge per case for EluviaTM exceeded the
average case-weighted threshold of $81,518 by $5,432.
The applicant conducted additional analyses to demonstrate it meets
the cost criterion. In these analyses, the applicant repeated the cost
analysis, as previously described, with one analysis of cases reporting
the ICD-10-PCS procedures codes for Peripheral DES procedures and the
other analysis with cases reporting the ICD-10-PCS procedures codes for
Peripheral BMS procedures. In each of these additional sensitivity
analyses, the final inflated average case-weighted standardized charge
per case exceeded the average case-weighted cost threshold amount. We
invited public comments on whether EluviaTM meets the cost
criterion.
Comment: The applicant submitted public comments reiterating the
various cost analyses results. The applicant maintained that the
technology meets the cost criterion.
Response: We appreciate the applicant's comments concerning the
cost criterion. After consideration of the public comments we received,
we agree that the EluviaTM device meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that the EluviaTM Drug-Eluting Vascular
Stent System represents a substantial clinical improvement over
existing technologies because it achieves superior primary patency;
reduces the rate of subsequent therapeutic interventions; decreases the
number of future hospitalizations or physician visits; reduces hospital
readmission rates; reduces the rate of device-related complications;
and achieves similar functional outcomes and EQ-5D index values while
associated with half the rate of target lesion revascularizations
(TLRs).
The applicant submitted the results of the MAJESTIC study, a
single-arm, first-in-human study of EluviaTM. The MAJESTIC
\79\ study is a prospective, multi-center, single-arm, open-label
study. According to the applicant, the MAJESTIC study demonstrated
long-term treatment durability among patients whose femoropopliteal
arteries were treated with the EluviaTM stent. The applicant
asserts that the MAJESTIC study demonstrates the sustained impact of
the EluviaTM stent on primary patency. The MAJESTIC study
enrolled 57 patients who had been diagnosed with symptomatic lower limb
ischemia and lesions in the superficial femoral artery or proximal
popliteal artery. Efficacy measures at 2 years included primary
patency, defined as duplex ultrasound peak systolic velocity ratio of
less than 2.5 and the absence of target lesion revascularization (TLR)
or bypass. Safety monitoring through 3 years included adverse events
and TLR. The 24-month clinic visit was completed by 53 patients; 52 had
Doppler ultrasound evaluable by the core laboratory, and 48 patients
had radiographs taken for stent fracture analysis. The 3-year follow-up
was completed by 54 patients. At 2 years, 90.6 percent (48/53) of the
patients had improved by 1 or more Rutherford categories as compared
with the pre-procedure level without the need for TLR (when those with
TLR were included, 96.2 percent sustained improvement); only 1 patient
exhibited a worsening in level, 66.0 percent (35/53) of the patients
exhibited no symptoms (category 0) and 24.5 percent (13/53) had mild
claudication (category 1) at the 24-month visit. Mean ABI improved from
0.73 0.22 at baseline to 1.02 0.20 at 12
months and 0.93 0.26 at 24 months. At 24 months, 79.2
percent (38/48) of the patients had an ABI increase of at least 0.1
compared with baseline or had reached an ABI of at least 0.9. The
applicant also noted that at 12 months the Kaplan-Meier estimate of
primary patency was 96.4 percent.
---------------------------------------------------------------------------
\79\ M[uuml]ller-H[uuml]lsbeck, S., et al., ``Long-Term Results
from the MAJESTIC Trial of the Eluvia Paclitaxel-Eluting Stent for
Femoropopliteal Treatment: 3-Year Follow-up,'' Cardiovasc Intervent
Radiol, December 2017, vol. 40(12), pp. 1832-1838.
---------------------------------------------------------------------------
With regard to the EluviaTM stent achieving superior
primary patency, the applicant submitted the results of the IMPERIAL
\80\ study in which the EluviaTM stent is compared, head-to-
head, to the Zilver[supreg] PTX Drug-Eluting stent. The IMPERIAL study
is a global, multi-center, randomized controlled trial consisting of
465 subjects. Eligible patients were aged 18 years old or older and had
a diagnosis of symptomatic lower-limb ischaemia, defined as Rutherford
Category 2, 3, or 4 and stenotic, restenotic (treated with a drug-
coated balloon greater than 12 months before the study or standard
percutaneous transluminal angioplasty only), or occlusive lesions in
the native superficial femoral artery or proximal popliteal artery,
with at least 1 infrapopliteal vessel patent to the ankle or foot.
Patients had to have stenosis of 70 percent or more (via angiographic
assessment), vessel diameter between 4 mm and 6 mm, and total lesion
length between 30 mm and 140 mm.
---------------------------------------------------------------------------
\80\ Gray, W.A., et al., ``A polymer-coated, paclitaxel-eluting
stent (Eluvia) versus a polymer-free, paclitaxel-coated stent
(Zilver PTX) for endovascular femoropopliteal intervention
(IMPERIAL): A randomised, non-inferiority trial,'' Lancet, September
24, 2018.
---------------------------------------------------------------------------
Patients who had previously stented target lesion/vessels treated
with drug-coated balloon less than 12 months prior to randomization/
enrollment and patients who had undergone prior surgery of the SFA/PPA
in the target limb to treat atherosclerotic disease were excluded from
the study. Two concurrent single-group (EluviaTM only) sub-
studies were done: A non-blinded, non-randomized pharmacokinetic sub-
study and a non-blinded, non-randomized study of patients who had been
diagnosed with long lesions (greater than 140 mm in diameter). The
IMPERIAL study is a prospective, multi-center, single-blinded
randomized, controlled (RCT) non-inferiority trial. Patients were
randomized (2:1) to implantation of either a paclitaxel-eluting polymer
stent (EluviaTM) or a paclitaxel-coated stent
(Zilver[supreg] PTX) after the treating physician had successfully
crossed the target lesion
[[Page 42229]]
with a guide wire. The primary endpoints of the study are Major Adverse
Events defined as all causes of death through 1 month, Target Limb
Major Amputation through 12 months and/or Target Lesion
Revascularization (TLR) through 12 months and primary vessel patency at
12 months post-procedure. Secondary endpoints included the Rutherford
categorization, Walking Impairment Questionnaire, and EQ-5D assessments
at 1 month and 6 months post-procedure. Patient demographic and
characteristics were balanced between EluviaTM stent and
Zilver[supreg] PTX stent groups.
The applicant noted that lesion characteristics for the patients in
the EluviaTM stent versus the Zilver[supreg] PTX stent arms
were comparable. Clinical follow-up visits related to the study were
scheduled for 1 month, 6 months, and 12 months after the procedure,
with follow-up planned to continue through 5 years, including clinical
visits at 24 months and 5 years and clinical or telephone follow-up at
3 and 4 years.
The applicant asserted that in the IMPERIAL study the
EluviaTM stent demonstrated superior primary patency over
the Zilver[supreg] PTX stent, 86.8 percent versus 77.5 percent,
respectively (p=0.0144). The non-inferiority primary efficacy endpoint
was also met. The applicant asserts that the SFA presents unique
challenges with respect to maintaining long-term patency. There are
distinct pathological differences between the SFA and coronary
arteries. The SFA tends to have higher levels of calcification and
chronic total occlusions when compared to coronary arteries. Following
an intervention within the SFA, the SFA produces a healing response
which often results in restenosis or re-narrowing of the arterial
lumen. This cascade of events leading to restenosis starts with
inflammation, followed by smooth muscle cell proliferation and matrix
formation.\81\ Because of the unique mechanical forces in the SFA, this
restenotic process of the SFA can continue well beyond 300 days from
the initial intervention. Results from the IMPERIAL study showed that
primary patency at 12 months, by Kaplan-Meier estimate, was
significantly greater for EluviaTM than for Zilver[supreg]
PTX, 88.5 percent and 79.5 percent, respectively (p=0.0119). According
to the applicant, these results are consistent with the 96.4 percent
primary patency rate at 12 months in the MAJESTIC study.
---------------------------------------------------------------------------
\81\ Forrester, J.S., Fishbein, M., Helfant, R., Fagin, J., ``A
paradigm for restenosis based on cell biology: Clues for the
development of new preventive therapies,'' J Am Coll Cardiol, March
1, 1991, vol. 17(3), pp. 758-69.
---------------------------------------------------------------------------
The IMPERIAL study included two concurrent single-group
(EluviaTM only) sub-studies: A non-blinded, non-randomized
pharmacokinetic sub-study and a non-blinded, non-randomized study of
patients with long lesions (greater than 140 mm in diameter). For the
pharmacokinetic sub-study, patients had venous blood drawn before stent
implantation and at intervals ranging from 10 minutes to 24 hours post
implantation, and again at either 48 hours or 72 hours post
implantation. The pharmacokinetics sub-study confirmed that plasma
paclitaxel concentrations after EluviaTM stent implantation
were well below thresholds associated with toxic effects in studies in
patients who had been diagnosed with cancer (0[middot]05 [mu]M or ~43
ng/mL).
The IMPERIAL sub-study long lesion subgroup consisted of 50
patients with average lesion length of 162.8 mm that were each treated
with two EluviaTM stents. According to the applicant, 12-
month outcomes for the long lesion subgroup are 87 percent primary
patency and 6.5 percent Target Lesion Revascularization (TLR).
According to the applicant, in a separate subgroup analysis of patients
65 years old and older (Medicare population), the primary patency rate
in the EluviaTM stent group is 92.6 percent, compared to
75.0 percent for the Zilver[supreg] PTX stent group (p=0.0386).
With regard to reducing the rate of subsequent therapeutic
interventions, secondary outcomes in the IMPERIAL study included repeat
re-intervention on the same lesion, target lesion revascularization
(TLR). The rate of subsequent interventions, or TLRs, in the
EluviaTM stent group was 4.5 percent compared to 9.0 percent
in the Zilver[supreg] PTX stent group. The applicant asserted that the
TLR rate in the EluviaTM group represents a substantial
reduction in re-intervention on the target lesion compared to that of
the Zilver[supreg] PTX stent group.
With regard to decreasing the number of future hospitalizations or
physician visits, the applicant asserted that the substantial reduction
in the lesion revascularization rate led to a reduced need to provide
additional intensive care, distinguishing the EluviaTM group
from the Zilver[supreg] PTX stent group. In the IMPERIAL study,
EluviaTM-treated patients required fewer days of re-
hospitalization. Patients in the EluviaTM group averaged
13.9 days of re-hospitalization for all adverse events compared to 17.7
days of re-hospitalization for patients in the Zilver[supreg] PTX stent
group. Patients in the EluviaTM group were re-hospitalized
for 2.8 days for TLR/Total Vessel Revascularization (TVR) compared to
7.1 days in the Zilver[supreg] PTX stent group. And lastly, patients in
the EluviaTM group were re-hospitalized for 2.7 days for
procedure/device-related adverse events compared to 4.5 days from the
Zilver[supreg] PTX stent group.
With regard to reducing hospital readmission rates, the applicant
asserted that patients treated in the EluviaTM group
experienced reduced rates of hospital readmission following the index
procedure compared to those in the Zilver[supreg] PTX stent group.
Hospital readmission rates at 12 months were 3.9 percent for the
EluviaTM group compared to 7.1 percent for the
Zilver[supreg] PTX stent group. Similar results were noted at 1 and 6
months; 1.0 percent versus 2.6 percent and 2.4 percent versus 3.8
percent, respectively.
With regard to reducing the rate of device-related complications,
the applicant asserted that while the rates of adverse events were
similar in total between treatment arms in the IMPERIAL study, there
were measurable differences in device-related complications. Device-
related adverse-events were reported in 8 percent of the patients in
the EluviaTM group compared to 14 percent of the patients in
the Zilver[supreg] PTX stent group.
Lastly, with regard to achieving similar functional outcomes and
EQ-5D index values, while associated with half the rate of TLRs, the
applicant asserted that narrowed or blocked arteries within the SFA can
limit the supply of oxygen-rich blood throughout the lower extremities,
causing pain or discomfort when walking (claudication). The applicant
further asserted that performing physical activities is often
challenging because of decreased blood supply to the legs, typically
causing symptoms to become more challenging over time unless treated.
While functional outcomes appear similar between the
EluviaTM and Zilver[supreg] PTX stent groups at 12 months,
these improvements for the Zilver[supreg] PTX stent group are
associated with twice as many TLRs to achieve similar EQ-5D index
values.\82\ Secondary endpoints improved after stent implantation and
were generally similar between the groups. At 12 months, of the
patients
[[Page 42230]]
with complete Rutherford assessment data, 241 (86 percent) of 281
patients in the EluviaTM group and 120 (85 percent) of 142
patients in the Zilver[supreg] PTX group had symptoms reported as
Rutherford Category 0 or 1 (none to mild claudication). The mean ankle-
brachial index was 1[middot]0 (SD 0[middot]2) in both groups at 12
months (baseline mean ankle-brachial index 0[middot]7 [SD 0[middot]2]
for EluviaTM; 0[middot]8 [0[middot]2] for Zilver[supreg]
PTX), with sustained hemodynamic improvement for approximately 80
percent of the patients in both groups. Walking function improved
significantly from baseline to 12 months in both groups, as measured
with the Walking Impairment Questionnaire and the 6-minute walk test.
In both groups, the majority of patients had sustained improvement in
the mobility dimension of the EQ-5D and roughly half had sustained
improvement in the pain or discomfort dimension. No significant
between-group differences were observed in the Walking Impairment
Questionnaire, 6-minute walk test, or EQ-5D. Secondary endpoint results
for the EluviaTM stent and Zilver[supreg] PTX stent groups
are as follows:
---------------------------------------------------------------------------
\82\ Gray, W.A., Keirse, K., Soga, Y., et al., ``A polymer-
coated, paclitaxel-eluting stent (Eluvia) versus a polymer-free,
paclitaxel-coated stent (Zilver PTX) for endovascular
femoropopliteal intervention (IMPERIAL): A randomized, non-
inferiority trial,'' Lancet, 2018, published online Sept 22, http://dx.doi.org/10.1016/S0140-6736(18)32262-1.
---------------------------------------------------------------------------
Hemodynamic improvement in walking--80.8 percent versus
78.7 percent;
Walking impairment questionnaire scores (change from
baseline)--40.8 (36.5) versus 35.8 (39.5);
Distance (change from baseline)--33.2 (38.3) versus 29.5
(38.2);
Speed (change from baseline)--18.3 (29.5) versus 18.1
(28.7);
Stair climbing (change from baseline)--19.4 (36.7) versus
21.1 (34.6); and
6- Minute walk test distance (m) (change from baseline)--
44.5 (119.5) versus 51.8 (130.5).
In the proposed rule, we stated that we were concerned that the
IMPERIAL study, which showed significant differences in primary patency
at 12 months, was designed for non-inferiority and not superiority. We
also noted the results of a recently published meta-analysis of
randomized controlled trials of the risk of death associated with the
use of paclitaxel-coated balloons and stents in the femoropopliteal
artery of the leg, which found that there is increased risk of death
following application of paclitaxel-coated balloons and stents in the
femoropopliteal artery of the lower limbs and that further
investigations are urgently warranted,\83\ although the
EluviaTM system was not included in the meta-analysis. We
invited public comments on whether the EluviaTM system meets
the substantial clinical improvement criterion, including the
implications of the conclusion of the meta-analysis results with
respect to a finding of substantial clinical improvement for
EluviaTM.
---------------------------------------------------------------------------
\83\ Katsanos, K., et al., ``Risk of Death Following Application
of Paclitaxel-Coated Balloons and Stents in the Femoropopliteal
Artery of the Leg: A Systematic Review and Meta-Analysis of
Randomized Controlled Trials,'' JAHA, vol. 7(24).
---------------------------------------------------------------------------
Comment: The applicant submitted public comments regarding CMS'
concerns. With regard to our concern that the IMPERIAL study was
designed for non-inferiority and not superiority, the applicant stated
that superiority testing was performed after the 12-month follow-up
window for all enrolled subjects had closed. The applicant also stated
that from a statistical perspective, the pre-specified success criteria
for superiority used the same logic as the pre-specified success
criteria for non-inferiority: ``ELUVIA will be concluded to be superior
to Zilver PTX for device effectiveness if the one-sided lower 95
percent confidence bound on the difference between treatment groups in
12-month primary patency is greater than zero.'' The applicant stated
that a more stringent one-sided lower 97.5 percent confidence bound
(shown as two-sided 95 percent confidence interval) on the difference
between treatment groups was observed to be greater than zero and the
corresponding p-value was 0.0144.
In addition to the internal analysis performed by the applicant,
the applicant stated that the data were published in The Lancet \84\
following its rigorous peer-review process. The applicant quoted the
following from The Lancet: ``The superiority analysis of primary
patency in the full-analysis cohort was a pre-specified post-hoc
analysis'' and ``In this head-to-head randomized trial, the primary
non-inferiority endpoints for efficacy and safety at 12 months were
met, and post-hoc analysis of the 12-month patency rate showed
superiority for Eluvia over Zilver PTX.''
---------------------------------------------------------------------------
\84\ Gray W.A., Keirse K., Soga Y., Benko A., Babaev A., Yokoi
Y., et al. A polymer-coated, paclitaxel-eluting stent (eluvia)
versus a polymer-free, paclitaxel-coated stent (Zilver PTX) for
endovascular femoropopliteal intervention (IMPERIAL): A randomised
non-inferiority trial. Lancet. 2018;392:1541-1551.
---------------------------------------------------------------------------
According to the applicant, clinical trial guidelines support
performing a pre-specified post-hoc superiority analysis in this
situation, provided ``(1) the trial has been properly designed and
carried out in accordance with the strict requirements of a non-
inferiority trial. (2) actual p-values for superiority are presented to
allow independent assessment of the strength of the evidence and (3)
analysis according to the intention-to-treat (ITT) principle is given
greatest emphasis.''\85\ The applicant contends that the IMPERIAL trial
met all those requirements.
---------------------------------------------------------------------------
\85\ Committee for Proprietary Medicinal Products. Points to
consider on switching between superiority and non-inferiority. Br J
Clin Pharmacol. 2001 Sep;52(3):223-8.
---------------------------------------------------------------------------
With respect to the results of the recently published meta-analysis
of randomized controlled trials of the risk of death associated with
the use of paclitaxel-coated balloons and stents in the femoropopliteal
artery of the leg, which found that there is increased risk of death
following application of paclitaxel-coated balloons and stents in the
femoropopliteal artery of the lower limbs, in its public comment, the
applicant maintained that the EluviaTM device is different
from the devices evaluated in the meta-analysis. The applicant also
noted that the EluviaTM device was not addressed in the
meta-analysis and that the EluviaTM device delivers
paclitaxel in much lower doses than the products discussed in the meta-
analysis. The applicant contends that the EluviaTM device is
the only peripheral device to deliver paclitaxel through a sustained-
release mechanism of action where delivery of paclitaxel is controlled
and focused on the target lesion. The applicant believes that the
suggestion in the meta-analysis of a late-term mortality risk
associated with paclitaxel coated devices is not directly applicable to
the EluviaTM device. The applicant further stated that they
submitted information (available at https://www.fda.gov/media/127704/download) to the FDA on paclitaxel relative to the EluviaTM
device in advance of FDA's June 19-20 Circulatory System Devices Panel
of the Medical Devices Advisory Committee Meeting. Consequently, the
applicant does not believe that the findings of limited
generalizability suggested in the meta-analysis should inhibit CMS from
determining that the EluviaTM satisfies the substantial
clinical improvement criterion.
In addition to the applicant's public comments, we also received
several public comments supporting the EluviaTM Drug-Eluting
Stent System's application for New Technology Add-on Payment in FY2020.
Commenters expressed that it is important for PAD patients to have
access to this technology.
We also received a comment expressing safety concerns with
paclitaxel devices used to treat PAD. The commenter stated they were
aware of an FDA alert concerning paclitaxel
[[Page 42231]]
devices. The commenter stated the applicant and other manufacturers of
devices using paclitaxel should consider an alternative to paclitaxel.
Response: We appreciate the applicant's and other public comments.
We are aware of the FDA's March 15, 2019 Letter to healthcare providers
regarding the ``Treatment of Peripheral Arterial Disease with
Paclitaxel-Coated Balloons and Paclitaxel-Eluting Stents Potentially
Associated with Increased Mortality'' and that on June 19-20, 2019, the
FDA convened a public meeting of the Circulatory System Devices Panel
of the Medical Devices Advisory Committee to share information and
perspectives from all interested parties on a potential late mortality
signal associated with the use of paclitaxel-coated balloons and
paclitaxel-eluting stents in patients with peripheral arterial disease.
In March 2019, the FDA conducted a preliminary analysis of long-
term follow-up data (up to five years in some studies) of the pivotal
premarket randomized trials for paclitaxel-coated products indicated
for PAD. While the analyses are ongoing, according to the FDA, the
preliminary review of the data has identified a potentially concerning
signal of increased long-term mortality in study subjects treated with
paclitaxel-coated products compared to patients treated with uncoated
devices.\86\ Of the three trials with 5-year follow-up data, each
showed higher mortality in subjects treated with paclitaxel-coated
products than subjects treated with uncoated devices. In total, among
the 975 subjects in these 3 trials, there was an approximately 50
percent increased risk of mortality in subjects treated with
paclitaxel-coated devices versus those treated with control devices
(20.1 percent versus 13.4 percent crude risk of death at 5 years).
---------------------------------------------------------------------------
\86\ https://www.fda.gov/medical-devices/letters-health-care-providers/update-treatment-peripheral-arterial-disease-paclitaxel-coated-balloons-and-paclitaxel-eluting.
---------------------------------------------------------------------------
The FDA stated that the data should be interpreted with caution for
several reasons. First, there is large variability in the risk estimate
of mortality due to the limited amount of long-term data. Second, the
studies were not originally designed to be pooled, introducing greater
uncertainty in the results. Third, the specific cause and mechanism of
the increased mortality is unknown.
Based on the preliminary review of available data, the FDA made the
following recommendations regarding the use of paclitaxel-coated
balloons and paclitaxel-eluting stents: That health care providers
consider the following until further information is available; continue
diligent monitoring of patients who have been treated with paclitaxel-
coated balloons and paclitaxel-eluting stents; when making treatment
recommendations and as part of the informed consent process, consider
that there may be an increased rate of long-term mortality in patients
treated with paclitaxel-coated balloons and paclitaxel-eluting stents;
discuss the risks and benefits of all available PAD treatment options
with your patients; for most patients, alternative treatment options to
paclitaxel-coated balloons and paclitaxel-eluting stents should
generally be used until additional analysis of the safety signal has
been performed; for some individual patients at particularly high risk
for restenosis, clinicians may determine that the benefits of using a
paclitaxel-coated product may outweigh the risks; ensure patients
receive optimal medical therapy for PAD and other cardiovascular risk
factors as well as guidance on healthy lifestyles including weight
control, smoking cessation, and exercise.
The FDA further stated that paclitaxel-coated balloons and stents
are known to improve blood flow to the legs and decrease the likelihood
of repeat procedures to reopen blocked blood vessels. However, because
of this concerning safety signal, the FDA stated that it believes
alternative treatment options should generally be used for most
patients while the FDA continues to further evaluate the increased
long-term mortality signal and its impact on the overall benefit-risk
profile of these devices. The FDA stated it intends to conduct
additional analyses to determine whether the benefits continue to
outweigh the risks for approved paclitaxel-coated balloons and
paclitaxel-eluting stents when used in accordance with their
indications for use. The FDA stated it will also evaluate whether these
analyses impact the safety of patients treated with these devices for
other indications, such as treatment of arteriovenous access stenosis
or critical limb ischemia.
Because of concerns regarding this issue, the FDA convened an
Advisory Committee meeting of the Circulatory System Devices Panel on
June 19-20, 2019 to: Facilitate a public, transparent, and unbiased
discussion on the presence and magnitude of a long-term mortality
signal; discuss plausible reasons, including any potential biological
mechanisms, for a long-term mortality signal; re-examine the benefit-
risk profile of this group of devices; consider modifications to
ongoing and future US clinical trials evaluating devices containing
paclitaxel, including added surveillance, updated informed consent, and
enhanced adjudication for drug-related adverse events and deaths; and
guide other regulatory actions, as needed. The June 19-20, 2019
Advisory Committee meeting of the Circulatory System Devices Panel
concluded that analyses of available data from FDA-approved devices
show an increase in late mortality (between two and five years)
associated with paclitaxel-coated devices intended to treat
femoropopliteal disease. However, causality for the late mortality rate
increase could not be determined. Additional data may be needed to
further assess the magnitude of the late mortality signal, determine
any potential causes, identify patient sub-groups that may be at
greater risk, and to update benefit-risk considerations of this device
class.\87\
---------------------------------------------------------------------------
\87\ https://www.fda.gov/advisory-committees/advisory-committee-calendar/june-19-20-2019-circulatory-system-devices-panel-medical-devices-advisory-committee-meeting#event-materials.
---------------------------------------------------------------------------
The FDA continues to recommend that health care providers report
any adverse events or suspected adverse events experienced with the use
of paclitaxel-coated balloons and paclitaxel-eluting stents. The FDA
stated that it will keep the public informed as any new information or
recommendations become available.
After consideration of the public comments we received and the
latest available information from the FDA advisory panel, we note the
FDA panel's preliminary review of the data that has identified a
potentially concerning signal of increased long-term mortality in study
subjects treated with paclitaxel-coated products compared to patients
treated with uncoated devices. Additionally, since the FDA has stated
that it believes alternative treatment options should generally be used
for most patients while the FDA continues to further evaluate the
increased long-term mortality signal and its impact on the overall
benefit-risk profile of these devices, we remain concerned that we do
not have enough information to determine that the EluviaTM
device represents a substantial clinical improvement over existing
technologies. Therefore, we are not approving the EluviaTM
device for FY 2020 new technology add-on payments. We will monitor any
new information or recommendations as they become available.
e. ELZONRISTM (tagraxofusp, SL-401)
Stemline Therapeutics submitted an application for new technology
add-on
[[Page 42232]]
payments for ELZONRISTM for FY 2020. ELZONRISTM
(tagraxofusp, SL-401) is a targeted therapy for the treatment of
blastic plasmacytoid dendritic cell neoplasm (BPDCN) administered via
infusion. The applicant stated that BPDCN, previously known as blastic
natural killer (NK) cell leukemia/lymphoma, is a rare, highly
aggressive hematologic malignancy with a median overall survival of 8
to 14 months from diagnosis that occurs predominantly in the elderly
(median age at diagnosis is 67 years old) and in male patients (75
percent). The applicant cited data from the Surveillance, Epidemiology,
and End Results Program (SEER) registry that the estimated incidence of
BPDCN is less than 100 new cases per year in the U.S. However, the
applicant believes that registries likely underestimate the true
incidence of BPDCN due to changing nomenclature and lack of a
standardized disease characterization prior to 2008, and that
additional patients may be eligible for treatment.
According to the applicant, ELZONRISTM is a targeted
therapy directed to the interleukin-3 receptor (IL-3 receptor). The IL-
3 receptor is composed of two chains: An alpha chain, also known as
CD123, and a [beta] chain. Together, the two chains form a high-
affinity cell surface receptor for interleukin-3 (IL-3). The binding of
IL-3 to the IL-3 receptor initiates signaling that stimulates the
proliferation and differentiation of certain hematopoietic cells. The
alpha unit of the IL-3 receptor (also known as CD123) has also been
found to be expressed in a variety of cancers, including BPDCN, a
malignancy derived from plasmacytoid dendrite cells (pDCs).
The applicant explained that ELZONRISTM is a recombinant
protein composed of human IL-3 genetically fused to a truncated
diphtheria toxin (DT) payload. The applicant stated that
ELZONRISTM binds with high affinity to the IL-3 receptor and
is engineered such that IL-3 replaces the native receptor-binding
domain of DT and thereby acts like a homing device, targeting the DT
cytotoxic payload specifically to CD123-expressing cells. Upon binding
to the IL-3 receptor, ELZONRISTM is internalized into
endosomes, where the low pH environment enables proteolytic cleavage
and release of the catalytic domain of DT into the cytoplasm. The
target of DT's catalytic domain is elongation factor 2 (EF-2), a key
protein involved in protein translation. Inactivation of EF-2 leads to
termination of protein synthesis, which ultimately results in cell
death. The applicant asserted that ELZONRISTM is engineered
such that IL-3 targets the cytotoxic payload specifically to CD123-
expressing cells.
The applicant indicated that the regimens historically employed for
the treatment of patients who have been diagnosed with BPDCN have
generally consisted of those regimens, or modified versions of those
regimens, used for aggressive hematologic malignancies, including
regimens normally used in the treatment of acute lymphoblastic
leukemia, acute myeloid leukemia, and lymphoma. The applicant
summarized the mechanisms of various drugs and regimens currently used
to treat BPDCN, including:
Etoposide, which the applicant explained works by
inhibiting topoisomerase II, which in turn disrupts the ligation step
of the cell cycle, leading to apoptosis and cell death.
Hyper CVAD, which the applicant explained is a regimen
consisting of cyclophosphamide, vincristine and doxorubicin,
dexamethasone, methotrexate, and cytarabine. Cyclophosphamide damages
DNA by binding to it and causing the formation of cross-links.
Vincristine prevents cell duplication by binding to the protein
tubulin. Dexamethasone is a steroid to counteract side effects.
Methotrexate is an antimetabolite that competitively inhibits an enzyme
that is used in in folate synthesis, arresting cell reproduction.
CHOP, which the applicant explained is a regimen of
cyclophosphamide, doxorubicin, vincristine, and prednisone.
AspaMetDex L-asparaginase, Methotrexate, Dexamethasone.
The applicant explained that L-asparaginase catalyzes the conversion of
L-asparagine to aspartic acid and ammonia, depriving leukemic cells of
L-asparagine, leading to cell death.
Ara-C regimen (cytarabine), which the applicant explained
interferes with synthesis of DNA by altering the sugar component of
nucleosides.
The applicant stated that there are no approved therapies or
established standards of care for the treatment of patients who have
been diagnosed with BPDCN, either for treatment-naive or previously-
treated patients. The applicant asserted that current treatments for
patients who have been diagnosed with BPDCN might temporarily help to
slow disease progression, but they fail to eradicate cancer stem cells
(CSCs), and no specific treatment regimen has been shown to be
effective or is recommended. According to the applicant, only half of
reported patients show initial response to the regimens historically
employed for treatment of a diagnosis of BPDCN, and these reported
responses do not generally appear to be durable, with many patients
experiencing a quick relapse. Overall survival is typically low,
ranging from 8 to 14 months across various treatment regimens.
With respect to the newness criterion, according to the applicant,
the FDA accepted the applicant's Biologics License Application (BLA)
filing for ELZONRISTM in August 2018 for the treatment of
patients who have been diagnosed with blastic plasmacytoid dendritic
cell neoplasm. The FDA granted this application Breakthrough Therapy,
Priority Review, and Orphan Drug designations, and on December 21,
2018, approved ELZONRISTM for the treatment of blastic
plasmacytoid dendritic cell neoplasm in adults and in pediatric
patients 2 years old and older. The applicant submitted a request for
approval for a unique ICD-10-PCS code for the administration of
ELZONRISTM beginning in FY 2020 and was granted approval for
the following procedure codes effective October 1, 2019: XW033Q5
(Introduction of Tagraxofusp-erzs Antineoplastic into peripheral vein,
percutaneous approach, new technology, group 5) and XW043Q5
(Introduction of Tagraxofusp-erzs Antineoplastic into central vein,
percutaneous approach, new technology group 5).
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, ELZONRISTM treats BPDCN via
target antigen specificity, attacking cells with the IL-3 receptor
(CD123) overexpressed in cancer stem cells (CSCs) and tumor bulk, but
minimally expressed or absent on normal hematopoietic stem cells. The
applicant indicated that ELZONRISTM's mechanism of action
involves a receptor-mediated endocytosis, inhibition of protein
synthesis, and interference with IL-3 signal transduction pathways,
leading to growth arrest and apoptosis in leukemia blasts and CSCs. The
applicant asserted that current BPDCN treatments are not targeted, and
their mechanisms of action aim to arrest quickly-dividing cells through
DNA alkylation and intercalation, as well as through protein binding to
prevent cell duplication. The applicant also asserted that current
[[Page 42233]]
treatments for patients who have been diagnosed with BPDCN might
temporarily help to slow disease progression, but they fail to
eradicate CSCs. The applicant stated that in contrast,
ELZONRISTM utilizes a payload that is not cell cycle-
dependent and, therefore, it is able to kill not just highly
proliferative tumor bulk, but also the relatively quiescent CSCs. The
applicant noted that there are similar targeted therapies currently
under investigation, although the applicant asserted that these other
therapies are all in much earlier stages of development. Therefore, the
applicant asserted that ELZONRISTM utilizes a different
mechanism of action than currently available treatment options.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that because
BPDCN is a distinct and rare hematologic malignancy and there are no
other approved therapies or established standard-of-care, cases
representing patients receiving treatment involving
ELZONRISTM would not be assigned to the same MS-DRG(s) when
compared to cases representing patients receiving treatment involving
existing technologies. In the proposed rule, we noted that, as
explained in the discussion of the cost criterion, the applicant stated
that potential cases representing patients who may be eligible for
treatment involving ELZONRISTM would be assigned to MS-DRGs
that contain cases representing patients who are receiving chemotherapy
without acute leukemia as a secondary diagnosis.
With respect to the third criterion, 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, according to the
applicant, the use of ELZONRISTM would involve treatment of
a dissimilar patient population as compared to other therapies. The
applicant stated that the World Health Organization standardized the
current name and specific category of disease for BPDCN in 2016,
designating it as a distinct entity within the acute myeloid neoplasms
and acute leukemias. The applicant indicated that no BPDCN standard-of-
care has been established and currently patients who have been
diagnosed with BPDCN are being treated with therapies used for other
diseases. Therefore, the applicant asserted that ELZONRISTM
would be used in the treatment of a new patient population because the
patient population in question is distinguishable from others by the
ICD-10-CM diagnosis code specific to BPDCN: C86.4 (Blastic NK-cell
lymphoma), for which there is no specific treatment regimen that has
been shown to be effective or is recommended, as previously stated.
As presented in the proposed rule and previously summarized, the
applicant maintains that ELZONRISTM meets the newness
criterion and is not substantially similar to existing technologies
because it has a unique mechanism of action; potential cases
representing patients who may be eligible for treatment involving the
use of ELZONRISTM would be assigned to a different MS-DRG
when compared to existing technologies; and the use of the technology
would treat a new patient population. We invited public comments on
whether ELZONRISTM is substantially similar to any existing
technologies and whether ELZONRISTM meets the newness
criterion.
Comment: The applicant submitted a comment reiterating that
ELZONRISTM is the first approved treatment for patients with
BPDCN and the first approved CD123-targeted therapy.
Response: Based on the applicant's comment and information
submitted by the applicant as part of its FY 2020 new technology add-on
payment application for ELZONRISTM, as discussed in the
proposed rule (84 FR 19319) and previously summarized, we believe that
ELZONRISTM has a unique mechanism of action and the use of
the technology would treat a new patient population. Therefore, we
believe ELZONRISTM is not substantially similar to existing
treatment options and meets the newness criterion. We consider the
beginning of the newness period to commence when ELZONRISTM
was approved by the FDA on December 21, 2018.
With regard to the cost criterion, the applicant used the FY 2017
MedPAR Hospital Limited Data Set (LDS) to assess the MS-DRGs to which
cases representing potential patient hospitalizations that may be
eligible for treatment involving ELZONRISTM would most
likely be assigned. The applicant identified these potential cases
using the ICD-10-CM diagnosis code C86.4 (Blastic NK-cell lymphoma),
which the applicant stated is another name for BPDCN. The applicant
identified 65 cases reporting ICD-10-CM diagnosis code C86.4 spanning
28 different MS-DRGs. The applicant asserted that cases representing
patients hospitalized who may be eligible to receive treatment
involving ELZONRISTM would most likely appear in MS-DRGs 847
(Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC)
and 846 (Chemotherapy without Acute Leukemia as Secondary Diagnosis
with MCC). Therefore, the applicant limited the analysis to the cases
in MS-DRG 847 and MS-DRG 846 that also reported the ICD-10-CM diagnosis
code C86.4. The cases identified in these two MS-DRGs accounted for 24
(37 percent) of the 65 cases reporting ICD-10-CM diagnosis code C86.4.
The applicant indicated that because the number of cases reporting
ICD-10-CM diagnosis code C86.4 is so low and it was difficult to
discern the costs of the predecessor therapies that would be replaced
by the use of ELZONRISTM, the applicant performed the cost
criterion analysis under two different scenarios. Both scenarios use
the 24 cases identified in the FY 2017 MedPAR data and increase the
sample size by using an additional 18 cases identified in the FY 2016
MedPAR data mapping to the same MS-DRGs and reporting the same ICD-10-
CM diagnosis code, for a combined total of 42 cases with an average
case-weighted unstandardized charge per case of $67,947. For the first
scenario, because the applicant was unable to determine the appropriate
costs for the predecessor therapies, the applicant did not remove any
predecessor charges from the cases analyzed, although the applicant
noted that it might be extreme to assume that no products or services
would be replaced if ELZONRISTM were used. For the second
scenario, the applicant removed all charges from the cases so that only
ELZONRISTM was used as the cost of the case. The applicant
characterized this as a conservative assumption, as it assumes that the
only charges related to these cases would be the cost of
ELZONRISTM.
The applicant then standardized the FY 2017 charges using the FY
2017 impact file and then inflated the charges to FY 2019 using the 2-
year inflation factor of 8.59 percent (1.085868) that the applicant
indicated was published in the FY 2019 IPPS/LTCH PPS final rule. The
applicant standardized FY 2016 charges using the FY 2016 impact file
and then inflated the charges to FY 2019 using a 3-year inflation
factor of 13.15 percent (1.131529), which was calculated based on the
1-year inflation factor (1.04205) that the applicant indicated was
listed in the FY 2019 IPPS/LTCH PPS final rule. In the proposed rule,
we noted that the inflation factors used by the applicant were the
proposed 1-year and 2-year inflation factors, which were published in
the FY 2019 IPPS/LTCH PPS final rule in the summary of FY 2019 IPPS
proposals (83 FR 41718). The final 1-year and 2-year inflation factors
[[Page 42234]]
published in the FY 2019 IPPS/LTCH PPS final rule are 1.04338 and
1.08864, respectively (83 FR 41722), and a 3-year inflation factor
calculated based on these numbers is 1.13587. We further noted that
these figures were revised in the FY 2019 IPPS/LTCH PPS final rule
correction notice. The corrected final 1-year and 2-year inflation
factors are 1.04396 and 1.08986, respectively (83 FR 49844), and a 3-
year inflation factor calculated based on the corrected final numbers
is 1.13776.
The applicant then added charges for ELZONRIS\TM\ in both
scenarios. To determine the charges for ELZONRIS\TM\, the applicant
calculated the average per discharge cost of ELZONRIS\TM\ inflated by
the inverse of the national average CCR for pharmacy costs of 0.191.
The applicant then calculated an average case-weighted standardized
charge per case for each scenario and compared it with the average
case-weighted threshold amount. The applicant stated that ELZONRIS\TM\
exceeded the average-case-weighted threshold amount under each scenario
and, therefore, meets the cost criterion. Results of the analyses of
both scenarios are summarized in this table:
[GRAPHIC] [TIFF OMITTED] TR16AU19.143
In the proposed rule, we noted that the applicant used the proposed
rule values to inflate the standardized charges. However, we further
noted that even when using either the final rule values or corrected
final rule values to inflate the charges, the average case-weighted
standardized charge per case for each scenario exceeded the average
case-weighted threshold amount. We invited public comments on whether
ELZONRIS\TM\ meets the cost criterion.
We did not receive any public comments on whether ELZONRIS\TM\
meets the cost criterion. Based on the information submitted by the
applicant as part of its FY 2020 new technology add-on payment
application for ELZONRIS\TM\, as discussed in the proposed rule (84 FR
19319 through 19320) and previously summarized, the average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount. Therefore, ELZONRIS\TM\ meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant stated that it believes ELZONRIS\TM\ represents a substantial
clinical improvement because: (1) ELZONRIS\TM\ is the only treatment
indicated specifically for the treatment of patients who have been
diagnosed with BPDCN, a disease without a defined standard-of-care; (2)
ELZONRIS\TM\ offers a treatment option for a patient population
ineligible for aggressive chemotherapy regimens used to treat BPDCN;
(3) ELZONRIS\TM\ exhibits high complete remission rates, potentially
superior to other regimens used to treat a diagnosis of BPDCN; (4)
ELZONRIS\TM\ significantly improves overall survival (OS) in the
treatment of patients diagnosed with BPDCN as compared to currently
available treatment regimens; (5) ELZONRIS\TM\ significantly improves
clinical outcomes in the BPDCN patient population because it may allow
more patients to bridge to stem cell transplantation, an effective
treatment not currently administered to most patients due to their
inability to tolerate the requisite conditioning therapies; (6)
ELZONRIS\TM\ exhibits a manageable profile that is consistent over
increasing patient exposure and experience, demonstrating a well-
tolerated targeted therapy suitable for the majority of patients who
are unable to receive intensive chemotherapy; and (7) ELZONRIS\TM\ is
more efficient than other chemotherapeutic drugs at killing BPDCN in
preclinical studies, suggesting clinical benefit would also be
exhibited if head-to-head comparison was pursued.
In support of the claim that ELZONRIS\TM\ is the only treatment
indicated specifically for the treatment of patients who have been
diagnosed with BPDCN, the applicant submitted a 2016 review article
which indicated that no standardized therapeutic approach has been
established yet for the treatment of BPDCN, and the optimal therapy
remains to be defined.\88\
---------------------------------------------------------------------------
\88\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A.,
``Blastic plasmacytoid dendritic cell neoplasm: Diagnostic criteria
and therapeutical approaches,'' British Journal of Haematology,
2016, vol. 174(2), pp. 188-202.
---------------------------------------------------------------------------
Second, in support of the claim that ELZONRIS\TM\ offers a
treatment option for a patient population ineligible for aggressive
chemotherapy regimens used to treat BPDCN, the applicant submitted a
2016 review of treatment modalities for patients who have been
diagnosed with BPDCN to establish that there is a clear unmet need for
targeted treatment. The study reported that seven BPDCN patients
treated with Hyper-CVAD, an aggressive chemotherapy regimen, achieved
an overall response of 86 percent and complete remission of 67 percent;
\89\ however, the applicant noted
[[Page 42235]]
that the evidence is limited to a small number of patients. Another
2016 review article indicated that supportive care or palliative
chemotherapy is used in the treatment of many patients who have been
diagnosed with BPDCN because of their age or comorbidities, and may be
the only option for elderly patients with a low performance status or
characterized by the presence of relevant co-morbidities, suggesting
that targeted therapy has the potential for improving patient
outcomes.\90\
---------------------------------------------------------------------------
\89\ Falcone, U., Sibai, H., Deotare, U, ``A critical review of
treatment modalities for blastic plasmacytoid dendritic cell
neoplasm,'' Critical Reviews in Oncology/Hematology, 2016, vol. 107,
pp. 156-162.
\90\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A.,
``Blastic plasmacytoid dendritic cell neoplasm: diagnostic criteria
and therapeutical approaches,'' British Journal of Haematology,
2016, vol. 174(2), pp. 188-202.
---------------------------------------------------------------------------
Third, the applicant maintained that ELZONRIS\TM\ exhibits high
complete remission rates, potentially superior to other regimens used
to treat patients who have been diagnosed with BPDCN. The applicant
submitted a 2013 retrospective case study of patients who had been
diagnosed with BPDCN, in which 15/41 (37 percent) of evaluable patients
achieved CR with induction therapies; 2 partial responders subsequently
became complete responders with consolidation therapy (17/41: 41
percent). This study noted a high death rate of 17 percent following
induction treatment.\91\ The applicant reported prospective clinical
trial data from ELZONRIS\TM\'s pivotal trial (ELZONRIS\TM\ 12[micro]g/
kg/day), which observed a complete response plus a complete clinical
response of 72 percent in treatment-naive patients (21/29
patients).\92\
---------------------------------------------------------------------------
\91\ Pagano, L., Valentini, C.G., Pulsoni, A., et al for GIMEMA-
ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto, Acute
Leukemia Working Party), ``Blastic plasmacytoid dendritic cell
neoplasm with leukemic presentation: an Italian multicenter study,''
Haematologica, 2013, vol. 98(2), pp. 239-246.
\92\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------
Fourth, the applicant maintained that ELZONRIS\TM\ significantly
improves overall survival (OS) in patients who have been diagnosed with
BPDCN as compared to currently available treatment regimens. The
applicant submitted a 2013 retrospective case study of patients who
have been diagnosed with BPDCN, which found that the median overall
survival was just 8.7 months in 43 patients.\93\ The applicant reported
prospective clinical trial data from ELZONRIS\TM\'s pivotal trial
(ELZONRIS\TM\ 12[micro]g/kg/day), which found that median overall
survival has not yet been reached, with a median follow-up of 23 months
[0.2-41 + months].\94\
---------------------------------------------------------------------------
\93\ Pagano, L., Valentini, C.G., Pulsoni, A., et al for GIMEMA-
ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto, Acute
Leukemia Working Party), ``Blastic plasmacytoid dendritic cell
neoplasm with leukemic presentation: an Italian multicenter study,''
Haematologica, 2013, vol. 98(2), pp. 239-246.
\94\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2
Clinical Trial of Tagraxofusp (SL-401) in Patients with Blastic
Plasmacytoid Dendritic Cell Neoplasm (BPDCN),'' Proceedings from the
2018 American Society of Hematology (ASH), 2018, Abstract S765.
---------------------------------------------------------------------------
Fifth, the applicant maintained that ELZONRISTM
significantly improves clinical outcomes in the treatment of the BPDCN
patient population because it may allow more patients to bridge to stem
cell transplantation, an effective treatment not currently administered
to most patients due to their inability to tolerate the requisite
conditioning therapies. The applicant submitted a 2011 retrospective
study that included 6 cases of elderly patients who had been diagnosed
with BPDCN in which 4 patients underwent allogenic stem cell
transplantation (SCT) following moderately reduced intensity of
conditioning chemotherapy regimens; 2 patients who received stem cell
transplant while in remission lived disease free 57 months and 16
months post-SCT, and 2 patients transplanted with active disease
achieved complete remission but relapsed 6 and 18 months after
transplantation. Conditioning chemotherapy regimens were reduced in
intensity due to the patients' elderly age.\95\ The applicant also
submitted a 2015 retrospective study of 25 BPDCN cases in which
patients were treated with SCT. Of 11 BPDCN patients treated with
autologous SCT and 14 patients treated with allogenic SCT, overall
survival (OS) at 4 years was 82 percent and 69 percent, respectively,
and no relapses were observed.\96\ The applicant also submitted a 2013
retrospective study of 43 BPDCN cases in which only 6 out of 43
patients (14 percent) received allogenic SCT.\97\ The applicant
submitted a 2010 retrospective study of BPDCN cases in which only 10
out of 47 patients (21 percent) received SCT.\98\ The applicant
submitted a 2016 review article which concluded that early results from
clinical trials for ELZONRISTM indicate that it could be
used to consolidate the effects of first-line chemotherapy and/or
reduce minimal residual disease before allogenic SCT.\99\ The applicant
reported prospective clinical trial data from ELZONRISTM's
pivotal trial (ELZONRISTM 12 [mu]g/kg/day), for which the
median age among the patients with BPDCN who received treatment
involving ELZONRISTM was 70 years old, in which 45 percent
(13/29) of treatment-naive patients treated with ELZONRISTM
(12 [mu]g/kg/day) were bridged to SCT in remission.\100\
---------------------------------------------------------------------------
\95\ Dietrich, S., et al., ``Blastic plasmacytoid dendritic cell
neoplasia (BPDC) in elderly patients: results of a treatment
algorithm employing allogeneic stem cell transplantation with
moderately reduced conditioning intensity, Biology of Blood and
Marrow Transplantation, 2011, vol. 17, pp. 1250-1254.
\96\ Aoki, T., et al., ``Long-term survival following autologous
and allogenic stem cell transplantation for Blastic plasmacytoid
dendritic cell neoplasm,'' Blood, 2015, vol. 125(23), pp. 3559-3562.
\97\ Pagano, L., Valentini, C.G., Pulsoni, A., et al. for
GIMEMA-ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto,
Acute Leukemia Working Party), ``Blastic plasmacytoid dendritic cell
neoplasm with leukemic presentation: an Italian multicenter study,''
Haematologica, 2013, vol. 98(2), pp. 239-246.
\98\ Dalle, S., et al., ``Blastic plasmacytoid dendritic cell
neoplasm: is transplantation the treatment of choice?'' The British
Journal of Dermatology, 2010, vol. 162, pp. 74-79.
\99\ Pagano, L., Valentini, C.G., Grammatico, S., Pulsoni, A.,
``Blastic plasmacytoid dendritic cell neoplasm: diagnostic criteria
and therapeutical approaches,'' British Journal of Haematology,
2016, vol. 174(2), pp. 188-202.
\100\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------
Sixth, the applicant maintained that ELZONRISTM exhibits
a manageable profile that demonstrates a well-tolerated targeted
therapy suitable for the majority of patients who are unable to receive
intensive chemotherapy. The prospective clinical trial data from
ELZONRISTM's pivotal trial (ELZONRISTM 12 [mu]g/
kg/day) found that ELZONRISTM's side effect profile remained
consistent over increasing patient exposure and experience. No evidence
of cumulative toxicity was seen over multiple cycles of
ELZONRISTM. Myelosuppression (thrombocytopenia, anemia,
neutropenia) was modest, reversible, and was not dose-limiting for any
patient. The most common treatment-related adverse events included
increased alanine aminotransferase levels, increased aspartate
aminotransferase levels and hypoalbuminemia, mostly restricted to the
first cycle of therapy. The most serious side effect was capillary leak
syndrome; most reports were Grade II in severity.\101\
---------------------------------------------------------------------------
\101\ Ibid.
---------------------------------------------------------------------------
Lastly, the applicant asserts that ELZONRISTM is more
efficient than other chemotherapeutic drugs at killing BPDCN in
preclinical studies, suggesting clinical benefit would also be
exhibited if head-to-head comparison to cytotoxic agents commonly used
for the
[[Page 42236]]
treatment of hematologic malignancies was pursued. The applicant
submitted a 2015 preclinical study that found malignant cells from
patients who had been diagnosed with BPDCN were more sensitive to
ELZONRISTM than to a wide variety of cytotoxic agents
commonly used for treatment of hematologic malignancies, including
drugs such as cytosine arabinoside, cyclophosphamide, vincristine,
dexamethasone, methotrexate, Erwinia L-asparaginase, and
asparaginase.\102\
---------------------------------------------------------------------------
\102\ Angelot-Delettre, F., Roggy, A., Frankel, A.E., Lamarthee,
B., Seilles, E., Biichle, S., et al., ``In vivo and in vitro
sensitivity of blastic plasmacytoid dendritic cell neoplasm to SL-
401, an interleukin-3 receptor targeted biologic agent,''
Haematologica, 2015, vol. 100(2), pp. 223-30.
---------------------------------------------------------------------------
After reviewing the information submitted by the applicant as part
of its FY 2020 new technology add-on payment application for
ELZONRISTM, in the FY 2020 IPPS/LTCH PPS proposed rule, we
stated we were concerned that some of the evidence submitted by the
applicant to demonstrate substantial clinical improvement over existing
technologies is based on preclinical studies. We also stated that we
were unsure if the study populations in the 2013 retrospective study
that the applicant used to compare remission rates are composed of
treatment-naive, previously-treated, or a mix of patients.
In addition, the applicant reported that the interim results of the
Phase II trial of treatment of BPDCN with ELZONRISTM
demonstrated high response rates in BPDCN, including: 90 percent
overall response in treatment naive patients (26/29) and 69 percent
overall response in relapse/refractory patients (9/13); 72 percent
complete response plus complete clinical response in treatment naive
patients (21/29) and 38 percent complete response plus complete
clinical response in relapse/refractory patients (5/13); and 45 percent
of patients treated in first-line setting were bridged to stem cell
transplant in remission (13/29).\103\ However, we stated that we were
concerned that the small number of patients in the study and the lack
of baseline data against which to compare this technology may make it
more difficult to determine whether these interim results support a
finding of substantial clinical improvement. We also noted that because
the clinical trial is ongoing and the final outcomes are not available,
we stated we were concerned that there may not be enough information on
the efficacy to determine substantial clinical improvement at this
time. We also noted that the applicant's December 2018 New Technology
Town Hall meeting presentation included information that differs
slightly from the application materials, and we were not clear whether
the study results submitted with the application reflect the most
current information available. We invited public comments on whether
ELZONRISTM meets the substantial clinical improvement
criterion, including with respect to the concerns we have raised.
---------------------------------------------------------------------------
\103\ Pemmaraju, N., et al., ``Results of Pivotal Phase 2 Trial
of SL-401 in Patients with Blastic Plasmacytoid Dendritic Cell
Neoplasm (BPDCN),'' Proceedings from the 2018 European Hematology
Association Congress, 2018, Abstract 214438.
---------------------------------------------------------------------------
Comment: The applicant submitted comments in response to CMS's
concerns in the proposed rule regarding whether ELZONRISTM
meets the substantial clinical improvement criterion.
With respect to the concern that some of the evidence submitted by
the applicant to demonstrate substantial clinical improvement over
existing technologies is based on preclinical studies, the applicant
stated that at the time of the new technology add-on payment
application submission (December 2018), the peer reviewed publications
of ELZONRISTM (tagraxofusp-erzs) included preclinical
studies by Angelot-Delettre (2015) and Delettre (2013) and initial
prospective evidence of the clinical activity of ELZONRISTM
in patients with BPDCN (Frankel 2014). The applicant stated that since
the new technology add-on payment application submission,
ELZONRISTM was approved by the FDA for the treatment of
BPDCN in adults and pediatric patients two years and older on December
21, 2018, and the efficacy and safety data from the pivotal study of
ELZONRISTM that formed the basis for the FDA approval was
published in the April 25th issue of the New England Journal of
Medicine (NEJM). The applicant stated that Study STML-401-0114
(ELZONRISTM BPDCN Clinical Trial), the subject of the NEJM
article, was a multicenter, multistage study of ELZONRISTM
in patients with BPDCN and the largest prospective clinical trial
designed to evaluate outcomes in patients with BPDCN. The applicant
submitted the 2019 study as part of its comment, which reported that
among the 29 previously untreated patients receiving
ELZONRISTM at a dose of 12 [micro]g/kg/day, the overall
response rate was 90 percent, 72 percent (21/29) achieved a complete
response plus a complete clinical response, and 45 percent (13/29)
bridged to SCT. Survival rates at 18 and 24 months were 59 percent and
52 percent, respectively. Among the 15 previously-treated patients, the
overall response rate was 67 percent, and the median overall survival
was 8.5 months. The study concluded that in adult patients with
untreated or relapsed BPDCN, the use of ELZONRISTM led to
clinical responses, though serious adverse events were common.\104\
---------------------------------------------------------------------------
\104\ Pemmaraju, N., et al., ``Tagraxofusp in Blastic
Plasmacytoid Dendritic-Cell Neoplasm.'' N Engl J Med. 2019, doi:
10.1056/NEJMoa1815105.
---------------------------------------------------------------------------
With respect to the concern that we were unsure if the study
populations in the 2013 retrospective study that the applicant used to
compare remission rates are composed of treatment-na[iuml]ve,
previously-treated, or a mix of patients, the applicant stated that the
2013 Pagano et al. study was a multi-center retrospective study that
evaluated 43 treatment-na[iuml]ve BPDCN patients from 2005-2011 who
received traditional chemotherapy. The applicant noted that the results
included 41 percent of patients achieving a CR; a median overall
survival of 8.7 months, and 14 percent of patients bridged to receive a
SCT.\105\ In contrast, the ELZONRISTM clinical trial
consisted of a mix of patients (N=47), of which 32 were receiving
ELZONRISTM as first-line treatment. The applicant stated
that among the 29 treatment-naive patients who received ELZONRIS at a
dose of 12 mcg/kg, 72 percent of patients (21/29) achieved a CR;
survival rates at 18 and 24 months were 59 percent and 52 percent,
respectively; and 45 percent of patients (13/29) bridged to receive a
SCT.\106\
---------------------------------------------------------------------------
\105\ Pagano, L., Valentini, C.G., Pulsoni, A., et al for
GIMEMA-ALWP (Gruppo Italiano Malattie EMatologiche dell'Adulto,
Acute Leukemia Working Party), ``Blastic plasmacytoid dendritic cell
neoplasm with leukemic presentation: an Italian multicenter study,''
Haematologica, 2013, vol. 98(2), pp. 239-246.
\106\ Pemmaraju, N., et al., ``Tagraxofusp in Blastic
Plasmacytoid Dendritic-Cell Neoplasm.'' N Engl J Med. 2019, doi:
10.1056/NEJMoa1815105.
---------------------------------------------------------------------------
With respect to the concern that the small number of patients in
the clinical trial and the lack of baseline data against which to
compare this technology may make it more difficult to determine whether
these interim results support a finding of substantial clinical
improvement, the applicant stated that BPDCN is a very rare and highly
aggressive hematologic malignancy, with an estimated incidence of 0.41/
1,000,000 patients age-adjusted to the 2000 US standard population,
corresponding to less than 100 new cases per year. The applicant stated
that the ELZONRISTM BPDCN Clinical Trial was the first study
prospectively designed to assess the safety and efficacy of a therapy
in patients with BPDCN, including a pre-defined cohort for confirmation
of
[[Page 42237]]
efficacy. The applicant stated that to date, it is considered the
largest prospective study of patients with BPDCN ever conducted (N=47);
a cohort that is sizeable and adequately represents the `real-world'
population in terms of demographics and baseline characteristics. The
applicant stated that as such, this study, for the first time, provided
prospectively acquired data for any therapy in this patient population
and are therefore considered to be more robust and reliable than
previously reported retrospective data. The applicant stated further
that in the absence of available therapies for patients with BPDCN,
empirical chemotherapies have been employed in the past for both
treatment-na[iuml]ve and previously treated BPDCN, and the published
literature regarding BPDCN treatment consists primarily of case reports
and retrospective data reviews with limited published data from
prospective clinical studies. The applicant stated that the accuracy
and ability to interpret the response rates reported in the literature
is limited, given the general lack of well-defined response criteria,
especially related to measurement of the extent of cutaneous disease
and other extramedullary sites of disease. As such, the applicant
stated that published response rates should be viewed with caution and
may represent artificially high response rates in some instances.
With respect to the concern that there may not be enough
information on the efficacy of ELZONRISTM to determine
substantial clinical improvement at this time given that the clinical
trial is ongoing and the final outcomes are not available, the
applicant stated that FDA approval was based on the efficacy and safety
results from the ELZONRISTM BPDCN Clinical Trial in patients
with treatment-naive or previously treated BPDCN. The applicant
explained that the clinical trial was a multi-stage study, with each
study stage featuring its own objectives and design elements. The
applicant stated that Stage 1 (dose escalation), Stage 2 (expansion),
and Stage 3 (pivotal, confirmatory for efficacy) are complete and the
results were published in the NEJM on April 25th, 2019. The applicant
stated that patients were also enrolled in an additional cohort (Stage
4) to enable ongoing access to ELZONRISTM in a clinical
study.
With respect to the concern that the applicant's December 2018 New
Technology Town Hall meeting presentation included information that
differs slightly from the application materials, and we were not clear
whether the study results submitted with the application reflect the
most current information available, the applicant stated that the most
current ELZONRISTM data was reported by Pemmaraju and
colleagues and published in the April 25th, 2019 issue of the
NEJM,\107\ and the applicant submitted a copy of the article as part of
its comment.
---------------------------------------------------------------------------
\107\ Ibid.
---------------------------------------------------------------------------
Response: We appreciate the additional information and analysis
provided by the applicant and the applicant's input in response to our
concerns regarding substantial clinical improvement. After reviewing
the information submitted by the applicant addressing our concerns
raised in the proposed rule, we agree with the applicant that
ELZONRISTM represents a substantial clinical improvement
over existing technologies because, based on the information provided
by the applicant, the technology offers a treatment option for a
patient population unresponsive to, or ineligible for, currently
available treatments and substantially improves response rates and
clinical outcomes for patients with BPDCN.
After consideration of the public comments we received, we have
determined that ELZONRISTM meets all of the criteria for
approval for new technology add-on payments. Therefore, we are
approving new technology add-on payments for ELZONRISTM for
FY 2020. Cases involving the use of ELZONRISTM that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS procedure codes XW033Q5 and XW043Q5.
In its application, the applicant stated that ELZONRISTM
is supplied as a non-preserved, sterile, single-use liquid dosage in 2
mL glass vials containing 1 mL of solution at a concentration of 1 mg/
mL (1 mg/vial). It is administered by intravenous infusion at
12[micro]g/kg/day over 15 minutes once daily on days 1-5 of a 21 day
cycle. The dosing period may be extended for dose delays up to day 10
of the cycle. The applicant stated that the first administration cycle
should occur in the inpatient setting; subsequent cycles may be
administered in the inpatient or appropriate outpatient setting. The
applicant stated that in clinical studies, roughly 70 percent of
treatment-naive patients received 2 vials per dose (the remaining
patients received 1 vial per dose). Relapsed/refractory patients were
more likely to have 1 vial per dose (70 percent vs. 30 percent). In
all, about 70 percent of patients are treatment naive, and 30 percent
are relapsed/refractory. Using this information, the applicant
calculated that the average inpatient hospitalization would require 7.9
vials. According to the applicant, the WAC per vial is $24,430.
Therefore, the average total cost of ELZONRISTM per patient
is $192,997. Under Sec. 412.88(a)(2) (revised as discussed in this
final rule), we limit new technology add-on payments to the lesser of
65 percent of the costs of the new medical service or technology, or 65
percent of the amount by which the costs of the case exceed the MS-DRG
payment. As a result, the maximum new technology add-on payment for a
case involving the use of ELZONRISTM is $125,448.05 for FY
2020. (As discussed in section II.H.9. of the preamble of this final
rule, we are revising the maximum new technology add-on payment to 65
percent, or 75 percent for certain antimicrobial products, of the
average cost of the technology.)
f. BalversaTM (Erdafitinib)
Johnson & Johnson Health Care Systems, Inc. (on behalf of Janssen
Oncology, Inc.) submitted an application for new technology add-on
payments for BalversaTM for FY 2020. BalversaTM
is indicated for the second-line treatment of adult patients who have
been diagnosed with locally advanced or metastatic urothelial carcinoma
whose tumors exhibit certain fibroblast growth factor receptor (FGFR)
genetic alterations as detected by an FDA-approved test, and who have
disease progression during or following at least one line of prior
chemotherapy including within 12 months of neoadjuvant or adjuvant
chemotherapy.
According to the applicant, BalversaTM is an oral pan-
fibroblast growth factor receptor (FGFR) tyrosine kinase inhibitor
being evaluated in Phase II and III clinical trials in patients who
have been diagnosed with advanced urothelial cancer. FGFRs are a family
of receptor tyrosine kinases, which may be upregulated in various tumor
cell types and may be involved in tumor cell differentiation and
proliferation, tumor angiogenesis, and tumor cell survival.
BalversaTM is a pan-fibroblast FGFR inhibitor with potential
antineoplastic activity. Upon oral administration,
BalversaTM binds to and inhibits FGFR, which may result in
the inhibition of FGFR-related signal transduction pathways and,
therefore, the inhibition of tumor cell proliferation and tumor cell
death in FGFR-overexpressing tumor cells.
The applicant indicated that urothelial cancer (also known as
transitional cell cancer or bladder cancer) is the sixth most common
type of cancer diagnosed in the U.S. In 2018,
[[Page 42238]]
an estimated 81,190 new cases of bladder cancer were expected to be
diagnosed (approximately 62,380 in men and 18,810 in women), and result
in 17,240 deaths (approximately 1 out of 5 diagnosed men and 1 out of 4
diagnosed women).\108\ According to the applicant, for patients with
metastatic disease, outcomes can be dire due to the often rapid
progression of the tumor and the lack of efficacious treatments,
especially in cases of relapsed or refractory disease. The applicant
further stated that the relative 5-year survival rate for patients with
metastatic disease is 5 percent.
---------------------------------------------------------------------------
\108\ American Cancer Society, ``Key Statistics for Bladder
Cancer,'' www.cancer.org/cancer/bladder-cancer/about/key-statistics.html.
---------------------------------------------------------------------------
According to the applicant, in regard to current second-line
treatment, patients who have been diagnosed with locally advanced or
metastatic urothelial cancer have limited options and favor anti-
programmed death ligand 1/anti-programmed death 1 (anti-PD-L1/anti-PD-
1) therapies (also known as checkpoint inhibitors) as opposed to
conventional cytotoxic chemotherapy. With objective response rates
ranging from approximately 20 to 25 percent with currently approved
therapies and treatments, the applicant stated that new effective
treatment options are needed for this patient population. Although
there are five FDA-approved immune checkpoint inhibitors, the applicant
stated that studies have shown that not all patients benefit from PD-1
blockade. The applicant explained that patients harboring FGFR
alternates, which occurs at a frequency of approximately 20 percent,
are believed to have immunologically ``cold tumors'' that are less
likely to benefit from PD-1 blockade therapy.
The applicant noted that BalversaTM was granted
Breakthrough Therapy designation by the FDA on March 15, 2018, for the
treatment of patients who have been diagnosed and treated for
urothelial cancer whose tumors have certain FGFR genetic alterations.
BalversaTM received accelerated FDA approval on April 12,
2019. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19322), we
noted that the applicant submitted a request for approval at the March
2019 ICD-10 Coordination and Maintenance Committee Meeting for a unique
ICD-10-PCS procedure code to specifically identify cases involving the
administration of BalversaTM. BalversaTM was
granted approval for the ICD-10-PCS procedure code XW0DXL5
(Introduction of Erdafitinib Antineoplastic into Mouth and Pharynx,
External Approach, New Technology Group 5), with an effective date of
October 1, 2019.
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that BalversaTM is not substantially
similar to any existing treatment options because its inhibitory
mechanism of action is novel. Specifically, the applicant stated that
BalversaTM is a pan-fibroblast FGFR inhibitor with potential
antineoplastic activity. Upon oral administration,
BalversaTM binds to and inhibits FGFR, which may result in
the inhibition of FGFR-related signal transduction pathways and,
therefore, the inhibition of tumor cell proliferation and tumor cell
death in FGFR-overexpressing tumor cells. The applicant stated that
BalversaTM is a potent pan-FGFR (1-4) tyrosine kinase
inhibitor with IC50 (drug concentration at which 50 percent of target
enzyme activity is inhibited) in the single-digit nanomolar range.
According to the applicant, BalversaTM will, therefore,
represent a first-in-class FGFR inhibitor because of its novel
mechanism of action.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that potential
cases representing patients who may be eligible for treatment involving
BalversaTM are likely to be assigned to a wide variety of
MS-DRGs because patients who may receive treatment involving
BalversaTM in the inpatient setting would likely be
hospitalized due to other conditions than urothelial cancer. The
applicant stated that potential cases representing patients who may be
eligible for treatment involving the use of BalversaTM may
be assigned to the same MS-DRGs as cases representing patients treated
with currently available treatment options for urothelial cancer.
With respect to the third criterion, 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, the applicant
asserted that the treatment involving BalversaTM is specific
to a select subset of patients who have been diagnosed with locally
advanced or metastatic urothelial carcinoma and previously treated, but
subsequently present with FGFR alterations. According to the applicant,
while patients who have been diagnosed with metastatic or unresectable
urothelial cancer may be offered second-line therapy options of a
checkpoint inhibitor or systemic chemotherapy, treatment involving
BalversaTM is specific to a subset of patients with certain
FGFR-genetic alterations. Therefore, the applicant believes that
BalversaTM treats a different patient population than
currently available treatments.
We invited public comments on whether BalversaTM is
substantially similar to any existing technology and whether it meets
the newness criterion.
Comment: The applicant noted that CMS did not object to the
assertion that BalversaTM meets the newness criterion
because BalversaTM is not substantially similar to existing
technologies and because it is the first drug with its mechanism of
action approved by the FDA.
Response: We agree with the applicant that BalversaTM
meets the newness criterion. We agree that BalversaTM is not
substantially similar to existing treatment options because it has a
unique mechanism of action. We consider April 12, 2019 as the beginning
of the newness period for BalversaTM.
With regard to the cost criterion, the applicant conducted the
following analysis. The applicant searched the FY 2017 MedPAR Hospital
Limited Data Set (LDS) for inpatient hospital claims for potential
cases representing patients who may be eligible for treatment using
BalversaTM. The applicant noted that because the inpatient
admission for the potential cases identified would likely be unrelated
to the proposed indication for the use of BalversaTM, it is
unlikely that the administration of BalversaTM would be
initiated during an inpatient hospitalization. In addition, the
applicant assumed that most hospitals would not utilize
BalversaTM for short-stay inpatient hospitalization, and the
applicant therefore eliminated all identified potential cases
representing inpatient hospitalizations of 3 days or fewer from its
analysis. The applicant also assumed that any inpatient hospitalization
of 4 days or longer would involve the daily administration of
BalversaTM and calculated the drug's costs on a case-by-case
basis, multiplying the length-of-stay times the cost of the drug.
[[Page 42239]]
The applicant used a combination of ICD-10-CM diagnosis codes to
identify these potential cases. The applicant first identified claims
with one of the following ICD-10-CM diagnosis codes listed in this
table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.144
The applicant then searched the MedPAR data file for inpatient
hospital claims that also had one of the following ICD-10-CM diagnosis
codes listed in this table to identify a combination of applicable
codes.
[GRAPHIC] [TIFF OMITTED] TR16AU19.145
Based on this search, the applicant identified 2,844 cases mapping
to a wide range of MS-DRGs. The applicant identified and used in its
analysis those MS-DRGs to which more than 1 percent of the total
identified cases were assigned, as listed in this table.
[[Page 42240]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.146
[GRAPHIC] [TIFF OMITTED] TR16AU19.147
Using 100 percent of the cases assigned to these MS-DRGs, the
applicant determined an average case-weighted unstandardized charge per
case of $86,302. The applicant did not remove any charges for prior
therapies because the applicant indicated that the use of Balversa\TM\
would not replace any other therapies. The applicant standardized the
charges for each case and inflated each case's charges by applying the
FY 2019 IPPS/LTCH PPS final rule outlier charge inflation factor of
1.08864 (83 FR 41722). (In the proposed rule, we noted that the 2-year
charge inflation factor was revised in the FY 2019 IPPS/LTCH PPS final
rule correction notice. The revised factor is 1.08986 (83 FR 49844).
However, we further noted that even when using either the revised final
rule values or the corrected final rule values published in the
correction notice to inflate the charges, the final inflated average
case-weighted standardized charge per case for Balversa\TM\ would
exceed the average case-weighted threshold amount.) The applicant then
added the charges for the cost of Balversa\TM\. To determine the
charges for the cost of Balversa\TM\, the applicant used the inverse of
the FY 2019 IPPS/LTCH PPS final rule pharmacy national average CCR of
0.191. The applicant's reported average case-weighted threshold amount
was $62,435 and its reported final inflated average case-weighted
standardized charge per case was $111,713. Based on this analysis, the
applicant believes Balversa\TM\ meets the cost criterion because the
final inflated average case-weighted standardized charge per case
exceeds the average case-weighted threshold amount. We invited public
comments on whether Balversa\TM\ meets the cost criterion.
Comment: The applicant submitted a comment stating that CMS did not
object to its assertion that BalversaTM meets the cost
criterion. The applicant also submitted an updated analysis. The
applicant stated that in the analysis presented to CMS for the proposed
rule, the average case-weighted threshold amount was $62,435 and the
final inflated average case-weighted standardized charge per case was
$111,713. After BalversaTM received FDA approval, the
analysis was updated with charges added to reflect the wholesale
acquisition cost for BalversaTM, resulting in a final
inflated average case-weighted standardized charge per case $109,211.
The applicant noted that this remains above the case-weighted threshold
amount of $62,435 and that BalversaTM therefore continues to
meet the cost criterion.
Response: We appreciate the additional information provided by the
applicant regarding whether BalversaTM meets the cost
criterion. We agree that BalversaTM meets the cost
criterion.
The applicant asserted that BalversaTM represents a
substantial clinical improvement over existing technologies because it
offers a
[[Page 42241]]
treatment option for a patient population unresponsive to or ineligible
for currently available treatments. The applicant stated that
BalversaTM provides a substantial clinical improvement for a
select group of patients who have been diagnosed with locally advanced
or metastatic urothelial carcinoma who have failed first-line treatment
and have limited second-line treatment options, despite the recent
introduction of checkpoint inhibitors. The applicant further stated
that the use of BalversaTM will be the first available
treatment option specific for the subset of patients who have certain
fibroblast growth factor receptor (FGFR) genetic alterations that are
detected by an FDA-approved test. The applicant also believes that
BalversaTM represents a significant clinical improvement
because the technology reduces mortality, decreases pain, and reduces
recovery time.
To support its assertions of substantial clinical improvement, the
applicant submitted the results of a Phase I dose-escalation study for
the use of BalversaTM in the target patient population for
which the applicant asserts BalversaTM would be the first
available treatment option and represents a substantial clinical
improvement, which is patients who had been diagnosed with advanced
solid tumors for which standard curative treatment appeared no longer
effective. With a sample size of 65 patients, patients received
escalating oral doses of BalversaTM ranging from 0.5 mg to
12 mg, administered continuously daily, or oral doses of
BalversaTM of 10 mg or 12 mg administered on a 7-days-on/7-
days-off intermittent schedule. The study intended to identify the
Recommended Phase II Dose (RP2D) and investigate the safety and
pharmacodynamics of the drug. The applicant stated that the initial
RP2D was considered 9 mg continuous daily dosing and 10 mg for
intermitted dosing on the basis of improved tolerability.
The applicant also provided data from a multi-center, open-label
Phase II study of 99 patients, ages 36 years old to 87 years old, with
the median age being 68 years old, who had been diagnosed with
metastatic or unresectable urothelial carcinoma that had specific FGFR
alterations and were treated with a starting daily dose of
BalversaTM of 8 mg. The applicant noted the study included
87 patients who progressed after at least or more than 1 line of prior
chemotherapy or within 12 months of (neo) adjuvant chemotherapy.
According to the applicant, the objective response rate (ORR) measured
by Response Evaluation Criteria in Solid Tumors (RECIST) version 1.1
criteria was 40.4 percent (95 percent confidence interval [CI], 30.7
percent to 50.1 percent; 3.0 percent complete responses and 37.4
percent partial responses). The disease control rate (complete
responses, partial responses, and stable disease) was 79.8 percent. The
ORRs were similar in chemotherapy-na[iuml]ve patients versus patients
who progressed/relapsed after chemotherapy (41.7 percent versus 40.2
percent) and in patients who had visceral metastases versus those who
did not (38.5 percent versus 47.6 percent). The median time to response
was 1.4 months, and the median duration of response was 5.6 months (95
percent CI, 4.2 months to 7.2 months). The applicant noted that the
results demonstrated a median progression-free survival of 5.5 months
(95 percent CI, 4.2 months to 6.0 months) and a median overall survival
of 13.8 months (95 percent CI, 9.8 months-not estimable). In an
exploratory analysis of 22 patients previously treated with
immunotherapy, the ORR was 59 percent; response to prior immunotherapy
(per investigator) in these patients was 5 percent.109 110
---------------------------------------------------------------------------
\109\ Nishina, T., Takahashi, S., Iwasawa, R., et al., ``Safety,
pharmacokinetic, and pharmacodynamics of erdafitinib, a pan-
fibroblast growth factor receptor (FGFR) tyrosine kinase inhibitor,
in patients with advanced or refractory solid tumors,'' Invest New
Drugs, 2018, vol. 36, pp. 424-434.
\110\ Tabernero, J., Bahleda, R., Dienstmann, R., et al.,
``Phase I Dose-Escalation Study of JNJ-42756493, an Oral Pan-
Fibroblast Growth Factor Receptor Inhibitor, in Patients With
Advanced Solid Tumors,'' J Clin Onc, Vol. 33(30), October 20, 2015,
pp. 3001-3008.
---------------------------------------------------------------------------
The applicant also referenced an ongoing Phase III study, but
indicated that the data was not available at the time of the
application's submission.
In the proposed rule, we stated that we have the following concerns
with regard to whether the technology meets the substantial clinical
improvement criterion. First, we stated that the applicant did not
provide substantial data comparing BalversaTM to existing
therapies. Additionally, the studies that were provided were based on
small sample sizes, open-labeled, and presented without a complete
comparison to existing therapies. Due to the limited nature of
available data, we stated we have concerns that we may not have enough
information to determine if BalversaTM represents a
substantial clinical improvement over existing technologies.
We invited public comments on whether BalversaTM meets
the substantial clinical improvement criterion.
Comment: The applicant submitted a comment in response to CMS'
concerns about the limited nature of available data. The applicant
referenced the Phase II study (n=87) previously detailed in the
proposed rule. The applicant stated that an objective response rate
(ORR) of 32.2 percent (95 percent confidence interval [CI]: 22.4-42.0)
was observed. The applicant also noted that among the majority of
patients (n=64) enrolled with FGFR 3 point mutations, the ORR was 40.6
percent (95 percent CI: 28.6-52.7).
In response to CMS' concern about the lack of comparison of
BalversaTM to existing therapies, the applicant stated that
in the absence of head-to-head data, effectiveness comparisons can be
made based on approved therapies in metastatic urothelial carcinoma for
which BalversaTM is approved. Per the applicant, FDA-
approved systemic therapies for locally advanced or mUC following
platinum-based chemotherapy include KEYTRUDA[supreg] (pembrolizumab),
TECENTRIQ[supreg] (atezolizumab), BAVENCIO[supreg] (avelumab),
IMFINZI[supreg] (durvalumab), and OPDIVO[supreg] (nivolumab). The
applicant noted that of the five approved checkpoint inhibitors,
pembrolizumab observed the highest ORR of 21 percent in their
registration trial.\111\ Furthermore, the applicant noted that in the
United States, docetaxel is an acceptable systemic chemotherapy
following progression after platinum-based chemotherapy. The applicant
stated that although docetaxel is not approved for the treatment of mUC
in the US, a Phase 2 study conducted in 30 patients demonstrated a
partial response in 4 (13.3 percent) patients.\112\
---------------------------------------------------------------------------
\111\ KEYTRUDA[supreg] (pembrolizumab injection) [package
insert]. Whitehouse Station, NJ: Merck Sharp & Dohme Corp.; April
2019.
\112\ McCaffrey JA, Hilton S, Mazumdar M, et al. Phase 2 trial
of docetaxel in patients with advanced or metastatic transitional-
cell carcinoma. J Clin Oncol. 1997;15(5):1853-1857.
---------------------------------------------------------------------------
Response: We appreciate the additional information and analysis
provided by the applicant in response to our concerns regarding
substantial clinical improvement, including the additional information
on data trends supporting an improved ORR for BalversaTM
when compared to other FDA approved medications. We note that in the
cited study regarding the ORR for pembrolizumab, ORRs of 33 percent and
21 percent were achieved in two separate efficacy randomized trials
with sample sizes of 834 and 540 respectively.\113\ These are
independent
[[Page 42242]]
studies with varying sample and study characteristics and lacking
unifying statistical testing. However, in light of the severity of the
disease and patient population with limited treatment options, and the
results provided by the applicant from its Phase II study, which
featured an objective response rate of 40.4 percent, a disease control
of 79.8 percent, and a median progression-free survival of 5.5 months,
we agree with the applicant that Balversa\TM\ meets the substantial
clinical improvement criterion.
---------------------------------------------------------------------------
\113\ KEYTRUDA[supreg] (pembrolizumab injection) [package
insert]. Whitehouse Station, NJ: Merck Sharp & Dohme Corp.; April
2019.
---------------------------------------------------------------------------
After consideration of the public comment we received, we have
determined that BalversaTM meets all of the criteria for
approval of new technology add-on payments. Therefore, we are approving
new technology add-on payments for BalversaTM for FY 2020.
Cases involving BalversaTM that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code XW0DXL5. In its application, the applicant stated that
BalversaTM will be supplied as 3 mg, 4 mg and 5 mg tablets
with a recommended starting dose of 8 mg daily. According to the
applicant, the WAC for one dose of BalversaTM is $613.20 per
day for an average duration of 8.9 days. Therefore, the total cost of
BalversaTM per patient is $5,481.89. Under Sec.
412.88(a)(2) (revised as discussed in this final rule), we limit new
technology add-on payments to the lesser of 65 percent of the costs of
the new medical service or technology, or 65 percent of the amount by
which the costs of the case exceed the MS-DRG payment. As a result, the
maximum new technology add-on payment for a case involving the use of
BalversaTM is $3,563.23 for FY 2020.
g. ERLEADATM (Apalutamide)
Johnson & Johnson Health Care Systems Inc., on behalf of Janssen
Products, LP, Inc., submitted an application for new technology add-on
payments for ERLEADATM (apalutamide) for FY 2020.
ERLEADATM received FDA approval on February 14, 2018. This
oral drug is an androgen receptor inhibitor indicated for the treatment
of patients who have been diagnosed with non-metastatic castration-
resistant prostate cancer (nmCRPC).
Prostate cancer is the second leading cause of cancer death in
men.\114\ Androgens, a type of hormone that includes testosterone, can
promote tumor growth. Androgen-deprivation therapy (ADT) is initially
an effective way to treat prostate cancer. However, almost all men with
prostate cancer eventually develop castration-resistant disease, or
cancer that continues to grow despite treatment with hormone therapy or
surgical castration.\115\ Non-metastatic castration-resistant prostate
cancer (nmCRPC) is a clinical state in which cancer has not spread to
other parts of the body, but continues to grow despite treatment with
ADT, either medical or surgical, that lowers testosterone levels.
Delaying metastases, or extending metastasis-free survival (MFS), may
delay symptomatic progression, morbidity, mortality, and healthcare
resource utilization. According to the applicant, nearly all men who
die from prostate cancer have antecedent metastases to bone or other
sites. ERLEADATM blocks the effect of androgens on the tumor
in order to delay metastases, a major cause of complications and death
among men with prostate cancer. Prior to ERLEADATM, there
were no FDA-approved treatments for nmCRPC to delay the onset of
metastatic castration-resistant prostate cancer (mCRPC).\116\ The U.S.
incidence of nmCRPC is estimated to be 50,000 to 60,000 cases per
year.\117\
---------------------------------------------------------------------------
\114\ American Cancer Society. https://www.cancer.org/research/cancer-facts-statistics/all-cancer-facts-figures/cancer-facts-figures-2019.html
\115\ Dai, C., Heemers, H., Sharifi, N., ``Androgen signaling in
prostate cancer,'' Cold Spring Harb Perspect Med, 2017, vol. 7(9),
pp. a030452.
\116\ Center for Drug Evaluation and Research. NDA/BLA Multi-
Disciplinary Review and Evaluation (Summary Review, Office Director,
Cross Discipline Team Leader Review, Clinical Review, Non-Clinical
Review, Statistical Review and Clinical Pharmacology Review) NDA
210951--ERLEADA (apalutamide)--Reference ID: 4221387. Available at:
https://www.accessdata.fda.gov/drugsatfda_docs/nda/2018/210951Orig1s000MultidisciplineR.pdf. Published March 19, 2018.
\117\ Beaver, Julia A., Kluetz, Paul, Pazdur, Richard,
``Metastasis-free Survival--A New End Point in Prostate Cancer
Trials,'' 2018, N Eng J of Med, vol. 378, pp. 2458-2460, 10.1056/
NEJMp1805966.
---------------------------------------------------------------------------
With respect to the newness criterion, ERLEADATM
(apalutamide) was granted Fast Track and Priority Review designations
under FDA's expedited programs, and received FDA approval on February
14, 2018 for the treatment of patients who have been diagnosed with
non-metastatic castration-resistant prostate cancer. In the FY 2020
IPPS/LTCH PPS proposed rule (84 FR 19325), we noted that the applicant
submitted a request for approval for a unique ICD-10-PCS code for the
administration of ERLEADATM beginning in FY 2020. Approval
was granted for the following procedure code effective October 1, 2019:
XW0DXJ5 (Introduction of Apalutamide Antineoplastic into Mouth and
Pharynx, External Approach, New Technology Group 5).
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant maintained that ERLEADATM is new because it was
the first drug approved by the FDA with its mechanism of action.
Specifically, ERLEADATM is an androgen receptor (AR)
inhibitor that binds directly to the ligand-binding domain of the AR.
It has a trifold mechanism of action. Apalutamide inhibits AR nuclear
translocation, inhibits DNA binding, and impedes AR-mediated
transcription, which together inhibit tumor cell growth.\118\ According
to the applicant, in non-clinical studies, apalutamide administration
caused decreased tumor cell proliferation and increased apoptosis
leading to decreased tumor volume in mouse xenograft models of prostate
cancer. Furthermore, the applicant asserted that in additional non-
clinical studies, apalutamide was shown to have a higher binding
affinity to the androgen receptor than bicalutamide (CASODEX), a first-
generation anti-androgen that has been used in clinical practice for
the treatment of nmCRPC. However, the applicant noted that bicalutamide
is not FDA-approved for this indication nor is there Phase III data
available on its use in this population. In addition, according to the
applicant, apalutamide has a different mechanism of action than
bicalutamide because it does not show antagonist-to-antagonist switch
like bicalutamide.
---------------------------------------------------------------------------
\118\ Clegg, N.J., Wongvipat, J., Joseph, J.D., et al., ``ARN-
509: a novel antiandrogen for prostate cancer treatment,'' Cancer
Res, 2012, vol. 72(6), pp. 1494-503.
---------------------------------------------------------------------------
With regard to the second criterion, whether a product is assigned
to the same or different MS-DRG, the applicant noted that patients who
may be eligible to receive treatment involving ERLEADATM in
the inpatient setting will likely be hospitalized due to other
conditions. Therefore, the applicant explained that potential cases
eligible to receive treatment involving ERLEADATM are likely
to be assigned to a wide variety of MS-DRGs, and ERLEADATM
is similar to existing technologies in this respect.
With regard to the third criterion, whether the new use of the
technology involves the treatment of the same or similar type of
disease and the same or
[[Page 42243]]
similar patient population, the applicant maintained that
ERLEADATM was the first FDA-approved treatment option for
patients who have been diagnosed with nmCRPC. According to the
applicant, there are a number of therapies currently available for
patients who have been diagnosed with mCRPC, including chemotherapy,
continuous ADT, immunotherapy, radiation therapy, radiopharmaceutical
therapy, and androgen pathway treatments, including secondary hormonal
therapies and supportive care. However, prior to ERLEADATM,
there were no FDA-approved treatment options for patients who have been
diagnosed with nmCRPC to delay the onset of mCRPC. Therefore, according
to the applicant, ERLEADATM provides a treatment option to
patients who have been diagnosed with a stage of prostate cancer that
previously had no other approved treatment options available, and the
standard approach was ``watch and wait/observation.'' The applicant
stated that both the National Comprehensive Cancer Network[supreg]
(NCCN[supreg]) guidelines for prostate cancer and American Urological
Association (AUA) guidelines for castration-resistant prostate cancer
note the limited treatment options for nmCRPC as compared to mCRPC. The
applicant pointed out that apalutamide is highly recommended, as one of
the two treatments with a Category 1 recommendation included in the
NCCN[supreg] guidelines and standard treatment options for asymptomatic
nmCRPC based on evidence level Grade A in the AUA
guidelines.119 120 Therefore, the applicant posited that
ERLEADATM involves the treatment of a new patient population
because it is a new treatment option for patients who have been
diagnosed with nmCRPC and have limited available treatment options.
---------------------------------------------------------------------------
\119\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines[supreg]): Prostate Cancer (Version 4.2018). National
Comprehensive Cancer Network. Available at: www.nccn.org. Published
August 15, 2018.
\120\ Lowrance, W.T., Murad, M.H., Oh, W.K., et al.,
``Castration-Resistant Prostate Cancer: AUA Guideline Amendment
2018,'' J Urol, 2018, pii: S0022-5347(18)43671-3.
---------------------------------------------------------------------------
As noted in the proposed rule and previously summarized, the
applicant maintained that ERLEADATM meets the newness
criterion and is not substantially similar to existing technologies
because it has a unique mechanism of action and offers an effective
treatment option to a new patient population with limited available
treatment options. We invited public comments on whether
ERLEADATM meets the newness criterion.
Comment: The applicant commented that CMS did not express concern
about the newness criterion, and reiterated that ERLEADATM
is not substantially similar to existing technologies and qualifies as
new because it was the first drug with its mechanism of action approved
by the FDA to treat patients with nmCRPC.
Response: We agree that ERLEADATM is not substantially
similar to existing technologies and that it meets the newness
criterion because it was the first drug with its mechanism of action
approved by the FDA to treat patients with nmCRPC. We consider February
14, 2018 as the beginning of the newness period for
ERLEADATM.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. In order to identify the range of MS-DRGs to which cases
representing potential patients who may be eligible for treatment using
ERLEADATM may map, the applicant identified cases that would
be eligible for use of ERLEADATM by the presence of two ICD-
10-CM diagnosis code combinations: C61 (Malignant meoplasm of prostate)
in combination with R97.21 (Rising PSA following treatment for
malignant neoplasm of prostate); or C61 in combination with Z19.2
(Hormone resistant malignancy status). The applicant searched the FY
2017 MedPAR final rule file (claims from FY 2015) for claims with the
presence of these two code combinations. Cases identified mapped to a
wide variety of MS-DRGs. The applicant eliminated all hospital stays of
fewer than 4 days from its analysis because of its assumption that most
hospitals would not provide ERLEADATM for short-stay
inpatients. The applicant also assumed that any hospital stay 4 days or
longer would involve the daily provision of ERLEADATM. This
resulted in 493 cases across 152 MS-DRGs, with approximately 33 percent
of all cases mapping to the following 9 MS-DRGs: MS-DRG 871 (Septicemia
or Severe Sepsis without MV >96 Hours with MCC); MS-DRG 543
(Pathological Fractures and Musculoskeletal and Connective Tissue
Malignancy with CC); MS-DRG 683 (Renal Failure with CC); MS-DRG 723
(Malignancy, Male Reproductive System with CC); MS-DRG 722 (Malignancy,
Male Reproductive System with MCC); MS-DRG 698 (Other Kidney and
Urinary Tract Diagnoses with MCC); MS-DRG 699 (Other Kidney and Urinary
Tract Diagnoses with CC); MS-DRG 682 (Renal Failure with MCC); and MS-
DRG 948 (Signs and Symptoms without MCC).
For the 493 identified cases, the average case-weighted
unstandardized charge per case was $66,559. The applicant then
standardized the charges using the FY 2017 IPPS/LTCH PPS final rule
Impact file. Because ERLEADATM would not replace any other
therapies occurring during the inpatient stay, the applicant did not
remove any charges for the current treatment. The applicant then
applied the 2-year inflation factor of 8.59 percent (1.085868)
published in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41718) to
inflate the charges from FY 2017 to FY 2019. In the proposed rule, we
noted that the inflation factors were revised in the FY 2019 IPPS/LTCH
PPS final rule correction notice. The corrected final 2-year inflation
factor is 1.08986 (83 FR 49844). The applicant converted the costs of
ERLEADATM to charges using the inverse of the FY 2019 IPPS/
LTCH PPS final rule pharmacy national average CCR of 0.191 (83 FR
41273) to include the charges in its estimate. Based on the FY 2019
IPPS/LTCH PPS final rule correction notice data file thresholds, the
average case-weighted threshold amount was $52,362. The average case-
weighted standardized charge per case was $76,901. Because the average
case-weighted standardized charge per case exceeds the average case-
weighted threshold amount, the applicant maintained that the technology
meets the cost criterion.
The applicant submitted an additional cost analysis including
hospital stays shorter than 4 days to demonstrate that
ERLEADATM also meets the cost criterion using all discharges
in the analysis, regardless of length of stay. While the applicant
maintained that ERLEADATM is unlikely to be administered by
the hospital for inpatient stays fewer than 4 days, the applicant
demonstrated that the average case-weighted standardized charge per
case ($57,150) continues to exceed the average case-weighted threshold
amount ($50,225) using all discharges (932 cases).
In the proposed rule, we noted that the applicant used the proposed
rule values to inflate the previously discussed standardized charges.
However, we further noted that even when using either the final rule
values or the corrected final rule values to inflate the charges, the
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount in each analysis. We
[[Page 42244]]
invited public comments on whether ERLEADATM meets the cost
criterion.
Comment: The applicant commented that the average case-weighted
standardized charge per case was above the average case-weighted
threshold amount in both the initial and second analysis.
Response: We agree that ERLEADATM meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that ERLEADATM represents a substantial
clinical improvement because: (1) The technology offers a treatment
option for a patient population previously ineligible for treatments,
because ERLEADATM is the first FDA-approved treatment for
patients who have been diagnosed with nmCRPC; and (2) use of the
technology significantly improves clinical outcomes for a patient
population because ERLEADATM was shown to significantly
improve a number of clinical outcomes in the randomized Phase III
SPARTAN trial,\121\ including significant improvement in metastasis-
free survival (MFS).
---------------------------------------------------------------------------
\121\ Smith, M.R., et al., ``Apalutamide Treatment and
Metastasis-free Survival in Prostate Cancer,'' N Engl J Med, 2018,
vol. 12;378(15), pp. 1408-1418.
---------------------------------------------------------------------------
First, the applicant stated that there were no FDA-approved
treatments to delay metastasis for patients who have been diagnosed
with nmCRPC, a small but important clinical state within the spectrum
of prostate cancer, prior to the FDA approval of ERLEADATM.
The applicant emphasized that until the FDA approved the use of
ERLEADATM, Medicare patients who have been diagnosed with
nmCRPC had extremely limited treatment options, and the standard
approach was ``watch and wait/observation.'' The applicant asserted
that ERLEADATM offers a promising new treatment option and
has been shown to improve MFS in a Phase III trial \122\ with a
demonstrated safety and tolerability profile and no negative impact to
health-related quality of life based on patient-reported outcomes.
Therefore, the applicant stated that the ``robust results'' of the
clinical trial demonstrate that ERLEADATM is a substantial
clinical improvement over existing technologies because it provides an
effective treatment option for a patient population previously
ineligible for treatments.
---------------------------------------------------------------------------
\122\ Ibid.
---------------------------------------------------------------------------
Second, the applicant maintained that ERLEADATM is a
substantial clinical improvement because ERLEADATM was shown
to significantly improve a number of clinical outcomes, most notably
MFS. Metastases are a major cause of complications and death among men
with prostate cancer. Therefore, according to the applicant, delaying
metastases may delay symptomatic progression, morbidity, mortality, and
healthcare resource utilization. ERLEADATM was approved by
the FDA based on a prostate cancer trial using the primary endpoint of
MFS, with overall survival used as a secondary endpoint.
The SPARTAN trial was a randomized, double-blind, placebo-
controlled, Phase III trial which included men who had been diagnosed
with nmCRPC and a prostate-specific antigen doubling time of 10 months
or less. Patients were randomly assigned, in a 2:1 ratio, to receive
apalutamide (240 mg per day) or placebo. A total of 1,207 men underwent
randomization (806 to the apalutamide group and 401 to the placebo
group). All of the patients continued to receive androgen-deprivation
therapy. The primary end point of MFS was defined as the time from
randomization to the first detection of distant metastasis on imaging
or death. The study team calculated that a sample of 1,200 patients
with 372 primary end-point events would provide the trial with 90
percent power to detect a hazard ratio for metastasis or death in the
apalutamide group versus the placebo group of 0.70, at a two-sided
significance level of 0.05. The Kaplan-Meier method was used to
estimate medians for each trial group. The primary statistical method
of comparison for time-to-event end points was a log-rank test with
stratification according to the pre-specified factors. Cox
proportional-hazards models were used to estimate the hazard ratios and
95 percent confidence intervals.
According to the applicant, results of the primary endpoint
analysis for MFS were both statistically significant and clinically
meaningful. Median MFS was 40.5 months in the apalutamide group as
compared with 16.2 months in the placebo group (hazard ratio [HR] =
0.28; 95 percent confidence interval [CI]: 0.23, 0.35; P<0.0001). In
other words, ERLEADATM significantly prolonged MFS by 2
years in men who had been diagnosed with nmCRPC. In a multi-variate
analysis, treatment with ERLEADATM was an independent
predictor for longer MFS (HR: 0.26; 95 percent CI: 0.21-0.32;
P<0.0001). The treatment effect of ERLEADATM on MFS was
consistently favorable across pre-specified subgroups, including
patients with Prostate Specific Antigen doubling time (PSADT) of less
than 6 months versus more than 6 months (short PSA doubling time is a
predictor of metastasis), use of bone-sparing agents, and local-
regional disease.
Additionally, the applicant stated that the validity of the primary
endpoint results is supported by improvements in all secondary
endpoints, with significant improvement observed in time to metastasis,
progression-free survival (PFS), and time to symptomatic progression
(all P<0.001) for ERLEADATM compared to placebo.
According to the applicant, treatment with ERLEADATM
significantly extended time to metastasis by almost 2 years (40.5
months versus 16.6 months, P<0.001). In addition, time to bone
metastasis and nodal metastasis in particular were both significantly
longer (P<0.0001) in the ERLEADATM group compared to the
placebo group.
According to the applicant, ERLEADATM was also
associated with a significant improvement in the secondary endpoint of
PFS, at 40.5 months for the ERLEADATM group versus 14.7
months for the placebo group (P<0.001). In a multi-variate analysis of
patients treated in the SPARTAN study, treatment with
ERLEADATM was an independent predictor for longer time to
symptomatic progression (reached versus not reached; P<0.001).
The applicant also included the results of additional secondary
endpoints for CMS consideration as evidence of substantial clinical
improvement, including a suggested overall survival (OS) benefit;
demonstrated safety profile; maintained quality of life; and decreased
prostate specific antigen (PSA) levels.
While OS data were not mature at the time of final MFS analysis
(only 24 percent of the required number of OS events were available for
analysis), the applicant asserted that OS results suggested a benefit
of treatment using ERLEADATM as compared to placebo. The
applicant explained that, according to a statistical analysis model
correlating the proportion of variability of OS attributable to the
variability of MFS, patients who developed metastases at 6, 9, and 12
months had significantly shorter median OS compared with those patients
without metastasis.
The applicant also stated that treatment using ERLEADATM
provides an effective option with a demonstrated safety profile and
tolerability for patients who have been diagnosed with nmCRPC. The
safety of the use of ERLEADATM was assessed in the SPARTAN
trial, and adverse events (AEs) that occurred at >=15 percent in either
group included: Fatigue, hypertension, rash, diarrhea, nausea,
[[Page 42245]]
weight loss, arthralgia, and falls. The applicant asserted that in
considering the risks and benefits of treatment involving the use of
ERLEADATM for patients who have been diagnosed with nmCRPC,
the FDA noted that there were no FDA-approved treatments for the
indication and that ERLEADATM had a favorable risk-benefit
profile.
Next, the applicant stated that the use of ERLEADATM
also has a substantial clinical improvement benefit of maintaining
quality of life. According to the applicant, patients who have been
diagnosed with nmCRPC are generally asymptomatic, so it is a positive
outcome if the addition of a therapy does not cause degradation of
health-related quality of life. The applicant maintained that in
asymptomatic men who have been diagnosed with high-risk nmCRPC, health-
related quality of life (HRQOL) was maintained after initiation of the
use of ERLEADATM.\123\ According to the applicant, patient-
reported outcomes using the Functional Assessment of Cancer Therapy-
Prostate [FACT-P] questionnaire and European Quality of Life-5
Dimensions-3 Levels [EQ-5D-3L] questionnaire results indicated that
patients who received treatment involving ERLEADATM
maintained stable overall HRQOL outcomes over time from both treatment
groups.
---------------------------------------------------------------------------
\123\ Saad, F., et al., ``Effect of apalutamide on health-
related quality of life in patients with non-metastatic castration-
resistant prostate cancer: an analysis of the SPARTAN randomized,
placebo- controlled, phase 3 trial,'' Lancet Oncology, 2018 Oct;
Epub 2018 Sep 10.
---------------------------------------------------------------------------
Additionally, the applicant discussed prostate specific antigen
(PSA) outcomes as another secondary result demonstrating substantial
clinical improvement. PSA, a protein produced by the prostate gland, is
often present at elevated levels in men who have been diagnosed with
prostate cancer and PSA tests are used to monitor the progression of
the disease. According to the applicant, at 12 weeks after
randomization, the median PSA level had decreased by 89.7 percent in
the ERLEADATM group versus an increase of 40.2 percent in
the placebo group. In an exploratory analysis performed by the
applicant of patients treated in the SPARTAN study, the use of
ERLEADATM decreased the risk of PSA progression by 94
percent compared with the patients in the placebo group (not reached vs
3.71 months; HR: 0.064; 95 percent CI: 0.052-0.080; P<0.0001). Overall,
a >=90 percent maximum decline in PSA from baseline at any time during
the study was reported in 66 percent of the patients in the
ERLEADATM group and 1 percent of the patients in the placebo
group, according to the applicant. The applicant noted that increase in
time to PSA progression is relevant from a clinical standpoint for
clinicians and patients alike because PSA monitoring, rather than the
use of regularly scheduled surveillance imaging, as was the case with
SPARTAN, is often the most practical method of screening for
progression of nmCRPC.
In the proposed rule, we stated that we had the following concerns
regarding the applicant's assertions of substantial clinical
improvement:
Regarding the SPARTAN trial design, we stated we were
concerned that the study enrollment may not be representative of the
U.S. population considering that North American enrollment was only 35
percent of patients overall, and only approximately 6 percent of
enrolled patients were black. Underrepresentation of black patients is
of particular concern considering that, in the United States, African-
American patients are disproportionately affected by prostate cancer.
According to the CDC,\124\ the rate of new prostate cancers by race is
158.3 per 100,000 men for African-Americans, compared to 90.2 for
whites, 78.8 for Hispanics, 51.0 for Asian/Pacific Islanders, and 49.6
for American Indians/Alaska Natives. We stated that we were concerned
that, based on an exploratory subgroup analysis performed by the
applicant, black patients may not have performed better in the
treatment group; while the hazard ratio of 0.63 (95 percent confidence
interval: 0.23, 1.72) suggests a benefit to the group treated with
ERLEADATM, the median MFS for this subgroup was reported as
shorter for the ERLEADATM group at 25.8 months than for the
placebo group, at 36.8 months.\125\ Additionally, we noted that 23
percent of the patients in the SPARTAN trial did not have definitive
local therapy at baseline for their diagnosis of prostate cancer, which
is accepted standard-of-care in the United States.
---------------------------------------------------------------------------
\124\ U.S. Department of Health and Human Services, Centers for
Disease Control and Prevention and National Cancer Institute, U.S.
Cancer Statistics Working Group, U.S. Cancer Statistics Data
Visualizations Tool, based on November 2017 submission data (1999-
2015), Available at: www.cdc.gov/cancer/dataviz, June 2018.
\125\ Smith, M.R., et al., ``Apalutamide Treatment and
Metastasis-free Survival in Prostate Cancer,'' N Engl J Med, 2018,
vol. 12;378(15), pp. 1408-1418.
---------------------------------------------------------------------------
In response to this concern about low North American enrollment and
subgroup underrepresentation, the applicant submitted additional
information claiming a consistent treatment effect across all
subpopulations and regions. The applicant also pointed to the low
hazard ratio for the subgroup of black patients as support for the
benefit of the use of ERLEADATM. In the proposed rule, we
welcomed additional information and public comments on whether the
SPARTAN trial results are generalizable to the U.S. population, and in
particular, African-American patients.
We also noted regarding the SPARTAN trial that a total of
7.0 percent of the patients in the ERLEADATM group and 10.6
percent of the patients in the placebo group withdrew consent from the
trial. In the proposed rule, we stated that additional explanation from
the applicant of how those that withdrew were considered in the
analysis, and whether there was any analysis of potential impact of
withdrawals on the study results would be helpful.
We also stated in the proposed rule that we had concerns
about the primary endpoint used for the SPARTAN trial, MFS. The
applicant explained that MFS was determined to be a reasonable end
point for patients who have been diagnosed with nmCRPC because of the
difficulty in using OS as a primary endpoint; multiple drugs can be
used sequentially for advanced disease, necessitating larger and longer
trials and potentially confounding interpretation of results if
attempting to prove that a prostate cancer drug lengthens OS.
Nevertheless, because MFS is not identical to OS and data on OS was not
mature at the time of the study's results, we noted that it may be
difficult to conclude based on the current data whether the use of
ERLEADATM improves OS.
To address this concern, the applicant submitted additional
information on MFS as a surrogate clinical endpoint for OS, including a
recent study by the International Clinical Endpoints for Cancer of the
Prostate (ICECaP) Working Group showing a correlation between MFS and
OS in several prostate cancer studies.\126\ The applicant explained
that based on review of 19 randomized, controlled trials evaluating 21
study units in 12,712 men with localized prostate cancer, the
correlation between OS and MFS was 0.91 (95 percent CI: 0.91-0.91) at
the patient level, as measured by Kendall's [tau]. To demonstrate that
MFS is closely linked with OS, the applicant cited a retrospective
analysis of electronic health record database for patients who
[[Page 42246]]
have been diagnosed with nmCRPC in which MFS independently predicted
mortality risk; patients developing metastasis within 1 year had 4.4-
fold greater risk for mortality (95 percent CI: 2.2-8.8) than those who
remained metastasis-free at year 3.\127\ The applicant also reiterated
that a significant positive correlation between MFS and OS was observed
in the SPARTAN trial (Pearson's correlation coefficient = 0.66;
Spearman's correlation coefficient = 0.62, P<0.0001; and Kendall [tau]
statistic = 0.52, parametric Fleischer's statistical model correlation
coefficient of 0.69 (standard error, 0.002; 95 percent CI: 0.69-0.70)).
---------------------------------------------------------------------------
\126\ ICECaP Working Group, Sweeney, C., Nakabayashi, M., et
al., ``The development of intermediate clinical endpoints in cancer
of the prostate (ICECaP)'', J Natl Cancer Inst, 2015, vol. 107(12),
pp. djv261
\127\ Li S., Ding Z, Lin J.H., et al., ``Association of
prostate-specific antigen (PSA) trajectories with risk for
metastasis and mortality in nonmetastatic castration-resistant
prostate cancer (nmCRPC),'' Abstract presented at: 2018
Genitorurinary Cancers Symposium, February 8-10, 2018, San
Francisco, CA.
---------------------------------------------------------------------------
We invited public comments on whether ERLEADATM meets
the substantial clinical improvement criterion for patients who have
been diagnosed with nmCRPC.
Comment: The applicant submitted comments in response to concerns
about the applicability of the data from the SPARTAN study to the US
population, including African-American patients. The applicant stated
that ERLEADATM treatment benefit was evaluated by region
(North America, Europe, Asia-Pacific), and the treatment effect showing
benefit from ERLEADATM in each region was consistent with
the overall population. Also, the applicant pointed to the additional
data summarized in the proposed rule (84 FR 19328) supplied in response
to this concern, and reiterated that analyses by race also indicate
that the SPARTAN study results are generalizable to the US patient
population with nmCRPC, including African-Americans.
The applicant also responded to our request for additional
explanation of how those that withdrew were considered in the analysis
and the potential impact of withdrawals on the study results. According
to the applicant, the small proportion of subjects who withdrew consent
for the study are not expected to affect the analysis' conclusions; all
subjects randomized to treatment were included in the Intention-to-
Treat analysis for efficacy, including subjects who withdrew consent.
The applicant stated that only 1.7 percent (n = 14) of subjects in the
ERLEADATM group and 2.7 percent (n = 11) of subjects in the
placebo group were censored due to withdrawal of consent, and that
small proportion is not expected to impact the conclusion of the MFS
analysis.
Finally, in response to our concern about the SPARTAN study primary
endpoint, MFS, the applicant submitted information to demonstrate that
MFS is accepted as a study endpoint by the FDA and the oncologic
community. The applicant described draft guidance from the FDA \128\ as
stating that the prolonged disease course and assessment period for
patients with nmCRPC may make the use of overall survival (OS)
impractical as a primary endpoint to support approval of treatments,
and that endpoints that can be measured earlier in the course of
disease, including MFS, are useful and clinically relevant assessments.
---------------------------------------------------------------------------
\128\ Center for Drug Evaluation and Research (CDER) & Center
for Biologics Evaluation and Research (CBER). Nonmetastatic,
Castration-Resistant Prostate Cancer: Considerations for Metastasis-
Free Survival Endpoint in Clinical Trials Guidance for Industry
DRAFT GUIDANCE; 2018. https://www.fda.gov/regulatory-information/search-fda-guidancedocuments/nonmetastatic-castration-resistant-prostate-cancer-considerations-metastasis-free-survival-endpoint.
Accessed June 1, 2019.
---------------------------------------------------------------------------
Additionally, the applicant commented further on the clinical
relevance of MFS and the correlation of metastasis with morbidity and
the need for additional medical interventions. The applicant discussed
the International Clinical Endpoints for Cancer of the Prostate
(ICECaP) Working Group's review of 19 randomized controlled trials
evaluating 21 study units in 12,712 patients with localized prostate
cancer, in which the correlation between OS and MFS was 0.91 (95
percent CI: 0.91-0.91) at the patient level, as measured by Kendall's
[tau]. At the trial level, R 2 was 0.83 (95 percent CI: 0.71-0.88) from
weighted linear regression of 8-year OS rates vs 5-year MFS rates. The
applicant asserted that the treatment effect (measured by log HR) for
MFS and OS was well correlated (R2, 0.92 [95 percent CI: 0.81-
0.95]).\129\ The applicant also referred to the study of an electronic
health record database in patients with nmCRPC in which MFS
independently predicted mortality risk: Metastasis within 1 year had
4.4-fold greater risk for mortality (95 percent CI: 2.2-8.8) than those
who remained metastasis-free at year 3.\130\ The applicant also stated
that the correlational analysis between MFS and OS in patients with
nmCRPC included in the SPARTAN study showed that patients who developed
metastases at 6, 9, and 12 months had significantly shorter median OS
compared with those patients without metastasis. Finally, the applicant
commented that the clinical benefit of MFS was further supported by an
analysis of the SPARTAN study performed after one year of additional
follow up, which assessed the time from randomization to the start of
the next subsequent therapy after discontinuation of the study
medication, known as second progression free survival (PFS2). According
to the applicant, that analysis supported treating patients with nmCRPC
with ERLEADATM provides a significantly longer response than
ADT alone followed by a second therapy and support treatment of these
patients with ERLEADATM.
---------------------------------------------------------------------------
\129\ Xie W., Regan M.M., Buyse M., et al. Metastasis-free
survival is a strong surrogate of overall survival in localized
prostate cancer. J Clin Oncol. 2017;35(27):3097-3104.
\130\ Li S., Ding Z., Lin J.H., et al. Association of prostate-
specific antigen (PSA) trajectories with risk for metastasis and
mortality in non- metastatic castration-resistant prostate cancer
(nmCRPC). Abstract presented at: 2018 Genitorurinary Cancers
Symposium; February 8-10, 2018; San Francisco, CA.
---------------------------------------------------------------------------
Response: We appreciate the additional information and analysis
provided by the applicant in response to our concerns regarding
substantial clinical improvement. After reviewing the information
submitted by the applicant addressing our concerns raised in the
proposed rule, we agree that ERLEADATM represents a
substantial clinical improvement because it significantly delays
metastasis in patients with nmCRPC.
After consideration of the public comment we received, we have
determined that ERLEADATM meets all of the criteria for
approval for new technology add-on payments. Therefore, we are
approving new technology add-on payments for ERLEADATM for
FY 2020. Cases involving the use of ERLEADATM that are
eligible for new technology add-on payments will be identified by ICD-
10-PCS procedure code XW0DXJ5. In its application, the applicant
estimated that the average Medicare beneficiary would require a dosage
of 4 tablets per day. The applicant explained that the WAC is $10,920
for a thirty day supply, or $91.00 per tablet. Typical dosage for
ERLEADATM is 4 tablets per day, resulting in a daily cost of
$364. Because the drug is administered daily, the cost to the hospital
would depend on the patient's length of stay. The applicant's MedPAR
analysis determined an average length of stay of approximately 7.854
days. Multiplying the length of stay of 7.854 by the daily cost of $364
resulted in an average cost per patient of $2,858.84. Under Sec.
412.88(a)(2) (revised as discussed in this final rule), we limit new
technology add-on payments to the lesser of 65 percent of the costs of
the new medical service or technology, or 65 percent of
[[Page 42247]]
the amount by which the costs of the case exceed the MS-DRG payment. As
a result, the maximum new technology add-on payment for a case
involving the use of ERLEADATM is $1,858.25 for FY 2020.
h. SPRAVATO (Esketamine)
Johnson & Johnson Health Care Systems, Inc., on behalf of Janssen
Pharmaceuticals, Inc., submitted an application for new technology add-
on payments for SPRAVATO (Esketamine) nasal spray for FY 2020. The FDA
indication for SPRAVATO is treatment-resistant depression (TRD).
According to the applicant, major depressive disorder affects
nearly 300 million people of all ages globally and is the leading cause
of disability worldwide. People with major depressive disorder (MDD)
suffer from a serious, biologically-based disease which has a
significant negative impact on all aspects of life, including quality
of life and function.\131\ Although currently available anti-
depressants are effective for many of these patients, approximately
one-third do not respond to treatment.\132\ Patients who have not
responded to at least two different anti-depressant treatments of
adequate dose and duration for their current depressive episode are
considered to have been diagnosed with TRD. MDD in older age is marked
by lower response and remission rates, greater disability and
functional decline, decreased quality of life, and greater mortality
from suicide.133 134 135
---------------------------------------------------------------------------
\131\ World Health Organization. (2018, March). Depression.
Available at: http://www.who.int/mediacentre/factsheets/fs369/en/.
\132\ National Institute of Mental Health. (2006, January).
Questions and Answers about the NIMH Sequenced Treatment
Alternatives to Relieve Depression (STAR*D)--Background. Available
at: https://www.nimh.nih.gov/funding/clinical-research/practical/stard/backgroundstudy.shtml.
\133\ Manthorpe, J., & Iliffe, S., ``Suicide in later life:
Public health and practitioner perspectives,'' International Journal
of Geriatric Psychiatry, 2010, vol. 25(12), pp. 1230-1238.
\134\ Lenze, E., Sheffrin, M., Driscoll, H., Mulsant, B.,
Pollock, B., Dew, M., Reynolds, C., ``Incomplete response in late-
life depression: Getting to remission,'' Dialogues in Clinical
Neuroscience, 2008, vol. 10(4), pp. 419-430.
\135\ Alexopoulos, G., & Kelly, R., ``Research advances in
geriatric depression,'' World Psychiatry,2009, vol. 8(3), pp. 140-
149.
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According to the applicant, currently available pharmacologic
treatments for depression include Selective Serotonin Reuptake
Inhibitors (SSRIs), Serotonin-norepinephrine reuptake inhibitors
(SNRIs), monoamine oxidase inhibitors (MAOIs), tricyclic anti-
depressants (TCAs), other atypical anti-depressants, and adjunctive
atypical antipsychotics. In addition to SPRAVATO, the only
pharmacologic treatment currently approved for treatment-resistant
depression is a combination of two drugs: An antipsychotic and an SSRI
(fluoxetine/olanzapine combination). Currently available non-
pharmacological medical treatments include electroconvulsive therapy,
vagal nerve stimulation, deep brain stimulation (DBS), transcranial
direct current stimulation (tDCS), and repetitive transcranial magnetic
stimulation (rTMS).
According to the applicant, SPRAVATO is a non-competitive, subtype
non-selective, activity-dependent glutamate receptor modulator. The
applicant indicates that SPRAVATO works through increased glutamate
release resulting in downstream neurotrophic signaling facilitating
synaptic plasticity, thereby bringing about rapid and sustained
improvement in people who have been diagnosed with TRD. The applicant
explained that, through glutamate receptor modulation, SPRAVATO helps
to restore connections between brain cells in people who have been
diagnosed with TRD.\136\
---------------------------------------------------------------------------
\136\ Sanacora, G., et. al., ``Targeting the Glutamatergic
System to Develop Novel, Improved Therapeutics for Mood Disorders,''
Nat Rev Drug Discov., 2008, pp. 426-437.
---------------------------------------------------------------------------
According to the applicant, the nasal spray device is a single-use
device that delivers a total of 28 mg of SPRAVATO in two sprays (one
spray per nostril). The applicant has approved dosages of 56 mg (two
devices) or 84 mg (three devices), with a 28 mg (one device) available
for patients 65 years old and older. The treatment session consists of
the patient's self-administration of SPRAVATO under healthcare
supervision to ensure proper usage and post-administration observation
to ensure patient stability. Specifically, clinicians will need to
monitor blood pressure and mental status changes. The applicant states
that monitoring will be required at every administration session.
With respect to the newness criterion, the applicant submitted a
New Drug Application (NDA) for SPRAVATO Nasal Spray based on a recently
completed Phase III clinical development program for treatment-
resistant depression. According to the applicant, SPRAVATO was granted
a Breakthrough Therapy designation in 2013. SPRAVATO Nasal Spray was
approved by the FDA with an effective date of March 5, 2019. In the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19329), we noted that the
applicant had submitted a request to the ICD-10 Coordination and
Maintenance Committee for approval for a unique ICD-10-PCS procedure
code to specifically identify cases involving the use of SPRAVATO,
beginning in FY 2020. As of the time of the development of this final
rule, a unique ICD-10-PCS procedure code to specifically identify cases
involving the use of SPRAVATO has not yet been finalized in response to
the applicant's request. Therefore, cases reporting SPRAVATO will be
identified by ICD-10-PCS procedure code 3E097GC (Introduction of Other
Therapeutic Substance into Nose, Via Natural or Artificial Opening) for
FY 2020.
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or similar mechanism of action, the applicant asserts that SPRAVATO has
a unique mechanism of action. The applicant stated that SPRAVATO is the
first new approach in 30 years for the treatment of major depressive
disorder, including treatment-resistant depression.137 138
According to the applicant, unlike existing approved anti-depressant
pharmacotherapies, SPRAVATO's anti-depressant activity does not
primarily modulate monoamine systems (norepinephrine, serotonin, or
dopamine). The applicant asserts that SPRAVATO restores connections
between brain cells in people with treatment-resistant depression
through glutamate receptor modulation, which results in downstream
neurotropic signaling.\139\
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\137\ Duman, R. (2018). Ketamine and rapid-acting anti-
depressants: A new era in the battle against depression and suicide.
F1000Research, 7, 659. doi:10.12688/f1000research.14344.1.
\138\ Dubovsky, S., ``What Is New about New Anti-depressants?,''
Psychotherapy and Psychosomatics, 2018, vol. 87(3), pp. 129-139,
doi:10.1159/000488945.
\139\ Sanacora, G., et. al., ``Targeting the Glutamatergic
System to Develop Novel, Improved Therapeutics for Mood Disorders,''
Nat Rev Drug Discov., 2008, pp. 426-437.
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With regard to the second criterion, whether the technology is
assigned to the same or different MS-DRG, the applicant asserts that it
is likely that potential cases representing patients who may be
eligible for treatment involving the use of SPRAVATO Nasal Spray would
be assigned to the same MS-DRGs as patients who receive treatment
involving currently available anti-depressants (AD).
[[Page 42248]]
With regard to the third criterion, whether the technology treats
the same or a similar disease or the same or similar patient
population, the applicant asserts that potential patients who may be
eligible to receive treatment involving SPRAVATO will be comprised of a
subset of patients who are receiving treatment involving currently
available anti-depressants. The applicant did not specifically address
the application of this criterion to SPRAVATO.
We invited public comments on whether SPRAVATO is substantially
similar to any existing technologies and whether it meets the newness
criterion.
Comment: The applicant submitted a public comment in response to
the proposed rule. The applicant stated that SPRAVATO is not
substantially similar to existing technologies and qualifies as new
because it is the first new antidepressant mechanism of action in
decades to treat Treatment Resistant Depression
(TRD).140 141 The applicant stated that unlike existing
pharmacotherapies for depression, the primary antidepressant activity
of SPRAVATO is not believed to directly involve inhibition of
serotonin, norepinephrine, or dopamine reuptake.142 143 144
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\140\ Duman R.S. Ketamine and rapid-acting antidepressants: A
new era in the battle against depression and suicide. F1000Research.
2018;7:F1000 Faculty Rev-659. doi:10.12688/f1000research.14344.1.
\141\ Dubovsky S.L. What Is New about New Antidepressants?
Psychotherapy and Psychosomatics. 2018;87(3):129-139. doi:10.1159/
000488945.
\142\ Duman R.S., Li N., Liu R.J., et al. Signaling pathways
underlying the rapid antidepressant actions of ketamine.
Neuropharmacology. 2012;62(1):35-41.
\143\ Duman R.S., Aghajanian G.K., Sanacora G., et al. Synaptic
plasticity and depression: New insights from stress and rapid-acting
antidepressants. Nat Med. 2016;22(3):238-249.
\144\ Sanacora G., Zarate C.A., Krystal J.H., et al. Targeting
the glutaminergic system to develop novel, improved therapeutics for
mood disorders. Nat Rev Drug Discov. 2008;7(5):426-437.
---------------------------------------------------------------------------
With regard to SPRAVATO treating the same or a similar disease or
the same or similar patient population as existing technologies, the
applicant reiterated that SPRAVATO treats, in conjunction with an oral
antidepressant, TRD. According to the applicant, even with currently
available antidepressant treatments, an estimated one-third of people
in the U.S. who suffer with MDD fail to respond to treatment.\145\ The
applicant stated that TRD has no universally accepted definition;
however, one definition consists of those patients with major
depressive disorder (MDD) who have not responded to at least two
different antidepressants of adequate dose and duration in the current
depressive episode.\146\
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\145\ Rush A.J., Trivedi M.H., Wisniewski S.R., et al. Acute and
longer-term outcomes in depressed outpatients requiring one or
several treatment steps: A STAR*D report. Am J Psychiatry.
2006;163(11):1905-1917.
\146\ AHRQ 2018
---------------------------------------------------------------------------
Response: We appreciate the additional information provided by the
applicant regarding whether SPRAVATO meets the newness criterion. After
consideration of the public comments we received and information
submitted by the applicant in its application, we believe that SPRAVATO
uses a unique mechanism of action to achieve a therapeutic outcome
because it works differently than currently available therapies,
through glutamate receptor modulation rather than the inhibition of
serotonin, norepinephrine, or dopamine reuptake. Therefore, we believe
SPRAVATO is not substantially similar to existing treatment options and
meets the newness criterion. We consider the beginning of the newness
period to commence when SPRAVATO was approved by the FDA on March 5,
2019.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. To identify cases eligible for SPRAVATO, the applicant
searched the FY 2017 MedPAR data file for claims with the presence of
one of the following ICD-10-CM diagnosis codes: F33 (Major depressive
disorder, recurrent), F33.2 (Major depressive disorder, recurrent
severe without psychotic features), F33.3 (Major depressive disorder,
recurrent, severe with psychotic symptoms), and F33.9 (Major depressive
disorder, recurrent, unspecified). Claims from the FY 2017 MedPAR data
file with the presence of one of these ICD-10-CM diagnosis codes mapped
to a wide variety of MS-DRGs. The applicant excluded claims if they had
one or more diagnoses from the following list: (1) Aneurysmal vascular
disease; (2) intracerebral hemorrhage; (3) dementia; (4)
hyperthyroidism; (5) pulmonary insufficiency; (6) uncontrolled brady-
or tachyarrhythmias; (7) history of brain injury; (8) hypertensive; (9)
encephalopathy; (10) other conditions associated with increased
intracranial pressure; and (10) pregnancy. The applicant believed that
these conditions would preclude the use of SPRAVATO. The applicant also
assumed that hospitals would not allow administration of SPRAVATO for
short-stay inpatient hospitalizations and, therefore, excluded all
hospitalizations of fewer than 5 days. The applicant assumed that
patients would be allowed to administer their first dose on the 5th day
and every 7 days thereafter. Lastly, the applicant assumed that, based
on clinical data, patients would use 2.5 spray devices per treatment,
once a week.
After applying the inclusion and exclusion criteria as previously
described, the applicant identified a total of 3,437 potential cases
mapping to 439 MS-DRGs, with approximately 54.7 percent of cases
mapping to MS-DRGs 885 (Psychoses), 871 (Septicemia or Severe Sepsis
without MV >96 Hours with MCC), 917 (Poisoning & Toxic Effects of Drugs
with MCC), 897 (Alcohol/Drug Abuse or Dependence without Rehabilitation
Therapy without MCC), 291 (Heart Failure & Shock with MCC or Peripheral
Extracorporeal Membrane Oxygenation (ECMO)), 918 (Poisoning & Toxic
Effects of Drugs without MCC), 190 (Chronic Obstructive Pulmonary
Disease with MCC), 853 (Infectious & Parasitic Diseases with O.R.
Procedure with MCC), 683 (Renal Failure with CC), and 682 (Renal
Failure with MCC). The applicant further defined the potential cases
representing patients who may be eligible for treatment involving the
use of SPRAVATO in the cost criterion analysis by reducing the number
of cases in each MS-DRG by one-third due to clinical data indicating
that approximately one-third of patients who have been diagnosed with
MDD also have been diagnosed with TRD.\147 148\
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\147\ National Institute of Mental Health. (2006, January).
Questions and Answers about the NIMH Sequenced Treatment
Alternatives to Relieve Depression (STAR*D)--Background. Available
at: https://www.nimh.nih.gov/funding/clinical-research/practical/stard/backgroundstudy.shtml.
\148\ Rush, A. J., Trivedi, M., Wisniewski, S., Nierenberg, A.,
Steward, J., Warden, D., Fava, M., ``Acute and Longer-term Outcomes
in Depressed Outpatients Requiring One or Several Treatment Steps: A
STAR*D report,'' American Journal of Psychiatry, 2006, vol, 163(11),
pp. 1905-1917.
---------------------------------------------------------------------------
The applicant calculated the average case-weighted unstandardized
charge per case to be $73,119. Because the use of SPRAVATO is not
expected to replace prior treatments, the applicant did not remove any
charges for the prior technology. The applicant then standardized the
charges and applied a 2-year inflation factor of 1.08986 obtained from
the FY 2019 IPPS/LTCH PPS final rule correction notice (83 FR 49844).
The applicant then added charges for the new technology to the inflated
average case-weighted standardized charges per case. No other related
charges were added to the cases. The applicant calculated a final
inflated
[[Page 42249]]
average case-weighted standardized charge per case of $74,738 and an
average case-weighted threshold amount of $48,864. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the applicant maintained
that the technology met the cost criterion.
With regard to the previous analysis, in the FY 2020 IPPS/LTCH PPS
proposed rule we stated that we were concerned whether it is
appropriate to reduce the number of cases to one-third of the total
potential cases identified. While the supporting statistical data
provided by the applicant suggest that one-third of patients who have
been diagnosed with MDD often also receive diagnoses of TRD, we stated
that it is unclear which cases representing patients should be removed.
We further stated that it is possible that patients who have been
diagnosed with MDD are covered by all 439 MS-DRGs, but patients who
have been diagnosed with TRD only exist in a certain subset of these
same MS-DRGs. Further, those patients who have been diagnosed with TRD
could account for the most costly of patients who have been diagnosed
with MDD. We noted in the proposed rule that, ultimately, without
further evidence, we may not be able to verify that the assumption that
patients who have been diagnosed with TRD comprise one-third of the
identified cases representing patients who have been diagnosed with MDD
and are evenly distributed across all of the MS-DRG identified cases is
appropriate. We invited public comments on this issue and whether the
SPRAVATO Nasal Spray meets the cost criterion.
Comment: The applicant submitted a comment in regard to our
concerns on the cost criterion. The applicant reiterated that there are
no ICD-10 codes with which to identify patients with TRD and about \1/
3\ of people with MDD have TRD. The applicant then stated that in its
original cost analysis they found cases with diagnosis codes signifying
MDD and randomly selected \1/3\ of those cases for the cost analysis.
In response to CMS' concerns, the applicant updated the analysis
selecting the \1/3\ of cases with the highest charges. This choice was
made in response to a study comparing Medicare beneficiaries with TRD
and Medicare beneficiaries without TRD which found that the cost of the
inpatient hospitalizations for the TRD cohort were clearly higher
(average $9,947 vs. $5,426).\149\ With this new sample selection the
applicant performed the cost analysis using the inverse of the FY 2019
pharmacy national average CCR of 0.191 to determine the charges for
SPRAVATO, and a 2-year inflation factor of 1.08986 from the FY 2019
IPPS final rule correction notice to inflate the charges from FY 2017
to FY 2019. The applicant stated that with the new selection
methodology, SPRAVATO meets the cost criterion, with an inflated
average case-weighted standardized charge per case of $165,669 that
exceeds the average case-weighted threshold amount of $74,682.
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\149\ Benson, C, Szukis, H. An Evaluation of Increased Clinical
and Economic Burden Among Elderly Medicare-covered Beneficiaries
With Treatment-Resistant Depression. Poster Presented at the Academy
of Managed Care Pharmacy (AMCP) Annual Meeting; April 23-26, 2018;
Boston, Massachusetts.
---------------------------------------------------------------------------
Response: We appreciate the comment and additional information
provided by the applicant. After consideration of the public comment we
received, we agree that SPRAVATO meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that SPRAVATO Nasal Spray represents a substantial
clinical improvement over existing treatments because it provides a
treatment option for a patient population that failed available
treatments and who have shown inadequate response to at least two anti-
depressants in their current episode of MDD.\150\ According to the
applicant, in addition to SPRAVATO, there is currently only one other
pharmacotherapy used for the treatment for diagnoses of TRD that is
approved by the FDA (Symbyax[supreg], a fluoxetine-olanzapine
combination), but its use is limited by tolerability concerns.\151\ In
support of its assertions of substantial clinical improvement, the
applicant provided several studies regarding SPRAVATO.
---------------------------------------------------------------------------
\150\ Rush, A. J., Trivedi, M., Wisniewski, S., Nierenberg, A.,
Steward, J., Warden, D., Fava, M., ``Acute and Longer-term Outcomes
in Depressed Outpatients Requiring One or Several Treatment Steps: A
STAR*D report,'' American Journal of Psychiatry, 2006, vol. 163(11),
pp. 1905-1917.
\151\ Cristancho, M., & Thase, M, ``Drug safety evaluation of
olanzapine/fluoxetine combination,'' Expert Opinion on Drug Safety,
2014, vol. 13(8), pp. 1133-1141.
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The first study is a Phase II, double-blind, doubly-randomized,
placebo-controlled, multi-center study in adults aged 20 years old to
64 years old.\152\ This study consisted of the following four phases:
The screening, double-blind treatment, the optional open-label
treatment, and post-treatment follow-up. During the treatment phase,
two periods of treatment occurred between the 1st and the 8th day and
the 8th and the 15th day. At the beginning of first treatment period,
participants were randomized 3:1:1:1 to an intranasal placebo, SPRAVATO
28 mg, 56 mg, or 84 mg twice weekly, respectively. During the second
treatment period, patients who were initially randomized to treatment
groups remained on the treatment regimen until the 15th day. Patients
initially assigned to the placebo group and who had moderate to severe
symptoms (as measured by the 16-item quick inventory of depressive
symptomatology-self report total score) were re-randomized 1:1:1:1 to
placebo, SPRAVATO 28 mg, 56 mg, or 84 mg twice weekly groups,
respectively.
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\152\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P.,
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
---------------------------------------------------------------------------
Of the 126 patients screened, 67 were randomized at the beginning
of the first treatment period, with 33 patients receiving placebo, 11
patients receiving 28 mg of SPRAVATO, 11 patients receiving 56 mg of
SPRAVATO, and 12 patients receiving 84 mg of SPRAVATO in dosages. At
the beginning of the second treatment period, those in the treated
group remained on the same treatment regimen, while the 33 placebo
patients were re-randomized. Of the placebo group in the first
treatment period, 6 patients were added to the 4 who remained on
placebo, 8 patients received 28 mg of SPRAVATO, 9 patients received 56
mg of SPRAVATO, and 5 patients received 84 mg SPRAVATO in dosages. Of
the 67 respondents randomized, 63 (94 percent) completed the first
treatment phase and 60 (90 percent) completed the first and second
treatment phases. During both treatment phases patients were assessed
at baseline, 2 hours, 24 hours, and at the study period endpoints for
the Montgomery-Asberg Depression Rating Scale (MADRS) score, Clinical
Global Impression of Severity scale score, adverse events and other
safety assessments including the Clinician Administered Dissociative
States Scale (CADSS). The primary efficacy endpoint, change from
baseline to endpoint in MADRS total score, was analyzed using the
analysis of covariance model including treatment and country as factors
and period baseline MADRS total score as a covariate.\153\
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\153\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P.,
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
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[[Page 42250]]
At the end of the first treatment period, the least square mean
change (standard error) for the placebo group was -4.9 (1.74). As
compared to the placebo, the least square mean difference from placebo
(standard error) for the SPRAVATO treatment groups was -5.0 (2.99) for
28 mg of SPRAVATO in dosage, -7.6 (2.91) for 56 mg of SPRAVATO in
dosage, and -10.5 (2.79) for 84 mg of SPRAVATO in dosage; these
differences were statistically significant at or beyond p < 0.05.
Similar differences were seen at 2 hours and 24 hours for these groups
with the only non-significant difference occurring for 56 mg of
SPRAVATO in dosage at 2 hours as compared to baseline. At the end of
the second treatment period, the least square mean change (standard
error) for the placebo group was -4.5 (2.92), for the SPRAVATO-treated
groups was -3.1 (2.99) from the placebo for 28 mg of SPRAVATO in
dosage, -4.4 (3.06) from the placebo for 56 mg of SPRAVATO in dosage,
and -6.9 (3.41) from the placebo for 84 mg of SPRAVATO in dosage. Only
the 84 mg of SPRAVATO dosage difference from the mean was statistically
significant (p<0.05). When the results from the first and second
treatment periods were pooled, all three groups had statistically
significant differences from the placebo. Based on these results, the
applicant asserts that all three SPRAVATO treatment groups were
superior to the placebo.
When considering the safety profile of the use of SPRAVATO, the
study reports that 3 (5 percent) of the treated patients and 1 (2
percent) open-label patient experienced adverse events leading to
discontinuation (syncope, headache, dissociative syndrome, ectopic
pregnancy). There was a noted dose response for the adverse events of
dizziness and nausea only. Most of the treated patients experienced
transient elevations in blood pressure and heart rate on dosing days,
as well as perceptual changes and/or dissociate symptoms (as measured
by CADSS) that began shortly after dosing and typically resolved by 2
hours.\154\
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\154\ Daly, E., Singh, J., Fedgchin, M., Cooper, K., Lim, P.,
Shelton, R., Drevets, W., ``Efficacy and Safety of Intranasal
Esketamine Adjunctive to Oral Anti-depressant Therapy in Treatment-
Resistant Depression,'' JAMA Psychiatry, 2018, vol. 75(2), pp. 139-
148.
---------------------------------------------------------------------------
The study titled Transform One submitted by the applicant is a
Phase III, randomized, double-blind, active controlled, multi-center
study which enrolled patients 18 years old to 64 years old who had been
diagnosed with treatment-resistant depression for 28 days.\155\
Patients were randomized (1:1:1) to receive SPRAVATO 56 mg, 84 mg, or a
placebo nasal spray administered twice weekly combined with a newly
initiated, open-label oral anti-depressant (AD) administered daily
(duloxetine, escitalopram, sertraline, or venlafaxine extended
release), which was dosed according to a fixed titration schedule.
Patients were assessed on the MADRS, CADSS, and discharge readiness as
measured by overall clinical status and the Global Assessment of
Discharge Readiness (CGADR). Discharge status was assessed at 1 and 1.5
hours. MADRS was assessed at 24 hours post initial dose and weekly
thereafter. CADSS was assessed at baseline and all dosing visits.
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\155\ Fedgchin, M., Trivedi, M., Daly, E., Melkote, R., Lane,
R., Lim, P., Singh, J., ``Randominzed, Double-blind Study of Fixed-
dosed Intranasal Esketamine Plus Oral Anti-depressant vs. Active
Control in Treatment-resistant Depression,'' 9th Biennial Conference
of the International Society for Affective Disorders (ISAD) and the
Houston Mood Disorders Conference, September 2018.
---------------------------------------------------------------------------
Three hundred and fifteen patients of the 346 were randomized and
completed the treatment phase; 115 patients were randomized to the 56
mg of SPRAVATO dosage group along with 114 to the 84 mg of SPRAVATO
dosage group and 113 to the placebo group. The withdrawal rate was 3-
fold higher in the 84 mg of SPRAVATO dosage group (16.4 percent) than
the 56 mg of SPRAVATO dosage group (5.1 percent) and the placebo group
(5.3 percent). Eleven of the 19 84 mg of SPRAVATO dosage withdrawals
withdrew after only receiving the first 56 mg SPRAVATO dose; the
withdrawal rate was not a dose-related safety finding. Baseline
statistics show few differences between groups: The 56 mg of SPRAVATO
dosage group has a higher proportion of patients who have 1 or 2
previous AD medications (69 percent) as compared to the patients in the
84 mg of SPRAVATO dosage group (51.8 percent) and placebo group (59.3
percent), and the placebo group (193.1) has a notably shorter duration
of the current episode of depression in weeks as compared to the 56 mg
of SPRAVATO dosage group (202.8) and 84 mg of SPRAVATO dosage group
(212.7). The MADRS score was assessed by a mixed model for repeated
measures with change from baseline as the response variable and the
fixed effect model terms for treatment dosage, day, region, class of
oral AD, a treatment-by-day moderating effect, and baseline value as a
covariate.
The primary efficacy measure was assessed by change in MADRS score
from baseline at 28 days. At the end of the study the 56 mg and 84 mg
of SPRAVATO dosage groups had a difference of least square means of -
4.1 and -3.2, respectively. Neither of these were statistically
significant differences as compared to the placebo. The least square
mean treatment difference of MADRS score as compared to the placebo
were also assessed longitudinally at baseline and the 2nd day (-3.0 for
the 56 mg of SPRAVATO dosage group and -2.2 for the 84 mg of SPRAVATO
dosage group), the 8th day (-3.0 for the 56 mg of SPRAVATO dosage group
and -2.7 for the 84 mg of SPRAVATO dosage group), the 15th day (-3.8
for the 56 mg of SPRAVATO dosage group and -3.6 for the 84 mg of
SPRAVATO dosage group), the 22nd day (-5.0 for the 56 mg of SPRAVATO
dosage group and -3.7 for the 84 mg of SPRAVATO dosage group), and the
28th day (-4.0 for the 56 mg of SPRAVATO dosage group and -3.6 for the
84 mg of SPRAVATO dosage group). In a graph provided by the applicant,
the lines plus standard errors plotted for the 56 mg and 84 mg of
SPRAVATO dosage groups overlap with each other at each time point, but
do not appear to overlap with the placebo group (calculated confidence
intervals would necessarily be wider and would possibly overlap).
A secondary efficacy measure was the rate of patients who are
responders and remitters. Response is defined as greater than or equal
to 50 percent improvement on MADRS from baseline. Remission is defined
as a MADRS total score less than or equal to 12. The 56 mg and 84 mg of
SPRAVATO dosage treatment groups, 54.1 percent and 53.1 percent,
respectively, had higher response rates than the placebo treatment
group at 38.9 percent. The 56 mg and 84 mg of SPRAVATO dosage treatment
groups, 36.0 percent and 38.8 percent, had higher remission rates than
the placebo treatment group at 30.6 percent.
Lastly, safety was assessed by adverse events and CADSS. Both the
56 mg and 84 mg of SPRAVATO dosage treatment groups had spikes of CADSS
scores, which spiked approximately 40 minutes post dose and resolved at
90 minutes. These post dose spikes gradually decreased from day 1 to
day 25, but remained higher than the placebo group. The 84 mg of
SPRAVATO dosage treatment group had higher CADSS score spikes than the
56 mg of SPRAVATO dosage treatment group at all periods except day 1.
The top 5 of 12 pooled treatment group adverse events and percentages
experienced are as follows: Nausea (29.4 percent), dissociation (26.8
percent), dizziness
[[Page 42251]]
(25.1 percent), vertigo (20.8 percent), and headache (20.3 percent).
The study titled Transform Two is a Phase III, randomized (1:1),
control trial, multi-center study enrolling patients 18 years old to 64
years old who had been diagnosed with treatment-resistant
depression.\156\ One hundred and fourteen patients were randomized to
the treatment group and 109 to the control group; 101 and 100 of the
treated and control groups respectively finished the study. For the
treatment group, doses of SPRAVATO began at 56 mg on the 1st day, with
potential increases up to 84 mg until the 15th day at which point the
dose remained stable. Two-thirds of the SPRAVATO-treated patients were
receiving the 84 mg dosage at the end of the study. For both the
placebo and treatment groups, a newly-initiated AD was assigned by the
investigator (duloxetine, escitalopram, sertraline, and venlafaxine
extended release) following a fixed titration dosing.
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\156\ Popova, V., Daly, E., Trivedi, M., Cooper, K., Lane, R.,
Lim, P., Singh, J., ``Randomized, Double-blind Study of Flexibly-
dosed Intranasal Esketamine Pus Oral Anti-depressant vs. Active
Control in Treatment-resistant Depression,'' Canadian College of
Neuropsychopharmacology (CCNP) 41st Annual Meeting, 2018.
---------------------------------------------------------------------------
The primary efficacy endpoint was the change from baseline at day
28 in MADRS total score, which was analyzed using a mixed-effects model
using repeated measures (MMRM). The model included baseline MADRS total
score as a covariate, and treatment, country, class of AD (SNRI or
SSRI), day, and day-by-treatment moderator as fixed effects, and a
random patient effect. The key secondary efficacy endpoints were as
follows: The proportion of patients showing onset of clinical response
by the 2nd day that was maintained for the duration of the treatment
phase, the change from baseline in socio-occupational disability using
the Sheehan Disability Scale (SDS) using the MMRM model, and the change
from baseline in depressive symptoms using the patient health
questionnaire 9-item (PHQ-9) using the MMRM model.
There were no apparent differences between the SPRAVATO treatment
and placebo groups at baseline. At day 28, the difference of least
square means (standard error) for the SPRAVATO-treated group was -4.0
(1.69) as compared to the placebo-treated group (p<0.05). Similar to
Transform One, the difference of least square means for the SPRAVATO-
treated group as compared to the placebo-treated group were plotted for
baseline and the 2nd, 8th, 15th, 22nd, and 28th day. At all treatment
periods, except baseline and the 15th day, the SPRAVATO treatment group
had statistically significant lower scores than the placebo-treated
group as indicated by 95 percent confidence intervals. The difference
between the SPRAVATO-treated and placebo-treated groups for the early
onset of sustained clinical response was substantively similar and not
statistically different. The difference of least square means (standard
error) in socio-occupational disability as measured by SDS was -4.0
(1.17) for those in the SPRAVATO-treated group as compared to the
placebo-treated group (p<0.05). The difference of least square means
(standard error) for the PHQ-9 total score for the SPRAVATO-treated
group compared to the placebo-treated group was -2.4 (0.88) (p<0.05).
Lastly, 69.3 percent of the SPRAVATO-treated patients as compared to
52.0 percent of the placebo-treated patients were considered responders
and 52.5 percent of the SPRAVATO-treated patients as compared to 31.0
percent of the placebo patients were considered remitters. The adverse
events list, post dosing blood pressure increase, and post dosing CADSS
spike were similar to those seen in the previous Transform One
study.\157\
---------------------------------------------------------------------------
\157\ Fedgchin, M., Trivedi, M., Daly, E., Melkote, R., Lane,
R., Lim, P., Singh, J., ``Randominzed, Double-blind Study of Fixed-
dosed Intranasal Esketamine Plus Oral Anti-depressant vs. Active
Control in Treatment-resistant Depression,'' 9th Biennial Conference
of the International Society for Affective Disorders (ISAD) and the
Houston Mood Disorders Conference, September 2018.
---------------------------------------------------------------------------
A post-hoc analysis based on Transform Two, which included 46
SPRAVATO-treated and 44 placebo-treated patients was conducted to
assess for differences in efficacy and safety between the U.S.
population and the overall study population.\158\ Efficacy was again
assessed by MADRS, SDS, and PHQ-9 scores using the MMRM and with safety
assessments for treatment-emergent adverse events (TEAEs), serious
adverse events (SAEs), CADSS and other measures. At baseline the
treated group of SPRAVATO plus an AD was similar to the placebo-treated
group who took only an AD on most measures to include average age, sex,
race, class of oral ADs, MADRS, CGI-S, SDS, and PHQ-9 scores. The
placebo-treated group had a longer average duration of current episode
at 177.6 days as compared to 132.2 days for the SPRAVATO-treated group;
the placebo-treated group had a higher proportion of patients having 3
or more previous AD medications (50.1 percent) as compared to the
SPRAVATO treatment group (32.7 percent).
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\158\ Alphs, L., Cooper, K., Starr, L., DiBernardo, A., Shawi,
M., Jamieson, C., Singh, J., ``Clinical Efficacy and Safety of
Flexibly Dosed Esketamine Nasal Spray in a US Population of Patients
With Treatment-Resistant Depression,'' American Psychiatry
Association, 2018, Chicago.
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Both the SPRAVATO-treated and placebo-treated groups showed
improvement on the efficacy measures after 28 days. At the endpoint of
28 days, the SPRAVATO treatment group had a statistically significant
MADRS total score least square mean difference of -5.5 (p < 0.05) from
the placebo treatment group. At the endpoint the median scores on the
clinician-rated severity of depressive illness as measured by CGI-S
were -1.5 and -1.0 for the SPRAVATO-treated and placebo-treated groups
respectively (one-sided p value > 0.07). For the measure of patient-
rated severity of depressive illness, the SPRAVATO treatment group had
a least square mean difference in PHQ-9 of -3.1 (p<0.05) as compared to
the placebo treatment group. On the measure of functional impairment,
the SPRAVATO treatment group had a least square mean difference in SDS
of -5.2 (p<0.01) as compared to the placebo treatment group. Overall
treatment-emergent adverse events were observed in 91.3 percent of
SPRAVATO-treated patients and 77.3 percent of placebo-treated patients.
One SPRAVATO-treated patient experienced a serious adverse event of
cerebral hemorrhage. Lastly, the top five most common adverse events
were dizziness, nausea, headache, dysgeusia, and throat irritation.
The study titled Transform Three is a randomized (1:1), double-
blind, active-controlled, multi-center study in elderly patients 65
years old and older who had been diagnosed with TRD.\159\ Randomization
was stratified by country and class of oral AD (SNRI and SSRI). All
treatment patients started on a 28 mg dosage of SPRAVATO and flexibly
increased dosages of 56 mg or 84 mg based on investigator's
determination of efficacy and tolerability. Both SPRAVATO-treated (n =
72) and placebo-treated (n = 66) patients were started on a newly
initiated AD (duloxetine, escitalopram, sertraline, and venlafaxine
extended release). One hundred and twenty-two patients completed the
double-blind phase, with 63 patients in the SPRAVATO-treated group and
60 patients in the placebo-treated group.
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\159\ Ochs-Ross, R., Daly, E., Lane, R., Zhang, Y., Lim, P.,
Foster, K., Sign, J., ``Efficacy and Safety of Esketamine Nasal
Spray Plus an Oral Anti-depressant in Elderly Patients with
Treatment-resistant Depression,'' 2018 Annual Meeting of the
American Psychiatric Association (APA), 2018, New York.
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The primary endpoint was the change in MADRS total score from the
1st day
[[Page 42252]]
to the 28th day. Secondary endpoints included the evaluation of
response and remission rates by group and the Clinical Global
Impression--Severity (CGI-S) scores. The safety endpoints were
evaluated by adverse event occurrence, laboratory tests, vital sign
measurements, physical exams, and other exams.
At baseline, there were substantive differences between the
placebo-treated and SPRAVATO treatment groups in three measures.
Patients from the SPRAVATO treatment group (48.6 percent) were more
likely to be from the European Union as compared to the placebo-treated
group (36.9 percent). Patients from the SPRAVATO treatment group were
more likely to have 1 (20.8 percent versus 9.2 percent) to 4 (16.7
percent versus 6.2 percent) previous ADs as compared to the placebo-
treated group. On the measure of duration of current episode of
depression in weeks, the SPRAVATO-treated group had an average
(standard deviation) of 163.1 (277.04) as compared to the placebo-
treated group with 274.1 (395.47). The primary endpoint, the change
from baseline to Day 28 of MADRS score difference of least square means
(95 percent CI) for the SPRAVATO treatment group was -3.6 (-7.20,0.07)
as compared to the placebo group. As with previous studies, the
longitudinal change in MADRS total score is presented for baseline and
at the 8th, 15th, 22nd, and 28th day. The results for the SPRAVATO-
treated group overlap with the placebo-treated group at each time
point. At Day 28, 27.0 percent of the SPRAVATO-treated patients as
compared to 13.3 percent of the placebo-treated patients were
considered responders and 17.5 percent of the SPRAVATO-treated patients
as compared to 6.7 percent of the placebo-treated patients were
considered remitters. At baseline and the end of the study, 83.4
percent and 38.1 percent, respectively, of the SPRAVATO-treated
patients were rated as experiencing severe or marked symptoms on the
CGI-S scale as compared to 66.1 percent and 54.4 percent, respectively,
for those on the placebo.
Of the 72 patients who were treated with SPRAVATO, 51 (70.8
percent) experienced a treatment-emergent adverse event (TEAE) as
compared to 39 of the 65 (60.0 percent) placebo-treated patients. Five
patients reported serious adverse events during the double-blind phase,
three of whom were SPRAVATO-treated patients and two of whom were
placebo-treated patients. The top 5 of the 16 adverse events among the
treated patients are dizziness (20.8 percent), nausea (18.1 percent),
blood pressure increase (12.5 percent), fatigue (12.5 percent), and
headache (12.5 percent).
A post-hoc analysis, which included 34 SPRAVATO-treated patients
and 36 placebo-treated patients from the Transform Three study, was
performed to examine the response and remission associated with
treatments in a subset of respondents 65 years old and older in the
United States.\160\ The MADRS, CGI-S, PHQ-9, and adverse event data
were utilized to assess clinical outcomes. Remission was defined as a
50 percent or greater decrease in MADRS baseline score and remission
was defined as a MADRS score of 12 or lower or a PHQ-9 score of less
than 5. At baseline the SPRAVATO-treated and placebo-treated groups
were similar on the measures of age, sex, race, class of oral AD, age
at major depressive disorder diagnosis, MADRS score, and CGI-S score.
The SPRAVATO treatment group differed from the placebo treatment group
on the measures of mean duration of current depressive episode in weeks
(187.6 versus 420.9) and mean PHQ-9 score (15.2 versus 18.2).
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\160\ Starr, L., Ochs-Ross, R., Zhang, Y., Singh, J., Lim, P.,
Lane, R., Alphs, L., ``Clinical Response, Remission, and Safety of
Esketamine Nasal Spray in a US Population of Geriatric Patients With
Treatment-Resistant Depression,'' American Psychiatric Association,
2018, New York.
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At the 28-day endpoint, response rates based on MADRS scores were
26.7 percent (n = 30) for the SPRAVATO-treated group and 14.7 percent
(n = 34) for the placebo-treated group. At the endpoint, remission
rates based on MADRS scores were 16.7 percent (n = 30) for the
SPRAVATO-treated group and 2.9 percent (n = 34) for the placebo-treated
group. Patient remission rates based on the PHQ-9 scores for SPRAVATO-
treated and placebo-treated patients were 9.4 percent (n = 32) and 22.6
percent (n = 31), respectively. Clinically meaningful response as
measured by a one point or greater decrease in the CGI-S score was 63.3
percent (n = 30) for the SPRAVATO-treated group and 29.4 percent (n =
34) for those on the placebo. Clinically significant response as
measured by a decrease of two or greater on the CGI-S scale was 43.3
percent (n = 30) for the SPRAVATO-treated group and 11.8 percent (n =
34) for those on the placebo. Lastly, 67.7 percent of the SPRAVATO-
treated patients and 58.3 percent of placebo-treated patients
experienced a treatment-emergent adverse event. There was one serious
adverse event in the SPRAVATO-treated group (hip fracture) and placebo-
treated group (dizziness) each. The top 5 most common adverse events in
the 34 SPRAVATO-treated patients were dysphoria (11.8 percent), fatigue
(11.8 percent), headache (11.8 percent), insomnia (11.8 percent), and
nausea (11.8 percent).
The study titled Sustain One concerns a double-blind, randomized
withdrawal, multi-center study entering either directly or after
completing the double-blind phase of an acute, short-term study.\161\ A
total of 705 patients were enrolled in this study of which 437 entered
directly into the study and the remainder transferred from one of two
short-term SPRAVATO studies (fixed dose, n = 150; flexible dose, n =
118). During the maintenance phase of this study, analyses were
performed on two mutually exclusive groups: (1) On the stable remitters
who were those randomized patients who were in stable remission at the
end of the optimization phase and who received at least one dose of the
study drug with one dose of an AD; and (2) on the stable responders who
were those randomized patients who were stable responders at the end of
optimization and who received at least one dose of the study drug with
one dose of an AD. A relapse was defined as a MADRS total score of 22
or greater for 2 consecutive assessments separated by 5 to 15 days or
hospitalization for worsening depression or any other clinically
relevant event suggestive of relapse.
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\161\ Daly, E., Trivedi, M., Janik, A., Li, H., Zhang, Y., Li,
X., Singh, J., ``A Randomized Withdrawal, Double-blind, Multicenter
Study of Esketamine Nasal Spray Plus an Oral Anti-depressant for
Relapse Prevent in Treatment-resistant Depression,'' 2018 Annual
Meeting of the American Society of Clinical Psychopharmacology
(ASCP), 2018, Miami.
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Of those classified in stable remission, 90 patients were receiving
treatment with SPRAVATO in combination with an AD and 86 patients were
receiving treatment with the placebo in combination with an AD. Of
those classified in stable response, 62 patients were receiving
treatment with SPRAVATO in combination with an AD and 59 patients were
receiving treatment with the placebo in combination with an AD. At
baseline, between group and within group randomization seems
substantively successful, except for a lower proportion of placebo-
treated stable responders being male (28.8 percent) as compared to
SPRAVATO-treated stable responders (38.7 percent), placebo-treated
stable remitters (31.4 percent), and SPRAVATO-treated stable remitters
(35.6 percent).
Kaplan-Meier estimates of patients who remained relapse free were
performed for both study groups. For both remitters and responders, the
SPRAVATO-treated had a higher
[[Page 42253]]
percent of patients without relapse for longer than the control group.
Overall, among the stable remitters, 24 (26.7 percent) of the patients
in the SPRAVATO-treated group and 39 (45.3 percent) of the patients in
the placebo-treated group experienced a relapse event during the
maintenance phase; among stable responders, 16 (25.8 percent) of the
patients and 34 (57.6 percent) of the patients in the respective groups
relapsed. Treatment with SPRAVATO in combination with an AD decreased
the risk of relapse by 51 percent (estimated hazard ratio = 0.49; 95
percent CI: 0.29, 0.84) among stable remitters and by 70 percent
(hazard ratio = 0.30; 95 percent CI: 0.16, 0.55) among stable
responders, as compared to the placebo.
Safety and adverse events were presented similarly to the
previously discussed study data. The top 5 of the 22 adverse events
were dysgeusia (27.0 percent), vertigo (25.0 percent), dissociation
(22.4 percent), somnolence (21.1 percent), and dizziness (20.4
percent). The applicant stated that most adverse events were mild to
moderate, observed post dose on dosing days, and generally resolved in
the same day. Serious adverse events considered related to the study
drug were reported for six patients in the SPRAVATO treatment group
(disorientation, hypothermia, lacunar stroke, sedation, and suicidal
ideation for one patient each, and autonomic nervous system imbalance
and simple partial seizure for one patient). The investigator
considered the lacunar infarct as probably related to the treatment,
while the sponsor considered the events of lacunar infarct and
hypothermia as doubtfully related to the treatment. As with the
previous studies, present-state dissociative symptoms and transient
perceptual effects measured by the CADSS total score began shortly
after the start of SPRAVATO dosing, peaked at 40 minutes, and resolved
by 1.5 hours.
The next study presented by the applicant titled Sustain Two
concerns an open-label, long-term (up to 1 year of exposure), multi-
center, single-arm, Phase III study for patients who had been diagnosed
with TRD who entered into the study as either direct-entry or
transferred-entry (patients who completed the double-blind, randomized,
4-week, Phase III, efficacy and safety study in elderly patients).\162\
A total of 802 patients were enrolled; 779 entered in the induction
phase (691 as direct-entry and 88 as transferred-entry non-responders).
A total of 603 patients entered the optimization/maintenance phase (580
from the induction phase and 23 were transferred-entry responders). A
total of 150 (24.9 percent) of the patients completed the optimization/
maintenance phase. At that time, the predefined total patient exposure
was met and the study was stopped by the sponsor; 331 (54.9 percent) of
the patients were still receiving treatment and, therefore,
discontinued the study. Patients treated had a starting dose of 56 mg
of SPRAVATO, or 28 mg for patients who were 65 years old or older,
followed by flexible dosing increases (28 mg to 84 mg per clinical
judgment) twice a week for 4 weeks. Dosages became stable at 15 days
for those under 65 years old, and at 18 days for those 65 years old and
older.
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\162\ Wajs, E., Aluisio, L., Morrison, R., Daly, E., Lane, R.,
Lim, P., Singh, J., ``Long-term Safety of Esketamine Nasal Spray
Plus Oral Anti-depressant in Patients with Treatment-resistant
Depression: Phase III, Open-label, Safety and Efficacy Study
(SUSTAIN-2),'' 2018 Annual Meeting of the American Society of
Clinical Psychopharmacology (ASCP), 2018, Miami.
---------------------------------------------------------------------------
At baseline, 802 respondents had an average age of 52.2 years old,
62.6 percent were women, 85.5 percent were white, an average BMI of
27.9 percent, and 43.1 percent with a family history of depression. The
anti-depressants prescribed to these respondents were duloxetine (31.1
percent), escitalopram (29.6 percent), sertraline (19.6 percent), and
venlafaxine extended release (19.5 percent). Of the respondents at
baseline, 39.9 percent had used 3 or more ADs prior to the study with
no response. Safety measures were reported at 4 weeks, 48 weeks, and
pooled. For TEAEs, 83.8 percent of patients experienced at least one at
4 weeks and 85.6 percent at 48 weeks. TEAEs occurred in 90.1 percent (n
= 723) of all patients and led to discontinuation in 9.5 percent of
both the pooled 4 and 48 week patient samples. TEAEs caused 2 deaths
(acute respiratory and cardiac failure, and completed suicide; neither
death considered as related by investigator) at 48 weeks. The top 5
most common TEAEs for the 4-week and 48-week time points were dizziness
(29.3 percent and 22.4 percent), dissociation (23.1 percent and 18.6
percent), nausea (20.2 percent and 13.9 percent), headache (17.6
percent and 18.9 percent), and somnolence (12.1 percent and 14.1
percent). At 4 weeks, 2.2 percent of the patients experienced at least
1 serious adverse event and 6.3 percent at 48 weeks. Of the 68 serious
adverse events, 63 were assessed as not related or doubtfully related
to treatment involving SPRAVATO by the investigator. Five of the
serious adverse events (anxiety, delusion, delirium, suicidal ideation
and suicide attempt) were considered as treatment related. Overall,
performance on multiple cognitive domains including visual learning and
memory, as well as spatial memory/executive function either improved or
remained stable post baseline in both elderly and younger patients.
Based on all of the previous discussion, the applicant concluded
that the use of SPRAVATO represents a substantial clinical improvement
over existing technologies. In the proposed rule, we stated the
following concerns regarding whether SPRAVATO meets the substantial
clinical improvement criterion.
First, we stated we were concerned that the use of the placebo in
combination with a newly prescribed anti-depressant may not be the most
appropriate comparator when assessing the clinical improvement of the
use of SPRAVATO as compared to existing therapies. In its application,
the applicant listed multiple treatment options aside from the use of
anti-depressants, which are currently available to treat diagnoses of
TRD. It is possible that other treatments approved for diagnoses of TRD
may obtain better treatment outcomes than changing to a new single
anti-depressant (as was the method used in the studies submitted in
support of this application). We stated that comparisons with existing
treatments for treatment-resistant major depressive disorders would
help us better evaluate the clinical improvements offered by the use of
SPRAVATO.
Second, we stated that we were not certain that the results in the
studies submitted consistently show that the use of SPRAVATO represents
a substantial clinical improvement when compared to existing therapies.
We stated that there does not appear to be a consistent statistically
significant positive primary efficacy outcome for SPRAVATO-treated
patients compared to placebo-treated patients. Based on the data
provided, we stated that we also were uncertain of the extent to which
the findings from the submitted studies apply to the broader Medicare
population. We further stated that we were particularly concerned that
there are few substantive and statistically significant improvements in
depression outcomes with SPRAVATO treatment among the Medicare-aged
participants of the study samples. In addition, we stated that the
studies which limit their analyses to Medicare-aged study participants
have limited racial diversity amongst small samples. In
[[Page 42254]]
addition, we noted that the submitted studies excluded patients with
significant medical and psychiatric comorbidities through exclusion
criteria. However, we noted the likelihood of having multiple chronic
comorbid conditions is increased amongst those with a mental health
disorder 163 164 and for the elderly.165 166 The
existence of comorbidities increases the likelihood that the negative
effects of poly-pharmacy and drug-drug interactions could be
experienced among the Medicare population. Given that the provided
studies utilized exclusion criteria, which excluded those with serious
comorbidities, we stated that we were concerned that the limited
results did not adequately represent the average or even the majority
of the Medicare population.
---------------------------------------------------------------------------
\163\ Thorpe, K., Jain, S., & Joski, P., ``Prevalence and
Spending Associated with Patients Who have a Behavioral Health
Disorder and Other Conditions,'' Health Affairs, 2017, vol. 36(1),
pp. 124-132, doi:10.1377/hlthaff.2016.0875.
\164\ Druss, B., & Walker, E., 2011, ``Mental Disorders and
Medical Comorbidity,'' Robert Wood Johnson Foundation, 2011.
Available at: http://www.policysynthesis.org.
\165\ Kim, J., & Parish, A., ``Polypharmcy and Medication
Management in Older Adults,'' Nurs Clin N Am, 2017, vol. 52, pp.
457-468, doi:http://dx.doi.org/10.1016/j.cnur.2017.04.007.
\166\ Kim, L., Koncilja, K., & Nielsen, C., ``Medication
Management in Older Adults,'' Cleveland Clinic Journal of Medicine,
2018, vol. 85(2), pp. 129-135, doi:10.3949/ccjm.85a.16109.
---------------------------------------------------------------------------
Third, we indicated that we had concerns regarding the primary and
secondary endpoints for several of these studies. We stated that it was
unclear whether the primary endpoint of these studies (change in
baseline MADRS) was the most appropriate endpoint to assess substantial
clinical improvement, particularly as it was unclear what threshold
degree of change was defined as meeting the definition of change from
baseline in the analyses, and whether this degree of change translated
to clinical improvement (for example, response and remissions rates).
In addition, we stated that we had concerns regarding the potential for
physician behavior to have introduced bias, which could impact the
study results. The studies state that anti-depressants are physician
assigned and not randomized. Some of the provided studies control for
the type of anti-depressant prescribed (SSRI and SNRI). We stated that
we believed there was the potential for an interaction effect between
the prescribed anti-depressant and SPRAVATO. We stated that it was
possible that one particular anti-depressant (of the anti-depressants
used in the studies)/SPRAVATO combination accounts for the entirety of
the differences seen between the treated groups and the control groups.
We further stated that without consistently controlling for the
specific anti-depressants prescribed in multivariate analyses, we may
not be able to parse this potentially complex relation apart.
Fourth, given that SPRAVATO is comprised of the drug ketamine, we
stated in the proposed rule that we were concerned with the potential
for abuse. Ketamine is accepted as a medication for which there is a
strong possibility for abuse.167 168 169 As one publication
finds, current abuse of intravenous ketamine occurs intranasally.\170\
While clinical trials assess the short-term benefits of ketamine
treatment, there exists a paucity of long-term studies to assess
whether chronic usage of this product may increase the likelihood of
abuse.\171\ In light of the potential for addictive behavior, we stated
we were concerned that despite any demonstrated short-term clinical
benefits, there may be potential negatives for the use of this drug in
the longer term.
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\167\ Schak, K., Vande Voort, J., Johnson, E., Kung, S., Leung,
J., Rasmussen, K., Frye, M., ``Potential Risks of Poorly Monitored
Ketamine Use in Depression Treatment,'' American Journal of
Psychiatry, 2016, vol. 173(3), pp. 215-218. Available at: http://www.ajp.psychiatryonline.org.
\168\ Freedman, R., Brown, A., Cannon, T., Druss, B., Earls, F.,
Escobar, J., Xin, Y., ``Can a Framework be Established for the Safe
Use of Ketamine?,'' American Journal of Psychiatry, 2018, vol. 7,
pp. 587-589. Available at: http://www.ajp.psychiatryonline.org.
\169\ Sanacora, G., Frye, M., McDonald, W., Mathew, S., Turner,
M., Schatzberg, A., Nemeroff, C., ``A Consensus Statement on the Use
of Ketamine in the Treatment of Mood Disorders,'' JAMA Psychiatry,
2017, Special Communication, E1-E6. doi:10.1001/
jamapsychiatry.2017.0080.
\170\ Schak, K., Vande Voort, J., Johnson, E., Kung, S., Leung,
J., Rasmussen, K., Frye, M., ``Potential Risks of Poorly Monitored
Ketamine Use in Depression Treatment,'' American Journal of
Psychiatry, 2016, vol. 173(3), pp. 215-218. Available at: http://www.ajp.psychiatryonline.org.
\171\ Sanacora, G., Frye, M., McDonald, W., Mathew, S., Turner,
M., Schatzberg, A., Nemeroff, C., ``A Consensus Statement on the Use
of Ketamine in the Treatment of Mood Disorders,'' JAMA Psychiatry,
2017, Special Communication, E1-E6. doi:10.1001/
jamapsychiatry.2017.0080.
---------------------------------------------------------------------------
We invited public comments on whether SPRAVATO meets the
substantial clinical improvement criterion.
Comment: The applicant submitted a comment addressing concerns
raised by CMS in the proposed rule regarding whether SPRAVATO meets the
substantial clinical improvement criterion. In response to CMS' concern
that a placebo may be an insufficient comparator for SPRAVATO, the
applicant stated that the use of a placebo was an appropriate method to
assess clinical improvements in TRD. According to the applicant, two
treatments (Symbyax [olanzapine and fluoxetine hydrochloride]) and
electroconvulsive therapy) are available for use in place of a placebo
but are not appropriate comparators due to tolerability concerns \172\
for the former and poor side effects and limited availability for the
latter.173 174
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\172\ Cristancho MA., Thase ME. Drug safety evaluation of
olanzapine/fluoxetine combination. Expert Opin Drug Saf.
2014;13(8):1133-1141.
\173\ Ochs-Ross R., Daly EJ., Lane R., et al. Efficacy and
safety of esketamine nasal spray plus an oral antidepressant in
elderly patients with treatment-resistant depression. Poster
presented at: Annual Meeting of the American Society of Clinical
Psychopharmacology (ASCP); May 29-June 1, 2018; Miami, Florida.
\174\ Amos T., Tandon N., Lefebvre P., et al. Direct and
indirect cost burden and change of employment status in treatment-
resistant depression: a matched-cohort study using a U.S. commercial
claims database. J. Clin Psychiatry. 2018;79(2).
---------------------------------------------------------------------------
In response to CMS' concern that the results of studies did not
consistently show substantial clinical improvement of SPRAVATO when
compared to existing therapies, the applicant referenced previously
submitted studies, Transform-2 and Sustain-1. According to the
applicant, in the Transform-2 trial, patients with TRD achieved
clinically meaningful and statistically significant improvement in
depressive symptoms after being switched to SPRAVATO vs. a placebo
\175\ which resulted in a group treatment difference which exceeded
minimum clinically important difference thresholds reported
elsewhere.176 177 Similarly the applicant asserted that, for
Sustain-1, SPRAVATO demonstrated a significantly delayed time to
relapse versus those treated with a placebo after 16 weeks of treatment
with SPRAVATO.\178\ The applicant further added that in a recent
publication in the New England Journal of Medicine, data from the
SPRAVATO Phase 3 studies provided evidence of clinically meaningful
efficacy when
[[Page 42255]]
SPRAVATO is used in combination with a newly initiated oral
antidepressant.\179\ The applicant concluded that SPRAVATO consistently
shows efficacy at both the short and long-term time points.
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\175\ Popova V, Daly EJ, Trivedi M, et al. Efficacy and safety
of flexibly dosed esketamine nasal spray combined with a newly
initiated oral antidepressant in treatment-resistant depression: a
randomized double-blind active-controlled study. Am J Psychiatry.
2019a;176(6):428-438.
\176\ Montgomery SA, M[ouml]ller HJ. Is the significant
superiority of escitalopram compared with other antidepressants
clinically relevant? Int Clin Psychopharmacol. 2009;24(3):111-118.
\177\ Montgomery SA, Nielsen RZ, Poulsen LH, et al. A
randomised, double-blind study in adults with major depressive
disorder with an inadequate response to a single course of selective
serotonin reuptake inhibitor or serotonin-noradrenaline reuptake
inhibitor treatment switched to vortioxetine or agomelatine. Hum
Psychopharmacol. 2014;29(5):470-482.
\178\ Daly EJ, Trivedi MH, Janik A, et al. Efficacy of
Esketamine Nasal Spray Plus Oral Antidepressant Treatment for
Relapse Prevention in Patients with Treatment-Resistant Depression:
A Randomized Clinical Trial [Epub ahead of print]. JAMA Psychiatry.
2019a. doi:10.1001/jamapsychiatry.2019.1189
\179\ Kim J, Farchione T, Potter A, et al. Esketamine for
treatment-resistant depression--first FDA-approved antidepressant in
a new class [epub ahead of print]. N Engl J Med. 2019 May 22. doi:
10.1056/NEJMp1903305
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In regard to CMS' concern about SPRAVATO's applicability to the
Medicare population, the applicant reiterated results from the
Transform-3 and Sustain-2 studies which included samples targeting ages
65 years of age and older. The applicant stated in their comment that
they acknowledge the limitations of the clinical trials given the
inclusion and exclusion criteria of the studies. The applicant also
recognized that people under 65 years of age with long-term
disabilities are also included in the Medicare population. Although the
applicant did not capture in the trials whether or not patients were on
disability, it indicated that many of the patients enrolled were not
working because of their depression. In the Transform-2 and Sustain-1
studies 30.9 percent and 25.5 percent respectively of patients were
unemployed; the applicant stated that many of the patients enrolled
were not working because of their depression and therefore the percent
unemployed was used as a proxy for chronically disabled.
In response to CMS' concern regarding studies lacking data to show
efficacy across various racial groups, the applicant conceded that
there is limited racial diversity amongst the Phase 3 clinical trials
for TRD, and that their intent is to continue gathering evidence based
on real world data as available. However, the applicant noted that
based on the limited sample size, there did not appear to be any
difference in efficacy for this variable.
In response to CMS' concern that studies provided exclude patients
with certain medical and psychiatric comorbidities, the applicant
stated that patients with other comorbid anxiety disorders, post-
traumatic stress disorder, and certain chronic medical conditions were
included. The applicant provided data from the Transform-3 study and
pooled studies (Transform-1, Transform-2, and Sustain-1) showing the
incidence of common psychiatric comorbidities upon enrollment in the
phase three trials in adults 18-64 treated with SPRAVATO.
[GRAPHIC] [TIFF OMITTED] TR16AU19.148
In response to CMS' concern that the primary endpoint (change in
baseline MADRS) may not be the most appropriate for evaluating SPRAVATO
success, the applicant stated the MADRS is a 10 item, clinician-
administered scale designed to measure overall severity of depressive
symptoms in subjects with MDD. The applicant stated that the scale was
selected because it is validated, reliable, and acceptable to
regulatory health authorities as a primary efficacy endpoint in a
patient population with MDD. Each item is scored between 0-6, leading
to a total score 0-60. The 10 items include the following symptoms:
apparent sadness; reported sadness; inner tension; reduced sleep;
reduced appetite; concentration difficulties; lassitude; inability to
feel; pessimistic thoughts; suicidal thoughts. Cutoffs generally used
for severity include: 0-6 normal; 7-19 mild depression; 20-34 moderate
depression; >34 severe depression.\180\ A ``clinically meaningful''
change from baseline on the MADRS (within-patient change) has been
reported to range between a 6-9 point reduction in total score. Change
in total scores is dependent, in part, on baseline MDD
severity.181 182 In contrast, when groups are compared to
each other at the conclusion of a trial, a 2-point difference between
groups has been found to be clinically meaningful.183 184
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\180\ Snaith RP, Harrop FM, Newby DA, Teale C. Grade scores of
the Montgomery-Asberg Depression and the Clinical Anxiety Scales. Br
J Psychiatry. 1986;148:599-601.
\181\ Leucht S, Fennema H, Engel RR, et la. What does the MADRS
mean? Equipercentile linking with the CGI using a company database
of mirtazapine studies. J Affect Disord.2017; 210:287-293.
\182\ Turkoz I, Alphs, L, Singh J, et al. Demonstration of the
relationship among Clinical Global Impression of Severity of
Depression Scale and Montgomery-[Aring]sberg Depression Rating,
Patient Health Questionnaire-9, and Sheehan Disability Scales
[poster]. Presented at: The International Society for CNS Clinical
Trials and Methodology (ISCTM) Annual Scientific Meeting; February
20-22, 2018; Washington, DC.
\183\ Montgomery SA, M[ouml]ller HJ. Is the significant
superiority of escitalopram compared with other antidepressants
clinically relevant? Int Clin Psychopharmacol. 2009;24(3):111-118.
\184\ Montgomery SA, Nielsen RZ, Poulsen LH, et al. A
randomised, double-blind study in adults with major depressive
disorder with an inadequate response to a single course of selective
serotonin reuptake inhibitor or serotonin-noradrenaline reuptake
inhibitor treatment switched to vortioxetine or agomelatine. Hum
Psychopharmacol. 2014;29(5):470-482.
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In response to CMS' concern about the potential for bias from
clinical staff, the applicant commented that as SPRAVATO has known
transient dissociative effects that are difficult to blind, potentially
biasing the research staff who observed these adverse events (AEs), the
MADRS was performed prior to dosing throughout the DB studies by
independent remote (by phone) blinded raters using the Structured
Interview Guide for the MADRS. Blinded, independent raters were
specifically trained not to inquire about AEs, and study subjects were
reminded not to discuss AEs with the MADRS raters. To enhance remote
rating quality and reliability, and to prevent rater drift, audio-
recording of the remote MADRS
[[Page 42256]]
assessments was implemented.\185\ As an additional measure to enhance
blinding, a bittering agent was added to the placebo nasal spray to
simulate the taste of SPRAVATO nasal spray.186 187
---------------------------------------------------------------------------
\185\ Daly EJ, Trivedi MH, Janik A, et al. Supplementary Online
Content for: Efficacy of Esketamine Nasal Spray Plus Oral
Antidepressant Treatment for Relapse Prevention in Patients with
Treatment-Resistant Depression: A Randomized Clinical Trial [epub
ahead of print]. JAMA Psychiatry. 2019b. doi:10.1001/
jamapsychiatry.2019.1189
\186\ Popova V, Daly EJ, Trivedi M, et al. Efficacy and safety
of flexibly dosed esketamine nasal spray combined with a newly
initiated oral antidepressant in treatment-resistant depression: a
randomized double-blind active-controlled study. Am J Psychiatry.
2019a;176(6):428-438.
\187\ Daly EJ, Trivedi MH, Janik A, et al. Efficacy of
Esketamine Nasal Spray Plus Oral Antidepressant Treatment for
Relapse Prevention in Patients with Treatment-Resistant Depression:
A Randomized Clinical Trial [Epub ahead of print]. JAMA Psychiatry.
2019a. doi:10.1001/jamapsychiatry.2019.1189
---------------------------------------------------------------------------
In response to CMS' concern about the potential for medication
interactions between the newly prescribed antidepressant and SPRAVATO,
the applicant provided subgroup analyses in a pooled adult population
with TRD from the Transform-1 and -2 studies which showed no major
differences in the MADRS total score from baseline to day 28 by class
of antidepressant. Further, the applicant stated that the rate of
treatment-emergent adverse events reported in subjects from the SSRI
subgroup (87.4 percent) was similar to the rate in subjects from the
SNRI subgroup (86.7 percent).
In response to CMS' concern for the potential abuse of SPRAVATO the
applicant stated that the medication is mandated by the FDA to be
accompanied by a Risk Evaluation and Mitigation Strategy (REMS) program
and other procedures to mitigate potential risk for misuse and abuse in
longer term use patients.\188\ The applicant states that additional
safeguards, such as safety surveillance using aggregate data from
external sources and the restricted distribution of SPRAVATO to a
limited number of wholesalers and distributers, are aimed at minimizing
the risk of misuse. Finally, the applicant stated that the Phase 3
programs assessed for evidence of withdrawal or rebound symptoms after
the cessation of SPRAVATO \189\ and found no evidence up to four weeks
later.
---------------------------------------------------------------------------
\188\ Kim J, Farchione T, Potter A, et al. Esketamine for
treatment-resistant depression--first FDA-approved antidepressant in
a new class [epub ahead of print]. N Engl J Med. 2019 May 22. doi:
10.1056/NEJMp1903305.
\189\ Popova V, Daly EJ, Trivedi M, et al. Data Supplement for:
Efficacy and safety of flexibly dosed esketamine nasal spray
combined with a newly initiated oral antidepressant in treatment-
resistant depression: a randomized double-blind active-controlled
study. Am J Psychiatry. 2019b;176(6):428-438.
---------------------------------------------------------------------------
Response: We appreciate the thorough response and additional
information provided by the applicant in response to our concerns
regarding substantial clinical improvement. We agree with the applicant
that due to difficulties arising from treatment with Symbyax or
electroconvulsive therapy that it may be clinically challenging to use
these current treatments for TRD as comparators for SPRAVATO. We also
agree that SPRAVATO shows evidence of clinically meaningful efficacy
based on the additional information provided by the applicant's comment
regarding change in baseline MADRS score as an appropriate measure to
assess substantial clinical improvement. We also appreciate the
applicant's efforts to address clinical bias and the potential for
abuse of SPRAVATO. In light of this information we agree that SPRAVATO
meets the substantial clinical improvement criterion.
After consideration of the public comments we received, we have
determined that Spravato meets all of the criteria for approval of new
technology add-on payments. Therefore, we are approving new technology
add-on payments for Spravato for FY 2020. Cases involving Spravato that
are eligible for new technology add-on payments will be identified by
ICD-10-PCS procedure code 3E097GC (Introduction of Other Therapeutic
Substance into Nose, Via Natural or Artificial Opening). According to
the applicant, the cost for one dose of SPRAVATO is $295, and patients
will typically require 2.5 nasal spray units per treatment for a cost
per day of $737.50. The applicant states that patients undergoing
induction typically receive treatment twice per week while those
undergoing maintenance receive treatment once per week or every two
weeks. Because the applicant assumed that hospitals would not provide
Spravato for stays shorter than 5 days the applicant assumed a dosage
schedule where the 1st dosage is administered on day 5, the 2nd dosage
is administered on day 12, and the 3rd dosage is administered on day
19, and so forth. The applicant found that there would be an average
dosage of 2.1169 nasal spray units per discharge. The applicant
therefore estimates that the average total cost of Spravato per patient
per discharge is $1,561.21 ($737.50 x 2.1169). Under Sec. 412.88(a)(2)
(revised as discussed in this final rule), we limit new technology add-
on payments to the lesser of 65 percent of the average cost of the
technology, or 65 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 a case involving the use of Spravato is $1,014.79 for FY 2020.
i. XOSPATA[supreg] (gilteritinib)
Astellas Pharma U.S., Inc. submitted an application for new
technology add-on payments for XOSPATA[supreg] (gilteritinib) for FY
2020. XOSPATA[supreg] received FDA approval November 28, 2018, and is
indicated for the treatment of adult patients who have been diagnosed
with relapsed or refractory acute myeloid leukemia (AML) with a FMS-
like tyrosine kinase 3 (FLT3) mutation as detected by an FDA-approved
test.
According to the applicant, XOSPATA[supreg] is an oral, small
molecule FMS-like tyrosine kinase 3 (FLT3). The applicant states that
XOSPATA[supreg] inhibits FLT3 receptor signaling and proliferation in
cells exogenously expressing FLT3, including FLT3 internal tandem
duplication (ITD), tyrosine kinase domain mutations (TKD) FLT3D835Y and
FLT3-ITD-D835Y and that it induces apoptosis in leukemic cells
expressing FLT3-ITD. FLT3 is a member of the class III receptor
tyrosine kinase family that is normally expressed on the surface of
hematopoietic progenitor cells, but it is over expressed in the
majority of AML cases.
The applicant states that AML is a type of cancer in which the bone
marrow makes abnormal myeloblasts (a type of white blood cell), red
blood cells, or platelets. According to the applicant, AML is a rare
and rapidly progressing form of cancer of the blood and bone marrow,
characterized by the proliferation of immature white blood cells known
as blast cells. The applicant states that while the specific cause of
AML is unknown, AML is generally characterized by aberrant
differentiation and increased proliferation of malignantly transformed
myeloid progenitor cells. It is considered a heterogeneous disease
state with various molecular and genetic abnormalities, which result in
variable clinical outcomes. When untreated or refractory to available
treatments, AML results in the accumulation of these transformed cells
within the bone marrow and suppression of the production of normal
blood cells (resulting in severe neutropenia and/or thrombocytopenia).
AML may be associated with infiltration of these cells into other
organs and tissues and can be rapidly fatal.
Almost 90 percent of leukemia cases are diagnosed in adults 20
years of age and older, among whom the most common types are chronic
lymphocytic
[[Page 42257]]
leukemia and AML.\190\ AML accounts for approximately 80 percent of
acute leukemias diagnosed in adults, with a median age at diagnosis of
66 years old. It has been estimated that 19,520 people are diagnosed
annually with AML in the United States.\191\ In general, the incidence
of AML increases with advancing age; the prognosis is poorer in older
patients, and the tolerability of the currently available standard-of-
care treatment for patients who have been diagnosed with AML is much
poorer for older patients.\192\
---------------------------------------------------------------------------
\190\ Atlanta: American Cancer Society; 2017 [cited October
2018]. Available from: https://www.cancer.org/content/dam/cancerorg/research/cancer-facts-and-statistics/cancer-treatment-and-survivorship-facts-and-figures/cancer-treatment-and-survivorshipfacts-and-figures-2016-2017.pdf.
\191\ Siegel, R.L., Miller, K.D., Jemal, A., ``Cancer
statistics, 2018,'' CA Cancer J Clin, 2018, vol. 68(1), pp. 7-30.
\192\ Tallman, M.S., ``New strategies for the treatment of acute
myeloid leukemia including antibodies and other novel agents,''
Hematology Am Soc Hematol Educ Program, 2005, pp. 143-50.
---------------------------------------------------------------------------
According to the applicant, approximately 30 percent of adult
patients who have been diagnosed with AML are refractory, meaning
unresponsive, to induction therapy. Furthermore, of those who achieve
complete response (CR), approximately 75 percent will relapse. These
patients are then determined to have relapsed/refractory (R/R) AML.
According to the applicant, several chemotherapy regimens have been
used for the treatment of patients who have been diagnosed with
resistant or relapsed disease; however, the chemotherapy combinations
are universally dose-intensive and cannot always be easily administered
to older patients because of a high-risk of unacceptable toxicity. The
applicant indicated that, while these regimens may generate second
remission rates of up to 50 percent in patients with a first remission
of more than 1 year, toxicity is high in most patients who are frail or
over 60 years old.193 194 195 Additionally, the applicant
stated that if patients (including younger patients) relapse within 6
months of their initial CR, the chance of attaining a second remission
is less than 20 percent with chemotherapy alone.\196\ Furthermore, 5-
year survival after first relapse is approximately 10 percent,
demonstrating the lack of an effective cure for patients who have been
diagnosed with relapsed AML.\197\ Salvage therapy utilizing low-dose
chemotherapy provides a therapy that is more tolerable; however, the
low response rates (17 to 21 percent) makes the benefit of these agents
limited.198 199 Patients who are in second relapse or are
refractory to first salvage, meaning unresponsive to both the preferred
treatment, as well as the secondary choice of treatment, have an
extremely poor prognosis, with survival measured in weeks.\200\
Additionally, patients who have been diagnosed with R/R AML have poor
quality of life, higher hospitalization and total resource use burden,
and higher total healthcare costs.201 202 203 204
---------------------------------------------------------------------------
\193\ Rowe, J.M., Tallman, M.S., ``How I treat acute myeloid
leukemia,'' Blood, 2010, vol. 116(17), pp. 3147-56.
\194\ Breems, D.A., Van Putten, W.L., Huijgens, P.C.,
Ossenkoppele, G.J., Verhoef, G.E., Verdonck, L.F., et al.,
``Prognostic index for adult patients with acute myeloid leukemia in
first relapse,'' J Clin Oncol, 2005, vol. 23(9), pp. 1969-78.
\195\ Karanes, C., Kopecky, K.J., Head, D.R., Grever, M.R.,
Hynes, H.E., Kraut, E.H., et al., ``A Phase III comparison of high
dose ARA-C (HIDAC) versus HIDAC plus mitoxantrone in the treatment
of first relapsed of refractory acute myeloid leukemia Southwest
Oncology Group Study,'' Leuk Res, 1999, vol. 23(9), pp. 787-94.
\196\ Forman, S.J., Rowe, J.M., ``The myth of the second
remission of acute leukemia in the adult,'' Blood, 2013, vol.
121(7), pp. 1077-82.
\197\ Rowe, J.M., Tallman, M.S., ``How I treat acute myeloid
leukemia,'' Blood, 2010, vol. 116(17), pp. 3147-56.
\198\ Itzykson, R., Thepot, S., Berthon, C., et al.,
``Azacitidine for the treatment of relapsed and refractory AML in
older patients,'' Leuk Res, 2015, vol. 39, pp. 124-130.
\199\ Khan, N., Hantel, A., Knoebel, R., et al., ``Efficacy of
single-agent decitabine in relapsed and refractory acute myeloid
leukemia,'' Leuk Lymphoma, 2017, vol. 58, pp. 1-7.
\200\ Giles, F., O'Brien, S., Cortes, J., Verstovsek, S., Bueso-
Ramos, C., Shan, J., et al., ``Outcome of patients with acute
myelogenous leukemia after second salvage therapy,'' Cancer, 2005,
vol. 104(3), pp. 547-54.
\201\ Goldstone, A.H., et al., ``Attempts to improve treatment
outcomes in acute myeloid leukemia (AML) in older patients: the
results of the United Kingdom Medical Research Council AML11
trial,'' Blood, 2001, vol. 98(5), pp. 1302-1311.
\202\ Pandya, B.J., et al., ``Quality of life of Acute Myeloid
Leukemia Patients in a Real-World Setting,'' JCO, 2017, vol. 35(15)
suppl., e18525.
\203\ Medeiros, B.C., et al., ``Economic Burden of Treatment
Episodes in Acute Myeloid Leukemia (AML) Patients in the US: A
Retrospective Analysis of a Commercial Payer Database,'' ASH, 2017
Poster.
\204\ Aly, A., et al., ``Economic Burden of Relapsed/Refractory
AML in the U.S.,'' ASH, 2017 Poster.
---------------------------------------------------------------------------
The applicant indicated that patients who have been diagnosed with
AML with FLT3 positive mutations are a well-established subpopulation
of AML patients, but there are no approved therapies for patients who
have been diagnosed with R/R AML with FLT3 mutations. Approximately 30
percent of patients newly diagnosed with AML have mutations in the FLT3
gene.205 206 FLT3 is a member of the class III receptor
tyrosine kinase family that is normally expressed on the surface of
hematopoietic progenitor cells. FLT3 and its ligand play an important
role in proliferation, survival, and differentiation of multipotent
stem cells. The applicant explained that FLT3 is overexpressed in the
majority of patients diagnosed with AML. In addition, activated FLT3
with internal tandem duplication (ITD) or tyrosine kinase domain (TKD)
mutations at around D835 in the activation loop are present in 20
percent to 25 percent and 5 percent to 10 percent of AML cases,
respectively.\207\ These activated mutations in FLT3 are oncogenic and
show transforming activity in cells.\208\
---------------------------------------------------------------------------
\205\ The Cancer Genome Atlas Research Network, ``Genomic and
Epigenomic Landscapes of Adult De Novo Acute Myeloid Leukemia,'' N
Engl J Med, 2013, vol. 368(22), pp. 2059-2074.
\206\ Leukemia and Lymphoma Society Facts 2016-2017. Available
at: https://www.lls.org/facts-and-statistics/facts-and-statistics-overview, [Last accessed March 7, 2018].
\207\ Kindler, T., Lipka, D.B., Fischer, T., ``FLT3 as a
therapeutic target in AML: still challenging after all these
years,'' Blood, 2010, vol. 116(24), pp. 5089-102.
\208\ Yamamoto, Y., Kiyoi, H., Nakano, Y., Suzuki, R., Kodera,
Y., Miyawaki, S., et al., ``Activating mutation of D835 within the
activation loop of FLT3 in human hematologic malignancies,'' Blood,.
2001, vol. 97, pp. 2434-9.En
---------------------------------------------------------------------------
Compared to patients with wild-type FLT3, AML patients with FLT3
mutation experience shorter remission duration at 2 years, according to
the applicant. Approximately 30 percent of FLT3-ITD patients relapse
versus approximately 16 percent of other AML patients.\209\
Additionally, these patients experience poorer survival outcomes. The
estimated median OS for patients who have been newly diagnosed with
FLT3 mutations is 15.2 to 15.5 months compared to 19.3 to 28.6 months
for patients with wild-type FLT3.\210\ Patients who have been diagnosed
with R/R FLT3 mutation positive AML have lower remission rates with
salvage chemotherapy, shorter durations of remission to second relapse
and decreased overall survival relative to FLT3 mutation negative
patients. \211 212 213\ According to the applicant,
[[Page 42258]]
patients who have been diagnosed with FLT3 mutation positive R/R AML
have a substantial unmet medical need for treatment.
---------------------------------------------------------------------------
\209\ Brunet, S., et al., ``Impact of FLT3 Internal Tandem
Duplication on the Outcome of Related and Unrelated Hematopoietic
Transplantation for Adult Acute Myeloid Leukemia in First Remission:
A Retrospective Analysis,'' J Clin Oncol, March 1, 2012, vol. 30(7),
pp. 735-41.
\210\ Sotak, M.L., et al., ``Burden of Illness of FLT3 Mutated
Acute Myeloid Leukemia (AML),'' Blood, 2011, vol. 118(21), pp. 4765
4765.
\211\ Konig, H., Levis, M., ``Targeting FLT3 to treat leukemia.
Expert Opin Ther Targets,'' 2015, vol. 19(1), pp. 37-54.
\212\ Chevallier, P., Labopin, M., Turlure, P., Prebet, T.,
Pigneux, A., Hunault, M., et al., ``A new Leukemia Prognostic
Scoring System for refractory/relapsed adult acute myelogeneous
leukaemia patients: a GOELAMS study,'' Leukemia, 2011, vol. 25(6),
pp. 939-44.
\213\ Levis, M., Ravandi, F., Wang, E.S., Baer, M.R., Perl, A.,
Coutre, S., et al., ``Results from a randomized trial of salvage
chemotherapy followed by lestaurtinib for patients with FLT3 mutant
AML in first relapse,'' Blood, 2011, vol. 117(12), pp. 3294-301.
---------------------------------------------------------------------------
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19337), we noted
that the applicant had submitted a request to the ICD-10 Coordination
and Maintenance Committee for approval for a unique ICD-10-PCS code to
identify procedures involving the use of XOSPATA[supreg], beginning in
FY 2020. Approval was granted for the following ICD-10-PCS procedure
code effective October 1, 2019: XW0DXV5 (Introduction of Gilteritinib
Antineoplastic into Mouth and Pharynx, External Approach, New
Technology Group 5).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and, therefore, would not be
considered ``new'' for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that XOSPATA[supreg] has a unique mechanism of
action and, therefore, should be considered new under this criterion.
The applicant stated that XOSPATA[supreg] is an oral, small molecule
FMS-like tyrosine kinase 3 (FLT3) inhibitor. According to the
applicant, XOSPATA[supreg] inhibits FLT3 receptor signaling and
proliferation in cells exogenously expressing FLT3, including FLT3
internal tandem duplication (ITD), tyrosine kinase domain mutations
(TKD) FLT3-D835Y and FLT3-ITD D835Y, and it induces apoptosis in
leukemic cells expressing FLT3-ITD. The applicant asserted that
XOSPATA[supreg] is the only FLT3-targeting agent approved by the FDA
for the treatment of relapsed or refractory FLT3mut+ AML.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant asserted that cases
involving patients being medically treated for the type of AML
indicated for XOSPATA[supreg] would map to the following MS-DRGs: 834
(Acute Leukemia without Major O.R. Procedure with MCC), 835 (Acute
Leukemia without Major O.R. Procedure with CC), and 836 (Acute Leukemia
without Major O.R. Procedure without CC/MCC). In the proposed rule, we
indicated that under current coding conventions it appeared likely that
cases involving treatment with the use of XOSPATA[supreg] would map to
the same MS-DRGs as existing therapies.
With regard to the third criterion, 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 when compared to an
existing technology, the applicant stated that XOSPATA[supreg] is FDA-
approved for the treatment of adult patients who have relapsed or
refractory AML with a FLT3 mutation. Cases representing potential
patients that may be eligible for treatment involving XOSPATA[supreg]
would be identified by ICD-10-CM diagnostic codes C92.02 (Acute
myeloblastic leukemia, in relapse) and C92.A2 (Acute myeloid leukemia
with multilineage dysplasia, in relapse). The applicant further
asserted that there are currently no other FLT3-targeting agents
approved for the treatment of patients who have been diagnosed with
relapsed or refractory FLT3mut+ AML. Therefore, the applicant asserted
that XOSPATA[supreg] is indicated to treat a new patient population for
which there are no other technologies currently available.
We invited public comments on whether XOSPATA[supreg] is
substantially similar to any existing technologies, and whether it
meets the newness criterion.
We did not receive any public comments concerning whether
XOSPATA[supreg] meets the newness criterion.
After consideration of the information provided by the applicant,
we believe that XOSPATA[supreg] has a unique mechanism of action and
treats a new patient population for which there are no other
technologies currently available, and therefore is not substantially
similar to existing technologies and meets the newness criterion. .
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion.
The applicant searched the FY 2017 MedPAR data file for cases
reporting ICD-10-CM diagnosis codes C92.02 (Acute myeloblastic
leukemia, in relapse) and C92.A2 (Acute myeloid leukemia with
multilineage dysplasia, in relapse) listed as a primary or secondary
diagnosis that mapped to MS-DRGs 834, 835, and 836. The applicant
applied the following trims to the cases:
Excluded Health Maintenance Organization (HMO) and IME
Only claims;
Excluded cases for bone marrow transplant because
potential eligible patients who may receive treatment involving
XOSPATA[supreg] would not receive a bone marrow transplant during the
same admission as they received chemotherapy;
Excluded cases indicating an O.R. procedure;
Excluded cases treated at 8 providers that were not listed
in the FY 2019 IPPS/LTCH PPS final rule correction notice impact file
(these are predominately cancer hospitals).
After applying the previously discussed trims, 407 potential cases
remained. The applicant noted that it used only departmental charges
that are used by CMS for rate setting.
Using the 407 cases, the applicant determined an average case-
weighted unstandardized charge per case of $166,389. The applicant then
removed all pharmacy charges because the applicant believed that
patients would typically receive other pharmaceuticals such as anti-
emetics during the hospital stay and patients receiving treatment
involving the use of XOSPATA[supreg] would continue to receive those
other pharmaceuticals. Additionally, according to the applicant, blood
charges were reduced because some patients receiving treatment
involving the use of XOSPATA[supreg] became infusion independent in the
clinical trial. The applicant standardized the charges for each case
and inflated each case's charges by applying the proposed outlier
charge inflation factor of 1.085868 (included in the FY 2019 IPPS/LTCH
PPS proposed rule (83 FR 20581)). The applicant calculated an average
case-weighted standardized charge per case of $157,034 using the
percent distribution of MS-DRGs as case-weights. Based on this
analysis, the applicant determined that the technology met the cost
criterion because the final inflated average case-weighted standardized
charge per case for XOSPATA[supreg] exceeded the average case-weighted
threshold amount of $88,479 by $68,555. As noted in the FY 2020 IPPS/
LTCH PPS proposed rule, the inflation factor used by the applicant was
the proposed 2-year inflation factor, which was discussed in the FY
2019 IPPS/LTCH PPS final rule summation of the calculation of the FY
2019 IPPS outlier charge inflation factor for the proposed rule (83 FR
41718 through 41722). The final 2-year inflation factor published in
the FY 2019 IPPS/LTCH PPS final rule was 1.08864 (83 FR 41722), which
was revised in the FY 2019 IPPS/LTCH PPS final rule correction notice
to 1.08986 (83 FR 49844).
We further noted that, although the applicant used the proposed
rule value to inflate the standardized charges, even when using the
final rule value or the
[[Page 42259]]
corrected final rule value revised in the correction notice to inflate
the charges, the final inflated average case-weighted standardized
charge per case for XOSPATA[supreg] would exceed the average case-
weighted threshold amount. We invited public comments on whether
XOSPATA[supreg] meets the cost criterion.
We did not receive any comments on whether XOSPATA[supreg] meets
the cost criterion. Based on the analysis described previously, we
believe that XOSPATA[supreg] meets the cost criterion.
With regard to substantial clinical improvement, the applicant
submitted one central study to support its assertion that
XOSPATA[supreg] represents a substantial clinical improvement over
existing technologies because it offers a treatment option for FLT3mut+
AML patients ineligible for currently available treatments. The
applicant also asserted that XOSPATA[supreg] represents a substantial
clinical improvement because the technology reduces mortality,
decreases the number of subsequent diagnostic or therapeutic
interventions, and reduces the number of future hospitalizations due to
adverse events as shown by its studies.\214\
---------------------------------------------------------------------------
\214\ Astellas, ``A Phase 3 Open-label, Multicenter, Randomized
Study of ASP2215 versus Salvage Chemotherapy in Patients with
Relapsed or Refractory Acute Myeloid Leukemia (AML) with FLT3
Mutation, Clinical Study Report,'' March 2018.
---------------------------------------------------------------------------
According to the applicant, the efficacy of XOSPATA[supreg] in the
treatment of patients who have been diagnosed with R/R AML has been
demonstrated in a U.S.-based, multi-national, active-controlled, Phase
III study (ADMIRAL, 2215-CL-0301). This study was designed to determine
the clinical benefit of the use of XOSPATA[supreg] in patients who have
been diagnosed with FMS-like tyrosine kinase (FLT3) mutated AML who are
refractory to, or have relapsed, after first-line AML therapy as shown
with overall survival (OS) compared to salvage chemotherapy, and to
determine the efficacy of the use of XOSPATA[supreg] as assessed by the
rate of complete remission and complete remission with partial
hematological recovery (CR/CRh) in these patients.\215\
---------------------------------------------------------------------------
\215\ Ibid.
---------------------------------------------------------------------------
In the ADMIRAL (2215-CL-0301) study, the applicant noted that
XOSPATA[supreg] demonstrated clinically meaningful CR and CRh rates, as
well as a clinically meaningful duration of CR/CRh in the patients
studied. The CR/CRh rate was 21.8 percent, with 31/142 patients
achieving a CR/CRh, 18/142 patients achieving CR (12.7 percent) and 13/
142 patients achieving a CRh (9.2 percent). Of the 31 patients (21.8
percent) who achieved CR/CRh, the median duration of remission was 4.5
months. For the 18 patients who achieved CR and the 13 patients who
achieved CRh, the median duration of response was 8.7 months and 2.9
months, respectively.\216\
---------------------------------------------------------------------------
\216\ Draft XOSPATA[supreg] (package insert) Northbrook, IL,
Astellas Pharma US, Inc., 2018.
---------------------------------------------------------------------------
The safety evaluation of XOSPATA[supreg] is based on 292 patients
who had been diagnosed with relapsed or refractory AML treated with 120
mg of XOSPATA[supreg] daily. The applicant noted that when looking at
the ADMIRAL study, the most common serious adverse events (SAEs) (Grade
III or above) were lab abnormalities of elevation of liver
transaminases in 43 (15 percent) of patients, fatigue in 14 (5 percent)
of patients, myalgia or arthralgia in 13 (5 percent) of patients, and
gastrointestinal disorders of diarrhea in 8 (3 percent) of patients and
nausea in 4 (1 percent) of patients. Due to the number and type of SAEs
reported, the applicant believed that XOSPATA[supreg] has the potential
to decrease the number of subsequent future hospitalizations or
physician visits as a result of management of adverse events, in
particular serious adverse events.
Transfusion dependence was also evaluated in the XOSPATA[supreg]-
treated patients. In some hematologic disorders, becoming transfusion
independent or receiving fewer transfusions over a specified interval
is defined as improvement or response depending on whether therapy is
given.\217\
---------------------------------------------------------------------------
\217\ Gale, R.P., Barosi, G., Barbui, T., Cervantes, F., Dohner,
K., Dupriez, B., et al., ``What are RBC-transfusion-dependence and -
independence?,'' Leuk. Res, 2011, vol. 35(1).
---------------------------------------------------------------------------
In the ADMIRAL study, at baseline prior to therapy initiation, 34
patients in the XOSPATA[supreg] arm were classified as transfusion
independent and 107 patients were classified as transfusion dependent.
Of these transfusion dependent patients, 34 (31.8 percent) patients
became transfusion independent during XOSPATA[supreg] treatment. Of the
34 patients who were transfusion independent at baseline, 18 (52.9
percent) patients maintained transfusion independence during
XOSPATA[supreg] treatment.
The applicant asserted that the use of XOSPATA[supreg] addresses a
medical need in a patient population that has been difficult to manage
in the past due to limited treatment options. In the ADMIRAL study, the
applicant provided data specific to reduced mortality rate compared to
historical data. Because of the small number of SAEs, the applicant
stated that it anticipates reduction of subsequent diagnostic and
therapeutic interventions, as well as decreased number of future
physician visits and hospitalization as noted previously. However, we
stated in the proposed rule the applicant did not provide direct
numbers for the comparator arm of the ADMIRAL study in its application.
Because of this, we further stated we were concerned that it may be
difficult to determine XOSPATA[supreg]'s comparative effectiveness. We
noted that the ADMIRAL study was designed to evaluate efficacy and
head-to-head trials were lacking. We indicated in the proposed rule
that until the comparative data for both randomized arms were
available, we were concerned that there may be insufficient evidence to
determine that XOSPATA[supreg] provides a substantial clinical
improvement over existing technologies.
We invited public comments on whether XOSPATA[supreg] meets the
substantial clinical improvement criterion.
Comment: The applicant provided updated information on the results
of the Phase 3 ADMIRAL trial. As noted above, patients in the ADMIRAL
trial with relapsed or refractory AML were randomized to receive either
XOSPATA[supreg] or salvage chemotherapy. The applicant provided
additional information that the median overall survival for patients
who received XOSPATA[supreg] was 9.3 months compared to 5.6 months for
patients who received salvage chemotherapy. Hazard ratio was 0.64 with
95 percent confidence levels of 0.49 to 0.83. The p-value was 0.0004.
The applicant also provided information showing that the ADMIRAL trial
showed a decrease of 34.5 percent in number of patients requiring the
transfusion with RBC or platelets.
Response: We appreciate the comments and additional data submitted
by the applicant in response to our concerns. After consideration of
the additional data provided, which shows an improvement in median
overall survival for patients who received XOSPATA[supreg] compared to
patients who received salvage chemotherapy, we believe XOSPATA[supreg]
meets the substantial clinical improvement criterion.
After consideration of the public comments we received, we have
determined that XOSPATA[supreg] meets all of the criteria for approval
of new technology add-on payments. Therefore, we are approving new
technology add-on payments for FY 2020. Cases involving XOSPATA[supreg]
that are eligible for new technology add-on payments will be identified
by ICD-10-PCS code XW0DXV5 (Introduction of Gilteritinib
[[Page 42260]]
Antineoplastic into Mouth and Pharynx, External Approach, New
Technology Group 5). In its application, the applicant estimated that
the average Medicare beneficiary would require a dosage of 120mg/day
administered as oral tablets in three divided doses. According to the
applicant, the WAC for one dose is $250, and patients will typically
require 3 tablets for the course of treatment with XOSPATA[supreg] per
day for an average duration of 15 days. Therefore, the total cost of
XOSPATA[supreg] per patient is $11,250. Under Sec. 412.88(a)(2)
(revised as discussed in this final rule), we limit new technology add-
on payments to the lesser of 65 percent of the average cost of the
technology, or 65 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 a case involving the use of XOSPATA[supreg] is $7,312.50 for FY
2020.
j. GammaTile TM
GT Medical Technologies, Inc. submitted an application for new
technology add-on payments for FY 2020 for the GammaTile TM.
We note that Isoray Medical, Inc. and GammaTile, LLC previously
submitted an application for new technology add-on payments for
GammaTile TM for FY 2018, which was withdrawn, and also for
FY 2019, however the technology did not receive FDA approval or
clearance by July 1, 2018 and, therefore, was not eligible for
consideration for new technology add-on payments for FY 2019. The
GammaTile TM is a brachytherapy device for use in the
treatment of patients who have been diagnosed with recurrent
intracranial neoplasms, which uses cesium-131 radioactive sources
embedded in a collagen matrix. GammaTile TM is designed to
provide adjuvant radiation therapy to eliminate remaining tumor cells
in patients who required surgical resection of recurrent brain tumors.
According to the applicant, the GammaTile TM technology is a
new vehicle of delivery for and inclusive of cesium-131 brachytherapy
sources embedded within the product. The applicant stated that the
technology has been manufactured for use in the setting of a craniotomy
resection site where there is a high chance of local recurrence of a
CNS or dual-based tumor. The applicant asserted that the use of the
GammaTile TM technology provides a new, unique modality for
treating patients who require radiation therapy to augment surgical
resection of malignancies of the brain. By offsetting the radiation
sources with a 3mm gap of a collagen matrix, the applicant asserted
that the use of the GammaTile TM technology resolves issues
with ``hot'' and ``cold'' spots associated with brachytherapy, improves
safety, and potentially offers a treatment option for patients with
limited, or no other, available options. The GammaTile TM is
biocompatible and bioabsorbable, and is left in the body permanently
without need for future surgical removal. The applicant asserted that
the commercial manufacturing of the product will significantly improve
on the process of constructing customized implants with greater speed,
efficiency, and accuracy than is currently available, and requires less
surgical expertise in placement of the radioactive sources, allowing a
greater number of surgeons to utilize brachytherapy techniques in a
wider variety of hospital settings. The GammaTile TM
technology received FDA clearance as a Class II medical device on July
6, 2018. The cleared indications for use state that GammaTile
TM is intended to deliver radiation therapy (brachytherapy)
in patients who have been diagnosed with recurrent intercranial
neoplasms. The applicant submitted a request for approval for a unique
ICD-10-PCS code for the use of the GammaTile TM technology,
which was approved effective October 1, 2017 (FY 2018). The ICD-10-PCS
procedure code used to identify procedures involving the use of the
GammaTile TM technology is 00H004Z (Insertion of radioactive
element, cesium-131 collagen implant into brain, open approach).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant stated that when compared to treatment using external beam
radiation therapy, GammaTile TM uses a new and unique
mechanism of action to achieve a therapeutic outcome. The applicant
explained that the GammaTile TM technology is fundamentally
different in structure, function, and safety from all external beam
radiation therapies, and delivers treatment through a different
mechanism of action. In contrast to external beam radiation modalities,
the applicant further explained that the GammaTile TM is a
form of internal radiation termed brachytherapy. According to the
applicant, brachytherapy treatments are performed using radiation
sources positioned very close to the area requiring radiation treatment
and deliver radiation to the tissues that are immediately adjacent to
the margin of the surgical resection. Conversely, external beam
radiation therapy travels inward and typically exposes radiation to a
large volume of normal brain tissue. As a result, the common clinical
practice to avoid radiation toxicity is to reduce dosage ranges,
limiting overall efficacy.
Due to the custom positioning of the radiological sources and the
use of the cesium-131 isotope, the applicant noted that the GammaTile
TM technology focuses therapeutic levels of radiation on an
extremely small area of the brain. Unlike all external beam techniques,
the applicant stated that this radiation does not pass externally
inward through the skull and healthy areas of the brain to reach the
targeted tissue and, therefore, may limit neurocognitive deficits seen
with the use of external beam techniques. Because of the rapid
reduction in radiation intensity that is characteristic of cesium-131,
the applicant asserted that the GammaTile TM technology can
target the margin of the excision with greater precision than any
alternative treatment option, while sparing healthy brain tissue from
unnecessary and potentially damaging radiation exposure.
The applicant also stated that, when compared to other types of
brain brachytherapy, GammaTile TM uses a new and unique
mechanism of action to achieve a therapeutic outcome. The applicant
explained that cancerous cells at the margins of a tumor resection
cavity can also be irradiated with the placement of brachytherapy
sources in the tumor cavity. However, the applicant asserted that the
GammaTile TM technology is a pioneering form of
brachytherapy for the treatment of brain tumors that uses the isotope
cesium-131 embedded in a collagen implant that is customized to the
geometry of the brain cavity. According to the applicant, the use of
cesium-131 and the custom distribution of seeds offset in a three-
dimensional collagen matrix results in a unique and highly effective
delivery of radiation therapy to brain tissue. Specifically, the
applicant asserted that the offset radiation source permits only a
prescribed radiation dose to reach the target surface, reducing the
potential for radiation induced necrosis and the need for reoperation.
Additionally, the applicant stated that because the half-life of
cesium-131 used in GammaTile TM is shorter compared to other
brachytherapy isotopes, this results in a more rapid and effective
energy deposition than other isotopes
[[Page 42261]]
with longer half-lives. Therefore, applicant believes that GammaTile
TM is unique due to the greater relative biological
effectiveness compared to other brachytherapy options.
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the GammaTile TM
technology is a treatment option for patients who have been diagnosed
with brain tumors that progress locally after initial treatment with
external beam radiation therapy, and cases involving this technology
are assigned to the same MS-DRG (MS-DRG 023 (Craniotomy with Major
Device Implant/Acute Complex CNS PDX with MCC or Chemotherapy Implant))
as other current treatment forms of brachytherapy and external beam
radiation therapy.
With regard to the third criterion, 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, the applicant
stated that the GammaTile TM technology offers a treatment
option for a patient population with limited, or no other, available
treatment options. The applicant explained that treatment options for
patients who have been diagnosed with brain tumors that progress
locally after initial treatment with external beam radiation therapy
are limited, and there is no current standard-of-care in this setting.
According to the applicant, surgery alone for recurrent tumors may
provide symptom relief, but does not remove all of the cancerous cells.
The applicant further stated that repeating external beam radiation
therapy for adjuvant treatment is hampered by an increasing risk of
brain injury because additional external beam radiation therapy will
increase the total dose of radiation to brain tissue, as well as
increase the total volume of irradiated brain tissue. Secondary
treatment with external beam radiation therapy is often performed with
a reduced and, therefore less effective, dose. The applicant stated
that the technique of implanting cesium-131 seeds in a collagen matrix
is currently only available to patients in one location and requires a
high degree of expertise to implant. The manufacturing process of the
GammaTile TM will greatly expand the availability of
treatment beyond research programs at highly specialized cancer
treatment centers.
Based on the previous discussion, the applicant concluded that the
GammaTile TM technology is not substantially similar to
other existing technologies and meets the newness criterion.
However, in the proposed rule we stated that we were concerned that
the mechanism of action of the GammaTile TM may be the same
or similar to current forms of radiation therapy or brachytherapy.
Specifically, we stated that while the placement of the cesium-131
source (or any radioactive source) in a collagen matrix offset may
constitute a new delivery vehicle, we were concerned that this sort of
improvement in brachytherapy for the use in the salvage treatment of
radiosensitive malignancies of the brain may not represent a new
mechanism of action. We also questioned whether the technology treats a
new patient population, as maintained by the applicant, because of the
availability of other implantable treatment devices that treat the same
patient population as the patients treated by the GammaTile
TM.
We invited public comments on whether the GammaTile TM
technology is substantially similar to any existing technologies and
whether it meets the newness criterion.
Comment: We received multiple comments in support of the claim that
GammaTile TM is not substantially similar to existing
technologies. A commenter stated that GammaTile TM was
designed to provide a fundamentally new mechanism, permitting cells
within the targeted area surrounding the tumor excision cavity to
receive therapeutic levels of radiation while eliminating hot spots
that have occurred with traditional brachytherapy. Commenters stated
that due to the consistency of construction and relative ease of
placement, GammaTile TM would provide a promising
therapeutic treatment to patients nationwide. The applicant also
provided additional information to support its assertion that GammaTile
TM meets the newness criterion. Specifically, the applicant
stated that the GammaTileTM is the only brachytherapy
implant device with an indication cleared by the U.S. FDA that
specifies an indication for treating recurrent brain tumors. The
applicant stated that it is the only brachytherapy implant device
designed to realign and retarget radiation in a three-dimensional
surgical excision using a new mechanism of action with the integration
of a geometric spacer to offset the brachytherapy sources from the
tissues. According to the applicant, this focused radiation therapy is
not possible either with external-beam radiation therapy (EBRT) using
photons, electrons, protons, or other forms of external beam radiation,
or with other brachytherapy sources or delivery devices. The applicant
also asserted that GammaTileTM should not be disqualified
from new technology add-on payments due to having the same or similar
mechanism of action because it is a type of radiation therapy. The
applicant stated that many pharmaceutical technologies utilize similar
microscopic chemical effects, yet may yield differing macroscopic
effects, and have been considered to utilize new mechanisms of action.
The applicant asserts that radiation therapy agents should be similarly
evaluated, asserting that otherwise, it could be argued that there can
be no new mechanisms of action for either drugs or radiation sources,
and that such a conclusion would be inconsistent with Congressional
intent and efforts to promote patient access to innovation, or the
overall mission of CMS. The applicant stated that
GammaTileTM provides a new mechanism of action when compared
to existing technologies and this new mechanism plays a primary role in
achieving the positive therapeutic outcomes seen in the clinical data.
Response: We appreciate the information provided by the applicant
and commenters. After consideration of comments, we believe that the
GammaTileTM mechanism of action is different from current
forms of radiation therapy and brachytherapy as it is the first FDA
cleared device to use a manufactured collagen matrix which offsets
radiation sources for use for the treatment of recurrent intracranial
neoplasms. Therefore, the GammaTileTM is not substantially
similar to existing brachytherapy technology and meets the newness
criterion.
With regard to the cost criterion, the applicant conducted the
following analysis. The applicant worked with the Barrow Neurological
Institute at St. Joseph's Hospital and Medical Center (St. Joseph's) to
obtain actual claims from mid-2015 through mid-2016 for craniotomies
that did not involve placement of the GammaTile TM
technology. The cases were assigned to MS-DRGs 025 through 027
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC,
and without CC/MCC, respectively). For the 460 claims, the average
case-weighted unstandardized charge per case was $143,831. The
applicant standardized the charges for each case and inflated each
case's charges by applying the outlier charge inflation factor of
1.04205 included in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41718)
by the age of each case (that is, the factor was applied to 2015 claims
3 times and 2016 claims 2 times). The applicant then calculated an
estimate for ancillary
[[Page 42262]]
charges associated with placement of the GammaTile TM
device, as well as standardized charges for the GammaTile TM
device itself. The applicant determined it meets the cost criterion
because the final inflated average case-weighted standardized charge
per case (including the charges associated with the GammaTile
TM device) of $253,876 exceeds the average case-weighted
threshold amount of $143,749 for MS-DRG 023, the MS-DRG that would be
assigned for cases involving the GammaTile TM device.
As indicated in the proposed rule, the applicant also noted, in
response to a concern expressed by CMS in the FY 2018 IPPS/LTCH PPS
proposed rule, that its analysis does not include a reduction in costs
due to reduced operating room times. The applicant stated that, while
the use the device will reduce operating times relative to the freehand
placement of seeds in other brain brachytherapy procedures, none of the
claims in the cost analysis involve such freehand placement. We invited
public comments on whether the GammaTile TM technology meets
the cost criterion.
We received no comments on whether the GammaTile TM
technology meets the cost criterion. Based on the analysis above, we
believe that GammaTile TM meets the cost criterion.
With regard to substantial clinical improvement, the applicant
stated that the GammaTile TM technology offers a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments for recurrent CNS malignancies and
significantly improves clinical outcomes when compared to currently
available treatment options. The applicant explained that therapeutic
options for patients who have been diagnosed with large or recurrent
brain metastases are limited (for example, stereotactic radiotherapy,
additional EBRT, or systemic immunochemotherapy). However, according to
the applicant, the GammaTile TM technology provides a
treatment option for patients who have been diagnosed with
radiosensitive recurrent brain tumors that are not eligible for
treatment with any other currently available treatment option.
Specifically, the applicant stated that the GammaTile TM
device may provide the only radiation treatment option for patients who
have been diagnosed with tumors located close to sensitive vital brain
sites (for example, brain stem) and patients who have been diagnosed
with recurrent brain tumors who may not be eligible for additional
treatment involving the use of external beam radiation therapy. There
is a lifetime limit for the amount of radiation therapy a specific area
of the body can receive. Patients whose previous treatment includes
external beam radiation therapy may be precluded from receiving high
doses of radiation associated with subsequent external beam radiation
therapy, and the GammaTile TM technology can also be used to
treat tumors that are too large for treatment with external beam
radiation therapy. Patients who have been diagnosed with these large
tumors are not eligible for treatment with external beam radiation
therapy because the radiation dose to healthy brain tissue would be too
high.
The applicant summarized how the GammaTileTM technology
improves clinical outcomes compared to existing treatment options,
including external beam radiation therapy and other forms of brain
brachytherapy as: (1) Providing a treatment option for patients with no
other available treatment options; (2) reducing the rate of mortality
compared to alternative treatment options; (3) reducing the rate of
radiation necrosis; (4) reducing the need for re-operation; (5)
reducing the need for additional hospital visits and procedures; and
(6) providing more rapid beneficial resolution of the disease process
treatment.
The applicant cited several sources of data to support these
assertions. The applicant referenced a paper by Brachman, Dardis et
al., which was published in the Journal of Neurosurgery on December 21,
2018.\218\ This study, a follow-up on the progress of 20 patients with
recurrent previously irradiated meningiomasis, is a feasibility or
superior progression-free survival study comparing the patient's own
historical control rate against subsequent treatment with
GammaTileTM.
---------------------------------------------------------------------------
\218\ Brachman, D., et al., ``Resection and permanent
intracranial brachytherpay using modular, biocompatible cesium-131
implants: Results in 20 recurrent previously irradiated
meningiomas,'' J Neurosurgery, December 21, 2018.
---------------------------------------------------------------------------
An additional source of clinical data is from Gamma Tech's internal
review of data from two centers treating brain tumors with
GammaTileTM; the two centers are the Barrow Neurological
Institute (BNI) at St. Joseph's Hospital and St. Joseph's Medical
Center, Phoenix, AZ, and this internal review is referred to herein as
the ``BNI'' study.\219\ The BNI study summarized Gamma Tech's
experience with the GammaTileTM technology. Another source
of data that the applicant cited to support its assertions regarding
substantial clinical improvement is an abstract by Pinnaduwage, D., et
al. Also submitted in the application were abstracts from 2014 through
2018 in which updates from the progression-free survival study and the
BNI study were presented at specialty society clinical conferences. The
following summarizes the findings cited by the applicant to support its
assertions regarding substantial clinical improvement.
---------------------------------------------------------------------------
\219\ Brachman, D., et al., ``Surgery and Permanent
Intraoperative Brachytherapy Improves Time to Progress of Recurrent
Intracranial Neoplasms,'' Society for Neuro-Oncology Conference on
Meningioma, June 2016.
---------------------------------------------------------------------------
Regarding the assertion of local control, the 2018 article which
was published in the Journal of Neurosurgery found that, with a median
follow-up of 15.4 months (range 0.03-47.5 months), there were 2
reported cases of recurrence out of 20 meningiomas, with median
treatment site progression time after surgery and brachytherapy with
the GammaTileTM precursor and prototype devices not yet
being reached, compared to 18.3 months in prior instances. Median
overall survival after resection and brachytherapy was 26 months, with
9 patient deaths. In a presentation at the Society for Neuro-Oncology
in November 2014,\220\ the outcomes of 20 patients who were diagnosed
with 27 tumors covering a variety of histological types treated with
the GammaTileTM prototype were presented. The applicant
noted the following with regard to the patients: (1) All tumors were
intracranial, supratentorial masses and included low and high-grade
meningiomas, metastases from various primary cancers, high-grade
gliomas, and others; (2) all treated masses were recurrent following
treatment with surgery and/or radiation and the group averaged two
prior craniotomies and two prior courses of external beam radiation
treatment; and (3) following surgical excision, the prototype
GammaTileTM were placed in the resection cavity to deliver a
dose of 60 Gray to a depth of 5 mm of tissue; and (4) all patients had
previously experienced regrowth of their tumors at the site of
treatment and the local control rate of patients entering the study was
0 percent.
---------------------------------------------------------------------------
\220\ Dardis, C., ``Surgery and Permanent Intraoperative
Brachytherapy Improves Times to Progression of Recurrent
Intracranial Neoplasms,'' Society for Neuro-Oncology, November 2014.
---------------------------------------------------------------------------
With regard to outcomes, the applicant stated that, after their
initial treatment, patients had a median progression-free survival time
of 5.8 months; post treatment with the prototype
GammaTileTM, at the time of
[[Page 42263]]
this analysis, only 1 patient had progressed at the treatment site, for
a local control rate of 96 percent; and median progression-free
survival time, a measure of how long a patient lives without recurrence
of the treated tumor, had not been reached (as this value can only be
calculated when more than 50 percent of treated patients have failed
the prescribed treatment).
The applicant also cited the findings from Brachman, et al. to
support local control of recurrent brain tumors. At the Society for
Neuro-Oncology Conference on Meningioma in June 2016 \221\, a second
set of outcomes on the prototype GammaTileTM was presented.
This study enrolled 16 patients with 20 recurrent Grade II or III
meningiomas, who had undergone prior surgical excision external beam
radiation therapy. These patients underwent surgical excision of the
tumor, followed by adjuvant radiation therapy with the prototype
GammaTileTM. The applicant noted the following outcomes: (1)
Of the 20 treated tumors, 19 showed no evidence of radiographic
progression at last follow-up, yielding a local control rate of 95
percent; 2 of the 20 patients exhibited radiation necrosis (1
symptomatic, 1 asymptomatic); and (2) the median time to failure from
the prior treatment with external beam radiation therapy was 10.3
months and after treatment with the prototype GammaTileTM
only 1 patient failed at 18.2 months. Therefore, the median treatment
site progression-free survival time after the prototype
GammaTileTM treatment had not yet been reached (average
follow-up of 16.7 months, range 1 to 37 months).
---------------------------------------------------------------------------
\221\ Brachman, D., et al, ``Surgery and Permanent
Intraoperative Brachytherapy Improves Time to Progress of Recurrent
Intracranial Neoplasms,'' Society for Neuro-Oncology Conference on
Meningioma, June 2016.
---------------------------------------------------------------------------
A third prospective study was accepted for presentation at the
November 2016 Society for Neuro-Oncology annual meeting.\222\ In this
study, 13 patients who were diagnosed with recurrent high-grade gliomas
(9 with glioblastoma and 4 with Grade III astrocytoma) were treated in
an identical manner to the cases previously described. Previously, all
patients had failed the international standard treatment for high-grade
glioma, a combination of surgery, radiation therapy, and chemotherapy
referred to as the ``Stupp regimen.'' For the prior therapy, the median
time to failure was 9.2 months (range 1 to 40 months). After therapy
with a prototype GammaTileTM, the applicant noted the
following: (1) The median time to same site local failure had not been
reached and 1 failure was seen at 18 months (local control 92 percent);
and (2) with a median follow-up time of 8.1 months (range 1 to 23
months) 1 symptomatic patient (8 percent) and 2 asymptomatic patients
(15 percent) had radiation-related MRI changes. However, no patients
required re-operation for radiation necrosis or wound breakdown. Dr.
Youssef was accepted to present at the 2017 Society for Neuro-Oncology
annual meeting, where he provided an update of 58 tumors treated with
the GammaTileTM technology. At a median whole group follow-
up of 10.8 months, 12 patients (20 percent) had a local recurrence at
an average of 11.33 months after implant. Six and 18 month recurrence
free survival was 90 percent and 65 percent, respectively. Five
patients had complications, at a rate that was equal to or lower than
rates previously published for patients without access to the
GammaTileTM technology.
---------------------------------------------------------------------------
\222\ Youssef, E., ``C-131 Implants for Salvage Therapy of
Recurrent High Grade Gliomas,'' Society for Neuro-Oncology Annual
Meeting, November 2016.
---------------------------------------------------------------------------
In support of its assertion of a reduction in radiation necrosis,
the applicant also included discussion of a presentation by D.S.
Pinnaduwage, Ph.D., at the August 2017 annual meeting of the American
Association of Physicists in Medicine. Dr. Pinnaduwage compared the
brain radiation dose of the GammaTileTM technology with
other radioactive seed sources. Iodine-125 and palladium-103 were
substituted in place of the cesium-131 seeds. The study reported
findings that other radioactive sources reported higher rates of
radiation necrosis and that ``hot spots'' increased with larger tumor
size, further limiting the use of these isotopes. The study concluded
that the larger high-dose volume with palladium-103 and iodine-125
potentially increases the risk for radiation necrosis, and the
inhomogeneity becomes more pronounced with increasing target volume.
The applicant also cited a presentation by Dr. Pinnaduwage at the
August 2018 annual meeting of the American Association of Physicists in
Medicine, in which research findings demonstrated that seed migration
in collagen tile implantations was relatively small for all tested
isotopes, with Cesium-13 showing the least amount of seed migration.
The applicant asserted that, when considered in total, the data
reported in these presentations and studies and the intermittent data
presented in their abstracts support the conclusion that a significant
therapeutic effect results from the addition of GammaTileTM
radiation therapy to the site of surgical removal. According to the
applicant, the fact that these patients had failed prior best available
treatments (aggressive surgical and adjuvant radiation management)
presents the unusual scenario of a salvage therapy outperforming the
current standard-of-care. The applicant noted that follow-up data
continues to accrue on these patients.
Regarding the assertion that GammaTileTM reduces
mortality, the applicant stated that the use of the
GammaTileTM technology reduces rates of mortality compared
to alternative treatment options. The applicant explained that studies
on the GammaTileTM technology have shown improved local
control of tumor recurrence. According to the applicant, the results of
these studies showed local control rates of 92 percent to 96 percent
for tumor sites that had local control rates of 0 percent from previous
treatment. The applicant noted that these studies also have not reached
median progression-free survival time with follow-up times ranging from
1 to 37 months. Previous treatment at these same sites resulted in
median progression-free survival times of 5.8 to 10.3 months.
The applicant further stated that the use of the
GammaTileTM technology reduces rates of radiation necrosis
compared to alternative treatment options. The applicant explained that
the rate of symptomatic radiation necrosis in the
GammaTileTM clinical studies of 5 to 8 percent is
substantially lower than the 26 percent to 57 percent rate of
symptomatic radiation necrosis requiring re-operation historically
associated with brain brachytherapy, and lower than the rates reported
for initial treatment of similar tumors with modern external beam and
stereotactic radiation techniques. The applicant indicated that this is
consistent with the customized and ideal distribution of radiation
therapy provided by the GammaTileTM technology.
The applicant also asserted that the use of the
GammaTileTM technology reduces the need for re-operation
compared to alternative treatment options. The applicant explained that
patients receiving a craniotomy, followed by external beam radiation
therapy or brachytherapy, could require re-operation in the following
three scenarios:
Tumor recurrence at the excision site could require
additional surgical removal;
[[Page 42264]]
Symptomatic radiation necrosis could require excision of
the affected tissue; and
Certain forms of brain brachytherapy require the removal
of brachytherapy sources after a given period of time.
However, according to the applicant, because of the high local
control rates, low rates of symptomatic radiation necrosis, and short
half-life of cesium-131, the GammaTileTM technology will
reduce the need for re-operation compared to external beam radiation
therapy and other forms of brain brachytherapy.
Additionally, the applicant stated that the use of the
GammaTileTM technology reduces the need for additional
hospital visits and procedures compared to alternative treatment
options. The applicant noted that the GammaTileTM technology
is placed during surgery, and does not require any additional visits or
procedures. The applicant contrasted this improvement with external
beam radiation therapy, which is often delivered in multiple fractions
that must be administered over multiple days. The applicant provided an
example where whole brain radiotherapy (WBRT) is delivered over 2 to 3
weeks, while the placement of the GammaTileTM technology
occurs during the craniotomy and does not add any time to a patient's
recovery.
Based on consideration of all of the previously presented data, the
applicant believed that the use of the GammaTileTM
technology represents a substantial clinical improvement over existing
technologies. In the proposed rule, we stated a concern that the
clinical efficacy and safety data provided by the applicant may be
limited. We indicated that the findings presented appear to be derived
from relatively small case-studies and not data from clinical trials
conducted under an FDA-approved investigational device exemption
application. We further stated that, while the applicant described
increases in median time to disease recurrence in support of clinical
improvement, we were concerned with the lack of analysis, meta-
analysis, or statistical tests that indicated that seeded brachytherapy
procedures represented a statistically significant improvement over
alternative treatments, such as external beam radiation or other forms
of brachytherapy. We also were concerned that many of the studies
involved the use of prototype devices, and not the actual manufactured
device. Finally, while the FDA cleared the 510(k) submission for
GammaTileTM authorizing marketing of the device for the
cleared indications for use, we noted in the proposed rule that the
FDA's issuance of a ``substantial equivalence determination'' for the
GammaTile did not indicate a review of any specific superiority claims
to a predicate device.
We invited public comments on whether the GammaTileTM
technology meets the substantial clinical improvement criterion.
Comment: Multiple commenters wrote in support that
GammaTileTM meets the substantial clinical improvement
criterion. A commenter stated that GammaTileTM provides a
meaningful benefit to a vulnerable population of patients, and promises
substantial clinical improvement over the management options currently
available for the treatment of recurrent brain tumors. Another stated
that there was growing evidence that that patients are living longer
without tumor recurrence, and with less associated morbidity and an
improved quality of life.
The applicant also provided additional information, including in
response to several of CMS's concerns. First, they stated that the data
are not limited and the data do not come from relatively small studies.
The applicant stated that most of the clinical data come from a robust,
comprehensive study. The applicant included a reference to its study,
described on ClinicalTrials.gov under NCT03088579, which included 79
recurrent, previously irradiated intracranial neoplasms. The applicant
clarified that over the course of previous submissions to CMS, they
presented interim data which may have given the impression that the
data came from smaller, disconnected studies, which was not the case.
The applicant stated that they received two peer-reviewed awards for
comprehensive clinical trial reporting on the treatment of 79 recurrent
brain tumors treated with GammaTile.TM
The applicant noted CMS's statement that the data did not appear to
come from ``FDA approved trials'' and CMS's statement that the FDA
review did not indicate a review of superiority claims. The applicant
responded that in its initial review of the GammaTileTM, the
FDA required information regarding the effect of radiation exposure on
the collagen tile and extensive animal model implant testing, including
brain implantation, and that the applicant also provided to FDA
information regarding the Gamma TileTM clinical trial data
involving 79 consecutive recurrent brain tumors. The applicant further
noted that the Gamma TileTM is the only brachytherapy
implant device with an indication cleared or approved by the U.S. Food
and Drug Administration that specifies an indication for treating
recurrent brain tumors.
In response to CMS's concern as to whether additional analysis,
meta-analysis, or statistical tests are needed to compare the
GammaTileTM to other treatment modalities, such as external
beam radiation or other forms of brachytherapy, the applicant commented
that there is ample information and data available to conclude that the
GammaTileTM is a substantial clinical improvement over
existing options. The applicant stated that they collaborated with a
biostatistics firm to advise to ensure the analysis of their data meets
the highest standards. Specifically, they stated that in the clinical
trial involving 79 recurrent brain tumors, each patient served as their
own control. The applicant asserted that this minimized the potential
influence of confounding variables such as age, gender, and treatment
team. The clinical endpoints included time to tumor progression and
survival, which the applicant states provided objective, clinically
important measures. The median local control after
GammaTileTM therapy versus prior treatment was 12.0 versus
9.5 months for high-grade glioma patients and 48.8 months versus 23.3
months for menigioma patients. For the metastasis patients, the median
local control had not been reached versus 5.1 months with prior
treatment. The median overall survival was 12.0 months for high grade
glioma patients, 12.0 months for brain metastasis patients, and 49.2
months for the meningioma patients.
Additionally, the applicant pointed out that the majority of
patients in the studies had failed a course of treatment that included
external beam radiation. The applicant stated that most had already
reached the maximum allowable amount of external beam radiation, and
repeating more of the same treatment as a control arm could not be
justified. The applicant reiterated that multiple studies demonstrated
that GammaTileTM performed in a superior manner compared to
adverse event rates for other therapies. In response to CMS's concern
that studies were performed with prototype devices, not commercially-
manufactured final products, the applicant stated that in the
manufacturing process, the assembly of the GammaTileTM is
reproduced to exacting specifications that are highly consistent with
the process used with the prototype and from patient to patient.
Finally, the applicant provided study data with updated analysis of
patient
[[Page 42265]]
outcome data to CMS. The applicant provided a recent summary
presentation on the 79 cases at The American Brachytherapy
Society.\223\ The applicant stated that these data demonstrate
dramatic, clinically meaningful difference in Kaplan-Meier curves
comparing time to local recurrence at same site in the same patients.
The applicant stated that GammaTileTM is significantly
outperforming the initial therapies attempted in this patient
population and the pattern in findings is consistent across all three
sub-groups of patients (recurrent meningiomas, recurrent gliomas, and
recurrent brain metastases). The applicant stated that the data
demonstrate reduced complication rates compared to external beam
radiation and standard brachytherapy.
---------------------------------------------------------------------------
\223\ Brachman D., Youssef E., Dardis C., et al.: Surgically
Targeted Radiation Therapy: Safety Profile of Collagen Tile
Brachytherapy in 79 Recurrent, Previously Irradiated Intracranial
Neoplasms on a Prospective Clinical Trial. Brachytherapy 18 (2019)
S35-36.
---------------------------------------------------------------------------
Response: After further review, CMS continues to have concerns with
respect to whether GammaTileTM meets the substantial
clinical improvement criterion to be approved for new technology add-on
payments. In particular, we note that the study performed on 79
patients was a single-arm and single-institution study, where each
patient functioned as their own control and the study goal was to
compare the time to local recurrence after GammaTileTM
treatment to the time of local recurrence after initial treatment of
intracranial tumors. That is, the control arm were patients treated for
initial intracranial brain tumors, and the treatment arm or the
GammaTileTM treatment arm were the same control patients now
experiencing local recurrent intracranial brain tumors in the same site
with the same brain tumor type. In this clinical trial, the applicant
compared the time from initial treatment to first local recurrence
(control arm) vs. time from GammaTileTM treatment of first
local recurrence to second local recurrence of the same brain tumor
site and tumor type. Based on the data, there was no statistically
significant difference between the control arm treatment and
GammaTileTM treatment.
Additionally, the applicant also shared the data on the initial 20
of 79 patients which was published (Brachman D, Youssef E, Dardis CJ,
et al. ``Resection and permanent intracranial brachytherapy using
modular, biocompatible cesium-131 implants: results in 20 recurrent,
previously irradiated meningiomas'' J Neurosurg Dec212018 pp1-10). The
authors of this published article identified the following potential
study limitations related to a single-arm, single-institution trial
design: (1) Potential confounding, due to a lack of a control group,
from the possibility that some tumors may have achieved local control
due to repeat surgery alone and not necessarily from
GammaTileTM intraoperative placement; (2) a lack of
technical generalizability since all the initial patients were treated
in a single center; and (3) reporting on a subset of a study's enrolled
patients can either overestimate or underestimate the utility of the
reported therapy. While we acknowledge the difficulty in establishing
randomized control groups in studies involving recurrent brain tumors,
after careful review of all data received to date, we find the data did
not show a statistically significant difference between the time to
first recurrence in the control arm in comparison to the time to second
recurrence in the GammaTileTM treatment arm. Based on the
information stated above, we are unable to make a determination that
GammaTileTM technology represents a substantial clinical
improvement over existing therapies. Therefore, we are not approving
new technology add-on payments for the GammaTileTM for FY
2020.
k. JAKAFITM (ruxolitinib)
Incyte Corporation submitted an application for new technology add-
on payments for JAKAFITM (ruxolitinib) for FY 2020.
JAKAFITM is an oral kinase inhibitor that inhibits Janus-
associated kinases 1 and 2 (JAK1/JAK2). The JAK pathway, which includes
JAK1 and JAK2, is involved in the regulation of immune cell maturation
and function. According to the applicant, JAK inhibition represents a
novel therapeutic approach for the treatment of acute graft-versus-host
disease (GVHD) in patients who have had an inadequate response to
corticosteroids.
Allogeneic hematopoietic stem cell transplantation (allo-HSCT) is a
treatment option for patients who have been diagnosed with hematologic
cancers, some solid tumors, and some non-malignant hematologic
disorders. According to the applicant, approximately 9,000 allo-HSCTs
were performed in the U.S. in 2017. The most common cause of death in
allo-HSCT recipients within the first 100 days is relapsed disease (29
percent), infection (16 percent), and GVHD (9 percent).\224\ GVHD is a
condition where donor immunocompetent cells attack the host tissue.
GVHD can be acute (aGVHD), which generally occurs prior to day 100, or
chronic (cGVHD). aGVHD results in systemic inflammation and tissue
destruction affecting multiple organs. Systemic corticosteroids are
used as first-line therapy for the treatment of a diagnosis of aGVHD,
with response rates between 40 percent and 60 percent. However, the
response is often not durable, and there is no consensus on optimal
second-line treatment.\225\ The applicant stated that it envisioned the
use of JAKAFITM as second-line treatment (that is, first-
line steroid treatment failures) for the treatment of a diagnosis of
steroid-refractory aGVHD.
---------------------------------------------------------------------------
\224\ D'Souza, A., Lee, S., Zhu, X., Pasquini, M., ``Current use
and trends in hematopoietic cell transplantation in the United
States,'' Biol Blood Marrow Transplant, 2017, vol. 23(9), pp. 1417-
1421.
\225\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
---------------------------------------------------------------------------
In its application for new technology add-on payments, the
applicant reported that there are no FDA-approved treatments for
patients who have been diagnosed with steroid-refractory aGVHD, and
despite available treatment options, according to the applicant,
patients do not always achieve a positive response, underscoring the
need for new and innovative treatments for these patients. The
applicant states that patients who develop steroid-refractory aGVHD can
progress to severe disease, with 1-year mortality rates of 70 to 80
percent. A number of combination treatment approaches are being
investigated as second-line therapy in patients who have been diagnosed
with steroid-refractory aGVHD, including methotrexate, mycophenolate
mofetil, extracorporeal photopheresis, IL-2R targeting agents
(basiliximab, daclizumab, denileukin, and diftitox), alemtuzumab, horse
antithymocyte globulin, etancercept, infliximab, and sirolimus.
According to the applicant, the American Society for Blood and Marrow
Transplantation (ASBMT) does not provide any recommendations for
second-line therapy for patients who have been diagnosed with steroid-
refractory aGVHD, nor suggest avoidance of any specific agent.
JAKAFITM received FDA approval in 2011 for the treatment
of patients who have been diagnosed with intermediate or high-risk
myelofibrosis (MF). In addition, JAKAFITM received FDA
approval in December 2014 for the treatment of patients who have been
[[Page 42266]]
diagnosed with polycythemia vera (PV) who have had an inadequate
response to, or are intolerant of hydroxyurea. JAKAFITM is
primarily prescribed in the outpatient setting for these indications.
The applicant submitted a supplemental new drug application (sNDA)
(with Orphan Drug and Breakthrough Therapy designations) seeking FDA's
approval for a new indication for JAKAFITM for the treatment
of patients who have been diagnosed with steroid-refractory aGVHD who
have had an inadequate response to treatment with corticosteroids and
received FDA approval on May 24, 2019 for the treatment of steroid-
refractory aGVHD in adult and pediatric patients 12 years and older
226 227. The applicant asserts that for this new indication,
JAKAFITM is expected to be used in the inpatient setting,
during either hospital admission for allo-HSCT, or upon need for
hospital re-admission for treating patients who have been diagnosed
with aGVHD who have had an inadequate response to treatment with
corticosteroids.
---------------------------------------------------------------------------
\226\ FDA website: https//www.fda.gpv/drugs/resources-
information-approved-drugs/fda-approves-ruxolitinib-acute-graft-
versus-host-disease.
\227\ Jakafi Prescribing Information: https://www.acessdata.fda.gov/drugsatfda_docs/label/2019/202192s017lb1.pdf.
---------------------------------------------------------------------------
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19347), we noted
that the applicant submitted a request for approval for a unique ICD-
10-PCS procedure code to describe procedures involving the
administration of JAKAFITM beginning in FY 2020. The
applicant was approved for an ICD-10-PCS code, XW0DXT5 (Introduction of
ruxolitinib into mouth and pharynx, external approach, new technology
group 5), effective October 1, 2019.
As previously stated, if a technology meets all three of the
substantial similarity criteria as previously described, it would be
considered substantially similar to an existing technology and,
therefore, would not be considered ``new'' for purposes of new
technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserts that there are no products that utilize the same or
similar mechanism of action (that is, JAK inhibition) to achieve the
same therapeutic outcome for the treatment of acute steroid-resistant
GVHD. The applicant further explained that JAKAFITM
functions to inhibit the JAK pathway, and has been shown in pre-
clinical and clinical trials to reduce GVHD. The applicant explained
that JAKs are intracellular, non-receptor tyrosine kinases that relay
the signaling of inflammatory cytokines. The applicant stated that,
based on their role in immune cell development and function, JAKs might
affect all phases of aGVHD pathogenesis, including cell activation,
expansion, and destruction. Specifically, JAKs regulate activities of
immune cells involved in aGVHD etiology, including antigen-presenting
cells, T-cells, and B-cells, and function downstream of many cytokines
relevant to GVHD-mediated tissue damage. Inhibition of JAK1/JAK2
signaling in aGVHD could be expected to block signal transduction from
proinflammatory cytokines that activate antigen-presenting cells,
expansion and differentiation of T-cells, suppression of regulatory T-
cells, and inflammation and tissue destruction mediated by infiltrating
cytotoxic T-cells.\228\ The applicant stated that other agents that are
being investigated as second-line treatments for patients who have been
diagnosed with steroid-resistant aGVHD, such as methotrexate,
mycophenolate mofetil, extracorporeal photopheresis, IL-2R targeting
agents (basiliximab, daclizumab, denileukin, and diftitox),
alemtuzumab, horse antithymocyte globulin, etancercept, infliximab, and
sirolimus, use a different mechanism of action than that of
JAKAFITM. The applicant believes that the mechanism of
action of JAKAFITM differs from that of existing
technologies used to achieve the same therapeutic outcome.
---------------------------------------------------------------------------
\228\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
---------------------------------------------------------------------------
With regard to the second criterion, whether a product is assigned
to the same or a different MS-DRG, in its application for new
technology add-on payments, the applicant asserted that there are
currently no FDA-approved medicines for the treatment of patients who
have been diagnosed with steroid-refractory aGVHD who have had an
inadequate response to corticosteroids and, therefore,
JAKAFITM would not be assigned to the same MS-DRG as
existing technologies.
With respect to the third criterion, 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, the applicant
stated that there are no existing treatment options for patients who
have been diagnosed with steroid-refractory aGVHD who have had an
inadequate response to corticosteroids and, therefore,
JAKAFITM represents a new treatment option for a patient
population without existing or alternative options. The applicant
stated that, based on its knowledge, there are no other prospective
studies evaluating the effects of treatment with JAK inhibitors for the
treatment of aGVHD in this patient population, and there are no FDA-
approved agents for the treatment of patients who have been diagnosed
with steroid-refractory aGVHD who have inadequately responded to
treatment with corticosteroids.
For the reasons summarized in the proposed rule and in this final
rule, the applicant maintained that JAKAFITM is not
substantially similar to any existing technology. We noted in the
proposed rule, however, that there are a number of available second-
line treatment options for a diagnosis of aGVHD that treat the same
patient population. We also noted that a number of these treatment
options use a method of immunomodulation and suppress the body's immune
response similar to the mechanics and goals of JAKAFITM and
stated that, therefore, we believed that JAFAKITM may have a
similar mechanism of action as existing therapies. Finally, we stated
in the proposed rule that for patients receiving treatment involving
any current second-line therapies for a diagnosis of steroid-refractory
aGVHD, CMS would expect these patient cases to be generally assigned to
the same MS-DRGs as a diagnosis for aGVHD, as would cases representing
patients who may be eligible for treatment involving
JAKAFITM. We invited public comments on whether
JAKAFITM is substantially similar to any existing
technologies, including with respect to the concerns we raised, and
whether the technology meets the newness criterion.
Comment: In its public comment, the applicant stated that CMS is
incorrectly comparing JAKAFITM to other therapies that treat
similar patient populations and utilize the same MS-DRG for the
diagnosis of aGVHD. They stated that JAKAFITM is the first
and only FDA-approved medicine for the aGVHD patient population and has
a novel mechanism of action that is distinct from the unapproved
treatment options that attempt to suppress the body's immune response
in patients with steroid-refractory aGVHD. Furthermore, they stated
that JAKAFITM, a kinase inhibitor, inhibits Janus Associated
Kinases (JAKs) JAK1 and JAK2, which mediate the signaling of a number
of cytokines and growth factors that are important for hematopoiesis
and
[[Page 42267]]
immune function.\229\ They also stated that JAK signaling involves
recruitment of signal transducers and activators of transcription
(STATs) to cytokine receptors, activation and subsequent localization
of STATs to the nucleus leading to modulation of gene expression and
that JAK-STAT signaling pathways play a key role in regulating the
development, proliferation, and activation of several immune cell types
important for GVHD pathogenesis. The commenter further stated that
JAKAFITM has been extensively evaluated in preclinical
models in steroid-refractory acute GVHD and that in a mouse model of
acute GVHD, oral administration of JAKAFITM was associated
with decreased expression of inflammatory cytokines in colon
homogenates and reduced immune-cell infiltration in the colon.
Additionally, they stated that in this study, significant improvements
in body weight were observed in JAKAFITM-treated mice and
that in the same mouse model, steroids were shown to not be as
effective in ameliorating disease severity, as compared to
JAKAFITM and steroid-treated animals had shown significant
disease improvement upon switching to JAKAFITM. Lastly they
stated that, treatment with JAKAFITM was shown to
significantly enhance survival in the major histocompatibility (MHC)-
mismatched mouse model of aGVHD as compared to vehicle control.
---------------------------------------------------------------------------
\229\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
---------------------------------------------------------------------------
The applicant also asserted that MS-DRGs are broad payment
groupings that are organized based on diagnosis and/or procedures
performed during an inpatient hospitalization (for example, Allogeneic
Bone Marrow Transplantation; Major Hematological and Immunological
Diagnoses Except Sickle Cell Crisis and Coagulation Disorders) and that
MS-DRGs do not provide a relevant means to determine newness. Per the
applicant, the fact that JAKAFITM and the unapproved
treatment options overlap in the same MS-DRG does not acknowledge the
clinical benefit that JAKAFITM offers patients with aGVHD.
Another commenter expressed support for JAKAFI\TM\. They stated
that aGVHD remains the most important barrier to successful outcomes of
an allogeneic stem cell transplant and that only ~50 percent of
patients respond to corticosteroids. They stated that those who do not,
have a 1 year mortality of ~70 percent to 80 percent. They also stated
that prior to the FDA approval of JAKAFI\TM\ on May 24, 2019, this
remained an unmet need since most of the available off-label therapies
are non-targeted in their approach. They asserted that the mechanism of
JAKAFI\TM\ is well-defined, and novel. They stated that none of the
alternative ``best available therapies'', which are all off-label, have
a well-defined mechanism of action or targeted approach. Thus, the
commenter believed that JAKAFI\TM\ represents a first-in kind approach
to steroid-refractory acute GVHD and that it meets the threshold for
``newness'' as defined by CMS.
Response: We appreciate the commenters' input on whether JAKAFI\TM\
meets the newness criterion. Upon review of the public comments and the
clinical information presented by the applicant, we agree with the
commenters that JAKAFI\TM\ meets the newness criterion. As noted by the
applicant, JAKAFI\TM\ inhibits JAK1 and JAK2, which mediate the
signaling of a number of cytokines and growth factors that are
important for hematopoiesis and immune function and these signaling
pathways play a key role in regulating the development, proliferation,
and activation of several immune cell types important for GVHD
pathogenesis, whereby other treatments that are used for aGVHD suppress
the body's immune response in patients with steroid-refractory aGVHD.
We believe this is a unique mechanism of action and therefore
JAKAFI\TM\ is not substantially similar to other drug therapies used to
treat steroid-refractory aGVHD and may provide treatment options for
certain patients with steroid-refractory aGVHD who have not responded
to other therapies. We consider May 24, 2019 the beginning of the
newness period for JAKAFI\TM\.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that the technology meets the cost
criterion. To identify cases representing patients who may be eligible
for treatment involving JAKAFI\TM\, the applicant searched the FY 2017
MedPAR Limited Data Set (LDS) for cases reporting ICD-10-CM diagnosis
codes for acute or unspecified GVHD in combination with either ICD-10-
CM diagnosis codes for associated complications of bone marrow
transplant or ICD-10-PCS procedure codes for transfusion of allogeneic
bone marrow, as identified in this table. The applicant used this
methodology to capture patients who developed aGVHD during their
initial stay for allo-HSCT treatment, as well as those patients who
were discharged and needed to be readmitted for a diagnosis of aGVHD.
The applicant submitted the following table displaying a complete
list of the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes it
used to identify cases representing patients who may be eligible for
treatment with JAKAFI\TM\.
[[Page 42268]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.149
[[Page 42269]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.150
The applicant identified a total of 210 cases mapping to MS-DRGs
014 (Allogeneic Bone Marrow Transplant), 808 (Major Hematological and
Immunological Diagnoses except Sickle Cell Crisis and Coagulation
Disorders with MCC), 809 (Major Hematological and Immunological
Diagnoses except Sickle Cell Crisis and Coagulation Disorders with CC),
and 871 (Septicemia or Severe Sepsis without MV > 96 hours with MCC).
The applicant indicated that, because it is difficult to determine the
realistic amount of drug charges to be replaced or avoided as a result
of the use of JAKAFITM, it provided two scenarios to
demonstrate that JAKAFITM meets the cost criterion. In the
first scenario, the applicant removed 100 percent of pharmacy charges
to conservatively estimate the charges for drugs that potentially may
be replaced or avoided by the use of JAKAFITM. The applicant
then standardized the charges and applied a 2-year inflation factor of
8.864 percent, which is the same inflation factor used by CMS to update
the outlier threshold in the FY 2019 IPPS/LTCH PPS final rule (83 FR
41722). (In the proposed rule, we noted that this figure was revised in
the FY 2019 IPPS/LTCH PPS final rule correction notice. The corrected
final 2-year inflation factor is 1.08986 (83 FR 49844).) The applicant
then added charges for JAKAFITM to the inflated average
case-weighted standardized charges per case. No other related charges
were added to the cases.
Under the assumption of 100 percent of historical drug charges
removed, the applicant calculated the inflated average case-weighted
standardized charge per case to be $261,512 and the average case-
weighted threshold amount to be $172,493. Based on this analysis, the
applicant believed that JAKAFITM meets the cost criterion
because the inflated average case-weighted standardized
[[Page 42270]]
charge per case exceeds the average case-weighted threshold amount.
As noted in the proposed rule and this final rule, the applicant
also submitted a second scenario to demonstrate that
JAKAFITM meets the cost criterion. The applicant indicated
that removing all charges for previous technologies as demonstrated in
the first scenario is unlikely to reflect the actual case because many
drugs are used in treating a diagnosis of aGVHD, especially during the
initial bone marrow transplant. Therefore, the applicant also provided
a sensitivity analysis where it did not remove any pharmacy charges or
any other historical charges, which it indicated could be a more
realistic assumption. Under this scenario, the final average case-
weighted standardized charge per case is $377,494, which exceeds the
average case-weighted threshold amount of $172,493. The applicant
maintained that JAKAFITM also meets the cost criterion under
this scenario.
We invited public comments on whether JAKAFITM meets the
cost criterion.
Comment: The applicant submitted a revised analysis of the two
scenarios used to demonstrate that JAKAFITM meets the cost
criterion. The applicant used a 2-year inflation factor of 1.08986 from
the FY 2019 IPPS/LTCH PPS final rule correction notice to inflate the
charges in both scenarios from FY 2017 to FY 2019. The applicant also
added charges for the new technology. Under the first scenario, in
which 100 percent of pharmacy charges were removed, the inflated
average case-weighted standardized charge per case increased from
$261,512 to $263,002. Under the second scenario, in which the applicant
did not remove any pharmacy charges, the inflated average case-weighted
standardized charge per case increased from $377,494 to $379,114. Based
on this revised analysis, for both scenarios, the applicant determined
that the inflated average case-weighted standardized charge per case
for JAKAFITM exceeds the average case-weighted threshold
amount of $172,493, and that JAKAFITM meets the cost
criterion.
Response: We appreciate the applicant's input and additional
analysis. After consideration of the public comments we received, we
agree with the applicant that JAKAFITM meets the cost
criterion.
With respect to the substantial clinical improvement criterion, in
its application for new technology add-on payments, the applicant
asserted that JAKAFITM represents a substantial clinical
improvement because: (1) The technology offers a treatment option for a
patient population previously ineligible for treatments because
JAKAFITM would be the first FDA-approved treatment option
for patients who have been diagnosed with GVHD who have had an
inadequate response to corticosteroids; and (2) use of the technology
significantly improves clinical outcomes in patients with steroid-
refractory aGVHD, which the applicant asserts is supported by the
results from REACH1, a prospective, open-label, single-cohort Phase II
study of the use of JAKAFITM, in combination with
corticosteroids, for the treatment of Grade II to IV steroid-refractory
aGVHD.
The applicant stated that there are very few prospective studies
evaluating second-line therapy for a diagnosis of steroid-refractory
aGVHD, and interpretation of these studies is hampered by the
heterogeneity of the patient population, small sample sizes, and lack
of standardization in the study design (including timing of the
response, different response criteria, and absence of validated
endpoints). Agents that have been investigated over the last 2 decades
in these studies include low-dose methotrexate, mycophenolate mofetil,
extracorporeal photopheresis, IL-2R targeting (that is, basiliximab,
daclizumab, denileukin, and diftitox), alemtuzumab, horse antithymocyte
globulin, etanercept, infliximab, and sirolimus. The applicant stated
that second-line treatments, especially those associated with
suppression of T-cells, are associated with increased infection and
viral reactivation (including cytomegalovirus (CMV), Epstein-Barr
virus, human herpes virus 6, adenovirus, and polyoma). Numerous
combination approaches (for example, antibodies directed against IL-2
receptor, mammalian target of rapamycin inhibitors, or other
immunosuppressive agents) also have been studied for the treatment of
steroid-refractory aGVHD, but the applicant indicated that data do not
support the recommendation or exclusion of any particular regimen. The
applicant also asserted that such treatment combination approaches have
been associated with significant toxicities, high failure rates, and an
average 6-month survival rate of 49 percent.\230\ Therefore, the
applicant maintains that therapeutic options are limited for patients
who are refractory to corticosteroid treatment for a diagnosis of
aGVHD.
---------------------------------------------------------------------------
\230\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
---------------------------------------------------------------------------
The applicant asserted that the clinical benefit of the use of
JAKAFITM in patients who have been diagnosed with steroid-
refractory aGVHD is supported by the results from five clinical
studies, including a mixture of prospective and retrospective studies.
The first study is REACH1, a prospective, open-label, single-cohort
Phase II study of the use of JAKAFITM, in combination with
corticosteroids, for the treatment of Grade II to IV steroid-refractory
aGVHD. REACH1 included 71 patients who had been diagnosed with steroid-
refractory aGVHD. Included eligible patients were those that were 12
years old or older, had undergone at least one allogeneic hematopoietic
stem cell transplantation from any donor source and donor type and were
diagnosed with Grade II to IV steroid-refractory aGVHD, and presented
evidence of myeloid engraftment. The patients' median age was 58 years
old (ages 18 years old to 73 years old); 66 patients were white and 36
patients were female. The majority of patients had peripheral blood
stem cells as the graft source (57 patients or 80.3 percent). The
starting dose of JAKAFITM was 5 mg twice daily (BID). The
dose could be increased to 10 mg BID after 3 days, if hematologic
parameters were stable and in the absence of any treatment-related
toxicities. Methylprednisolone (or prednisone equivalent) was
administered at a starting dose of 2 mg/kg/day on the first day of
treatment and tapered as appropriate. Patients receiving calcineurin
inhibitors or other medications for GVHD prophylaxis were permitted to
continue at the investigator's discretion. The primary endpoint was
overall response rate (ORR) at Day 28, which the applicant indicated
has been shown to be predictive of non-relapse mortality (NRM). No
description of the statistical methods used in the REACH1 study was
provided by the applicant.
The applicant stated that the ORR at Day 28 was achieved by 54.9
percent of patients; nearly half (48.7 percent) of the responding
patients achieved a complete response (CR). The best ORR was 73.2
percent. Median time to first response for all responders was 7 days.
Median duration of response was 345 days for both Day 28 responders
(lower limit, 159 days) and for other responders (lower limit, 106
days). Event-free probability estimates for Day 28 responders at 3 and
6 months were 81.6 percent and 65.2 percent, respectively. Among all
patients, median (95 percent CI) overall survival
[[Page 42271]]
was 232.0 (93.0-not evaluable) days. Mean survival rates for the 39
responders at Day 28 were 73.2 percent at 6 months, 69.9 percent at 9
months, and 66.2 percent at 12 months with non-relapsed mortality of
21.2 percent at 6 months, 24.5 percent at 9 months, and 28.2 percent at
12 months. Mean survival rates for the 13 other responders were 35.9
percent at 6 and 9 months and were not evaluable at 12 months with non-
relapsed mortality at 64.1 percent at 6 and 9 months and not evaluable
at 12 months. Mean survival rates for non-responders were 15.8 percent
at 6 months and 10.5 percent at 9 months and 12 months with non-
relapsed mortality at 78.9 percent at 6 months and 84.2 percent at 9
and 12 months. Most patients (55.8 percent) had a greater than or equal
to 50 percent reduction from baseline in corticosteroid dose.
The applicant stated that the additional use of JAKAFITM
to corticosteroid-based treatment did not result in unexpected
toxicities or exacerbation of known toxicities related to high-dose
corticosteroids or aGVHD. Cytopenias were among the most common
treatment-emergent adverse events. The applicant indicated that
JAKAFITM was well tolerated, and the adverse event profile
was consistent with the observed safety profiles of the use of
JAKAFITM and that of patients who had been diagnosed with
steroid-refractory aGVHD. The most common treatment emergent adverse
events in the REACH1 study were anemia (64.8 percent), hypokalemia
(49.3 percent), peripheral edema (45.1 percent), decreased platelet
count (45.1 percent), decreased neutrophil count (39.4 percent),
muscular weakness (33.8 percent), dyspnea (32.4 percent),
hypomagnesaemia (32.4 percent), hypocalcemia (31 percent), and nausea
(31 percent). The most common treatment emergent infections were sepsis
(12.7 percent) and bacteremia (9.9 percent).
All patients who had a CMV event (n=14) had a positive CMV donor or
recipient serostatus or both at baseline. No deaths were attributed to
CMV events. The applicant asserted that the results of the prospective
REACH1 study demonstrate the potential of the use of
JAKAFITM to meaningfully improve the outcomes of allo-HSCT
patients who develop steroid-refractory aGVHD, and further underscore
the promise of JAK inhibition to advance the treatment of this
potentially-devastating condition. Longer term follow-up analyses from
REACH1 are expected to yield additional insights into the long-term
efficacy and safety profile of the use of JAKAFITM in this
patient population.
In a second prospective, open-label study, 14 patients who had been
diagnosed with acute or chronic GVHD that were refractory to
corticosteroids and at least 2 other lines of treatment were treated
with JAKAFITM at a dose of 5 mg twice a day and increased to
10 mg twice a day. Of the 14 patients, 13 responded with respect to
clinical GVHD symptoms and serum levels of pro-inflammatory cytokines.
Three patients with histologically-proven acute skin or intestinal GVHD
Grade I, achieved a CR. One non-responder discontinued use of
JAKAFITM after 1 week because of lack of efficacy. In all
other patients, corticosteroids could be reduced after a median
treatment period of 1.5 weeks. CMV reactivation was observed in 4 out
of the 14 patients, and they responded well to antiviral therapy. Until
last follow-up, no patient experienced a relapse of GVHD.
The applicant asserted that the efficacy and safety of the use of
JAKAFITM for the treatment of steroid-refractory aGVHD is
further supported by the results from a third study, a retrospective,
multi-center study of 95 patients who received JAKAFITM as
salvage therapy for corticosteroid-refractory GVHD. In the 54 patients
who had been diagnosed with aGVHD, the median number of GVHD therapies
received was 3. The (best) ORR was 81.5 percent. A CR and partial
response (PR) was achieved in 46.3 percent and 35.2 percent of
patients, respectively. Median time to response was 1.5 weeks (range 1
to 11 weeks). Cytopenias and cytomegalovirus reactivation were seen in
55.5 percent (Grade III or IV) and 33.3 percent of patients who had
been diagnosed with aGVHD, respectively. Of those patients responding
to treatment with JAKAFITM, with either CR or PR (n=44), the
rate of GVHD-relapse was 6.8 percent (3/44). The 6-month-survival was
79 percent (67.3 percent to 90.7 percent, 95 percent CI). The median
follow-up time was 26.5 weeks (range 3 to 106 weeks). Underlying
malignancy relapse occurred in 9.2 percent of patients who had been
diagnosed with aGVHD.
A fourth retrospective study evaluated data from the same 95
patients in 19 stem cell transplant centers in Europe and the United
States. For long-term results, CR was defined as the absence of any
symptoms related to GVHD; PR was defined as the improvement of greater
than or equal to 1 in stage severity in one organ, without
deterioration in any other organ. A response had to last for at least
or more than 3 weeks. Of the 54 patients who had been diagnosed with
aGVHD, the 1-year overall survival (OS) rate was 62.4 percent (CI: 49.4
percent to 75.4 percent). The estimated median OS (50 percent death)
was 18 months for aGVHD patients. The median duration of
JAKAFITM treatment was 5 months. At follow-up, 22/54 (41
percent) of the patients had an ongoing response and were free of any
immunosuppression. Cytopenias (any grade) and CMV-reactivation were
observed during JAKAFITM-treatment (30/54, 55.6 percent and
18/54, 33.3 percent, respectively).
A fifth retrospective study evaluated 79 patients who received
treatment using JAKAFITM for refractory GVHD at 13 centers
in Spain. Twenty-two patients had a diagnosis of aGVHD (Grades II to
IV) and received a median of 2 previous GVHD therapies (range, 1 to 5
therapies). The median daily dose of JAKAFITM was 20 mg. The
overall response rate was 68.2 percent, which was obtained after a
median of 2 weeks of treatment, and 18.2 percent (4/22) of the patients
reached CR. Overall, steroid doses were tapered in 72 percent of the
patients who had been diagnosed with aGVHD. Cytomegalovirus
reactivation was reported in 54.5 percent of the patients who had been
diagnosed with aGVHD. Overall, 26 patients (32.9 percent) discontinued
treatment using JAKAFITM due to: Lack of response (14),
cytopenias (3 patients had thrombocytopenia, 3 had anemia, and 3 had
both); infections (1 patient); other causes (2 patients). Ten deaths
occurred in patients who had been diagnosed with aGVHD.
In the proposed rule, we noted the following concerns with respect
to whether JAKAFITM represents a substantial clinical
improvement. First, we stated that while the applicant has submitted
data from several clinical studies to support the efficacy of the use
of JAKAFITM in treatment of patients who have been diagnosed
with steroid-resistant aGVHD, including an overall response rate at Day
28 for 54.9 percent of the patients enrolled in one study, with nearly
half of the responding patients achieving CR, the applicant has not
provided any data directly comparing the use of JAKAFITM to
any second-line treatments. As noted previously in the proposed rule
and this final rule, a number of different agents can be used for
second-line treatment as described by recommendations from the American
Society of Blood and Marrow Transplantation (ASBMT).\231\ Numerous
[[Page 42272]]
combination approaches have been investigated for second-line therapy
for diagnoses of steroid-refractory aGVHD in allo-HSCT patients. These
studied agents include methotrexate, mycophenolate mofetil,
extracorporeal photopheresis, IL-2R targeting agents (basiliximab,
daclizumab, denileukin, and diftitox), alemtuzumab, horse antithymocyte
globulin, etancercept, infliximab, and sirolimus. In addition, we
stated that recommendations from professional societies for the
treatment of diagnoses of aGVHD describe the lack of data demonstrating
superior efficacy of any single agent as second-line therapy for
patients who have been diagnosed with steroid-resistant aGVHD and,
therefore, suggest that choice of second-line treatment be guided by
clinical considerations.\232\ We stated that, because the applicant has
not provided any data directly comparing the use of JAKAFITM
to any other second-line treatments (for example, current standard-of-
care), it may make it difficult to directly assess whether the use of
JAKAFITM provides a substantial clinical improvement
compared to these existing therapies.
---------------------------------------------------------------------------
\231\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: Recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
\232\ Martin, P.J., Rizzo, J.D., Wingard, J.R., et al., ``First
and second-line systemic treatment of acute graft-versus-host
disease: Recommendations of the American Society of Blood and Marrow
Transplantation,'' Biol Blood Marrow Transplant, 2012, vol. 18(8),
pp. 1150-1163.
---------------------------------------------------------------------------
Second, we stated that we have concerns regarding the methodologic
approach of the studies submitted by the applicant in support of its
assertions regarding substantial clinical improvement. While two of the
clinical studies provided by the applicant are prospective in nature,
the other three clinical studies provided in support of the application
are retrospective studies and, therefore, provide a weaker basis of
evidence for making conclusions of the causative effects of the drug
compared to prospective studies. Additionally, we noted that no
blinding or randomization occurred to minimize potential biases from
the lack of a control group, and no Phase III study data were submitted
by the applicant, to assist in our evaluation of substantial clinical
improvement. Although we acknowledged that the patient population that
would be eligible for treatment involving JAKAFITM under its
proposed indication is likely relatively small because it is a subset
of the patient population receiving allo-HSCTs, we stated that it may
be difficult to evaluate the impact of the technology on longer term
outcomes, such as overall survival and durability of response based on
the studies submitted because the clinical studies are based on
relatively small sample sizes.
Third, we stated that given the variable amount of detail provided
on the studies generally (for example, the number of patients from the
United States, how many are Medicare eligible and the results for these
Medicare-eligible patients, what specific first-line treatments
enrolled patients received and for what duration, how CRs and PRs were
defined and assessed, statistical methods and assumptions), it was more
difficult to fully assess the generalizability of the applicant's
assertions to the Medicare population.
Fourth, we noted that several patients enrolled in each of the
studies provided by the applicant had safety-related complications,
including cytopenias and CMV reactivation. We stated that these
complications were concerning because the target population is already
immunocompromised and at risk of serious infections.
We invited public comments on whether JAKAFITM meets the
substantial clinical improvement criterion, including with respect to
the concerns we raised.
Comment: The applicant submitted a comment addressing our concerns
regarding substantial clinical improvement as indicated in the proposed
rule. With respect to our concern that the applicant did not provide
any data directly comparing the use of JAKAFITM to any
second-line treatments, the applicant stated that no head-to-head,
multicenter, randomized, well-controlled studies have been carried out
to assess the efficacy and safety of second-line therapy for aGVHD and
that clinicians rely on reports of retrospective studies and single-arm
phase II studies to evaluate the merits of any given treatment \233\.
They stated that comparison of results between these studies is
complicated by the lack of standardized endpoints and the small numbers
of patients included in most reports.
---------------------------------------------------------------------------
\233\ Martin PJ, Rizzo JD, Wingard JR, et al. First and second-
line systemic treatment of acute graft-versus-host disease:
Recommendations of the American Society of Blood and Marrow
Transplantation. Biol Blood Marrow Transplant. 2012;18(8):1150-1163.
---------------------------------------------------------------------------
With respect to our concern regarding the methodologic approach of
the studies submitted by the applicant in support of its assertions
regarding substantial clinical improvement, the applicant stated that
the FDA granted JAKAFITM Breakthrough Therapy Designation
and Priority Review for aGVHD and asserted that these designations
indicate that the FDA believes the product offers a significant and
substantial clinical improvement when compared to standard therapies.
The applicant also referred to the prospective, open-label, single-arm,
multicenter, pivotal study (REACH1) that was the basis for the FDA's
approval of JAKAFITM for treatment of steroid-refractory
acute GVHD in adults and pediatric patients 12 years and older. The
applicant reiterated that the primary endpoint in the REACH1 study was
Day 28 overall response rate (ORR) (complete response, very good
partial response or partial response) as defined by Center for
International Blood and Marrow Transplant Research (CIBMTR) criteria,
and that the ORR at Day 28 in the patients who were refractory to
steroids alone and evaluable for efficacy was 57.1 percent (28/49). The
applicant stated that the majority of these 28 patients had achieved a
CR (53.6 percent, 15/28) and that Day 28 ORR was 100 percent for Grade
II aGVHD, 40.7 percent for Grade III aGVHD, and 44.4 percent for Grade
IV2 aGVHD.
The applicant also stated that the key secondary endpoint in REACH1
was duration of response. The duration of response, at the time of the
3-month data cutoff, was calculated using two measures:
From Day-28 response to progression, new salvage therapy
for acute GVHD or death from any cause (with progression being defined
as worsening by one stage in any organ without improvement in other
organs in comparison to prior response assessment). The median duration
of response by this definition was 16 days (95 percent CI 9, 83).
From Day-28 response to either death or need for new
therapy for aGVHD (additional salvage therapy or increase in steroids).
The median duration of response by this definition was 173 days (95
percent CI 66, NE).
The applicant further stated that, as described in its initial
application, patients who develop steroid-refractory aGVHD can progress
to severe disease, with 1-year mortality rates of 70-80 percent; the
weighted average 6-month survival estimate across 25 studies that
reported 6-month overall survival was 49 percent; the overall
distribution of 6-month survival rates was similar for prospective and
retrospective studies; the largest study tested horse antithymocyte
globulin (ATG) in 79 patients, and reported a 6-month survival estimate
of 44 percent; and hence, this study has previously been used as a
reference point for the
[[Page 42273]]
interpretation of survival results in other studies.
With respect to our concerns about the generalizability of the
applicant's assertions to the Medicare population, the applicant stated
that of the 49 patients that were evaluable for efficacy, the mean age
was 57 (range, 18-72 years). They also stated that the exploratory
subgroup analysis shows that 12 percent were of Medicare-eligible age
(that is, >= 65 years) and that the exploratory subgroup analysis
showed that JAKAFITM demonstrates clinical activity across
patients <65 and >= 65 years. Lastly they stated that of all patients
enrolled in REACH1 (n = 71), 18 percent were of Medicare-eligible age,
and is supportive of the Medicare patient population of 25 percent
estimated in their new technology add-on payment application.
Finally, with respect to our concern that several patients enrolled
in each of the studies provided by the applicant had safety-related
complications, including cytopenias and CMV reactivation, which is
concerning because the target population is already immunocompromised
and at risk of serious infections, the applicant stated that in the
REACH1 study, the adverse event profile was consistent with the
observed safety profiles of JAKAFITM and that of patients
with steroid-refractory acute GVHD. They also stated that hematologic
laboratory abnormalities were evaluated in the REACH1 study during
JAKAFITM treatment and based on laboratory parameters, all
grade anemia, thrombocytopenia, and neutropenia were reported in 75
percent, 75 percent, and 58 percent of patients, respectively. They
also presented the following information: Anemia, thrombocytopenia, and
neutropenia were reported as Grade 3 or 4 (worst grade during
treatment) in 45 percent, 61 percent, and 40 percent of patients,
respectively; treatment-emergent cytopenias led to discontinuation of
Jakafi in 2 patients; infections occurred in 55 percent of enrolled
patients, with 41 percent being Grade \3/4\ in severity; infections led
to treatment discontinuation in 10 percent of patients; related to
cytomegalovirus (CMV), all patients who had a CMV event (n = 14, 19.7%;
includes CMV infection [n = 10, 14.1%] and recurrent CMV viremia [n =
4, 5.6%]) had a positive CMV donor or recipient serostatus or both at
baseline. They stated that no deaths were attributed to CMV events in
the study.
Another commenter stated that steroid-refractory aGVHD has a dismal
outcome with currently ``best-available therapy'' that are all off-
label, and the 1 year survival rate of these patients is less than 20
percent to 30 percent. The commenter stated that in the REACH1 study,
among the 49 patients evaluable for efficacy, the median survival was
333 days (95 percent CI, 93-NE) at the time of the 3-month data cutoff.
The estimated 6-month and 12-month survival for Day 28 responders was
70.6 percent (95 percent CI, 47.3 percent-85 percent) for both time
points. The commenter concluded that a significant proportion of
patients are impacted favorably. Regarding the risk of infections, the
commenter provided the following information: There is global immune
dysfunction in patients with corticosteroid refractory acute GVHD; in
the setting of a clinical trial for this subset of patients, it is
tough to assess the impact of the intervention versus the baseline risk
of infection; and in the REACH-1 study, it was noted that there were no
treatment emergent fatal events related to CMV, which is an important
viral infection in patients undergoing allogeneic stem cell transplant.
The commenter stated that as a clinical investigator, they believe that
early intervention with JAKAFITM (in patients meeting
criteria of steroid-refractory aGVHD) will further decrease the risk of
global immune-dysfunction, and lead to further decrease in infection in
responders, as clinicians will be able to spare corticosteroids.
Response: We appreciate the commenters' input. After consideration
of the public comments we received, we agree that JAKAFITM
is a treatment option which offers a substantial clinical improvement
over standard therapies for patients who have been diagnosed with
steroid-refractory aGVHD. We agree that current treatment options for
patients with steroid-refractory aGVHD have a poor outcome and that the
one year survival rate is not favorable. Additionally, the data cited
by the applicant in its public comments from the Phase II REACH1 study
demonstrated improved outcomes, including the following: Overall
response rate at Day 28 in the patients who were refractory to steroids
alone and evaluable for efficacy was 57.1 percent (28/49); the majority
of the 28 patients who were refractory to steroids alone and evaluable
for efficacy had achieved a CR (53.6 percent, 15/28); Day 28 ORR was
100 percent for Grade II aGVHD, 40.7 percent for Grade III aGVHD, and
44.4 percent for Grade IV2 aGVHD. In terms of safety, there were no
treatment emergent fatal events related to CMV, which is an important
viral infection in patients undergoing allogeneic stem cell transplant.
Additionally, the REACH1 study included patients (18 percent) that were
of Medicare-eligible age demonstrating the effectiveness of
JAKAFITM in the Medicare population. Finally, the clinical
information for JAKAFITM presented by the applicant
demonstrates that certain patients with steroid-refractory aGVHD have
better clinical outcomes than those who were not treated with
JAKAFITM. Therefore, we believe that JAKAFITM
meets the substantial clinical improvement criterion.
After consideration of the public comments we received, we have
determined that JAKAFITM meets all of the criteria for
approval of new technology add-on payments. Therefore, we are approving
new technology add-on payments for JAKAFITM for FY 2020.
Cases involving JAKAFITM that are eligible for new
technology add-on payments will be identified by ICD-10-PCS procedure
code XW0DXT5, Introduction of ruxolitinib into mouth and pharynx,
external approach, new technology group 5. According to the applicant,
JAKAFITM has a WAC of $13,111 for 60 tablets/30 day supply
(or approximately $218.52) per tablet, and patients will take
JAKAFITM orally, twice per day, with an anticipated duration
of treatment of 14 days. Therefore, the total cost of
JAKAFITM per patient is $6,118.56. Under Sec. 412.88(a)(2
(revised as discussed in this final rule), we limit new technology add-
on payments to the lesser of 65 percent of the costs of the new medical
service or technology, or 65 percent of the amount by which the costs
of the case exceed the MS-DRG payment. As a result, the maximum new
technology add-on payment for a case involving the use of
JAKAFITM is $3,977.06 for FY 2020.
l. Supersaturated Oxygen (SSO2) Therapy (DownStream[supreg]
System)
TherOx, Inc. submitted an application for new technology add-on
payments for Supersaturated Oxygen (SSO2) Therapy (the
TherOx DownStream[supreg] System) for FY 2020. We note that the
applicant previously submitted an application for new technology add-on
payments for FY 2019, which was withdrawn prior to the issuance of the
FY 2019 IPPS/LTCH PPS final rule. The DownStream[supreg] System is an
adjunctive therapy that creates and delivers superoxygenated arterial
blood directly to reperfused areas of myocardial tissue which may be at
risk after an acute myocardial infarction (AMI), or heart attack. Per
the FDA, SSO2 Therapy is indicated for the preparation and
delivery of
[[Page 42274]]
SuperSaturated Oxygen Therapy (SSO2 Therapy) to targeted
ischemic regions perfused by the patient's left anterior descending
coronary artery immediately following revascularization by means of
percutaneous coronary intervention (PCI) with stenting that has been
completed within 6 hours after the onset of anterior acute myocardial
infarction (AMI) symptoms caused by a left anterior descending artery
infarct lesion. The applicant stated that the net effect of the
SSO2 Therapy is to reduce the size of the infarction and,
therefore, lower the risk of heart failure and mortality, as well as
improve quality of life for STEMI patients.
SSO2 Therapy consists of three main components: The
DownStream[supreg] System; the DownStream cartridge; and the
SSO2 delivery catheter. The DownStream[supreg] System and
cartridge function together to create an oxygen-enriched saline
solution called SSO2 solution from hospital-supplied oxygen
and physiologic saline. A small amount of the patient's blood is then
mixed with the SSO2 solution, producing oxygen-enriched
hyperoxemic blood, which is delivered to the left main coronary artery
(LMCA) via the delivery catheter at a flow rate of 100 ml/min. The
duration of the SSO2 Therapy is 60 minutes and the infusion
is performed in the catheterization laboratory. The oxygen partial
pressure (pO2) of the infusion is elevated to ~1,000 mmHg,
therefore providing oxygen locally to the myocardium at a hyperbaric
level for 1 hour. After the 60-minute SSO2 infusion is
complete, the cartridge is unhooked from the patient and discarded per
standard practice. Coronary angiography is performed as a final step
before removing the delivery catheter and transferring the patient to
the intensive care unit (ICU).
The applicant for the SSO2 Therapy received premarket
approval from the FDA on April 2, 2019. The applicant stated that use
of the SSO2 Therapy can be identified by the ICD-10-PCS
procedure codes 5A0512C (Extracorporeal supersaturated oxygenation,
intermittent) and 5A0522C (Extracorporeal supersaturated oxygenation,
continuous).
As discussed earlier, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments. The applicant
identified three treatment options currently available to restore
coronary artery blood flow in AMI patients. These options are
fibronolytic therapy (plasminogen activators) with or without
glycoprotein IIb/IIIa inhibitors, percutaneous coronary intervention
(PCI) with or without stent placement, and coronary artery bypass graft
(CABG). The applicant noted that all of these therapies restore blood
flow at the macrovascular level by targeting the coronary artery
thrombosis that is the direct cause of the AMI. The applicant also
noted that PCI with stenting is the preferred treatment for STEMI
patients. The applicant asserted that SSO2 Therapy is not
substantially similar to these existing treatment options and,
therefore, meets the newness criterion. In this final rule, as in the
proposed rule, we summarize the applicant's assertions with respect to
whether the SSO2 Therapy meets each of the three substantial
similarity criteria.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that SSO2 Therapy is a unique therapy
designed to deliver localized hyperbaric oxygen equivalent to the
coronary arteries immediately after administering the standard-of-care,
PCI with stenting. The applicant describes SSO2 Therapy's
mechanism of action as two-fold: (1) First, the increased oxygen levels
act to re-open the microcirculatory system within the infarct zone,
which has experienced ischemia during the occlusion period, and (2)
second, once the microcirculatory system is re-opened, the blood flow
containing the additional oxygen re-starts metabolic processes within
the stunned myocardium. According to the applicant, the net result is
to reduce the extent of necrosis as measured by infarct size in the
myocardium post-AMI and thereby improve left ventricular function,
leading to improved patient outcomes. The applicant maintained that
this mechanism of action is not comparable to that of any existing
treatment because no other therapy has demonstrated an infarct size
reduction over and above the routine delivery of PCI. As previously
mentioned, the applicant asserted that currently available therapies
restore blood flow at the macrovascular level by targeting the coronary
artery thrombosis that is the direct cause of the AMI.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant reiterated that the
standard procedure for treating patients with AMI is PCI with stent
placement, and that these cases are typically assigned to MS-DRG 246
(Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with
MCC or 4+ Arteries/Stents), MS-DRG 247 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent without MCC), MS-DRG 248
(Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries/Stents), MS-DRG 249 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent without MCC), MS-
DRG 250 (Percutaneous Cardiovascular Procedures without Coronary Artery
Stent with MCC), or MS-DRG 251 (Percutaneous Cardiovascular Procedures
without Coronary Artery Stent without MCC). The applicant maintained
that because no other technologies exist that can deliver localized
hyperbaric oxygen in the acute care setting, SSO2 Therapy
has no analogous MS-DRG assignment. However, in the FY 2020 IPPS/LTCH
PPS proposed rule (84 FR 19353), we noted that potential cases that may
be eligible for treatment involving SSO2 Therapy may be
assigned to the same MS-DRG(s) as other cases involving PCI with stent
placement also used to treat patients who have been diagnosed with AMI.
With respect to the third criterion, 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, according to the
applicant, the target patient population of SSO2 Therapy is
patients who are receiving treatment after a diagnosis of AMI and
specifically ST-segment elevation myocardial infarction (STEMI) where
the anterior wall infarction impacts the left ventricle (LV). The
applicant acknowledged that, because SSO2 Therapy is
administered following completion of successful PCI, its target patient
population includes a subset of patients with the same or similar type
of disease process as patients treated with PCI with stent placement.
However, the applicant also asserted that, while PCI with stenting
achieves the goal of re-opening a blocked artery, SSO2
Therapy delivers localized hyperbaric oxygen to reduce the extent of
the myocardial necrosis that occurs as a consequence of experiencing
AMI. Therefore, the applicant believed that SSO2 Therapy
offers a treatment option for a different type of disease than
currently available treatments.
We invited public comments on whether SSO2 Therapy is
substantially similar to existing technologies and whether it meets the
newness criterion.
We did not receive any public comments on whether SSO2
Therapy is substantially similar to existing technologies and whether
it meets the newness criterion. However, based on
[[Page 42275]]
the information submitted by the applicant as part of its FY 2020 new
technology add-on payment application for SSO2 Therapy, as
discussed in the proposed rule (84 FR 19353) and as previously
summarized in this final rule, we believe that SSO2 Therapy
has a unique mechanism of action as it delivers a localized hyperbaric
oxygen equivalent to the coronary arteries immediately after
administering the standard-of-care, PCI with stenting, in order to
restart metabolic processes within the stunned myocardium and reduce
infarct size. Therefore, we believe SSO2 Therapy is not
substantially similar to existing technologies and meets the newness
criterion. We consider the beginning of the newness period to commence
when SSO2 Therapy was approved by the FDA on April 2, 2019.
With regard to the cost criterion, the applicant conducted the
following analysis to demonstrate that SSO2 Therapy meets
the cost criterion. The applicant searched the FY 2017 MedPAR file for
claims reporting diagnoses of anterior STEMI by ICD-10-CM diagnosis
codes I21.0 (ST elevation myocardial infarction of anterior wall),
I21.01 (ST elevation (STEMI) myocardial infarction involving left main
coronary artery), I21.02 (ST elevation (STEMI) myocardial infarction
involving left anterior descending coronary artery), or I21.09 (ST
elevation (STEMI) myocardial infarction involving other coronary artery
of anterior wall) as a primary diagnosis, which the applicant believed
would describe potential cases representing potential patients who may
be eligible for treatment involving the SSO2 Therapy. The
applicant identified 11,668 cases mapping to 4 MS-DRGs, with
approximately 91 percent of all potential cases mapping to MS-DRG 246
(Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with
MCC or 4+ Arteries/Stents) and MS-DRG 247 (Percutaneous Cardiovascular
Procedures with Drug-Eluting Stent without MCC). The remaining 9
percent of potential cases mapped to MS-DRG 248 (Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent with MCC or 4+
Arteries/Stents) and MS-DRG 249 (Percutaneous Cardiovascular Procedures
with Non-Drug-Eluting Stent without MCC).
The applicant determined that the average case-weighted
unstandardized charge per case was $98,846. The applicant then
standardized the charges. The applicant did not remove charges for the
current treatment because, as previously discussed, SSO2
Therapy would be used as an adjunctive treatment option following
successful PCI with stent placement. The applicant then added charges
for the technology, which accounts for the use of 1 cartridge per
patient, to the average charges per case. The applicant did not apply
an inflation factor to the charges for the technology. The applicant
also added charges related to the technology, to account for the
additional supplies used in the administration of SSO2
Therapy, as well as 70 minutes of procedure room time, including
technician labor and additional blood tests. The applicant inflated the
charges related to the technology. Based on the FY 2019 IPPS/LTCH PPS
final rule correction notice data file thresholds, the average case-
weighted threshold amount was $96,267. In the applicant's analysis, the
inflated average case-weighted standardized charge per case was
$144,364. Because the inflated average case-weighted standardized
charge per case exceeds the average case-weighted threshold amount, the
applicant maintained that the technology meets the cost criterion.
We invited public comments on whether the SSO2 Therapy
meets the cost criterion.
We did not receive any public comments on whether SSO2
Therapy meets the cost criterion. Based on the information submitted by
the applicant as part of its FY 2020 new technology add-on payment
application for SSO2 Therapy, as discussed in the proposed
rule (84 FR 19353 through 19354) and as previously summarized in this
final rule, the average case-weighted standardized charge per case
exceeded the average case-weighted threshold amount. Therefore,
SSO2 Therapy meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that SSO2 Therapy represents a
substantial clinical improvement over existing technologies because it
improves clinical outcomes for STEMI patients as compared to the
currently available standard-of-care treatment, PCI with stenting
alone. Specifically, the applicant asserted that: (1) Infarct size
reduction improves mortality outcomes; (2) infarct size reduction
improves heart failure outcomes; (3) SSO2 Therapy
significantly reduces infarct size; (4) SSO2 Therapy
prevents left ventricular dilation; and (5) SSO2 Therapy
reduces death and heart failure at 1 year. The applicant highlighted
the importance of the SSO2 Therapy's mechanism of action,
which treats hypoxemic damage at the microvascular or microcirculatory
level. Specifically, the applicant noted that microvascular impairment
in the myocardium is irreversible and leads to a greater extent of
infarction. According to the applicant, the totality of the data on
myocardial infarct size, ventricular remodeling, and clinical outcomes
strongly supports the substantial clinical benefit of SSO2
Therapy administration over the standard-of-care.
To support the claims that infarct size reduction improves
mortality and heart failure outcomes, the applicant cited an analysis
of the Collaborative Organization for RheothRx Evaluation (CORE) trial
and a pooled patient-level analysis.
The CORE trial was a prospective, randomized, double-
blinded, placebo-controlled trial of Poloxamer 188, a novel therapy
adjunctive to thrombolysis at the time the study was conducted.\234\
The applicant sought to relate left ventricular ejection fraction (EF),
end-systolic volume index (ESVI) and infarct size (IS), as measured in
a single, randomized trial, to 6-month mortality after myocardial
infarction treated with thrombolysis. According to the applicant,
subsets of clinical centers participating in CORE also participated in
one or two radionuclide sub-studies: (1) Angiography for measurement of
EF and absolute, count-based LV volumes; and (2) single-photon emission
computed tomographic sestamibi measurements of IS. These sub-studies
were performed in 1,194 and 1,181 patients, respectively, of the 2,948
patients enrolled in the trial. Furthermore, ejection fraction, ESVI,
and IS, as measured by central laboratories in these sub-studies, were
tested for their association with 6-month mortality. According to the
applicant, the results of the study showed that ejection fraction (n =
1,137; p = 0.0001), ESVI (n = 945; p=0.055) and IS (n = 1,164; p =
0.03) were all associated with 6-month mortality, therefore,
demonstrating the relationship between these endpoints and
mortality.\235\
---------------------------------------------------------------------------
\234\ Burns, R.J., Gibbons, R.J., Yi, Q., et al., ``The
relationships of left ventricular ejection fraction, end-systolic
volume index and infarct size to six-month mortality after hospital
discharge following myocardial infarction treated by thrombolysis,''
J Am Coll Cardiol, 2002, vol. 39, pp. 30-6.
\235\ Ibid.
---------------------------------------------------------------------------
The pooled patient-level analysis was performed from 10
randomized, controlled trials (with a total of 2,632 patients) that
used primary PCI with stenting.\236\ The analysis assessed infarct size
within 1 month after randomization by either cardiac magnetic resonance
(CMR) imaging or
[[Page 42276]]
technetium-99m sestamibi single-photon emission computed tomography
(SPECT), with clinical follow-up for 6 months. Infarct size was
assessed by CMR in 1,889 patients (71.8 percent of patients) and by
SPECT in 743 patients (28.2 percent of patients) including both
inferior wall and more severe anterior wall STEMI patients. According
to the applicant, median infarct size (or percent of left ventricular
myocardial mass) was 17.9 percent and median duration of clinical
follow-up was 352 days. The Kaplan-Meier estimated 1-year rates of all-
cause mortality, re-infarction, and HF hospitalization were 2.2
percent, 2.5 percent, and 2.6 percent, respectively. The applicant
noted that a strong graded response was present between infarct size
(per 5 percent increase) and the 2 outcome measures of subsequent
mortality (Cox-adjusted hazard ratio: 1.19 [95 percent confidence
interval: 1.18 to 1.20]; p<0.0001) and hospitalization for heart
failure (adjusted hazard ratio: 1.20 [95 percent confidence interval:
1.19 to 1.21]; p<0.0001), independent of other baseline factors.\237\
The applicant concluded from this study that infarct size, as measured
by CMR or technetium-99m sestamibi SPECT within 1 month after primary
PCI, is strongly associated with all-cause mortality and
hospitalization for heart failure within 1 year.
---------------------------------------------------------------------------
\236\ Stone, G.W., Selker, H.P., Thiele, H., et al.,
``Relationship between infarct size and outcomes following primary
PCI,'' J Am Coll Cardiol, 2016, vol. 67(14), pp. 1674-83.
\237\ Ibid.
---------------------------------------------------------------------------
Next, to support the claim that SSO2 Therapy
significantly reduces infarct size, the applicant cited the AMIHOT I
and II studies.
The AMIHOT I clinical trial was designed as a prospective,
randomized evaluation of patients who had been diagnosed with AMI,
including both anterior and inferior patients, and received treatment
with either PCI with stenting alone or with SSO2 Therapy as
an adjunct to successful PCI within 24 hours of symptom onset.\238\ The
study included 269 randomized patients and 3 co-primary endpoints:
Infarction size reduction, regional wall motion score improvement at 3
months, and reduction in ST segment elevation. The study was designed
to demonstrate superiority of the SSO2 Therapy group as
compared to the control group for each of these endpoints, as well as
to demonstrate non-inferiority of the SSO2 Therapy group
with respect to 30-day Major Adverse Cardiac Event (MACE). The
applicant stated that results for the control versus SSO2
Therapy group comparisons for the three co-primary effectiveness
endpoints demonstrated a nominal improvement in the test group,
although this nominal improvement did not achieve clinical and
statistical significance in the entire population. The applicant
further stated that a pre-specified analysis of the SSO2
Therapy patients who were revascularized within 6 hours of AMI symptom
onset and who had anterior wall infarction showed a marked improvement
in all 3 co-primary endpoints as compared to the control group.\239\
Key safety data revealed no statistically significant differences in
the composite primary endpoint of 1-month (30 days) MACE rates between
the SSO2 Therapy and control groups. MACE includes the
combined incidence of death, re-infarction, target vessel
revascularization, and stroke. In total, 9/134 (6.7 percent) of the
patients in the SSO2 Therapy group and 7/135 (5.2 percent)
of the patients in the control group experienced 30-day MACE (p =
0.62).\240\
---------------------------------------------------------------------------
\238\ O'Neill, W.W., Martin, J.L., Dixon, S.R., et al., ``Acute
Myocardial Infarction with Hyperoxemic Therapy (AMIHOT), J Am Coll
Cardiol, 2007, vol. 50(5), pp. 397-405.
\239\ Ibid.
\240\ Ibid.
---------------------------------------------------------------------------
The AMIHOT II trial randomized 301 patients who had been
diagnosed with and receiving treatment for anterior AMI with either PCI
plus the SSO2 Therapy or PCI alone.\241\ The AMIHOT II trial
had a Bayesian statistical design that allows for the informed
borrowing of data from the previously completed AMIHOT I trial. The
primary efficacy endpoint of the study required proving superiority of
the infarct size reduction, as assessed by Tc-99m Sestamibi SPECT
imaging at 14 days post PCI/stenting, with the use of SSO2
Therapy as compared to patients who were receiving treatment involving
PCI with stenting alone. The primary safety endpoint for the AMIHOT II
trial required a determination of non-inferiority in the 30-day MACE
rate, comparing the SSO2 Therapy group with the control
group, within a safety delta of 6.0 percent.\242\ Endpoint evaluation
was performed using a Bayesian hierarchical model that evaluated the
AMIHOT II result conditionally in consideration of the AMIHOT I 30-day
MACE data. According to the applicant, the results of the AMIHOT II
trial showed that the use of SSO2 therapy, together with PCI
and stenting, demonstrated a relative reduction of 26 percent in the
left ventricular infarct size and absolute reduction of 6.5 percent
compared to PCI and stenting alone.\243\
---------------------------------------------------------------------------
\241\ Stone, G.W., Martin, J.L., de Boer, M.J., et al., ``Effect
of Supersaturated Oxygen Delivery on Infarct Size after Percutaneous
Coronary Intervention in Acute Myocardial Infarction,'' Circ
Cardiovasc Intervent, 2009, vol. 2, pp. 366-75.
\242\ Ibid.
\243\ Ibid.
---------------------------------------------------------------------------
Next, to support the claim that SSO2 Therapy prevents
left ventricular dilation, the applicant cited the Leiden study, which
represents a single-center, sub-study of AMIHOT I patients treated at
Leiden University in the Netherlands. The study describes outcomes of
randomized selective treatment with intracoronary aqueous oxygen (AO),
the therapy delivered by SSO2 Therapy, versus standard care
in patients who had acute anterior wall myocardial infarction within 6
hours of onset. Of the 50 patients in the sub-study, 24 received
treatment using adjunctive AO and 26 were treated according to standard
care after PCI, with no significant differences in baseline
characteristics between groups. LV volumes and function were assessed
by contrast echocardiography at baseline and 1 month. According to the
applicant, the results demonstrated that treatment with aqueous oxygen
prevents LV remodeling, showing a reduction in LV volumes (3 percent
decrease in LV end-diastolic volume and 11 percent decrease in LV end-
systolic volume) at 1 month as compared to baseline in AO-treated
patients, as compared to increasing LV volumes (14 percent increase in
LV end diastolic volume and 18 percent increase in LV end-systolic
volume) at 1 month in control patients.\244\ The results also show that
treatment using AO preserves LV ejection fraction at 1 month, with AO-
treated patients experiencing a 10 percent increase in LV ejection
fraction as compared to a 2 percent decrease in LV ejection fraction
among patients in the control group.\245\
---------------------------------------------------------------------------
\244\ Warda, H.M., Bax, J.J., Bosch, J.G., et al., ``Effect of
intracoronary aqueous oxygen on left ventricular remodeling after
anterior wall ST-elevation acute myocardial infarction,'' Am J
Cardiol, 2005, vol. 96(1), pp. 22-4.
\245\ Ibid.
---------------------------------------------------------------------------
Finally, to support the claim that SSO2 Therapy reduces
death and heart failure at 1 year, the applicant submitted the results
from the IC- HOT clinical trial, which was designed to confirm the
safety and efficacy of the use of the SSO2 Therapy in those
individuals presenting with a diagnosis of anterior AMI who have
undergone successful PCI with stenting of the proximal and/or mid left
anterior descending artery within 6 hours of experiencing AMI symptoms.
It is an IDE, nonrandomized, single arm study. The study primarily
focused on safety, utilizing a composite endpoint of 30-day Net Adverse
Clinical Events (NACE). A maximum observed event rate of 10.7 percent
was
[[Page 42277]]
established based on a contemporary PCI trial of comparable patients
who had been diagnosed with anterior wall STEMI. The results of the IC-
HOT trial exhibited a 7.1 percent observed NACE rate, meeting the study
endpoint. Notably, no 30-day mortalities were observed, and the type
and frequency of 30-day adverse events occurred at similar or lower
rates than in contemporary STEMI studies of PCI-treated patients who
had been diagnosed with anterior AMI.\246\ Furthermore, according to
the applicant, the results of the IC-HOT study supported the
conclusions of effectiveness established in AMIHOT II with a measured
30-day median infarct size = 19.4 percent (as compared to the AMIHOT II
SSO2 Therapy group infarct size = 20.0 percent).\247\ The
applicant stated that notable measures include 4-day microvascular
obstruction (MVO), which has been shown to be an independent predictor
of outcomes, 4-day and 30-day left ventricular end diastolic and end
systolic volumes, and 30-day infarct size.\248\ The applicant also
stated that the IC-HOT study results exhibited a favorable MVO as
compared to contemporary trial data, and decreasing left ventricular
volumes at 30 days, compared to contemporary PCI populations that
exhibit increasing left ventricular size.\249\ The applicant asserted
that the IC-HOT clinical trial data continue to demonstrate the
substantial clinical benefit of the use of SSO2 Therapy as
compared to the standard-of-care, PCI with stenting alone.
---------------------------------------------------------------------------
\246\ David, SW, Khan, Z.A., Patel, N.C., et al., ``Evaluation
of intracoronary hyperoxemic oxygen therapy in acute anterior
myocardial infarction: The IC-HOT study,'' Catheter Cardiovasc
Interv, 2018, pp. 1-9.
\247\ Ibid.
\248\ Ibid.
\249\ Ibid.
---------------------------------------------------------------------------
The applicant also performed controlled studies in both porcine and
canine AMI models to determine the safety, effectiveness, and mechanism
of action of the SSO2 Therapy.250 251 According
to the applicant, the key summary points from these animal studies are:
---------------------------------------------------------------------------
\250\ Spears, J.R., Henney, C., Prcevski, P., et al., ``Aqueous
Oxygen Hyperbaric Reperfusion in a Porcine Model of Myocardial
Infarction,'' J Invasive Cardiol, 2002, vol. 14(4), pp. 160-6.
\251\ Spears, J.R., Prcevski, P., Xu, R., et al., ``Aqueous
Oxygen Attenuation of Reperfusion Microvascular Ischemia in a Canine
Model of Myocardial Infarction,'' ASAIO J, 2003, vol. 49(6), pp.
716-20.
---------------------------------------------------------------------------
SSO2 Therapy administration post-AMI acutely
improves heart function as measured by left ventricular ejection
fraction (LVEF) and regional wall motion as compared with non-treated
control subjects.
SSO2 Therapy administration post-AMI results in
tissue salvage, as determined by post-sacrifice histological
measurements of the infarct size. Control animals exhibit larger
infarcts than the SSO2-treated animals.
SSO2 Therapy has been shown to be non-toxic to
the coronary arteries, myocardium, and end organs in randomized,
controlled swine studies with or without induced acute myocardial
infarction.
SSO2 Therapy administration post-AMI has
exhibited regional myocardial blood flow improvement in treated animals
as compared to controls.
A significant reduction in myeloperoxidase (MPO) levels in
the SSO2-treated animals versus controls, which indicate
improvement in underlying myocardial hypoxia.
Transmission electron microscopy (TEM) photographs showing
amelioration of endothelial cell edema and restoration of capillary
patency in ischemic zone cross-sectional histological examination of
the SSO2- treated animals, while non-treated controls
exhibit significant edema and vessel constriction at the microvascular
level.
In the proposed rule, we stated that we had the following concerns
regarding whether the technology meets the substantial clinical
improvement criterion. We noted that the standard-of-care for STEMI had
evolved since the AMIHOT I and AMIHOT II studies were conducted, such
that it is unclear whether use of SSO2 Therapy would
demonstrate the same clinical improvement as compared to the current
standard-of-care. We also noted that the AMIHOT II study used SPECT
infarct size data 14 days post-MI for efficacy and MACE events
(including death, re-infarction, revascularization, and stroke) by 30
days post-MI for safety. Therefore, we stated that we were concerned
that there is no long-term data to demonstrate the validity of these
statistics, and that infarct size has not been completely validated as
a surrogate marker for the combination of PCI plus SSO2.
With respect to the IC-HOT study, we stated that we were concerned that
the lack of a control may limit the interpretation of the data. We also
were concerned that the safety data (death, re-infarction, re-
vascularization, stent thrombosis, severe heart failure, and bleeding)
for the IC-HOT study were limited to the 30 days post-MI, with no long-
term data being available.
We invited public comments on whether the SSO2 Therapy
meets the substantial clinical improvement criterion, including with
respect to whether the results of the AMIHOT I and AMIHOT II studies
remain valid given the advancements in STEMI care since these trials
were conducted, and the availability of long-term data to validate the
efficacy and safety data of the AMIHOT II and IC-HOT studies.
Comment: Several commenters submitted comments regarding CMS's
concerns about whether SSO2 Therapy meets the substantial
clinical improvement criterion. Many of these commenters summarized the
history of STEMI care, beginning with the first breakthrough of
thrombolytic therapy followed by interventional procedures with balloon
angioplasty and subsequent stenting of the coronary blockage, which
became widely accepted as the standard of care. These commenters
affirmed the relationship between myocardial infarct size and long term
clinical outcomes such as heart failure, rehospitalization and
mortality. Several commenters referenced the CORE trial in which the
size of the measured infarct was directly correlated with the rates of
6-month death in 1,164 STEMI patients treated with thrombolytic
therapy. The CORE trial found that every reduction in infarct size by
an absolute 5 percent of the left ventricle correlated with a 17-18
percent improvement in survival). The commenters also referenced a
recent meta-analysis of 2,632 patients from 10 randomized controlled
trials with STEMI who underwent PCI and then had their infarct size
measured within the next several days. The meta-analysis showed that
myocardial infarction size was strongly associated with 1-year
hospitalization for heart failure and all-cause mortality, and that for
every 5 percent increase in MI size, there was a 20 percent increase in
relative hazard ratio for 1-year hospitalization for heart failure and
all-cause mortality. A commenter emphasized that the relationship
between infarct size and outcomes is not dependent on the mode of
therapy delivered during patient treatment; reduced infarct size, no
matter how it is accomplished, has been associated with improved
survival and reduced heart failure and rehospitalization.
With respect to the validity of the AMIHOT I and AMIHOT II studies
given the advancements in STEMI care since the trials were conducted,
the commenters believed that the treatment of STEMI patients had not
changed since the AMIHOT II study was conducted, and that no new
adjunct pharmacology or device had been proven clinically beneficial
until SSO2 Therapy. Several commenters asserted
[[Page 42278]]
that SSO2 Therapy is the first treatment (adjunctive or
otherwise) in three decades of trials to significantly reduce
myocardial infarct size and that it has not been superseded by any
recent strategies or devices. Another commenter explained that the
evolution in STEMI care since the advent of stenting can be attributed
to improvement in the stents' material (for instance, the introduction
of drug coating) and the organization of medical care, including
reducing time from symptom onset to first medical contact, door-to-
balloon time, total ischemic time, and improved antithrombotic therapy.
The commenter acknowledged that these developments improved clinical
outcomes and reduced mortality, but that they all occur in the clinical
workflow prior to the therapeutic intervention, which has remained
unchanged since the advent of drug-eluting stents. A commenter noted
that short term 30 day mortality for STEMI patients has dropped
steadily from 10-20 percent to under 5 percent with the latest
generation drug eluting stents. However, another commenter pointed out
that the mortality rate has not changed in recent years for STEMI
treated with PCI. Another commenter noted that large infarctions still
occur in spite of the advances in PCI, and that many therapies have
failed to demonstrate better outcomes beyond that obtained from timely
reperfusion alone.
A commenter stated that until the development of the
SSO2 Downstream System there was no practicable method
available for treating critically ill STEMI patients with hyperoxemic
coronary perfusion. The commenter stated that even with rapid treatment
of AMI itself by PCI, the infarct size and loss of heart muscle is
often substantial, resulting in heart failure. The commenter also
stated that numerous drugs and devices have been studied to reduce
heart failure after STEMI, including fluosol, magnesium, RheothRx,
trimetazidine, hSOD, cylexin, adenosine, anti-CD18 antibodies,
eniporide, pexelizumab, tilarginine, EPO, sodium nitrate, cyclosporine,
TRO40303, delcasertib, metformin, bendavia, aspiration thrombectomy,
distal embolic protection, hypothermia, pre- and post-conditioning,
cell therapy and others. According to the commenter, none have been
convincingly effective, and most have been costly and have had side-
effects.
With respect to the availability of long-term data to validate the
efficacy and safety data of the AMIHOT II and IC-HOT studies, many of
the commenters reiterated the results of these studies as presented in
the original application and as previously summarized in this final
rule. Specifically, the commenters highlighted (1) the 26 percent
relative and 6.5 percent absolute reduction in median infarct size
compared to the control group (p = 0.02) in the AMIHOT II study, and
(2) the 0 percent mortality and 1 percent incidence of congestive heart
failure at both 30 days and at 1 year in the IC-HOT study. A commenter
noted that the relatively low, median infarct size by CMR at 30 days in
the IC- HOT trial was nearly identical to the median value at 2 weeks
by perfusion imaging in the AMIHOT II trial. The commenter stated that
infarct size remained unchanged over the 30 day follow up period, and
asserted that further changes in infarct size are therefore extremely
unlikely. The same commenter noted that the very low percentage of
microvascular occlusion that was found in the IC-HOT trial at day 30
also portends a favorable long term outcome.
Most commenters also referred to a formal analysis comparing the
clinical outcomes in SSO2 treated patients to those of a
case-matched historical control population. This analysis compared the
1-year clinical outcomes from the IC-HOT study to a propensity score-
matched population from a similar patient cohort of high-risk anterior
STEMI patients enrolled in the INFUSE-AMI trial (n=83 patients per arm
for the matched analysis). Per the commenters, statistically
significant reductions in mortality and heart failure were observed at
one year post treatment. At 1 year after PCI, mortality was 7.6 percent
in the control group from the INFUSE-AMI trial vs. 0.0 percent in the
SSO2 therapy group (p = 0.01). Furthermore, new onset heart
failure or heart failure readmissions occurred in 7.4 percent in the
INFUSE-AMI group vs. 0.0 percent in the SSO2 Therapy group
(p = 0.01). A commenter noted that because these results are non-
randomized, were drawn from 2 separate studies, are from a modest
number of patients, and the effect size is better than would be
expected in a large trial (noting that no therapy will completely
eliminate death and HF after anterior STEMI), they should be considered
hypothesis generating. Nonetheless, the commenter stated that they do
suggest long-term clinical improvement with SSO2 Therapy,
consistent with the proven reduction in infarct size.
Response: We thank the commenters for their input. We appreciate
the additional background on the evolution of STEMI care and agree with
the commenters that infarct size can be strongly correlated with
outcomes such as heart failure, rehospitalization, and mortality. We
agree that the results of the AMIHOT I, AMIHOT II, and IC-HOT studies
are promising and suggest the potential for long term clinical
improvement with SSO2 Therapy consistent with the reduction
in infarct size demonstrated by imaging. However, we are uncertain if
the clinical improvement seen in these studies is necessarily a result
of infarct size reduction after SSO2 Therapy use, or other
developments in STEMI care delivery. That is, it is unclear, based on
the information provided, the incremental effect of SSO2
Therapy on clinical outcomes as compared to the current standard of
care, PCI with stenting but without the SSO2 Therapy as an
adjunctive treatment.
After consideration of all the information from the applicant, as
well as the public comments we received, we are unable to determine
that SSO2 Therapy represents a substantial clinical
improvement over the currently available therapies used to treat STEMI
patients. We remain concerned that the current data does not adequately
support a sufficient association between the outcome measures of heart
failure, rehospitalization, and mortality with the use of
SSO2 Therapy specifically to determine that the technology
represents a substantial clinical improvement over existing available
options. Therefore, we are not approving new technology add-on payments
for SSO2 Therapy for FY 2020.
m. T2Bacteria[supreg] Panel (T2 Bacteria Test Panel)
T2 Biosystems, Inc. submitted an application for new technology
add-on payments for the T2 Bacteria Test Panel (T2Bacteria[supreg]
Panel) for FY 2020. According to the applicant, the T2Bacteria[supreg]
Panel is indicated as an aid in the diagnosis of bacteremia, bacterial
presence in the blood which is a precursor for sepsis. Per the FDA
cleared indication, results from the T2Bacteria Panel are not intended
to be used as the sole basis for diagnosis, treatment, or other patient
management decisions in patients with suspected bacteremia. Concomitant
blood cultures are necessary to recover organisms for susceptibility
testing or further identification, and for organisms not detected by
the T2Bacteria Panel. However, the applicant noted that the T2 Bacteria
Panel is a multiplex diagnostic panel that detects five major bacterial
pathogens (Enterococcus faecium, Escherichia coli, Klebsiella
[[Page 42279]]
pneumoniae, Pseudomonas aeruginosa, and Staphylococcus aureus)
associated with sepsis. According to the applicant, the
T2Bacteria[supreg] Panel is capable of detecting bacterial pathogens
directly in whole blood more rapidly and with greater sensitivity as
compared to the current standard-of-care, blood culture. The applicant
noted that the T2Bacteria[supreg] Panel's major detected species are
five of the most common and virulent sepsis-causing
organisms.252 253 The applicant asserted that, by enabling
the rapid administration of species-specific antimicrobial therapies,
the T2Bacteria[supreg] Panel helps to reduce patients' hospital
lengths-of-stay and substantially improves clinical outcomes.
Furthermore, the applicant asserted that the T2Bacteria[supreg] Panel
helps to reduce the overuse of ineffective or unnecessary antimicrobial
therapy, reducing patient side effects, lowering hospital costs, and
potentially counteracting the growing resistance to antimicrobial
therapy.
---------------------------------------------------------------------------
\252\ Boucher, H., Talbot, G., Bradley, J., Edwards, J.,
Gilbert, D., Rice, L., Bartlett, J.,''Bad Bugs, No Drugs: No ESKAPE!
An update from the infectious disease society of America,'' Clinical
Infectious Diseases, 2009, vol. 48, pp. 1-12, doi:10.1086/595011.
\253\ Rice, L., ``Federal Funding for the Study of Antimicrobial
Resistance in Nosocomial Pathogens: No ESKAPE,'' Journal of
Infectious Diseases, 2008, vol. 197, pp. 1079-1081, doi:10.1086/
533452.
---------------------------------------------------------------------------
The applicant stated that the T2Bacteria[supreg] Panel runs on the
T2Dx Instrument, which is a bench-top diagnostic instrument that
utilizes developments in magnetic resonance and nanotechnology to
detect pathogens directly in whole blood, plasma, serum, saliva, sputum
and urine at limits of detection as low as one colony forming unit per
milliliter. The applicant explained that the T2Dx breaks down red blood
cells, concentrates microbial cells and cellular debris, amplifies DNA
using a thermostable polymerase and target-specific primers, and
detects amplified product by amplicon-induced agglomeration of
supermagnetic particles and T2MR measurement.\254\ To perform a
diagnostic test, the patient's sample tube is snapped onto the
disposable test cartridge, which is pre-loaded with all necessary
reagents. The cartridge is then inserted into the T2Dx, which
automatically processes the sample and then delivers a diagnostic test
result. The applicant asserted that each test panel is comprised of a
test cartridge and a reagent tray and that each are required to run the
T2Bacteria[supreg] Test Panel.
---------------------------------------------------------------------------
\254\ Clancy, C., & Nguyen, H., ``T2 magnetic resonance for the
diagnosis of bloodstream infections: Charting a path forward,''
Journal of Antimicrobial Chemotherapy, 2018, vol. 73(4), pp. iv2-
iv5, doi:10.1093/jac/dky050.
---------------------------------------------------------------------------
As stated in the FY 2020 IPPS/LTCH PPS proposed rule and as
previously stated in this final rule, the current standard-of care for
identifying bacterial bloodstream infections that cause sepsis is a
blood culture. The applicant explained that blood culture diagnostics
have many limitations, beginning with a series of time and labor
intensive analyses. According to the applicant, completing a blood
culture requires typically 20 mLs or more of a patient's blood, which
is obtained in two 10 mL draws and placed into two blood culture
bottles containing nutrients formulated to grow bacteria. The applicant
explained that before the blood culture indicates if a patient is
infected, pathogens typically must reach a concentration of 1,000,000
to 100,000,000 CFU/mL in the blood specimen. This growth process
typically takes 1 to 6 or more days because the pathogen's initial
concentration in the blood specimen is often less than 10 CFU/mL.- The
applicant stated that a typical blood culture provides a result in a 2
to 4 day timeframe for species ID and yields 50 to 65 percent clinical
sensitivity.255 256 According to the applicant, a recent
retrospective analysis of 13 U.S. hospitals and over 150,000 cultures
found a median blood culture time for species ID of 43 hours.\257\
---------------------------------------------------------------------------
\255\ Clancy, C., & Nguyen, M. H., ``Finding the ``Missing 50%''
of Invasive Candidiasis: How nonculture Diagnostics will improve
understanding of disease spectrum and transform patient care,''
Clinical Infectious Diseases, 2013, vol. 56(9), pp. 1284-1292,
doi:10.1093/cid/cit006.
\256\ Cockerill, F., Wilson, J., Vetter, E., Goodman, K.,
Torgerson, C., Harmsen, W., Wilson, W., ``Optimal Testing Parameters
for Blood Cultures,'' Clinical Infectious Diseases, 2004, vol. 38,
pp. 1724-1730.
\257\ Tabak, Y., Vankeepuram, L., Ye, G., Jeffers, K., Gupta,
V., & Murray, P., ``Blood Culture Turanaround Time in US Acute Care
Hospitals and Implications for Laboratory Process Optimization,''
Journal of Clinical Microbiology, August 2018, pp. 1-15.
---------------------------------------------------------------------------
According to the applicant, blood cultures provide results at
multiple stages. A negative test result requires a minimum of 5 days
for blood cultures. A positive blood culture typically means that some
pathogen is present, but additional steps must be performed to identify
the specific pathogen and provide targeted therapy. The applicant
submitted data stating that during the T2Bacteria[supreg] Panel's
pivotal study, blood cultures took an average of 63.2 hours (off
T2Bacteria[supreg] Panel) and 38.5 hours (on T2Bacteria[supreg] Panel)
to obtain positive results and 96.0 hours (off T2Bacteria[supreg]
Panel) and 71.7 hours (on T2Bacteria[supreg] Panel) to achieve species
identification.\258\ The applicant stated that, given this length of
time to species identification, the first therapy for a patient at risk
of sepsis is often broad-spectrum antibiotics, which treats some, but
not all bacteria types. In addition, the applicant indicated that the
time to species identification in blood culture diagnostics causes
delays in administration of species-specific targeted therapies,
increasing hospital lengths-of-stay and risk of death.
---------------------------------------------------------------------------
\258\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant received FDA
510(k) clearance on May 24, 2018, based on a determination of
substantial equivalence to a legally marketed predicate device. The
applicant noted that the T2Bacteria[supreg] Panel has a very broad
application in the inpatient hospital setting and, as a result,
potential cases available for use of the T2Bacteria[supreg] Panel may
be identified by thousands of ICD-10-CM diagnosis codes. In the
proposed rule (84 FR 19357), we noted that the applicant had submitted
a request to the ICD-10 Coordination and Maintenance Committee for
approval for a unique ICD-10-PCS procedure code, effective in FY 2020,
to describe procedures which use the T2Bacteria[supreg] Panel.
T2Bacteria[supreg] Panel was granted approval for the ICD-10-PCS code
XXE5XM5 (Measurement of Infection, Whole Blood Nucleic Acid-base
Microbial Detection, New Technology Group 5), effective October 1,
2019.
As previously discussed, if a technology meets all three of the
substantial similarity criteria, it would be considered substantially
similar to an existing technology and would not be considered ``new''
for purposes of new technology add-on payments.
With regard to the first criterion, whether a product uses the same
or a similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that the T2Bacteria[supreg] Panel: (1) Has a
different mechanism of action when compared to the current standard-of-
care for the diagnosis of bacterial pathogens directly from whole
blood; and (2) is designed to achieve a different therapeutic outcome
when compared to the other diagnostic test panel that is based on the
same technological diagnostic platform. Specifically, the applicant
asserted that the standard-of-care blood culture is a laboratory test
in which blood, taken from the patient, is inoculated into bottles
containing culture media and incubated over a period of time to
determine whether
[[Page 42280]]
infection-causing micro-organisms (bacteria or fungi) are present in
the patient's bloodstream. In contrast, the applicant stated that the
T2Bacteria[supreg] Panel relies on developments in magnetic resonance
and nanotechnology to determine the presence of bacterial pathogens in
a patient's blood by exploiting the physics of magnetic resonance.
Furthermore, the applicant indicated that the only other product on the
U.S. market that uses the same or similar mechanism of action as the
T2Bacteria[supreg] Panel is the T2Candida Panel, which detects five
clinically relevant species of Candida, a fungal pathogen known to
cause sepsis. However, the applicant noted that the T2Candida Panel is
a diagnostic aid in the treatment of sepsis caused by fungal infections
in the blood and thus achieves a different therapeutic outcome than the
T2Bacteria[supreg] Panel.
With regard to the second criterion, whether the technology is
assigned to the same or different MS-DRG, the applicant did not
comment. However, we stated in the proposed rule that we believed cases
involving the use of the technology would be assigned to the same MS-
DRGs as cases involving the current standard-of-care of laboratory
blood cultures.
With respect to the third criterion, 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, according to the
applicant, the T2Bacteria[supreg] Panel would be used as a diagnostic
aid in the treatment of similar diseases and patient populations as the
current standard-of-care, laboratory blood cultures.
In the proposed rule, we stated our concern that the mechanism of
action of the T2Bacteria[supreg] Test Panel may be similar to the
mechanism of action used by laboratory blood cultures or other
available diagnostic tests that are the current standard of care. While
the applicant stated that the T2Bacteria[supreg] Test Panel has a
unique mechanism of action, we noted that like other available
diagnostic tests, the T2Bacteria[supreg] Test Panel uses DNA to
identify bacterial species. Similarly, in order to obtain species
identification from the current standard-of-care, blood cultures, a DNA
test is also required. Therefore, we stated that we were concerned with
the similarity of this mechanism of action. We invited public comments
on whether the T2Bacteria[supreg] Test Panel is substantially similar
to the standard-of-care laboratory blood cultures or other diagnostic
tests and whether this technology meets the newness criterion.
Comment: A commenter submitted a comment in response to CMS'
concern that the T2Bacteria[supreg] Test Panel has a mechanism of
action which is similar to currently available diagnostic tests. The
commenter stated that while it is the case that the T2Bacteria[supreg]
Test Panel uses DNA to identify bacteria species, its unique feature is
the rapid identification of bacteria without the requirement for blood
culture and/or other diagnostic techniques. The commenter stated that
they knew of no other FDA cleared diagnostics for which this is the
case.
Two commenters stated that the T2Bacteria[supreg] Test Panel
detects bacterial-associated DNA differently than all other FDA cleared
products because it does not depend on a positive blood culture and
bacterial cell growth to detect pathogens. The commenters added that
this innovation is due to magnetic resonance detection used by the
T2Bacteria[supreg] Test Panel.
The applicant submitted a comment stating that the
T2Bacteria[supreg] Test Panel does not use the same or similar
mechanism of action compared to an existing technology. The applicant
stated that all other bloodstream pathogen identification methods
require a positive blood culture and that the T2Bacteria[supreg] Test
Panel has a limit of detection greater than 1,000 times lower than any
bloodstream pathogen identification method, allowing it to be used
directly on patient blood samples without culturing. Lastly the
applicant stated that while the T2Bacteria Panel does identify species
with DNA, the differences from direct and independent detection, lack
of growth, and lack of interference from antibiotics and competitive
growth relative to all other FDA cleared diagnostics distinguishes the
T2Bacteria Panel as a novel technology.
In response to CMS' concern that the T2Bacteria[supreg] Test Panel
was similar to the blood cultures in that they both require DNA tests
to identify bacterial species, a commenter stated that DNA tests are
not required to identify bacteria from blood cultures. The commenter
stated that most institutions still use traditional microbiology
techniques (for example, biochemical reaction tests) to identify
bacterial species.
Response: We appreciate the commenters' input and the additional
information provided by the applicant in response to our concerns in
the proposed rule. After consideration of the public comments we
received and information submitted by the applicant in its application,
we believe that the T2Bacteria[supreg] Test Panel uses a unique
mechanism of action to achieve a therapeutic outcome because it works
differently than currently available therapies through magnetic
resonance detection to detect bacterial DNA directly from patient blood
samples. Therefore, we believe T2Bacteria[supreg] Test Panel is not
substantially similar to existing technologies and meets the newness
criterion.
With regard to the cost criterion, the applicant provided the
following analysis. To identify the MS-DRGs to which potential cases
available for use of the T2Bacteria[supreg] Panel would most likely
map, a selection of ICD-10-CM diagnosis codes associated with the
clinical presence of the on-panel sepsis-causing bacteria for which the
T2Bacteria[supreg] Test Panel tests was
identified.259 260 261 262 263 The applicant asserted that
the T2Bacteria[supreg] Test Panel can identify three Gram-negative
blood stream infections (Escherichia coli, Klebsiella pneumoniae,
Pseudomonas aeruginosa) and two Gram-positive bloodstream infection
species (Staphylococcus aureus, and Enterococcus faecium). A total of
67 ICD-10-CM diagnosis codes were identified and segmented by two
categories, infections (39 codes) and sepsis (28 codes). The applicant
asserted that the former category represents potential cases available
to be diagnosed by the T2Bacteria[supreg] Panel for patients who are at
risk for sepsis and the latter
[[Page 42281]]
represents potential cases available for use of the T2Bacteria[supreg]
Panel for patients who have been diagnosed with a confirmed sepsis. The
applicant stated that distinguishing between the two was necessary due
to the varying costs associated with the treatment of patients at risk
for sepsis versus confirmed cases of sepsis.
---------------------------------------------------------------------------
\259\ Calderwood, S., ``Clinical manifestations, diagnosis and
treatment of enterohemorrhagic Escherichia coli (EHEC) infection,''
September 2017. Available at: https://www.uptodate.com/contents/clinical-manifestations-diagnosis-and-treatment-of-enterohemorrhagic-escherichia-coli-ehec-infection.
\260\ Yu, W. L., & Chuang, Y. C., ``Clinical features,
diagnosis, and treatment of Klebsiella pneumoniae infection,'' May
18, 2017. Available at: https://www.uptodate.com/contents/clinical-
features-diagnosis-and-treatment-of-klebsiella-pneumoniae-
infection?search=Klebsiella%20pneumoniae&source=search_result&selecte
dTitle=1~150&usage_type=default&display_rank=1.
\261\ Kanj, S., & Sexton, D., ``Epidemiology, microbiology, and
pathogenesis of Pseudomonas aeruginosa infection,'' October 9, 2018.
Available at: https://www.uptodate.com/contents/epidemiology-microbiology-and-pathogenesis-of-pseudomonas-aeruginosa;-
infection?search=Pseudomonas%20aeruginosa&source=search_result&select
edTitle=2~150&usage_type=default&display_rank=2.
\262\ Holland, T., & Fowler, V., ``Clinical manifestations of
Staphylococcus aureus infection in adults,'' September 22, 2017.
Available at: https://www.uptodate.com/contents/clinical-
manifestations-of-staphylococcus-aureus-infection-in-
adults?search=Staphylococcus%20aureus&source=search_result&selectedTi
tle=3~150&usage_type=default&display_rank=3.
\263\ Murray, B., ``Microbiology of enterococci,'' August 31,
2017. Available at: https://www.uptodate.com/contents/microbiology-
of-
enterococci?search=Enterococcus%20faecium&source=search_result&select
edTitle=2~21&usage_type=default&display_rank=2.
---------------------------------------------------------------------------
After the identification of the 39 infection and 28 sepsis
diagnosis codes, both selections were refined by the applicant with the
removal of cases identified by a total of 15 codes that represent
pathogens not within the spectrum of blood infections that the
T2Bacteria[supreg] Panel has been tested with and/or has been confirmed
to detect. From the infection diagnosis codes, cases identified by two
ICD-10-CM diagnosis codes: A021 (Salmonella sepsis); and A227 (Anthrax
sepsis) were removed. From the sepsis diagnosis codes, cases identified
by 13 diagnosis codes were removed: A021 (Salmonella sepsis); A227
(Anthrax sepsis); A400 (Sepsis due to streptococcus, group A); A401
(Sepsis due to streptococcus, group B); A403 (Sepsis due to
streptococcus pneumonia); A408 (Other streptococcal sepsis); A409
(Streptococcal sepsis, unspecified); A413 (Sepsis due to hemophilus
influenza); A414 (Sepsis due to anaerobes); A4153 (Sepsis due to
serratia); A427 (Actinomycotic sepsis); A5486 (Gonococcal sepsis); and
B377 (Candidal sepsis). The remaining infection and sepsis diagnosis
codes were then used to query the FY 2017 MedPAR database to identify
inpatient discharges reporting these diagnosis codes under the primary
and secondary position.
According to the applicant, the resulting sets of MS-DRGs from both
diagnosis code selection queries had visible commonalities when looking
at only the MS-DRGs that contained potential cases which represented at
least 1 percent of the discharge volume for the specific diagnoses.
According to the applicant, due to the high volume of cases pulled and
visible trends, provider-specific discharges at the MS-DRG level with
fewer than 11 discharges were omitted from the analysis. In reconciling
the list of MS-DRGs containing potential cases identified for the
specific infection and sepsis codes, the applicant stated that MS-DRGs
853 (Infectious & Parasitic Diseases with O.R. Procedure with MCC), 870
(Septicemia or Severe Sepsis with Mechanical Ventilation > 96 Hours),
871 (Septicemia or Severe Sepsis without Mechanical Ventilation > 96
Hours with MCC) and 872 (Septicemia or Severe Sepsis without Mechanical
Ventilation > 96 Hours without MCC) contain at least 1 percent of the
potential case volume under both scenarios and are the MS-DRGs to which
these potential cases available for use of the T2Bacteria[supreg] Test
Panel would most closely map.
The applicant provided multiple cost analysis scenarios to
demonstrate that the T2Bacteria[supreg] Test Panel meets the cost
criterion. Eight scenarios were provided for the Sepsis and Infection
diagnosis codes, separately, using the ICD-10-CM selections and based
on the following methodologies: (1) Applicable discharges for the
potential cases contained in 4 MS-DRGs (853, 870, 871 and 872); (2)
applicable discharges for cases inclusive of all identified MS-DRGs;
(3) applicable discharges with ICU usage for potential cases contained
in 4 MS-DRGs (853, 870, 871 and 872); (4) applicable discharges with
ICU usage for potential cases inclusive of all identified MS-DRGs; (5)
applicable discharges for cases contained in 4 MS-DRGs (853, 870, 871
and 872) with removal of 50 percent of pharmacy charges for prior
technology; (6) applicable discharges for potential cases inclusive of
all identified MS-DRGs with removal of 50 percent of pharmacy charges
for prior technology; (7) applicable discharges with ICU usage for
potential cases contained in 4 MS-DRGs (853, 870, 871 and 872) with
removal of 75 percent of pharmacy charges for prior technology; and (8)
applicable discharges with ICU usage for potential cases contained
inclusive of all identified MS-DRGs with removal of 75 percent of
pharmacy charges for prior technology.
The applicant's order of operations used for each analysis is as
follows: (1) Using the 15 sepsis or 37 infection diagnosis codes; (2)
using the complete set of cases or those who had an ICU stay; (3)
removing pharmacy charges at 0 percent, 50 percent, or 75 percent (for
ICU patients only); and (4) standardizing the charges per cases using
the Impact File published with the FY 2019 IPPS/LTCH PPS final rule
correction notice data file. After removing the charges for the prior
technology and standardizing charges, the applicant applied an
inflation factor of 1.08986, which is the 2-year inflation factor from
the FY 2019 IPPS/LTCH PPS final rule correction notice (83 FR 49844) to
update the charges from FY 2017 to FY 2019. The applicant then added
charges for the T2Bacteria[supreg] Panel. Under each scenario, the
applicant stated that the inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount. In
this final rule, as in the proposed rule, we provide a table depicting
the applicant's results for all 16 scenarios that the applicant
indicated demonstrates that the technology meets the cost criterion.
[[Page 42282]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.151
[[Page 42283]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.152
The applicant noted that, in all 16 scenarios, the average case-
weighted standardized charge per case for potential cases available for
aid by use of the T2Bacteria[supreg] Test Panel would exceed the
average case-weighted threshold amounts in the FY 2019 IPPS/LTCH PPS
final rule correction notice data file by between $803.87 and
$33,488.82. Supplementary analyses were provided by the applicant,
which included eight additional scenarios that combined the 15 sepsis
and 37 infection diagnosis codes into one set of 52 diagnosis codes.
The applicant again utilized an inflation factor of 1.08986 and
followed the same methodology as the previously discussed cost
analyses. The applicant again noted that the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amounts in all scenarios, ranging between $1,083.67
and $32,430.57.
We invited public comments on whether the T2Bacteria[supreg] Panel
meets the cost criterion.
Comment: A commenter stated that cost remains a major impediment to
the use of the T2Bacteria technology despite its vital importance. In
addition, the applicant submitted a statement reaffirming that the
T2Bacteria Test Panel fulfills the cost criterion as demonstrated by
multiple cost analysis scenarios presented in their original
application and as previously summarized in this final rule.
Response: We thank the commenter for their input. After
consideration of the comments received and the analyses described
previously we agree that the T2Bacteria[supreg] Panel meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the T2Bacteria[supreg] Panel represents a
substantial clinical improvement over existing technologies. According
to the applicant, the T2Bacteria[supreg] Panel is the only FDA cleared-
diagnostic aid that has the ability to rapidly and accurately identify
sepsis-causing bacteria species directly
[[Page 42284]]
from whole blood within 3 to 5 hours, instead of the 1 to 5 days
required by current standard-of-care laboratory blood cultures or other
diagnostic technology. The applicant also asserted that the use of the
T2Bacteria[supreg] Panel provides more rapid beneficial resolution of
the disease process due to enabling faster treatment. Several studies
provided by the applicant suggest that effective detection prior to
therapy can lead to a reduction in hospital lengths-of-stay and
likelihood of death.264 265 According to the applicant, in
these studies for every hour reduction in time to effective therapy or
species ID, the length-of-stay decreased by 2.7 hours.
---------------------------------------------------------------------------
\264\ Huang, A., Newton, D., Kunapuli, A., Gandhi, T., Washer,
L., Isip, J., Nagel, J., ``Impact of Rapid Organism Identification
via Matrix-Assisted Laser Desorption/Ionization Time-of-Flight
Combined with Antimicrobial Stewardship Team Intervention in Adult
Patients with Bacteremia and Candidemia,'' Clinical Infectious
Diseases, 2013, vol. 57(9), pp. 1237-1245.
\265\ Perez, K., Olsen, R., Musick, W., Cernoch, P., Davis, J.,
Peterson, L., & Musser, J., ``Integrating Rapid Diagnostics and
Antimicrobial Stewardship Improves Outcomes in Patients with
Antibiotic-Resistant Gram-Negative Bacteremia,'' Journal of
Infection, 2014, vol. 69(3), pp. 216-225.
---------------------------------------------------------------------------
The applicant stated that the T2Bacteria[supreg] pivotal trial that
it submitted to support FDA clearance enrolled 11 hospitals in the
United States and 1,427 patients with a blood culture ordered as the
standard-of-care, with species ID determined by MALDI-TOF or
Vitek2.\266\ Furthermore, due to the low prevalence of panel specific
organisms, an additional 250 contrived specimens were evaluated. The
T2Bacteria[supreg] Panel result was blinded to the managing staff and
did not influence care. Blood samples were drawn for culture and
T2Bacteria[supreg] Panel from the same line at the same time. The mean
time to blood culture positivity was 51.0 43.0 hours (mean
SD) and the mean time to species ID was 83.7
47.6 hours (mean SD). In contrast, the mean time to
T2Bacteria[supreg] Panel result was 6.5 1.9 hours, where a
full load of 7 samples completed in 7.70 1.4 hours and a
single sample completed in 3.6 0.02 hours. Therefore, the
difference in mean time to result between blood culture and the
T2Bacteria[supreg] Panel assay was 77.2 hours or 3.2 days (p < 0.001).
Compared to the matched draw blood culture and contrived samples, the
overall sensitivity ranged from 81.3 percent to 100 percent and
specificity ranged from 95.0 percent to 100 percent, respectively. Of
the 190 positive T2Bacteria[supreg] Panel results, 35 had matching
blood culture results and 155 were potentially false positive. Of these
155, 35 had a positive blood culture at another blood draw within 14
days; 30 had positive results by amplification and gene sequencing; and
23 had other positive non-blood specimens for the same organism. Sixty-
three of the 190 (33 percent) positive results were not associated with
evidence of infection. Later testing by the applicant confirmed that
reagent contamination caused the high false positive rates specifically
for E. coli of 1.7 percent and P. aeruginosa (1.7 percent) in stored
blood samples. Compared to blood culture results for species identified
with the T2Bacteria[supreg] Panel, the assay detected 3.2-times more
positives associated with infection.
---------------------------------------------------------------------------
\266\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------
Nguyen, et al., a submitted publication manuscript based on the
pivotal study data, found that the species identification of the
T2Bacteria[supreg] Panel took an average mean time of 3.61
0.2 hours up to 7.70 1.38 hours (mean time dependent on
the number of samples loaded, 1 to 7), which was shorter than that of
the standard-of-care blood culture with a mean time of 71.7 39.3 hours.\267\ In addition to faster species identification,
the applicant asserted that the T2Bacteria[supreg] Panel identifies
more infection-positive cases than blood cultures when verified by non-
concurrent test results \268\ or when verified with proven, probably,
or possible criteria (concurrent blood culture positive results, non-
concurrent blood culture results with positive culture results from
another site within 21 days, and no culture match, but the
T2Bacteria[supreg] Panel bacteria was a plausible cause of disease,
respectively). In this study, 66 percent of patients with concomitant
blood culture results and T2Bacteria[supreg] Panel positive results
were not on active antibiotics at the time of the blood draw, while 24
percent of patients with probable or possible blood stream infections
that were positive by T2Bacteria[supreg] Panel alone were not on
effective therapy.
---------------------------------------------------------------------------
\267\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P.,
Alangaden, G., Pankey, G., Mylonakis, E. ``Clinical performance of
the T2Bacteria panel for diagnosis bloodstream infections due to
five common bacterial pathogens,'' Manuscript for submission.
\268\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
---------------------------------------------------------------------------
In another study submitted by the applicant, 137 blood cultures and
T2Bacteria[supreg] Panel tests were obtained from participants in the
emergency department.\269\ T2Bacteria[supreg] Panel results were
verified with concordant blood culture results, or when discordant with
blood cultures from another location drawn within 14 days of the
matched draw, or with the whole blood Sanger sequencing method. No
samples generated an invalid result for the T2Bacteria[supreg] assay.
The T2Bacteria[supreg] Panel identified 15 positives for which blood
cultures had concordant matches for 12. The three unmatched positives
were verified via other means. As compared to blood cultures, the
T2Bacteria[supreg] Panel had an overall positive percent agreement of
100 percent (12/12) and a negative percent agreement of 98.4 percent
(662/673). The negative percent agreement is shown to be due to blood
culture results that are indeterminate, or false positive.
---------------------------------------------------------------------------
\269\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery,
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a
sensitive and rapid detector of bacteremia that can be initiated in
the emergency department and has potential to favorably influence
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------
In the same study \270\, the T2Bacteria[supreg] Panel results
relative to standard-of-care blood culture identification were
classified into four impact level categories: (1) Minimal impact
results have negative blood culture results with no evidence of
infection for which results would have little to no impact; (2) some
impact results occur for patients who have an effective therapy at the
time of results, but the number of antibiotics administered could have
been reduced; (3) moderate impact results are for those on effective
therapy at the time of results, but were switched to species-directed
therapy within 12 hours of a standard-of-care blood culture
identification; and (4) direct impact results relate to those who could
have been placed on effective therapy earlier based on the results of
the T2Bacteria[supreg] Panel.\271\ The study identified 7 ``minimal
impact'' incidents, 8 ``some impact'' incidents, 4 ``moderate impact''
incidents, and 4 ``direct impact'' incidents, indicating that 16/23
(69.6 percent) of positive test results could have potentially
influenced patient care.
---------------------------------------------------------------------------
\270\ Ibid.
\271\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery,
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a
sensitive and rapid detector of bacteremia that can be initiated in
the emergency department and has potential to favorably influence
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------
[[Page 42285]]
In articles provided by the applicant which concerned separate
studies, the T2Bacteria[supreg] Panel was found to have a shorter time
to species identification than blood cultures.272 273 The
study analysis by De Angelis, et al., 2018, an international,
prospective observational study involving 129 patients (144 enrolled)
18 years of age and older who had a blood culture and for whom a
T2Bacteria[supreg] Panel was also obtained, showed that the
T2Bacteria[supreg] Panel provided a mean time to species identification
and negative result of 5.5 1.4 hours and 6.1
1.5 hours, respectively as compared to 25.2 15.2 hours and
120 0.0 hours resulting from the standard-of-care blood
culture method, respectively.\274\ There were a total of 10
concordantly identified micro-organisms, 2 identified by standard-of-
care blood culture only, and 20 detected by the T2Bacteria[supreg]
Panel only. As compared to the results from the standard-of-care blood
culture method, the results from the T2Bacteria[supreg] Panel had a
sensitivity that ranged from 50 percent to 100 percent across the 5
detection channels, with an aggregate of 83.3 percent and a specificity
that ranged from 94.8 percent to 100 percent, with an aggregate of 97.6
percent. For patients who had a matched blood culture positive (n=8)
and who met the criterion of infection (n=6), a total of 36 percent (5/
14) of the patients were receiving inappropriate antimicrobial therapy
at the time of the T2Bacteria[supreg] Panel result. The results of this
study are again discussed in another article submitted by the
applicant, which states that these results may have the potential to
rapidly identify the five on-panel pathogens that may include cases
missed by results of the standard-of-care blood culture.\275\
---------------------------------------------------------------------------
\272\ De Angelis, G., Posteraro, B., Dr. Carolis, E.,
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M.,
``T2Bacteria magnetic resonance assay for the rapid detection of
ESKAPEc pathogens directly in whole blood,'' Journal of
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26,
doi:10.1093/jac/dky049.
\273\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P.,
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of
the T2Bacteria panel for diagnosis bloodstream infections due to
five common bacterial pathogens,'' Manuscript for submission.
\274\ De Angelis, G., Posteraro, B., Dr. Carolis, E.,
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M.,
``T2Bacteria magnetic resonance assay for the rapid detection of
ESKAPEc pathogens directly in whole blood,'' Journal of
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26,
doi:10.1093/jac/dky049.
\275\ Clancy, C., & Nguyen, H., ``T2 magnetic resonance for the
diagnosis of bloodstream infections: charting a path forward,''
Journal of Antimicrobial Chemotherapy, 2018, vol. 73(4), pp. iv2-
iv5, doi:10.1093/jac/dky050.
---------------------------------------------------------------------------
The applicant further asserted that the T2Bacteria[supreg] Panel
provides a decreased rate of subsequent diagnostic or therapeutic
interventions. The applicant discussed the results of a meta-analysis
of 70 studies, in which the proportion of patients on an inappropriate
empiric therapy was 46.5 percent.\276\ The applicant indicated that the
results show that amongst patients with a blood culture draw, typical
antibiotic administration rates range from 50 to 70
percent.277 278 279 The applicant asserted that based on the
results of the analysis by the Voigt, et al., manuscript, 35 percent
(8/23) of the patients, receiving 3.6 1.1 (mean SD) unique antibiotics per patient, could have potentially seen
a reduction in the number of administered antibiotics.\280\ The
applicant further stated via a supplementary presentation to CMS that
the use of the T2Bacteria[supreg] Panel allows for earlier species
directed therapy than that allowed for by standard-of-care blood
cultures. The applicant believed that the use of the T2Bacteria[supreg]
Panel may allow the provider to move from broad potentially unnecessary
empiric to species-targeted therapy. The applicant stated that using
hospital antibiograms and being informed of the species by the
T2Bacteria[supreg] Panel, the physician is able to use species-directed
therapy and place up to 90 percent of patients on an effective therapy
in a few hours instead of 2 to 3 days.
---------------------------------------------------------------------------
\276\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok,
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,''
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
\277\ Castellanos-Ortega, A., Suberviola, B., Garcia-Astudillo,
L., Holanda, M., Ortiz, F., Llorca, J., & Delgado-Rodriguez, M.,
``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 quasi-experimental study,'' Crit Care Med,
2010, vol. 38(4), pp. 1036-1043, doi:10.1097/CCM.0b0bl3e3181d455b6.
\278\ Karlsson, S., Varpula, M., Pettila, V., & Parvlainen, I.,
``Incidence, Treatment, and Outcome of Severe Sepsis in ICU-treated
Adults in Finland: The Finnsepsis study,'' Intensive Care Medicine,
2007, vol. 33, pp. 435-443, doi:10.1007/s00134-006-0504-z.
\279\ Suberviola, B., Marquez-Lopez, A., Castellanos-Ortega, A.,
Fernandez-Mazarrasa, C., Santibanez, M., & Martinez, L.,
``Microbiological Diagnosis of Speis: Polymerase chain reaction
system versus blood cultures,'' American Journal of Critical Care,
2016, vol. 25(1), pp. 68-75.
\280\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery,
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a
sensitive and rapid detector of bacteremia that can be initiated in
the emergency department and has potential to favorably influence
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------
According to the applicant, the practice of antibiotic de-
escalation was recently evaluated across 23 studies and found to be
safe and effective.\281\ Given the toxicity associated with
antibiotics, where some antibiotics cause encephalopathies including
seizures \282\ and in extreme cases show up to a 4.5 percent mortality
rate due to the antibiotic itself,\283\ the applicant asserted that
judicious use of antibiotics is necessary. The applicant further stated
that rapid diagnostics such as that able to be accomplished by the use
of the T2Bacteria[supreg] Panel assay, due to its negative predictive
value (NPV) of 99.7 percent,\284\ will enable physicians to focus
therapy and reduce the use of unnecessary drugs, where a targeted
therapy is possible in 3.8 hours instead of 2 days, reducing toxicity
and development of resistance.\285\
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\281\ Ohji, G., Doi, A., Yamamoto, S., & Iwata, K., ``Is De-
escalation of Antimicrobials Effective? A systematic review and
meta-analysis,'' International Journal of Infectious Diseases, 2016,
vol. 49, pp. 71-79, Retrieved from http://dx.doi.org/10.1016/j.ijid.2016.06.002.
\282\ Bhattacharyya, S., Darby, R. R., Raibagkar, P., Gonzalez
Castro, L. N., & Berkowitz, A., ``Antibiotic-associated
Encephalopathy,'' American Academy of Neurology, 2016, pp. 963-971.
\283\ Koch-Weser, J., Sidel, V., Federman, E., Kanarek, P.,
Finer, D., & Eaton, A., ``Adverse Effects of Sodium Colistimethate;
Manifestations and specific reaction rates during 317 courses of
therapy,'' Annals of Internal Medicine, 1970, vol. 72, pp. 857-868.
\284\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P.,
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of
the T2Bacteria panel for diagnosis bloodstream infections due to
five common bacterial pathogens,'' Manuscript for submission.
\285\ Weisz, E., Newton, E., Estrada, S., & Saunders, M.,
``Early Experience with the T2Bacteria Research Use Only (RUO) Panel
at a Community Hospital,'' Lee Memorial Hospital, Fort Meyers.
---------------------------------------------------------------------------
The applicant stated that the use of the T2Bacteria[supreg] Panel
will result in reduced mortality. The applicant indicated that the
results of large retrospective analyses show that every hour delaying
time to appropriate antibiotic therapy increased odds of death by 4
percent or reduced survival by 7.6 percent.286 287 288 The
applicant stated that the results of the T2Bacteria[supreg] Panel
Pivotal trial show that out of 23 positive patients, 4 (17 percent)
could
[[Page 42286]]
have seen a reduction in time to effective therapy, with mean time of
28.0 hours. An additional 4 (17 percent) could have seen a reduction in
time to species-directed therapy, with mean time reduction of 52.6
hours. The applicant stated that by using the T2Bacteria[supreg] Panel
assay relative to standard-of-care blood cultures, they expect a
potential reduction in the odds of death to be 52.8 percent. According
to the applicant, this factor of 2 difference is consistent with a two-
time higher odds of death in patients given inappropriate empiric
antibiotics relative to appropriate empiric antibiotics.\289\ The
applicant indicated that this result suggests that employing the use of
the T2Bacteria[supreg] Panel assay should reduce mortality in
bacteremia patients who are not immediately on appropriate therapy.
---------------------------------------------------------------------------
\286\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok,
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,''
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
\287\ Kumar, A., Roberts, D., Wood, K., Light, B., Parrillo, J.,
Sharma, S., Cheang, M., ``Duration of Hypotension before Initiation
of Effective Antimicrobial Therapy is the Critical Determinant of
Survival in Human Septic Shock,'' Crit Care Med, 2006, vol. 34(6),
pp. 1589-1596, doi:10.1097/01.CCM.0000217961.75225.E9.
\288\ Seymour, C., Gesten, F., Prescott, H., Friedrich, M.,
Iwashyna, T., Phillips, G., Levy, M., ``Time to Treatment and
Mortality during Mandated Emergency Care for Sepsis,'' The New
England Journal of Medicine, 2017, vol. 376(23), pp. 2235-2244,
doi:10.1056/NEJMoa1703058.
\289\ Paul, M., Shani, V., Muchtar, E., Kariv, G., Robenshtok,
E., & Leibovici, L., ``Systematic Review and Meta-Analysis of the
Efficacy of Appropriate Empiric Antibiotic Therapy for Sepsis,''
Antimicrobial Agents and Chemotherapy, 2010, vol. 54(11), pp. 4851-
4863.
---------------------------------------------------------------------------
In the form of supplementary information, the applicant stated that
the use of the T2Bacteria[supreg] Panel covers 5 species, which account
for 50 percent to 70 percent of all blood stream infections, depending
on local epidemiology. According to the applicant, the remaining 30
percent to 50 percent of patients would continue to need standard-of-
care blood cultures for species identification. Based on all of the
previous discussions, the applicant believed that the
T2Bacteria[supreg] Test Panel represents a substantial clinical
improvement over existing technologies.
In the proposed rule, we stated that we have the following concerns
regarding whether the T2Bacteria[supreg] Panel meets the substantial
clinical improvement criterion. First, we stated that we were not
certain that the applicant had provided sufficient evidence to
demonstrate that the early identification without antibiotic
susceptibility provided by the use of the T2 Bacteria[supreg] Panel is
enough to prevent unnecessary empiric therapy because specific
identification and antibiotic susceptibilities may still be required by
blood cultures to adequately treat sepsis. For instance, if an on-panel
bacteria were identified it remains possible that this species could be
resistant to the standard-of-care treatment for such bacteria used in a
hospital. In addition, we stated that we believe that not only is it
possible for an identified species to be resistant to typical empiric
therapy, therefore diminishing the utility of its early identification,
it also is possible for off-panel organisms to be present and also not
be affected by species-targeted empiric treatment. The applicant
provided supplemental information in which it stated that, consistent
with its labeling, the use of the T2Bacteria[supreg] Test Panel would
not replace blood cultures for specific organisms. Given this
information, we stated that we were concerned that the use of the
T2Bacteria[supreg] Panel may not be a substantial clinical improvement
over standard-of-care blood cultures, the existing comparator.
Second, the applicant provided research and analyses which suggest
that the use of the T2Bacteria[supreg] Test Panel may lead to decreased
hospital lengths-of-stay, and decreased mortality. Specifically, these
analyses and articles show that there is a possibility for a correlated
relationship between the T2Bacteria[supreg] Panel's time to species ID
and these identified outcomes. The applicant addressed this issue in a
qualitative manuscript analysis involving identification of potential
impacts of the T2Bacteria[supreg] Test Panel.\290\ In the proposed
rule, we stated that we recognized that this qualitative analysis is
informative, but we were concerned that the low number of cases (under
10) may limit generalizability of these results. Given this
information, we stated that we were concerned that in lieu of direct
testing, these suggestive findings may not show a causative
relationship.
---------------------------------------------------------------------------
\290\ Voigt, C., Silbert, S., Widen, R., Marturano, J., Lowery,
T., Ashcraft, D., & Pankey, G., ``The T2Bacteria assay is a
sensitive and rapid detector of bacteremia that can be initiated in
the emergency department and has potential to favorably influence
subsequent therapy,'' Journal of Emergency Medical Review, pp. 1-30.
---------------------------------------------------------------------------
Third, we stated that we were concerned that in all of the studies
provided, the comparator for the T2Bacteria[supreg] Panel is a single
blood culture draw. It is well established that blood culture
sensitivity and specificity increase with repeat blood draws. According
to research provided by the applicant, a single set of blood cultures
should not be drawn, but rather surveillance blood cultures, involving
multiple draws over time, should be practiced.\291\ Therefore, in the
proposed rule, we stated that we believed initial blood cultures
followed by repeated blood draws would have been a better comparator.
Furthermore, we stated that we believed an even stronger comparator for
the T2Bacteria[supreg] Test Panel would be other DNA based tests, such
as polymerase chain reaction (PCR), which also utilize DNA to identify
bacterial infections.
---------------------------------------------------------------------------
\291\ Wilson, M., Mitchell, M., Morris, A., Murray, P., Reimer,
L., Reller, L. B., Welch, D., ``Prinicples and Procedures for Blood
Cultures; Approved Guildeline,'' Clinical and Laboratory Standards
Institute, 2007.
---------------------------------------------------------------------------
Ultimately, we stated that we were concerned that the use of the
T2Bacteria[supreg] Test Panel may not alter the clinical course of
treatment. We stated that we believed that the variable sensitivity and
specificity for the T2Bacteria[supreg] Panel may be of concern if these
results do not compare favorably to other available DNA tests. We
stated that while some of the false positives in the pivotal trial were
explained by reagent contamination (43 of the 63 false positives),\292\
the high false positive rate seen in the applicant's literature, (for
example, 13 of 32 positives (40.6 percent),\293\ 58 of 146 positives
(39.7 percent),\294\ and a potential 20 of 63 (31.7 percent) from the
pivotal trial) may result in unnecessary treatment of patients.
Furthermore, we stated that use of a contrived arm in the pivotal trial
and low overall incidence of these five specific sepsis-causing
organisms may make it difficult to determine a substantial clinical
improvement in the complex clinical setting. Lastly, we stated that it
seemed that blood cultures may still be necessary to identify species
susceptibility because the T2Bacteria[supreg] Test Panel does not
identify susceptibility and subsequent treatment based upon its results
will still require empiric treatment. We stated that if these points
are true, then the inferred decreased hospital lengths-of-stay,
decreased mortality, and better clinical outcomes may not be achieved
with the use of the T2Bacteria[supreg] Test Panel.
---------------------------------------------------------------------------
\292\ T2 Biosystems, Inc., ``T2Bacteria[supreg] Panel for use on
the T2Dx[supreg] Instrument, 510(k) summary,'' Lexington, 2018.
\293\ De Angelis, G., Posteraro, B., Dr Carolis, E.,
Menchinelli, G., Franceschi, F., Tumbarello, M., Sanguinetti, M.,
``T2Bacteria magnetic resonance assay for the rapid detection of
ESKAPEc pathogens directly in whole blood,'' Journal of
Antimicrobial Chemotherapy, 2018, vol. 73, pp. iv20-iv26,
doi:10.1093/jac/dky049.
\294\ Nguyen, M. H., Clancy, C., Pasculle, A. W., Pappas, P.,
Alangaden, G., Pankey, G., Mylonakis, E., ``Clinical performance of
the T2Bacteria panel for diagnosis bloodstream infections due to
five common bacterial pathogens,'' Manuscript for submission.
---------------------------------------------------------------------------
We invited public comments on whether the T2Bacteria[supreg] Test
Panel technology meets the substantial clinical improvement criterion,
including with respect to the specific concerns we have raised.
Comment: Several commenters responded to our concern that early
identification without antibiotic susceptibility of a bacteria may not
be enough to prevent unnecessary empiric therapy. These commenters
stated that the T2Bacteria Test Panel is a favorable complement to
blood cultures that can
[[Page 42287]]
rapidly identify sick patients given the limitations of the current
standard of care, with a commenter stating that the Test Panel should
not be considered a comparator to blood cultures.
A commenter stated that even without susceptibility results the
T2Bacteria Test Panel enables the tailoring of therapy faster than any
other technology, especially in patients known to be infected but with
negative blood cultures. A second commenter stated that the Test Panel
has the potential to impact both skin and urinary tract infections
without the need for susceptibility testing. The commenter stated that
a negative test result for patients with cellulitis could provide
strong evidence against the need for vancomycin in certain patients and
could also potentially facilitate the de-escalation of treatment. The
commenter added as an example that in urinary tract infections which
are primarily caused by E. coli and K. pneumonia, a positive test along
with an institutional antibiogram can help shape therapy, while a
negative for P. aeruginosa can lead to the reduced use of a key driver
of antimicrobial resistance.
The applicant submitted a comment stating that the vast majority of
bacteremia episodes are correctly treated after a positive species
identification 295 296 297 and physicians acknowledge the
value of species ID without susceptibility.\298\ The applicant
acknowledged that the T2Bacteria Test Panel is not a replacement for
blood cultures but asserted that a diagnostic does not need to replace
another to improve patient outcomes. According to the applicant,
depending on the patient population and hospital ward, the T2Bacteria
Panel will cover 50 to 70 percent of all bacteremia, including 90
percent of bacteremia by ESKAPE pathogens that are at particularly high
risk of resisting broad spectrum antibiotics and could benefit from a
species-directed change in therapy.299 300 301 302 303 The
applicant further noted that with a mean time difference between blood
cultures and T2Bacteria Test Panel species identification of 77.2
hours,\304\ clinicians could escalate or de-escalate therapy based on
species ID 3 days in advance of the current standard of care. Lastly
the applicant stated that a recent and independent economic analysis of
direct-from-sample molecular diagnostic assays in an emergency
department showed cost savings with technologies similar to the
T2Bacteria Panel.\305\
---------------------------------------------------------------------------
\295\ Doern GV, Vautour R, Gaudet M, Levy B. Clinical impact of
rapid in vitro susceptibility testing and bacterial identification.
J Clin Microbiol. 1994;32(7):1757-62.
\296\ Byl B, Clevenbergh P, Jacobs F, et al. Impact of
infectious diseases specialists and microbiological data on the
appropriateness of antimicrobial therapy for bacteremia. Clin Infect
Dis. 1999;29(1):60-6; discussion 7-8. Epub 1999/08/05.
\297\ Kerremans JJ, Verbrugh HA, Vos MC. Frequency of
microbiologically correct antibiotic therapy increased by infectious
disease consultations and microbiological results. J Clin Microbiol.
2012;50(6):2066-8. Epub 2012/03/17.
\298\ She RC, Alrabaa S, Lee SH, Norvell M, Wilson A, Petti CA.
Survey of physicians' perspectives and knowledge about diagnostic
tests for bloodstream infections. PLoS One. 2015;10(3):e0121493.
\299\ Karlowsky JA, Jones ME, Draghi DC, Thornsberry C, Sahm DF,
Volturo GA. Prevalence and antimicrobial susceptibilities of
bacteria isolated from blood cultures of hospitalized patients in
the United States in 2002. Ann Clin Microbiol Antimicrob. 2004;3:7.
Epub 2004/05/12.
\300\ Kumar A, Ellis P, Arabi Y, et al. Initiation of
inappropriate antimicrobial therapy results in a fivefold reduction
of survival in human septic shock. Chest. 2009;136(5):1237-48.
\301\ Boucher HW, Talbot GH, Bradley JS, et al. Bad bugs, no
drugs: no ESKAPE! An update from the Infectious Diseases Society of
America. Clin Infect Dis. 2009;48(1):1-12. Epub 2008/11/28.
\302\ Karlowsky JA, Jones ME, Draghi DC, Thornsberry C, Sahm DF,
Volturo GA. Prevalence and antimicrobial susceptibilities of
bacteria isolated from blood cultures of hospitalized patients in
the United States in 2002. Ann Clin Microbiol Antimicrob. 2004;3:7.
Epub 2004/05/12.
\303\ Kumar A, Ellis P, Arabi Y, et al. Initiation of
inappropriate antimicrobial therapy results in a fivefold reduction
of survival in human septic shock. Chest. 2009;136(5):1237-48.
\304\ Nguyen MH, Clancy CJ, Pasculle AW, et al. Performance of
the T2Bacteria Panel for Diagnosing Bloodstream Infections: A
Diagnostic Accuracy Study. Ann Intern Med. 2019. Epub 2019/05/15.
\305\ Zacharioudakis IM, Zervou FN, Shehadeh F, Mylonakis E.
Cost-effectiveness of molecular diagnostic assays for the therapy of
severe sepsis and septic shock in the emergency department. PLoS
One. 2019;14(5):e0217508. Epub 2019/05/28.
---------------------------------------------------------------------------
Response: We appreciate the commenters' input and the applicant's
response, including the additional information provided by the
applicant and commenter in regards to the potential for early species
identification to impact care provided by physicians.
Comment: Several commenters provided comments in response to our
concern that the T2Bacteria Test Panel may not lead to decreased
hospital lengths-of-stay and mortality due to a lack of supportive
data. A commenter stated that the panel obviates the need for waiting
for cells to grow as clinicians still face the challenge of selecting
therapy while waiting for a positive blood culture, and that a major
predictor of mortality in sepsis and septic shock is time to
appropriate therapy. The commenter added that the T2Bacteria Test Panel
helps place patients on appropriate therapy earlier than previously
possible, leading to faster resolution and shorter lengths of stay.
The applicant reiterated results from an observational study
summarized in the proposed rule in which 70 percent of patients with
positive results from the T2Bacteria Test Panel may have realized
benefits in their care. The applicant stated that a meta-analysis of 70
studies found the proportion of patients not on appropriate empiric
antibiotic therapy was found to be 46.5 percent.\306\ The applicant
asserted, given these observations, that the T2Bacteria Panel has
potential to substantially reduce the proportion of patients on
inappropriate therapy, which for a significant proportion of patients
will reduce unnecessary use of antibiotics and time to effective
therapy. The applicant stated that to date a total of 125 patients in
seven studies have been found to benefit from the T2Bacteria Test
Panel, with 28.6 percent of patients benefitting after a T2Bacteria
positive result, 53.7 percent benefitting after a T2Bacteria negative
result, and 41.8 percent of patients benefitting overall. Finally, the
applicant emphasized that the T2Bacteria Test Panel was cleared by the
FDA less than one year ago and interventional studies are ongoing.
---------------------------------------------------------------------------
\306\ Paul M, Shani V, Muchtar E, Kariv G, Robenshtok E,
Leibovici L. Systematic review and meta-analysis of the efficacy of
appropriate empiric antibiotic therapy for sepsis. Antimicrob Agents
Chemother. 2010;54(11):4851-63. Epub 2010/08/25.
---------------------------------------------------------------------------
A commenter stated that they collaborated with T2 Biosystems in the
study of the T2Bacteria Test panel on patients with leukemia and those
undergoing hematopoietic cell transplantation. The commenter stated
that among 84 patients, 4.8 percent and 13.1 percent were positive for
an infection as identified by blood cultures and the T2Bacteria Test
Panel respectively. Of seven patients, five had organisms detected that
would have altered antibacterial therapy. The commenter added that the
median time to detection for the T2Bacteria Test Panel as compared to
blood cultures was 3.7 hours as compared to 12.5 hours respectively.
Response: We thank both commenter and applicant for their input,
and appreciate the additional information regarding the correlation
between T2Bacteria Test Panel, hospital length-of-stay, and mortality.
Comment: Regarding our concern that the single blood culture draw
used in the applicant's pivotal trial may be a poor comparator to the
T2Bacteria Test Panel in light of the well-established, increasing
sensitivity and specificity involved in repeated blood draws, a
commenter stated that a major advantage of the T2Bacteria Test Panel is
the ability to potentially obviate multiple blood draws for blood
culture. The commenter added that since the
[[Page 42288]]
T2Bacteria Test Panel is the only FDA cleared direct-from-blood test
for bacteremia it is well positioned to have a major impact on the
clinical workflow.
The applicant stated since no other direct-from-blood, culture-
independent DNA based tests are FDA cleared, they were required to use
blood cultures as a comparator. The applicant maintained that the
purpose of the comparator in the prospective arm of the T2Bacteria
pivotal study was to demonstrate that the T2Bacteria assay can detect
clinical infections. The applicant also maintained that comparator
selection for an FDA diagnostic accuracy study has no impact on the
clinical utility of the T2Bacteria Panel, as clinical impact analyses
evaluate clinical diagnoses, patient outcomes, and the timing of
effective antibiotic therapy. Finally, the applicant agreed with our
statement in the proposed rule that repeat blood draws are the standard
of care; however, the applicant stated that they also present a problem
for comparative analyses. Per the applicant, bacteria may enter and
exit the bloodstream for short durations over time during the course of
disease and effective antibiotics can have a strong influence on the
ability of bacteria to grow in culture. According to the applicant, by
using repeat blood draws as the comparator, the applicant would record
an inflated number of apparent false negatives from the effects of
antibiotics and transient bacteremia.
Response: We thank the commenter and the applicant for their input.
We appreciate the additional information regarding the use of repeat
blood draws as a comparator to the T2Bacteria Test Panel.
Comment: In response to CMS' concern that the use of the T2Bacteria
Test Panel may not alter the clinical course of treatment, the
applicant stated that there are two dimensions to this concern, the
impact on therapy escalations and de-escalations. First the applicant
noted the T2Bacteria Test Panel has a specificity of 96 percent and
therefore false positives would raise unnecessary treatment by 1 to 2
percent. The applicant added that this increase represents a worst case
estimate because it assumes blind adherence to the T2Bacteria Panel
result, with no consideration of the clinical course of the patient.
Second, the applicant stated that the increase in unnecessary
treatment from false positive results ignores the potential for de-
escalation. Per the applicant, within the context of the clinical
course, a negative T2 Bacteria result could be an opportunity to reduce
unnecessary antibiotic use, particularly due to a 99.7 percent negative
predictive value. For example, vancomycin is frequently prescribed
empirically; reported vancomycin empiric therapy rates include 23
percent \307\, 54 percent \308\, 65 percent \309\, and 67 percent
\310\. The applicant stated that if clinicians de-escalated vancomycin
based on clinical indicators and a negative T2Bacteria result, a major
reduction in vancomycin administration could be realized, which would
likely more than compensate for the additional unnecessary therapy from
the panel.
---------------------------------------------------------------------------
\307\ Roustit M, Francois P, Sellier E, et al. Evaluation of
glycopeptide prescription and therapeutic drug monitoring at a
university hospital. Scand J Infect Dis. 2010;42(3):177-84. Epub
2009/12/17.
\308\ Logsdon BA, Lee KR, Luedtke G, Barrett FF. Evaluation of
vancomycin use in a pediatric teaching hospital based on CDC
criteria. Infect Control Hosp Epidemiol. 1997;18(11):780-2. Epub
1997/12/16.
\309\ Kim NH, Koo HL, Choe PG, et al. Inappropriate continued
empirical vancomycin use in a hospital with a high prevalence of
methicillin-resistant Staphylococcus aureus. Antimicrob Agents
Chemother. 2015;59(2):811-7. Epub 2014/11/19.
\310\ Junior MS, Correa L, Marra AR, Camargo LF, Pereira CA.
Analysis of vancomycin use and associated risk factors in a
university teaching hospital: a prospective cohort study. BMC Infect
Dis. 2007;7:88. Epub 2007/08/07.
---------------------------------------------------------------------------
A commenter stated that the ability to know if a patient is
infected with an ESKAPE pathogen within three to five hours of a blood
draw is a major clinical advantage. They added that the test will
reduce unnecessary use of antibiotics, save hospitals money, and save
lives. When addressing the concern for false positives, the commenter
stated that the likelihood of infection is significantly higher with a
T2Bacteria positive than without. They added that the current overuse
of antibiotics is driven by a lack of information for time-critical
patients and that with the T2Bacteria Test Panel this issue is
addressed.
Response: We appreciate the commenter's and applicant's input
regarding the potential of the T2Bacteria Test Panel to alter the
clinical workflow of treating infections and impact on antibiotic
resistance.
After consideration of the public comments we received, we agree
that the T2Bacteria Test Panel represents a substantial clinical
improvement over existing technologies because it reduces the
proportion of patients on inappropriate therapy, thus reducing the rate
of subsequent diagnostic or therapeutic intervention as well as length
of stay and mortality rates caused by sepsis causing bacterial
infections. In summary, we have determined that the T2Bacteria test
panel meets all of the criteria for approval for new technology add-on
payments. Therefore, we are approving new technology add-on payments
for the T2Bacteria test panel for FY 2020. Cases involving the use of
the T2Bacteria test panel that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure code XXE5XM5. In
its application, the applicant estimated that the cost of the
T2Bacteria test panel is $150. Under Sec. 412.88(a)(2) (revised as
discussed in this final rule), we limit new technology add-on payments
to the lesser of 65 percent of the average cost of the technology, or
65 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 a case
involving the use of the T2Bacteria test panel is $97.50 for FY 2020.
6. Request for Information on the New Technology Add-On Payment
Substantial Clinical Improvement Criterion
Under the Hospital Inpatient Prospective Payment System (IPPS), CMS
has established policies to provide additional payment for new medical
services and technologies. Similarly, under the Hospital Outpatient
Prospective Payment System (OPPS), CMS has established policies to
provide separate payment for innovative medical devices, drugs and
biologicals. Sections 1886(d)(5)(K) and (L) of the Act require the
Secretary to establish a mechanism to recognize the costs of new
medical services and technologies under the IPPS, and section
1833(t)(6) of the Act requires the Secretary to provide an additional
payment amount, known as a transitional pass-through payment, for the
additional costs of innovative medical devices, drugs, and biologicals
under the OPPS.
Under the IPPS, the regulations at Sec. 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. Under this third criterion, Sec. 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 (we refer readers
to the September 7, 2001 final rule for a more detailed discussion
[[Page 42289]]
of this criterion (66 FR 46902)). For more background on add-on
payments for new medical services and technologies under the IPPS, we
refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48552).
Similar regulations exists for the OPPS; we refer interested readers to
the FY 2020 IPPS/LTCH PPS proposed rule discussion of those regulations
(84 FR 19367).
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19368), we stated
that we understood that greater clarity regarding what would
substantiate the requirements of the substantial clinical improvement
criterion would help the public, including innovators, better
understand how CMS evaluates new technology applications for add-on
payments and provide greater predictability about which applications
will meet the criterion for substantial clinical improvement.
Therefore, in the proposed rule, we announced that we were considering
potential revisions to the substantial clinical improvement criteria
under the IPPS new technology add-on payment policy, and the OPPS
transitional pass-through payment policy for devices, and invited
public comments on the type of additional detail and guidance that the
public and applicants for new technology add-on payments would find
useful. The request for public comments was intended to be broad in
scope and provide a foundation for potential rulemaking in future
years. We refer readers to the FY 2020 IPPS/LTCH PPS proposed rule for
additional detail regarding this request for public comments (84 FR
19367 through 19369).
CMS appreciates the many comments received in response to our
request for information on longer term changes to the substantial
clinic improvement criteria. CMS remains committed to helping ensure
that Medicare beneficiaries have access to potentially life-saving
diagnostics and therapies that improve beneficiary health outcomes. The
comments received from the public will help us achieve these goals. In
addition to the policies that we are finalizing in this FY 2020 final
rule with respect to new medical services and technologies, we intend
to continue to review the comments received in response to our Request
for Information in order to continue our work in this area and inform
our future rulemaking.
7. Revisions and Clarifications to the New Technology Add-On Payment
Substantial Clinical Improvement Criterion Under the IPPS
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19369) we also
announced that we were considering adopting, in the FY 2020 IPPS/LTCH
PPS final rule, the following potential regulatory changes to the
substantial clinical improvement criteria for applications received
beginning in FY 2020 for IPPS (that is, for FY 2021 and subsequent new
technology add-on payment) and beginning in CY 2020 for OPPS, after
consideration of the public comments we receive in response to the
proposed rule. We also invited public comments on whether any or all of
these potential regulatory changes might be more appropriate as changes
in guidance rather than or in addition to changes to our regulations.
Adopting a policy in regulation or sub-regulatory guidance
that explicitly specifies that the requirement for substantial clinical
improvement can be met if the applicant demonstrates that new
technology would be broadly adopted among applicable providers and
patients. A broad adoption criterion would reflect the choices of
patients and providers, and thus the marketplace, in determining
whether a technology represents a substantial clinical improvement.
This patient-centered approach would acknowledge that patients and
providers can together determine the potential for substantial clinical
improvement on an individual basis. As part of the policy being
considered, we would add a provision at Sec. 412.87(b)(1) and Sec.
419.66(c)(2) stating that ``substantially improves'' means, inter alia,
broad adoption by applicable providers and patients. We invited public
comments on whether, if such a provision is finalized, it should
specify that a ``majority'' is the appropriate way to further define
and specify ``broad adoption'', or if some other measure of ``broad''
(for example, more than the current standard-of-care, more than a
particular percentage) is more appropriate. Furthermore, we invited
public comments on whether to further specify that ``broad adoption''
is in the context of applicable providers and patients for the
technology, and does not mean broadly adopted across the entire IPPS or
OPPS. We stated that we were interested in whether commenters have
particular suggestions regarding how, in implementing such a provision,
CMS could provide other helpful regulatory clarification or sub-
regulatory guidance regarding how ``broad adoption'' could be measured
and demonstrated prospectively as a basis for substantial clinical
improvement. We stated that if adopted, such a policy would establish,
by regulation, predictability and clarity regarding the meaning and
application of substantial clinical improvement by providing a specific
and clear path to one way substantial clinical improvement can be
established.
Adopting in regulations or through sub-regulatory guidance
a definition that the term ``substantially improves'' means, inter
alia, that the new technology has demonstrated positive clinical
outcomes that are different from existing technologies. As part of the
policy being considered, we would specify that the term ``improves''
can always be met by comparison to existing technology. Then, we would
further specify that such improvement may always be demonstrated by
reference and comparison to diagnosis or treatment achieved by existing
technology. We stated that this would provide a standard for innovators
that is predictable and based on comparison to outcomes from existing
technologies, and would reflect that an evaluation of ``improvement''
involves a comparison relative to existing technology. We stated that
if adopted, such a policy, would establish, by regulation or through
sub-regulatory guidance, predictability and clarity regarding the
meaning and application of substantial clinical improvement by
clarifying how existing and new technologies are compared.
Adopting a policy in regulation or through sub-regulatory
guidance that specifies that ``substantially improves'' can be met
through real-world data and evidence, including a non-exhaustive list
of such data and evidence, but that such evidence is not a requirement.
Real-world evidence reflects usage in everyday settings outside of a
clinical trial, which is the majority of care delivered in the United
States. For example, between 3 percent and 5 percent of patients with
cancer are enrolled in a clinical trial.\311\
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\311\ https://ascopubs.org/doi/full/10.1200/jop.0922001.
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As part of the policy being considered, the regulation or sub-
regulatory guidance would list the kinds of data and evidence and
particular findings that CMS would consider in determining whether the
technology meets the substantial clinical improvement criterion and
that such kinds of data can be sufficient to meet that standard. Then,
we would provide a non-exhaustive list of such kinds of data and
findings, including: A decreased mortality rate; a reduction in length
of stay; a reduced recovery time; a reduced rate of at least one
significant complication; a decreased rate of at least one subsequent
diagnostic or therapeutic intervention; a reduction in at least one
clinically significant adverse
[[Page 42290]]
event; a decreased number of future hospitalizations or physician
visits; a more rapid beneficial resolution of the disease process
treatment; an improvement in one or more activities of daily living;
or, an improved quality of life. We stated that outcomes relating to
quality of life, length of stay, and activities of daily living may
reflect meaningful endpoints not often captured by clinical trials or
other pivotal trials designed primarily for regulatory purposes. We
invited public comments on whether we should adopt such a policy and
list, and if so, what the list should contain. We also invited comments
on whether, as a general matter, data exists on patients' experience
with new medical devices outside of the clinician's office, on the
effects of a treatment on patients' activities of daily living, or on
any of the other areas as previously listed. We stated that these
comments would at least inform our adoption of a policy in regulations
or sub-regulatory guidance. We stated that if adopted, such a policy,
would establish, by regulation or guidance, predictability and clarity
regarding the meaning and application of substantial clinical
improvement by providing a specific and clear path to one way
substantial clinical improvement can be established.
To address the impression that a peer-reviewed journal
article is required for the agency to find that a new technology meets
the requirement for substantial clinical improvement, explicitly
adopting a policy in regulations or sub-regulatory guidance that the
relevant information for purposes of a finding of substantial clinical
improvement may not require a peer-reviewed journal article. We stated
that we recognize the value of both academic and other traditional and
non-traditional emerging sources of information in determining
substantial clinical improvement. We invited public comments on
whether, in addition to making clear that a peer-reviewed journal
article is not required, types of relevant information that could be
helpful should be specified in such a regulation or guidance to include
but not be limited to other particular formats or sources of
information, such as consensus statements, white papers, patient
surveys, editorials and letters to the editor, systematic reviews,
meta-analyses, inferences from other literature or evidence, and case
studies, reports or series, in addition to randomized clinical trials,
study results, or letters from major associations, whether published or
not. We stated that if adopted, such a policy, would establish, by
regulation or guidance, predictability and clarity that the agency is
open, in every case, to all types of information in considering whether
a new technology meets the substantial clinical improvement criterion,
consistent with our current practice of not requiring any particular
type of information.
Adopting a policy in regulations or sub-regulatory
guidance that, if there is a demonstrated substantial clinical
improvement based on the use of a new medical service or technology for
any subset of beneficiaries, the substantial clinical improvement
criterion may be met regardless of the size of that subset patient
population. Substantial clinical improvement may be confounded by
comorbidities, patient factors, or other concomitant therapies which
are not readily controlled in research studies. This potential change
recognizes that subset populations may have unique needs. As part of
the policy being considered, we would include a statement in regulation
or guidance that a technology may meet the ``substantial clinical
improvement'' criterion by demonstrating a substantial improvement for
any subset of beneficiaries regardless of size. We stated that this
potential change would reflect that many medical technologies are
designed for limited subset populations. Many personalized and
precision medicine approaches aspire for ``n=1 therapy.''
We invited public comments on whether, in adopting such a policy,
we should also specify that the add-on payment would be limited to use
in that subset of patient population. If not, why not? For example, if
a new technology that treats cancer only demonstrates substantial
clinical improvement for a select subset of patients with that
diagnosis, should the additional inpatient payments for use of the new
technology be limited to only when that new technology is used in the
treatment of that select subset of Medicare beneficiaries, and, if so,
how could that subset of patient population be defined in advance, and
in what circumstances should there be an exception to any such
limitation? If such a policy were adopted, how could it be constructed
or written to not create new limitations or obstacles to innovation
that are not present in our regulations today?
We also invited public comments as to whether there are special
approaches that CMS should adopt in regulations or through sub-
regulatory guidance for new technologies that treat low-prevalence
medical conditions in which substantial clinical improvement may be
more challenging to evaluate. Specifically, we invited comment on how
to categorize and specify these conditions, including how to define
``low-prevalence'', whether CMS should adopt any of the potential
changes under consideration in this section which are not adopted more
broadly, or any special approaches suggested by commenters. We stated
that the goal is to establish, by regulation or guidance,
predictability and clarity that the substantial clinical improvement
criterion can be met, either in all cases or for cases involving low-
prevalence medical conditions, regardless of the size of the patient
population which would benefit.
Adopting a policy in regulations or sub-regulatory
guidance that specifically addresses that the substantial clinical
improvement criterion can be met without regard to the FDA pathway for
the technology. We indicated that as part of the policy being
considered, we would clarify in regulation that the notion of
``improvement'' includes situations where there is an extant technology
such as a predicate device for 510(k) purposes, and explicitly state
that the agency will not require a device to receive an FDA marketing
authorization other than a 510(k) clearance in order for the device to
be considered a substantial clinical improvement. We stated that if
adopted, the policy described here, would establish, by regulation or
guidance, predictability and clarity by clarifying that the substantial
clinical improvement criterion can be met without regard to the FDA
pathway for the technology, consistent with our current practice.
We solicited comments on the potential revisions and regulatory or
sub-regulatory changes as previously described, and also welcomed
suggestions on other information that would help us clarify and/or
modify in the FY 2020 IPPS/LTCH PPS final rule or through sub-
regulatory guidance CMS' expectations regarding substantial clinical
improvement for payments for new technologies.
Comments: With respect to the use of ``broad adoption'' in
evaluating substantial clinical improvement, some commenters urged CMS
to proceed cautiously through additional rulemaking. Some of these
comments stated that ``broad adoption'' should not be a prerequisite
for new technology add on payment eligibility. MedPAC indicated it did
not equate substantial clinical improvement with broad adoption, and
that it is not appropriate for the Medicare program to provide higher
payment for services that have not been proven to have a clinical
[[Page 42291]]
advantage over existing treatment options. MedPAC indicated that it has
written extensively about items and services provided to Medicare
beneficiaries that lack evidence of comparative clinical effectiveness,
yet are broadly used.
With respect to indicating that ``substantially improves'' means
that the new technology has demonstrated positive clinical outcomes
that are different from existing technologies, some commenters were
concerned that such a standard might restrict alternative study designs
or impose standards that exceed realistic requirements. These
commenters noted that for many novel technologies, there may be no
existing technologies that could appropriately serve as a comparator.
Some commenters indicated that such a comparison should not be a
requirement for meeting the substantial clinical improvement criterion.
If CMS decides to advance a comparison to existing technologies as a
standard for demonstrating substantial clinical improvement, these
commenters indicated that it is important to note that the comparator
should be the standard of care, which may be a procedure or no
intervention, rather than existing technology.
With respect to indicating that ``substantially improves'' can be
met through real-world data and evidence, many commenters supported the
continued development of real-world data as evidence to demonstrate
substantial clinical improvement. Some commenters indicated that would
allow applicants greater flexibility to gather evidence in support of
new technology add on payment or pass-through either in conjunction
with or as a part of their data collection for FDA approval purposes.
These commenters indicated that data registries that collect real world
data are an important part of modern product development and
monitoring. Some commenters supported a non-exhaustive list of the data
and findings, including the following: A decreased mortality rate, a
reduction in length of stay, a reduced recovery time, a reduced rate of
at least one significant complication, a decreased rate of at least one
subsequent diagnostic or therapeutic intervention, a reduction in at
least one clinically significant adverse event, a decreased number of
future hospitalizations or physician visits, a more rapid beneficial
resolution of the disease process treatment, an improvement in one or
more activities of daily living, or an improved quality of life. Some
commenters indicated that CMS should consider other outcomes or
findings that would positively impact patient care, and that one such
outcome would be anticipated greater medication adherence or
compliance. Some commenters indicated that real-world evidence should
not be required for meeting the substantial clinical improvement
criterion since it may not necessarily be available when a new
technology is first approved or cleared by the FDA. Some commenters
indicated that if CMS allows real-world evidence to be used for
demonstrating substantial clinical improvement, CMS should also
consider real-world evidence obtained from markets outside the U.S.
since U.S.-based real-world evidence may not be available. Some
commenters indicated that while in certain instances real world
evidence would be appropriate to supplement other evidence, it would
not be appropriate to only rely on the use of real world data. Some
commenters indicated that CMS should consider how the FDA and the
National Evaluation System for health Technology (NEST) consider real
world data.
With respect to indicating that the relevant information for
purposes of a finding of substantial clinical improvement may not
require a peer-reviewed journal article, many commenters supported
this. These commenters indicated that the peer-review process used for
publications in medical journals often suffers from long timelines that
are often out of the control of the new technology add on payment
applicants. These commenters indicated that these lengthy processes can
sometimes jeopardize a new technology add on payment or pass-through
application, both of which have time limits based on the newness
criterion. These commenters believed that peer-reviewed journal
articles do play an important role by having studies evaluated through
the peer-review process and through the dissemination of the
information to the medical community, but peer-review publication
should not be a requirement for submission of studies or data for new
technology add on payment or pass-through. Some commenters indicated
that CMS should accept the documents that evaluate and summarize the
clinical study data that is submitted to FDA for review as a part of
the FDA approval or clearance process. They indicated that this
information and its format are sufficient for FDA to conduct its review
and CMS should be able to evaluate the evidence in a similar manner.
These commenters indicated that CMS should explicitly state that peer-
reviewed publications are not required and that other forms of evidence
submission are acceptable for substantial clinical improvement
evaluation.
Many commenters supported an approach that if there is a
demonstrated substantial clinical improvement based on the use of a new
medical service or technology for any subset of beneficiaries, the
substantial clinical improvement criterion may be met regardless of the
size of that subset patient population. These commenters believed that
this is consistent with several of the other policies discussed in the
proposed rule, especially to allow for the submission of real-world
evidence. These commenters indicated that subgroup analysis is often a
key aspect of clinical investigation, and sometimes substantial
clinical improvements will apply to a subset of patients. The
commenters further indicated that these subsets are sometimes
populations without currently adequate treatment options for which a
new technology would be particularly beneficial. Some commenters noted
that this policy could also help incentivize the development of new
anti-infective drugs because new anti-infectives, or anti-infectives
that are investigated for new indications, are often studied for
particular subpopulations in which there are gaps among the currently
available drugs.
Response: As with the comments on longer term changes, CMS
appreciates the many comments received regarding potential revisions
and clarifications to the substantial clinical improvement criterion
beginning with applications received beginning in FY 2020 for IPPS
(that is, for FY 2021 and subsequent new technology add-on payment).
We agree with the commenters who indicated that it may be premature
to incorporate ``broad adoption'' into our evaluation of substantial
clinical improvement. However, we also believe that many of the ideas
supported by commenters are consistent with the principles underlying
our existing approach for evaluating substantial clinical improvement.
After reviewing the comments we have received, we believe it would
helpful to prospectively codify in our regulations at Sec. 412.87 the
following aspects of how we evaluate substantial clinical improvement
for purposes of new technology add-on payments under the IPPS.
First, and most importantly, the totality of the circumstances is
considered when making a determination that a new medical service or
technology represents an advance that substantially improves,
[[Page 42292]]
relative to services or technologies previously available, the
diagnosis or treatment of Medicare beneficiaries.
Second, a determination that a new medical service or technology
represents an advance that substantially improves, relative to services
or technologies previously available, the diagnosis or treatment of
Medicare beneficiaries means:
The new medical service or technology offers a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments; or
The new medical service or technology 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, and there must also be evidence
that use of the new medical service or technology to make a diagnosis
affects the management of the patient; or
The use of the new medical service or technology
significantly improves clinical outcomes relative to services or
technologies previously available as demonstrated by one or more of the
following: A reduction in at least one clinically significant adverse
event, including a reduction in mortality or a clinically significant
complication; a decreased rate of at least one subsequent diagnostic or
therapeutic intervention; a decreased number of future hospitalizations
or physician visits; a more rapid beneficial resolution of the disease
process treatment including, but not limited to, a reduced length of
stay or recovery time; an improvement in one or more activities of
daily living; an improved quality of life; or, a demonstrated greater
medication adherence or compliance; or,
The totality of the circumstances otherwise demonstrates
that the new medical service or technology substantially improves,
relative to technologies previously available, the diagnosis or
treatment of Medicare beneficiaries.
Third, evidence from the following published or unpublished
information sources from within the United States or elsewhere may be
sufficient to establish that a new medical service or technology
represents an advance that substantially improves, relative to services
or technologies previously available, the diagnosis or treatment of
Medicare beneficiaries: Clinical trials, peer reviewed journal
articles; study results; meta-analyses; consensus statements; white
papers; patient surveys; case studies; reports; systematic literature
reviews; letters from major healthcare associations; editorials and
letters to the editor; and public comments. Other appropriate
information sources may be considered. This is consistent with our
current approach, as discussed in the proposed rule, in which we accept
a wide range of data and other evidence to support the conclusion of
substantial clinical improvement.
Fourth, the medical condition diagnosed or treated by the new
medical service or technology may have a low prevalence among Medicare
beneficiaries. This is consistent with our current approach, in which
we do not require a certain prevalence among Medicare beneficiaries.
Fifth, the new medical service or technology may represent an
advance that substantially improves, relative to services or
technologies previously available, the diagnosis or treatment of a
subpopulation of patients with the medical condition diagnosed or
treated by the new medical service or technology. This is consistent
with our current approach, in which the medical service or technology
may be a substantial clinical improvement for a subpopulation of
patients.
In addition to codifying these at Sec. 412.87, we will consider
the other suggestions made by commenters along with review of the
comments received in response to our Request for Information in order
to continue our critical work in this area and inform our future
rulemaking.
8. Alternative Inpatient New Technology Add-On Payment Pathway for
Transformative New Devices
Under section 1886(d)(5)(K)(vi) of the Act, a medical service or
technology will be considered a ``new medical service or technology''
if the service or technology meets criteria established by the
Secretary after notice and an opportunity for public comment. For a
more complete discussion of the establishment of the current criteria
for the new technology add-on payment, we refer readers to the
September 7, 2001 final rule (66 FR 46913), where we finalized the
``substantial improvement'' criterion to limit new technology add-on
payments under the IPPS to those technologies that afford clear
improvements over the use of previously available technologies.
Specifically, we stated that we would evaluate a request for new
technology add-on payments against the following criteria to determine
if the new medical service or technology would represent a substantial
clinical improvement over existing technologies:
The device offers a treatment option for a patient
population unresponsive to, or ineligible for, currently available
treatments.
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 use of the device
to make a diagnosis affects the management of the patient.
Use of the device significantly improves clinical outcomes
for a patient population as compared to currently available treatments.
We also noted examples of outcomes that are frequently evaluated in
studies of medical devices. (We note our codification of certain
aspects of our evaluation of the substantial clinical improvement
criterion as discussed in section II.H.7. of this preamble.)
In the September 7, 2001 final rule (66 FR 46913), we stated that
we believed the special payments for new technology should be limited
to those new technologies that have been demonstrated to represent a
substantial improvement in caring for Medicare beneficiaries, such that
there is a clear advantage to creating a payment incentive for
physicians and hospitals to utilize the new technology. We also stated
that where such an improvement is not demonstrated, we continued to
believe the incentives of the DRG system would provide a useful balance
to the introduction of new technologies. In that regard, we also
pointed out that various new technologies introduced over the years
have been demonstrated to have been less effective than initially
believed, or in some cases even potentially harmful. We stated that we
believe that it is in the best interest of Medicare beneficiaries to
proceed very carefully with respect to the incentives created to
quickly adopt new technology.
Since 2001 when we first established the substantial clinical
improvement criterion, the FDA programs for helping to expedite the
development and review of transformative new technologies that are
intended to treat serious conditions and address unmet medical needs
(referred to as FDA's expedited programs) have continued to evolve in
tandem with advances in medical innovations and technology. In the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19371), we noted that at the
time of the development of the September 7,
[[Page 42293]]
2001 final rule, devices were the predominant new technology entering
the market and, therefore, the substantial clinical improvement
criterion was developed with innovative new devices as a focus. At the
time, the FDA had three expedited programs (Priority Review,
Accelerated Approval, and Fast Track) for drugs and biologicals and no
expedited programs for devices. Now, as described in FDA guidance
(available on the website at: https://www.fda.gov/downloads/Drugs/Guidances/UCM358301.pdf and https://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/UCM581664.pdf), there are four expedited FDA programs for drugs (the
three expedited FDA programs named above and a fourth, Breakthrough
Therapy, which was established in 2012) and one expedited FDA program
for devices, the Breakthrough Devices Program. The 21st Century Cures
Act (Cures Act) (Pub. L. 144-255) established the Breakthrough Devices
Program to expedite the development of, and provide for priority review
of, medical devices and device-led combination products that provide
for more effective treatment or diagnosis of life-threatening or
irreversibly debilitating diseases or conditions and which meet one of
the following four criteria: That represent breakthrough technologies;
for which no approved or cleared alternatives exist; that offer
significant advantages over existing approved or cleared alternatives,
including the potential, compared to existing approved alternatives, to
reduce or eliminate the need for hospitalization, improve patient
quality of life, facilitate patients' ability to manage their own care
(such as through self-directed personal assistance), or establish long-
term clinical efficiencies; or the availability of which is in the best
interest of patients.
In the proposed rule, we explained that some stakeholders over the
years have requested that new technologies that receive marketing
authorization and are part of an FDA expedited program be deemed as
representing a substantial clinical improvement for purposes of the
inpatient new technology add-on payments, even in the initial
rulemaking on this issue. We understand this request would arguably
create administrative efficiency because some stakeholders currently
view the two sets of criteria as the same, overlapping, similar, or
otherwise duplicative or unnecessary. As discussed in the September 7,
2001 final rule in which we initially adopted the requirement that a
new technology must represent a substantial clinical improvement, we
proposed to consult a Federal panel of experts in evaluating new
technology under the ``substantial improvement'' criterion. A commenter
believed the panel would be unnecessary and that CMS should
automatically deem drugs and biologicals approved by FDA that were
included in its expedited programs (which the commenter referred to as
``fast track'' processes) as new technology (66 FR 46914). We stated in
response that the panel would consider all relevant information
(including FDA expedited program approval) in making its
determinations. However, we stated that we did not envision an
automatic approval process.
Since 2001, we have continued to receive similar comments. More
recently, in response to the FY 2019 New Technology Town Hall meeting
notice (83 FR 50379) and the meeting, a commenter stated that the Food
and Drug Administration Modernization Act of 1997 authorized a category
of medical devices that are eligible for FDA Priority Review
designation (83 FR 20278). The commenter explained that, to qualify,
products must be designated by the FDA as offering the potential for
significant improvements in the diagnosis or treatment of the most
serious illnesses, including those that are life-threatening or
irreversibly debilitating. The commenter indicated that the processes
by which products meeting the statutory standard for priority review
are considered by the FDA are specified in greater detail in FDA's
Expedited Access Pathway Program, and in the 21st Century Cures Act.
The commenter believed that the criteria for FDA Priority Review
designation of devices are very similar to the substantial clinical
improvement criteria and, therefore, devices used in the inpatient
setting determined to be eligible for expedited review and approved by
the FDA should automatically be considered as meeting the substantial
clinical improvement criterion, without further consideration by CMS.
As we discussed in the proposed rule, the Administration is
committed to addressing barriers to healthcare innovation and ensuring
Medicare beneficiaries have access to critical and life-saving new
cures and technologies that improve beneficiary health outcomes. As
detailed in the President's FY 2020 Budget, HHS is pursuing several
policies that will instill greater transparency and consistency around
how Medicare covers and pays for innovative technology.
Therefore, given the FDA programs for helping to expedite the
development and review of transformative new drugs and devices that
meet expedited program criteria (that is, new drugs and devices that
treat serious or life-threatening diseases or conditions for which
there is an unmet medical need), we considered whether it would also be
appropriate to similarly facilitate access to these transformative new
technologies for Medicare beneficiaries taking into consideration that
marketing authorization (that is, Premarket Approval (PMA); 510(k)
clearance; the granting of a De Novo classification request; or
approval of a New Drug Application (NDA)) for a product that is the
subject of one of FDA's expedited programs could lead to situations
where the evidence base for demonstrating substantial clinical
improvement in accordance with CMS' current standard has not fully
developed at the time of FDA marketing authorization (that is, PMA;
510(k) clearance; the granting of a De Novo classification request; or
approval of a NDA) (as applicable). (We note a biological product can
be the subject of an expedited program as the subject of the FDA's
Biologics License Application (BLA).) We also considered whether FDA
marketing authorization of a product that is part of an FDA expedited
program is evidence that the product is sufficiently different from
existing products for purposes of newness.
After consideration of these issues, and consistent with the
Administration's commitment to addressing barriers to healthcare
innovation and ensuring Medicare beneficiaries have access to critical
and life-saving new cures and technologies that improve beneficiary
health outcomes, we concluded that it would be appropriate to develop
an alternative pathway for transformative medical devices. In
situations where a new medical device is part of the Breakthrough
Devices Program and has received FDA marketing authorization (that is,
the device has received PMA; 510(k) clearance; or the granting of a De
Novo classification request), we proposed an alternative inpatient new
technology add-on payment pathway to facilitate access to this
technology for Medicare beneficiaries (84 FR 19372).
Specifically, we proposed that, for applications received for new
technology add-on payments for FY 2021 and subsequent fiscal years, if
a medical device is part of the FDA's Breakthrough Devices Program and
received FDA marketing authorization, it would be considered new and
not substantially similar to an existing technology for purposes of the
new technology add-on payment under the
[[Page 42294]]
IPPS. In light of the criteria applied under the FDA's Breakthrough
Device Program, and because the technology may not have a sufficient
evidence base to demonstrate substantial clinical improvement at the
time of FDA marketing authorization, we also proposed that the medical
device would not need to meet the requirement under Sec. 412.87(b)(1)
that it represent an advance that substantially improves, relative to
technologies previously available, the diagnosis or treatment of
Medicare beneficiaries. We proposed to add a new paragraph (c) under
Sec. 412.87 to codify this proposed policy; existing paragraph (c)
would be redesignated as paragraph (d) and amendments would be made to
proposed redesignated paragraph (d) to reflect this proposed
alternative pathway and to make clear that a new medical device may
only be approved under Sec. 412.87(b) or proposed new Sec. 412.87(c).
Under this proposed alternative pathway, a medical device that has
received FDA marketing authorization (that is, has been approved or
cleared by, or had a De Novo classification request granted by, the
FDA) and that is part of the FDA's Breakthrough Devices Program would
need to meet the cost criterion under Sec. 412.87(b)(3), as reflected
in proposed new Sec. 412.87(c)(3), and would be considered new as
reflected in proposed Sec. 412.87(c)(2).
Given the lack of an evidence base to demonstrate substantial
clinical improvement at the time of FDA marketing authorization, we
solicited public comment on how CMS should weigh the benefits of this
proposed alternative pathway to facilitate beneficiary access to
transformative new medical devices, including the benefits of
mitigating potential delayed access to innovation and adoption, against
any potential risks, such as the risk of adverse events or negative
outcomes that might come to light later.
As discussed in the proposed rule (84 FR 19373), for the reasons
discussed in section I.O. of Appendix A to the proposed rule, we did
not propose an alternative inpatient new technology add-on payment
pathway for drugs at this time. In that section, we stated that while
we continue to work on these initiatives for drug affordability, we
believed that it was appropriate to distinguish between drugs and
devices in our consideration of a proposed policy change for
transformative new technologies (84 FR 19672).
Comment: The majority of commenters supported our proposed
alternative new technology add-on payment pathway for a new medical
device that is part of the Breakthrough Devices Program and has
received FDA marketing authorization. In general, these commenters
agreed that this policy will afford an opportunity to gather evidence
to demonstrate substantial clinical improvement while enhancing
hospital adoption, which will increase beneficiary access to new
technologies that improve health outcomes. Some of the other reasons
cited by commenters who supported this proposed policy include reduced
burden and redundancy, improved administrative efficiency, greater
transparency, predictability and certainty in the regulatory and
reimbursement processes, and consistency across federal programs,
including support of greater interagency collaboration between CMS and
FDA. In particular, some of the commenters who expressed support for
this policy indicated that they believe that the FDA's Breakthrough
Device program is designed to appropriately balance benefits to
patients with life threatening illnesses against potential risks for
devices that receive marketing authorization.
Some commenters urged CMS not to adopt this proposed alternative
new technology add-on payment pathway for certain transformative
medical devices. These commenters believe that devices that receive
market authorization through FDA's Breakthrough Device program are
unlikely to include data applicable to the Medicare beneficiary
population, and have more uncertainty of benefit than the current
evidence standard under the current new technology add-on payment
policy. As such they believe this proposed policy, if finalized, would
offer a financial incentive for the use of such transformative medical
devices without improving clinical outcomes for beneficiaries.
A few commenters, notwithstanding their general support for the
proposal, expressed uncertainty about adopting the proposed policy,
because the FDA's Breakthrough Device program is still relatively new.
These commenters recommend that CMS continue to work jointly with FDA
to understand the achievements and challenges of this program as it
progresses. A few other commenters conditionally supported the adoption
of the proposal, indicating that they believe an expansion of the
evidence standard for establishing substantial clinical improvements
could be preferable to eliminating the substantial clinical improvement
criterion for medical devices that have received FDA market
authorization and are subject to the Breakthrough Device Program. In
contrast, another commenter indicated because new technology add-on
payments result in an additional cost to the Medicare program, CMS
should ensure that clinical benefit is clearly established before
approving any technology under the new technology add-on payment
policy.
Other commenters also expressed concerns about the proposed policy.
Specifically, with respect to a medical device that receives a 510(k)
clearance, some commenters stated it would not be appropriate to
consider a product ``new and not substantially similar'' to an existing
technology when the 510(k) clearance process is based on a predicate
device and can be met by demonstrating that it is substantially
equivalent to a medical device already on the market. Most of these
same commenters, however, did support that devices that receive either
a PMA approval or for which FDA has granted a De Novo classification
request would be considered new, stating their belief that such FDA
designations indicate that such a medical device would not be
substantially similar to an existing technology.
We also received comments requesting that CMS extend or develop
similar alternative new technology add-on payment pathways for all
expedited FDA pathways (for example, Fast Track, Accelerated Approval,
Breakthrough Therapy, and Priority Review, including Qualified
Infectious Disease Products (QIDPs)), as well as other categories of
technologies such as those with a Regenerative Medicine Advanced
Therapy (RMAT) designation, devices granted a Humanitarian Device
Exemption (HDE), and those that do not currently fit into existing CMS
benefit categories, such as Software as a Medical Device (SaMD). In
particular, many of these commenters explicitly urged CMS to expand the
proposed policy to include drugs that have also received Breakthrough
Therapy designation from the FDA, arguing that the rationale to and
CMS's stated goal of the proposal to facilitate access to technology
for Medicare beneficiaries applies equally to all technologies that
receive market authorization under an expedited FDA pathway. Some of
these commenters stated their belief that contrary to CMS's
assumptions, the current drug-pricing system does not provide generous
incentives for innovation, and argued that instead costly innovative
drugs, which are not separately or adequately reimbursed in inpatient
settings, can lead to a significant barrier to access for new treatment
options for beneficiaries. Other commenters argued that CMS
[[Page 42295]]
should have a consistent new technology add-on payment policy for all
``breakthrough'' technologies, that is, devices and drugs that have
received FDA marketing authorization and are subject to an expedited
FDA program. These commenters indicated that there is no reason for CMS
to adopt inconsistent reimbursement policies for technologies that are
market authorized as the subject of an expedited FDA program just
because one technology is a device and the other is a drug. They
believe the data and requirements needed to support a Breakthrough
Therapy designation are as sufficient for new technology add-on payment
purposes for drugs as the Breakthrough Device Program requirements are
for devices. In advocating that CMS consider expanding the proposal to
include drugs that receive market authorization as part of an expedited
FDA program, it was suggested that CMS could also consider including
additional criteria to qualify under an alternative pathway; for
example, if a drug improves patient quality of life, produces long-term
clinical treatment efficiencies, or such other criteria as specified by
the Secretary.
Several commenters urged CMS to extend the proposed alternative new
technology add-on payment pathway to a product that is designated by
the FDA as a QIDP. The commenters expressed significant concerns
related to the public health crisis represented by antimicrobial
resistance, which occurs when germs like bacteria and fungi develop the
ability to resist drugs designed to kill them. The Federal Food, Drug,
and Cosmetic Act defines QIDPs as ``an antibacterial or antifungal drug
for human use intended to treat serious or life-threatening infections,
including those caused by (1) an antibacterial or antifungal resistant
pathogen, including novel or emerging infectious pathogens; or (2)
qualifying pathogens listed by the Secretary . . . .'' \312\ These
commenters asserted that timely access to appropriate antimicrobial
therapy is key to clinical success and improved patient outcomes. They
further maintained that resistant infections result in higher costs to
healthcare systems, including Medicare, because patients experience
illnesses of a longer duration, require additional tests, and require
the use of more expensive drugs and related services. These commenters
believed extending the proposed alternative new technology add-on
payment pathway to QIDPs would be one way to address regulatory
barriers and payment disincentives to innovation related to
antimicrobial resistance, while improving Medicare beneficiaries'
access to new treatments that improve health outcomes and save lives.
---------------------------------------------------------------------------
\312\ 21 U.S.C. 355f(g)(l)-(2).
---------------------------------------------------------------------------
Some commenters who supported the proposal also encouraged CMS to
consider other changes to the new technology add-on payment policy,
such as further revising and clarifying the substantial clinical
improvement criteria (as also discussed in the proposed rule), updating
or eliminating the ``substantial similarity'' criteria (stating those
criteria are not required by statute), and adopting a policy to
automatically assess new MS-DRG creation or assignment for new
technologies when their new technology add-on payment status expires.
Lastly, several commenters that supported this proposal also
recommended that CMS likewise expedite beneficiary access to
``breakthrough'' devices in the outpatient hospital setting by adopting
a similar pathway to obtain OPPS pass-through device status.
Response: We appreciate the commenters' support of the proposed
alternative new technology add-on payment pathway for a new medical
device that is part of the Breakthrough Devices Program and has
received FDA marketing authorization. As discussed in the proposed rule
and as previously discussed in this final rule, after considering that
the evidence base to demonstrate substantial clinical improvement may
not be fully developed at the time of FDA marketing authorization, we
proposed an alternative inpatient new technology add on payment pathway
to facilitate access for Medicare beneficiaries to new medical devices
that are part of the Breakthrough Devices Program and have received FDA
marketing authorization. It is for this reason that we believe that
with respect to these technologies, even though, as some commenters
assert, there may be less certainty of clinical benefit or data
representing the Medicare beneficiary population as compared to the
evidence standard for substantial clinical improvement under the
current new technology add-on payment policy, we believe the benefits
of providing early access to critical and life-saving new cures and
technologies that improve beneficiary health outcomes support
establishing this alternative pathway. While we appreciate the
commenter's concern regarding additional Medicare program expenditures,
for the previously stated reasons, we believe it is appropriate to
facilitate beneficiary access to transformative new medical devices by
establishing an alternative pathway for a device that receives FDA
marketing authorization and is subject to the FDA's Breakthrough
Devices Program that does not require substantial clinical improvement
be demonstrated as a condition of approval because the evidence base to
demonstrate substantial clinical improvement may not be fully developed
at the time of FDA marketing authorization for such devices.
We agree with commenters that this policy supports greater
interagency collaboration between CMS and FDA, and CMS is committed to
continue to work collaboratively with the FDA as the FDA's expedited
programs, including the Breakthrough Devices Program, evolve. We refer
commenters that conditionally supported the adoption of the proposed
alternative pathway, but preferred that the evidence standard for
establishing substantial clinical improvement be expanded, to the
discussion of substantial clinical improvement in section II.H.7. of
this final rule. With respect to commenters that expressed concern
regarding the ``newness'' criterion for a medical device that receives
a 510(k) clearance under the proposed alternative new technology add-on
payment pathway for transformative medical devices, we do not agree
that such a product cannot be ``new and not substantially similar'' to
an existing technology for purposes of the new technology add-on
payment policy. FDA's clearance of a 510(k) is based on a determination
that the device at issue is ``substantially equivalent'' to a legally
marketed (predicate) device, which is not subject to PMA. As we have
discussed in prior rulemakings, under our current policy, a new
technology, including a device that receives a 510k clearance, can be
considered ``new'' for purposes of the new technology add-on payment if
it does not meet at least one of the three substantial similarity
criteria (and therefore would not be considered substantially similar
to an existing technology). (For a detailed discussion of the criteria
for substantial similarity, we refer readers to the FY 2006 IPPS final
rule (70 FR 47351 through 47352) and the FY 2010 IPPS/LTCH PPS final
rule (74 FR 43813 through 43814).) Therefore, we believe it is
appropriate to include a device that has received PMA, 510(k)
clearance, or has been granted a De Novo classification request for FDA
marketing authorization under the alternative inpatient new technology
add-on payment pathway for transformative new devices.
In response to comments that requested that the proposed
alternative inpatient new technology add-on
[[Page 42296]]
payment pathway be extended to, or an alternative pathway similarly be
created for, drugs and biologicals (that is, Priority Review,
Accelerated Approval, Fast Track, and Breakthrough Therapy), we
recognize that the goal of facilitating access to new technologies for
Medicare beneficiaries could also apply to these designations. However,
as we discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19373
and 19672), we believed that making this policy applicable to drugs
would further incentives for innovation but without decreasing cost, a
key priority of this Administration. As we also stated in the proposed
rule, while we continue to work on initiatives for drug affordability,
we believe that it is appropriate to distinguish between drugs and
devices in our consideration of a proposed policy change for
transformative new technologies, and therefore we disagree with
commenters that there is no reason to adopt different new technology
add-on payment policies for devices and drugs that receive market
authorization and are subject to an expedited FDA pathway. We continue
to believe that it is appropriate to distinguish between drugs and
devices in our consideration of a policy change for transformative new
technologies while we continue to work on these initiatives for drug
affordability for the reasons stated in the proposed rule. Therefore we
are not applying this alternative inpatient new technology add-on
payment pathway in situations where a new drug designated for or
approved under an FDA expedited program for drugs has received FDA
marketing authorization. We will continue to consider this issue for
future rulemaking, including the suggestion to develop additional
criteria to qualify under an alternative pathway for technologies that
receive FDA marketing authorization under or are designated for an FDA
expedited program for drugs.
While we are not applying this alternative inpatient new technology
add-on payment pathway to new drugs more generally, we understand and
share commenters' concerns related to antimicrobial resistance and its
serious impact on Medicare beneficiaries and public health overall. The
Center for Disease Control and Prevention (CDC) describes antimicrobial
resistance as ``one of the biggest public health challenges of our
time.'' \313\ We believe Medicare beneficiaries may be
disproportionately impacted by antimicrobial resistance due in large
part to the elderly's unique vulnerability to drug-resistant infections
(e.g., due to age-related and/or disease-related immunosuppression,
greater pathogen exposure from via catheter use). Medicare
beneficiaries account for the majority of cases of both new diagnoses
of antimicrobial resistant infections (approximately 62 percent) and
the resulting deaths (approximately 65 percent) in hospitals in the
United States.\314\ Antimicrobial resistance results in a substantial
number of additional hospital days for Medicare beneficiaries
(estimated to be more than 600,000 additional days each year),
resulting in significant unnecessary health care expenditures.\315\
While we continue to believe, for the reasons stated, that it is
appropriate to distinguish between drugs and devices in the application
of an alternative new technology add-on payment pathway, after
consideration of these specific concerns and consistent with the
Administration's commitment to address issues related to antimicrobial
resistance, in order to help secure access to antibiotics, and improve
health outcomes for Medicare beneficiaries in a manner that is as
expeditious as possible, at this time we believe it would be
appropriate to extend the proposed alternative new technology add-on
payment pathway to a product that is designated by the FDA as a QIDP.
Therefore, under our finalized policy we are providing that for
applications received for new technology add-on payments for FY 2021
and subsequent fiscal years, if a technology receives the FDA's QIDP
designation and received FDA marketing authorization, it will be
considered new and not substantially similar to an existing technology
for purposes of new technology add-on payments and will not need to
meet the requirement that it represent an advance that substantially
improves, relative to technologies previously available, the diagnosis
or treatment of Medicare beneficiaries.
---------------------------------------------------------------------------
\313\ ``Antibiotic/Antimicrobial Resistance (AR/AMR),'' Centers
for Disease Control and Prevention, (page last updated Sept. 10,
2018), https://www.cdc.gov/drugresistance/index.html.
\314\ Internal analysis from the Centers for Disease Control and
Prevention.
\315\ Id.
---------------------------------------------------------------------------
Regarding the requests to develop an alternative pathway for new
technology add-on payments for other special designations (other than
those that receive market authorization under an expedited FDA pathway
as previously discussed), while we recognize that the goal of
facilitating access to new technologies for Medicare beneficiaries
could also apply to other designations, in general we believe it is
prudent to gain experience under this new alternative pathway for
certain transformative new devices before expanding it to other special
designations to allow us to evaluate the benefits of this proposed
alternative pathway to facilitate beneficiary access to transformative
new medical devices as well as any other considerations that may come
to light after application of this new pathway. We will keep these
suggestions in mind for consideration in future rulemaking.
With respect to the commenters that recommended other changes to
the IPPS new technology add-on payment policy, we appreciate these
suggestions and will take them into consideration for future
rulemaking. In addition, we note that we are proposing to adopt a
similar pathway to obtain OPPS pass-through status for medical devices
that receive FDA marketing authorization and are part of the FDA's
Breakthrough Devices Program in the CY 2020 OPPS/ASC proposed rule.
Therefore, after consideration of public comments, we are
finalizing our proposed alternative new technology add-on payment
pathway for certain medical devices and, for the reasons discussed
above, we are also extending that alternative new technology add-on
payment pathway to a product that is designated by the FDA as a QIDP.
Therefore, for applications received for new technology add-on payments
for FY 2021 and subsequent fiscal years, if a medical device is part of
the FDA's Breakthrough Devices Program or a product is designated by
the FDA as a QIDP, and received FDA marketing authorization, it will be
considered new and not substantially similar to an existing technology
for purposes of the new technology add-on payment under the IPPS, and
not need to meet the requirement that it represent an advance that
substantially improves, relative to technologies previously available,
the diagnosis or treatment of Medicare beneficiaries. We are also
adopting our proposed changes to Sec. 412.87 to codify this proposed
policy, as modified to reflect the finalized alternative pathway for
QIDPs.
Specifically, to codify this final policy, under Sec. 412.87 we
are adding new paragraphs (c) and (d) and redesignating existing
paragraph (c) as paragraph (e); redesignated paragraph (e) is being
amended to reflect these alternative pathways and to make clear that a
new medical service or technology may only be approved under Sec.
412.87(b), new Sec. 412.87(c), or new Sec. 412.87(d). Under this
alternative pathway for QIDPs, a medical product that has received FDA
marketing
[[Page 42297]]
authorization and is designated by the FDA as a QIDP will need to meet
the cost criterion under Sec. 412.87(b)(3), as reflected in new Sec.
412.87(d)(3), and will be considered new as reflected in new Sec.
412.87(d)(2).
In the proposed rule, we further noted that section
1886(d)(5)(K)(ii)(II) of the Act provides for the collection of data
with respect to the costs of a new medical service or technology
described in subclause (I) for a period of not less than 2 years and
not more than 3 years beginning on the date on which an inpatient
hospital code is issued with respect to the service or technology. We
also invited public comments on whether the newness period under the
proposed alternative new technology add-on payment pathway for
transformative new medical devices should be limited to a period of
time sufficient for the evidence base for the new transformative
medical device to develop to the point where a substantial clinical
improvement determination can be made (for example, 1 to 2 years after
approval, depending on whether the transformative new medical device
would be eligible for a third year of new technology add-on payments).
We noted that, if we were to adopt such a policy in the future, the
proposed amended regulation text would be revised accordingly. We
further noted that the newness period for a transformative new medical
device cannot exceed 3 years, regardless of whether it is approved
under the current eligibility criteria, the proposed alternative
pathway, or potentially first under the proposed alternative pathway,
and subsequently under the current eligibility criteria later in its
newness period.
Comment: Some commenters supported limiting the duration of the
payment under the alternative new technology add-on payment pathway for
transformative new medical devices to 2 years. These commenters
believed that revaluation of available evidence of substantial clinical
improvement for the third year achieves an appropriate balance of
potential risks with access for new treatment options for
beneficiaries.
In contrast, other commenters recommend that the timeframe align
with the full eligibility period available under the existing new
technology add-on payment policy. That is, the new technology add-on
payment should be applicable for not less than 2 years and not more
than 3 years to allow sufficient time for CMS to collect hospital cost
and claims data to inform MS-DRG assignment and relative weights. These
commenters indicated that re-evaluating a device that received
marketing authorization as part of the FDA's Breakthrough Devices
Program 1 or 2 years after approval may not provide adequate time to
collect and evaluate data needed to demonstrate substantial clinical
improvement, and believed the full new technology add-on payment policy
eligibility period is necessary to ensure Medicare beneficiaries have
access to the latest innovations. Commenters also stated that
establishing different eligibility timelines for devices approved for
new technology add-on payments through the traditional and alternative
pathways could limit the development and adoption of devices that are
part of the FDA's Breakthrough Devices Program.
Response: We appreciate the feedback and recommendations provided
by commenters on limiting the newness period under the proposed
alternative new technology add-on payment pathway for transformative
new medical devices. We will take these comments in consideration, and
may consider adopting such a policy in the future through rulemaking.
9. Change to the Calculation of the Inpatient New Technology Add-On
Payment
As noted in the proposed rule and earlier, section
1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or
technology may be considered for a new technology add-on payment if,
based on the estimated costs incurred with respect to discharges
involving such service or technology, the DRG prospective payment rate
otherwise applicable to such discharges under this subsection is
inadequate. As discussed in the September 7, 2001 final rule, in
deciding which treatment is most appropriate for any particular
patient, it is expected that physicians would balance the clinical
needs of patients with the efficacy and costliness of particular
treatments. In the May 4, 2001 proposed rule (66 FR 22695), we stated
that we believed it is appropriate to limit the additional payment to
50 percent of the additional cost of the new technology to
appropriately balance the incentives. We stated that this proposed
limit would provide hospitals an incentive for continued cost-effective
behavior in relation to the overall costs of the case. In addition, we
stated that we believed hospitals would face an incentive to balance
the desirability of using the new technology versus the old; otherwise,
there would be a large and perhaps inappropriate incentive to use the
new technology.
As such, the current calculation of the new technology add-on
payment is based on the cost to hospitals for the new medical service
or technology. Specifically, under Sec. 412.88, if the costs of the
discharge (determined by applying CCRs as described in Sec. 412.84(h))
exceed the full DRG payment (including payments for IME and DSH, but
excluding outlier payments), Medicare will make an add-on payment equal
to the lesser of: (1) 50 Percent of the costs of the new medical
service or technology; or (2) 50 percent of the amount by which the
costs of the case exceed the standard DRG payment. 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 or medical service.
We stated in the FY 2020 IPPS/LTCH PPS proposed rule that since the
50-percent limit to the new technology add-on payment was first
established, we have received feedback from stakeholders that our
current policy does not adequately reflect the costs of new technology
and does not sufficiently support healthcare innovations. For example,
stakeholders have stated that a maximum add-on payment of 50 percent
does not allow for accurate payment of a new technology with an
unprecedented high cost, such as the CAR T-cell technologies
KYMRIAH[supreg] and YESCARTA[supreg] (83 FR 41173).
After consideration of the concerns raised by commenters and other
stakeholders, and consistent with the Administration's commitment to
addressing barriers to healthcare innovation and ensuring Medicare
beneficiaries have access to critical and life-saving new cures and
technologies that improve beneficiary health outcomes, we stated in the
proposed rule that we agree that there may be merit to the
recommendations to increase the maximum add-on amount, and that capping
the add-on payment amount at 50 percent could in some cases no longer
provide a sufficient incentive for the use of a new technology. Costs
of new medical technologies have increased over the years to the point
where 50 percent of the estimated cost may not be adequate, and we have
received feedback that hospitals may potentially choose not to provide
certain technologies for that reason alone.
At the same time, we continue to believe that it is important to
preserve the incentives inherent under an average-based prospective
payment system through the use of a percentage of the estimated costs
of a new technology or service. We stated in the September 7, 2001
final rule (66 FR
[[Page 42298]]
46919) that we do not believe it is appropriate to pay an add-on amount
equal to 100 percent of the costs of new technology because there is no
similar methodology to reduce payments for cost-saving technology. For
example, as new technologies permit the development of less-invasive
surgical procedures, the total costs per case may begin to decline as
patients recover and leave the hospital sooner. Finally, we stated our
concern that, because these payments are linked to charges submitted by
hospitals, there is the potential that hospitals may adapt their charge
structure to maximize payments for DRGs that include eligible new
technologies. The higher the marginal cost factor, the greater the
incentive hospitals face in this regard.
As noted in the FY 2020 IPPS/LTCH PPS proposed rule, it is
challenging to determine empirically a precise payment percentage
between the current 50 percent and 100 percent payment that would be
the most appropriate. However, we stated that we believed that 65
percent would be an incremental increase that would reasonably balance
the need to maintain the incentives inherent to the prospective payment
system while also encouraging the development and use of new
technologies.
Therefore, in the proposed rule, we proposed that, beginning with
discharges on or after October 1, 2019, if the costs of a discharge
involving a new technology (determined by applying CCRs as described in
Sec. 412.84(h)) exceed the full DRG payment (including payments for
IME and DSH, but excluding outlier payments), Medicare will make an
add-on payment equal to the lesser of: (1) 65 Percent of the costs of
the new medical service or technology; or (2) 65 percent of the amount
by which the costs of the case exceed the standard DRG payment. Unless
the discharge qualifies for an outlier payment, the additional Medicare
payment would be limited to the full MS-DRG payment plus 65 percent of
the estimated costs of the new technology or medical service. We also
proposed to revise paragraphs (a)(2) and (b) under Sec. 412.88 to
reflect these proposed changes to the calculation of the new technology
add-on payment amount beginning in FY 2020.
Comment: The vast majority of the comments we received supported an
increase in the new technology add-on payment percentage, citing
reasons such as providing more adequate payments to hospitals on a per
case basis; increased efficacy, effectiveness, and overall quality of
patient care; reduction in price barriers that previously may have
disincentivized the use of the most innovative technology; and to the
extent that more hospitals are able to adopt technologies approved for
new technology add-on payments as a result of higher Medicare payments,
the more claims data will be available to fully reflect the costs of
these technologies in and improve the accuracy of MS-DRG weights. Some
commenters indicated that they remained concerned that hospitals will
continue to endure a significant shortfall between their costs and
their payments when using technologies approved for new technology add-
on payments, even with the proposed increase to 65 percent. These
commenters believed that even if the payment percentage were increased
to 65 percent, a hospital that provides a costly medical service or
technology that qualifies for a for new technology add-on payment would
still lose money on the case regardless of how efficient it is.
Therefore, these commenters stated that an increase to only 65 percent
would not be adequate to accomplish CMS's stated goals of addressing
barriers to healthcare innovation and ensuring Medicare beneficiaries
have access to critical and life-saving new cures and technologies that
improve beneficiary health outcomes.
While commenters generally supported the proposed increase in the
new technology add-on payment percentage, many indicated that a
percentage between 80 and 100 percent would be more appropriate to
sufficiently incentivize the use of new technologies and ensure
Medicare beneficiaries' access to innovations in care and improved
health outcomes. A few commenters stated that the proposal to increase
the new technology add-on payment percentage from 50 percent to 65
percent was consistent with CMS's stated goals of addressing barriers
to healthcare innovation and ensuring Medicare beneficiaries access to
new technologies. Similarly, MedPAC indicated that a percentage up to
65 should be sufficient to achieve access given the continued growth in
the number of new technology applications.
Many commenters stated that a strong case could be made that the
new technology add-on payment percentage should be higher than 65
percent. Some commenters encouraged CMS to consider setting the
percentage as close to 100 percent as possible, indicating that any
percentage that is less than 100 percent would continue to provide a
disincentive for appropriate use of a new technology. The majority of
commenters suggested that the most appropriate new technology add-on
payment amount increase would be 80 percent; however, there were also
commenters that suggested new technology add-on payment amount
increases of 75, 85 and 100 percent. Commenters who supported an
increase to 80 percent indicated a variety of reasons, including that
80 percent strikes an appropriate balance of including a cost sharing
element with the hospitals for new technologies, alleviates enough of
the financial disincentive to allow hospitals to provide greater access
to Medicare patients who may benefit from these innovative
technologies, preserves the incentives inherent under the MS-DRG
payment system without creating an undue financial burden, and
encourages more swift adoption of new technologies. Several commenters
indicated that increasing the new technology add-on payment percentage
to 80 percent would be consistent with other CMS shared-risk
mechanisms, and in particular it would align with the IPPS outlier
payment, under which hospitals are reimbursed based on a marginal cost
factor equal to 80 percent of the combined operating and capital costs
in excess of the fixed-loss threshold.
Some commenters also pointed to an analysis by Avalere Health LLC
that they state found that despite receiving $40.5 million in new
technology add-on payments between FY 2006 and FY 2013, hospitals also
received $23.2 million in outlier payments on these same cases. These
commenters believe that the fact that so many new technology add-on
payment cases also qualify for outlier payments underscores how
inadequate the new technology add-on payment is, and they state that
for this reason they believe that an 80 percent level would mitigate
those losses, further encourage adoption of new technologies, and
continue to provide incentives for hospitals to act as prudent
purchasers. A few commenters also indicated that although an 80 percent
new technology add-on payment percentage would not fully compensate all
hospitals for the cost of using new technologies, it would bring CMS
closer to fulfilling the statutory obligation to make payments in ``an
amount that adequately reflects the estimated average cost of such
service or technology.''
While most commenters indicated that the percentage should be
raised uniformly for all technologies approved for new technology add-
on payments, some commenters indicated that the percentage for certain
technologies (for example, CAR T-cell therapy) needed to be higher, up
to 100 percent, due to the high cost of the therapy, while other
[[Page 42299]]
commenters pointed to other specific types of new technologies where
they indicated that the new technology add-on payment percentage should
be higher. In particular, several commenters urged CMS to adopt a new
technology add-on payment percentage of 100 percent for products
designated by the FDA as QIDPs given the significant concerns they
expressed related to the public health crisis represented by
antimicrobial resistance (as further described in section II.H.8. of
this preamble). Some of these commenters further urged CMS to at least
finalize a policy that would provide for an increased percentage for
QIDPs above the proposed 65 percent, for example, 80 percent or 90
percent, if a maximum percentage of 100 percent for QIDPs was not
adopted. As discussed in section II.H.8. of this preamble where we
discuss our finalized policy to extend the alternative new technology
add-on payment pathway for certain transformative medical devices to
QIDPs, these commenters asserted that timely access to appropriate
antimicrobial therapy is key to clinical success and improved patient
outcomes. In addition, they maintained that resistant infections result
in higher costs to healthcare systems, including Medicare, because
patients experience illnesses of a longer duration, require additional
tests, and require the use of more expensive drugs and related
services. These commenters asserted that further increasing the new
technology add-on payment percentage for QIDPs above the proposed 65
percent (and specifically, to between 80 to 100 percent) would address
regulatory barriers and payment disincentives to innovation related to
antimicrobial resistance, while improving Medicare beneficiaries'
access to new treatments that improve health outcomes and save lives.
Commenters also suggested CMS consider other modifications to the
new technology add-on payment policy, such as no longer using the
current ``lesser of'' methodology and instead making a uniform add-on
payment for all new technology cases, using the acquisition cost
reported on the claim as the basis for the add-on payment amount, and
establishing a more frequent inpatient new technology add-on payment
policy approval process.
Response: We appreciate the commenters' support for the proposed
increase in the new technology add-on payment percentage. As discussed
in the proposed rule and previously in this final rule, it is
challenging to determine empirically a precise payment percentage
between the current 50 percent and 100 percent payment that would
reasonably balance the need to maintain the incentives inherent to the
prospective payment system while also encouraging the development and
use of new technologies. In response to commenters that encouraged CMS
to consider setting the percentage as close to 100 percent as possible,
indicating that any percentage that is less than 100 percent would
continue to provide a disincentive for appropriate use of a new
technology, we strongly disagree. Setting the percentage as close to
100 percent as possible maintains very little of the incentives
inherent to the prospective payment system. In response to commenters
who suggested that the most appropriate new technology add-on payment
amount increase would be in the 75 or 80 percent range, while we agree
this would better maintain the incentives for cost-effective behavior
than a 100 percent payment, we do not believe there is evidence that a
payment in this range is required to ensure appropriate access to new
technologies. We also disagree that the new technology add-on payment
amount should necessarily align with the IPPS outlier payment
methodology. We note that there are different policy considerations for
new technology payments and outlier payments. We also disagree that the
existence of outlier payments for some new technology cases is evidence
that those payments are necessarily inadequate, as there may be
unrelated reasons why a hospital would receive outlier payments. There
may also be circumstances where new technology payments and outlier
payments work in a complimentary manner for related reasons, that do
not necessarily mean the appropriate policy is to increase new
technology payments; for example, we note that MedPAC in its comment
letter recommended that CAR T-cell therapy continue to be paid in FY
2020 using a combination of new technology add-on payments and outlier
payments. Lastly, we generally disagree that our proposed 65 percent
payment does not adequately reflect the estimated average cost of a new
technology. Commenters did not cite evidence that our proposed 65
percent payment, a 30 percent increase (= (0.65/0.50)-1)) over the
current 50 percent payment, would generally be an insufficient
incremental increase to ensure appropriate access to new technologies.
However, while we generally disagree with commenters that our
proposed 65 percent new technology add-on payment would be inadequate,
as noted earlier in section II.H.8, we understand and share commenters'
concerns related to antimicrobial resistance and its serious impact on
Medicare beneficiaries and public health overall. As we noted in that
section, the Center for Disease Control and Prevention (CDC) describes
antimicrobial resistance as ``one of the biggest public health
challenges of our time.'' We believe Medicare beneficiaries may be
disproportionately impacted by antimicrobial resistance due in large
part to the elderly's unique vulnerability to drug-resistant infections
(e.g., due to age-related and/or disease-related immunosuppression,
greater pathogen exposure from via catheter use). As such,
antimicrobial resistance results in a substantial number of additional
hospital days for Medicare beneficiaries, resulting in significant
unnecessary health care expenditures. Although we continue to believe,
for the reasons discussed, that our proposed new technology add-on
payment percentage of 65 percent is generally appropriate, after
consideration of these specific concerns and consistent with the
Administration's commitment to address issues related to antimicrobial
resistance, in order to help secure access to antibiotics, and improve
health outcomes for Medicare beneficiaries in a manner that is as
expeditious as possible, at this time we believe it would be
appropriate to apply a higher new technology add-on payment of 75
percent for a product that is designated by the FDA as a QIDP and
receives FDA marketing authorization.
With regard to the comments that requested an increase to the new
technology add-on payment percentage for CAR T-cell therapy, as we
discuss in greater detail in section II.F.2.c. of this preamble, after
a review of the comments received, we continue to believe, similar to
last year, that given the relative newness of CAR T-cell therapy, and
our continued consideration of approaches and authorities to encourage
value-based care and lower drug prices, it would be premature to adopt
structural changes to our existing payment mechanisms, either under the
IPPS or for IPPS-excluded cancer hospitals, specifically for CAR T-cell
therapy. For these reasons, we are not adopting the commenters'
requested changes to our current payment mechanisms for FY 2020,
including, but not limited to, structural changes in new technology
add-on payments and/or a differentially higher new technology add-on
payment percentage specifically for CAR T-cell therapy products. (For
additional details on the comments we received in
[[Page 42300]]
response to our request for public comment on payment alternatives for
CAR T-cell cases that was included in the proposed rule, and our
responses, refer to section II.F.2.c. of the preamble of this final
rule.)
We appreciate the commenters' suggestions for other modifications
to the new technology add-on payment policy, such as making a uniform
add-on payment, using the acquisition cost reported on the claim as the
basis for the add-on payment, and developing a more frequent approval
process, and will consider them for future rule-making.
After consideration of public comments, we are finalizing an
increase in the new technology add-on payment percentage. Specifically,
for a new technology other than a medical product designated by the FDA
as a QIDP, beginning with discharges on or after October 1, 2019, if
the costs of a discharge involving a new technology (determined by
applying CCRs as described in Sec. 412.84(h)) exceed the full DRG
payment (including payments for IME and DSH, but excluding outlier
payments), Medicare will make an add-on payment equal to the lesser of:
(1) 65 percent of the costs of the new medical service or technology;
or (2) 65 percent of the amount by which the costs of the case exceed
the standard DRG payment. For a new technology that is a medical
product designated by the FDA as a QIDP, beginning with discharges on
or after October 1, 2019, if the costs of a discharge involving a new
technology (determined by applying CCRs as described in Sec.
412.84(h)) exceed the full DRG payment (including payments for IME and
DSH, but excluding outlier payments), Medicare will make an add-on
payment equal to the lesser of: (1) 75 percent of the costs of the new
medical service or technology; or (2) 75 percent of the amount by which
the costs of the case exceed the standard DRG payment. Under this
finalized policy, unless the discharge qualifies for an outlier
payment, the additional Medicare payment will be limited to the full
MS-DRG payment plus 65 percent (or 75 percent for a medical product
designated by the FDA as a QIDP) of the estimated costs of the new
technology or medical service. We are also finalizing our proposed
revisions to paragraphs (a)(2) and (b) under Sec. 412.88 to reflect
these changes to the calculation of the new technology add-on payment
amount beginning in FY 2020, as modified to reflect the finalized
percentage for a medical product designated by the FDA as a QIDP.
II. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
1. Legislative Authority
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 2020 hospital wage index based on the
statistical areas appears under section III.A.2. 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
wage-related costs of short-term, acute care hospitals. (CMS collects
these data on the Medicare cost report, CMS Form 2552-10, Worksheet S-
3, Parts II, III, and IV. The OMB control number for approved
collection of this information is 0938-0050, which expires on March 31,
2022.) 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 2020 is discussed in section II.B. of the Addendum to
this final rule.
As discussed in section III.I. 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), (d)(8)(C),
and (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 2020 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 2020 wage index appears under sections III.E.3. and F. of the
preamble of this final rule.
2. Core-Based Statistical Areas (CBSAs) for the FY 2020 Hospital Wage
Index
The wage index is calculated and assigned to hospitals on the basis
of the labor market area in which the hospital is located. Under
section 1886(d)(3)(E) of the Act, beginning with FY 2005, we delineate
hospital labor market areas based on OMB-established Core-Based
Statistical Areas (CBSAs). The current statistical areas (which were
implemented beginning with FY 2015) are based on revised OMB
delineations issued on February 28, 2013, in OMB Bulletin No. 13-01.
OMB Bulletin No. 13-01 established revised delineations for
Metropolitan Statistical Areas, Micropolitan Statistical Areas, and
Combined Statistical Areas in the United States and Puerto Rico based
on the 2010 Census, and provided guidance on the use of the
delineations of these statistical areas using standards published in
the June 28, 2010 Federal Register (75 FR 37246 through 37252). We
refer readers to the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951
through 49963) for a full discussion of our implementation of the OMB
labor market area delineations beginning with the FY 2015 wage index.
Generally, OMB issues major revisions to statistical areas every 10
years, based on the results of the decennial census. However, OMB
occasionally issues minor updates and revisions to statistical areas in
the years between the decennial censuses through OMB Bulletins. On July
15, 2015, OMB issued OMB Bulletin No. 15-01, which provided updates to
and superseded OMB Bulletin No. 13-01 that was issued on February 28,
2013. The attachment to OMB Bulletin No. 15-01 provided detailed
information on the update to statistical areas since February 28, 2013.
The updates provided in OMB Bulletin No. 15-01 were based on the
application of the 2010 Standards for Delineating Metropolitan and
Micropolitan Statistical Areas to Census Bureau population estimates
for July 1, 2012 and July 1, 2013. In the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56913), we adopted the updates set forth in OMB Bulletin
No. 15-01 effective October 1, 2016, beginning with the FY 2017 wage
index. For a complete discussion of the adoption of the updates set
forth in OMB Bulletin No. 15-01, we refer readers to the FY 2017
[[Page 42301]]
IPPS/LTCH PPS final rule. In the FY 2018 IPPS/LTCH PPS final rule (82
FR 38130), we continued to use the OMB delineations that were adopted
beginning with FY 2015 to calculate the area wage indexes, with updates
as reflected in OMB Bulletin No. 15-01 specified in the FY 2017 IPPS/
LTCH PPS final rule.
On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which
provided updates to and superseded OMB Bulletin No. 15-01 that was
issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01
provide detailed information on the update to statistical areas since
July 15, 2015, and are based on the application of the 2010 Standards
for Delineating Metropolitan and Micropolitan Statistical Areas to
Census Bureau population estimates for July 1, 2014 and July 1, 2015.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41362 through 41363), we
adopted the updates set forth in OMB Bulletin No. 17-01 effective
October 1, 2018, beginning with the FY 2019 wage index. For a complete
discussion of the adoption of the updates set forth in OMB Bulletin No.
17-01, we refer readers to the FY 2019 IPPS/LTCH PPS final rule.
For FY 2020, we are continuing to use the OMB delineations that
were adopted beginning with FY 2015 (based on the revised delineations
issued in OMB Bulletin No. 13-01) to calculate the area wage indexes,
with updates as reflected in OMB Bulletin Nos. 15-01 and 17-01.
3. Codes for Constituent Counties in CBSAs
CBSAs are made up of one or more constituent counties. Each CBSA
and constituent county has its own unique identifying codes. There are
two different lists of codes associated with counties: Social Security
Administration (SSA) codes and Federal Information Processing Standard
(FIPS) codes. Historically, CMS has listed and used SSA and FIPS county
codes to identify and crosswalk counties to CBSA codes for purposes of
the hospital wage index. As we discussed in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38129 through 38130), we have learned that SSA county
codes are no longer being maintained and updated. However, the FIPS
codes continue to be maintained by the U.S. Census Bureau. We believe
that using the latest FIPS codes will allow us to maintain a more
accurate and up-to-date payment system that reflects the reality of
population shifts and labor market conditions.
The Census Bureau's most current statistical area information is
derived from ongoing census data received since 2010; the most recent
data are from 2015. The Census Bureau maintains a complete list of
changes to counties or county equivalent entities on the website at:
https://www.census.gov/geo/reference/county-changes.html. We believe
that it is important to use the latest counties or county equivalent
entities in order to properly crosswalk hospitals from a county to a
CBSA for purposes of the hospital wage index used under the IPPS.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through
38130), we adopted a policy to discontinue the use of the SSA county
codes and began using only the FIPS county codes for purposes of
crosswalking counties to CBSAs. In addition, in the same rule, we
implemented the latest FIPS code updates which were effective October
1, 2017, beginning with the FY 2018 wage indexes. These updates have
been used to calculate the wage indexes in a manner generally
consistent with the CBSA-based methodologies finalized in the FY 2005
IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule.
For FY 2020, we are continuing to use only the FIPS county codes
for purposes of crosswalking counties to CBSAs. For FY 2020, Tables 2
and 3 associated with this final rule and the County to CBSA Crosswalk
File and Urban CBSAs and Constituent Counties for Acute Care Hospitals
File posted on the CMS website reflect these county changes.
B. Worksheet S-3 Wage Data for the FY 2020 Wage Index
The FY 2020 wage index values are based on the data collected from
the Medicare cost reports submitted by hospitals for cost reporting
periods beginning in FY 2016 (the FY 2019 wage indexes were based on
data from cost reporting periods beginning during FY 2015).
1. Included Categories of Costs
The FY 2020 wage index includes all of 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 include
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 47317)).
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS 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 2019, the wage
index for FY 2020 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 2020 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). For FY 2020 and subsequent years, other wage-
related costs are also excluded from the calculation of the wage index.
As discussed in the FY 2019 IPPS/LTCH final rule (83 FR 41365 through
41369), other wage-related costs reported on Worksheet S-3, Part II,
Line 18 and Worksheet S-3, Part IV, Line 25 and subscripts, as well as
all other wage-related costs, such as contract labor costs, are
excluded from the calculation of the wage index.
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.
C. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2020 wage index were obtained from
Worksheet S-3, Parts II and III of the Medicare cost report (Form CMS-
2552-10, OMB
[[Page 42302]]
Control Number 0938-0050 with expiration date March 31, 2022) for cost
reporting periods beginning on or after October 1, 2015, and before
October 1, 2016. For wage index purposes, we refer to cost reports
during this period as the ``FY 2016 cost report,'' the ``FY 2016 wage
data,'' or the ``FY 2016 data.'' Instructions for completing the wage
index sections of Worksheet S-3 are included in the Provider
Reimbursement Manual (PRM), Part 2 (Pub. 15-2), Chapter 40, Sections
4005.2 through 4005.4. The data file used to construct the FY 2020 wage
index includes FY 2016 data submitted to us as of June 19, 2019. As in
past years, we 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 2020 wage index, we
identified and excluded 81 providers with aberrant data that should not
be included in the wage index, although we stated in the FY 2020 IPPS/
LTCH PPS proposed rule that if data elements for some of these
providers are corrected, we intend to include data from those providers
in the final FY 2020 wage index (84 FR 19375). We also adjusted certain
aberrant data and included these data in the proposed wage index. For
example, in situations where a hospital did not have documentable
salaries, wages, and hours for housekeeping and dietary services, we
imputed estimates, in accordance with policies established in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We
instructed MACs to complete their data verification of questionable
data elements and to transmit any changes to the wage data no later
than March 22, 2019. In addition, as a result of the April and May
appeals processes, and posting of the April 30, 2019 PUF, we have made
additional revisions to the FY 2020 wage data, as described further
below. The revised data are reflected in this FY 2020 IPPS/LTCH PPS
final rule.
Among the hospitals we identified with aberrant data and excluded
from the proposed rule wage index were eight hospitals that are part of
a health care delivery system that is unique in several ways. As we
explained in the proposed rule, (84 FR 19375), the vast majority of the
system's hospitals (38) are located in a single State, with one union
representing most of their hospital employees in the ``northern''
region of the State, while another union represents most of their
hospital employees in the ``southern'' region of the State. The
salaries negotiated do not reflect competitive local labor market
salaries; rather, the salaries reflect negotiated salary rates for the
``northern'' and ``southern'' regions of the State respectively. For
example, all medical assistants in the ``northern'' region start at
$24.31 per hour, and medical assistants in the ``southern'' region
start at $20.36 per hour. Thus, all salaries for similar positions and
levels of experience in the northern region, for example, are the same
regardless of prevailing labor market conditions in the area in which
the hospital is located. In addition, this chain is part of a managed
care organization and an integrated delivery system wherein the
hospitals rely on the system's health care plans for funding. For the
FY 2020 proposed wage index calculation, we identified and excluded
eight of the hospitals that are part of this health care system. The
average hourly wages of these eight hospitals differ most from their
respective CBSA average hourly wages, and there is a large gap between
the average hourly wage of each of the eight hospitals and the next
closest average hourly wage in their respective CBSAs. In the proposed
rule (84 FR 19376), we stated that we do not believe that the average
hourly wages of these eight hospitals accurately reflect the economic
conditions in their respective labor market areas during the FY 2016
cost reporting period. Therefore, we stated that we believe the
inclusion of the wage data for these eight hospitals in the proposed
wage index would not ensure that the FY 2020 wage index represents the
relative hospital wage level in the geographic area of the hospital as
compared to the national average of wages. Rather, the inclusion of
these data would distort the comparison of the average hourly wage of
each of these hospitals' labor market areas to the national average
hourly wage. We stated that we believe that under section 1886(d)(3)(E)
of the Act, which requires the Secretary to establish an adjustment
factor (the wage index) reflecting the relative hospital wage level in
the geographic area of a hospital compared to the national average
hospital wage level, we have the discretion to remove hospital data
from the wage index that is not reflective of the relative hospital
wage level in the hospitals' geographic area. In previous rulemaking
(80 FR 49491), we explained that we remove hospitals from the wage
index because their average hourly wages are either extraordinarily
high or extraordinarily low compared to their labor market areas, even
though their data were properly documented. For this reason, we have
removed the data of other hospitals in the past; for example, data from
government-owned hospitals and hospitals providing unique or niche
services which affect their average hourly wages. In the proposed rule
(84 FR 19376), we noted that we are considering removing all of the
hospitals in this health care system from the FY 2021 and subsequent
wage index calculations, not because they are failing edits due to
inaccuracy, but because of the uniqueness of this chain of hospitals,
in particular, the fact that the salaries of their employees are not
based on local labor market rates.
In constructing the proposed FY 2020 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2016, 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 stated in the proposed rule that we
believe 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); that is, any hospital that is designated as a CAH
by 7 days prior to the publication of the preliminary wage index public
use file (PUF) is excluded from the calculation of the wage index. For
the proposed rule, we removed 4 hospitals that converted to CAH status
on or after January 26, 2018, the cut-off date for CAH exclusion from
the FY 2019 wage index, and through and including January 24, 2019, the
cut-off date for CAH exclusion from the FY 2020 wage index. Since
issuance of the proposed rule, we learned of 3 more CAHs that converted
to CAH status on or after January 26, 2018, through and including
January 24, 2019, for a total of 7 CAH exclusions. Also, since issuance
of the proposed rule and in preparation for the April 30, 2019 PUF, we
identified and deleted 2 more hospitals (one whose data changed since
the January PUF and became aberrant, and the other whose data did not
change, but it became evident for the first time that it was aberrantly
low), while restoring 17 hospitals (including 1 hospital that is part
of the unique healthcare chain discussed in the proposed rule at 84 FR
19375-6) whose data improved. After the April 30, 2019 PUF we
identified and deleted 1 more hospital (whose data did not change, but
it became evident
[[Page 42303]]
for the first time that it was aberrantly low), while restoring the
wage data of the 7 hospitals that are part of the unique health care
chain. That is, we have restored to the final rule wage index
calculation for FY 2020 the wage data of the 8 hospitals that are part
of the unique health care chain discussed in the proposed rule (84 FR
19375-6), as discussed further below. In summary, in the calculation of
the FY 2020 final wage index, we have restored the wage data of the 8
hospitals that are part of the unique health care chain referenced
above plus the wage data of 16 additional hospitals, while deleting the
wage data of 3 additional hospitals and 3 additional CAHs.
Consequently, we calculated the proposed wage index using the Worksheet
S-3, Parts II and III wage data of 3,239 hospitals.
For the final FY 2020 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' data in the FY 2019 wage index (83 FR 41364 through 41365);
that is, using campus full-time equivalent (FTE) percentages as
originally finalized in the FY 2012 IPPS/LTCH PPS final rule (76 FR
51591). Table 2, which contains the final FY 2020 wage index associated
with this final rule (available via the internet on the CMS website),
includes separate wage data for the campuses of 17 multicampus
hospitals. The following chart lists the multicampus hospitals by CSA
certification number (CCN) and the FTE percentages on which the wages
and hours of each campus were allotted to their respective labor market
areas:
[GRAPHIC] [TIFF OMITTED] TR16AU19.153
We note that, in past years, in Table 2, we have placed a ``B'' to
designate the subordinate campus in the fourth position of the hospital
CCN. However, for the FY 2019 IPPS/LTCH PPS proposed and final rules
and subsequent rules, we have moved the ``B'' to the third position of
the CCN. Because all IPPS hospitals have a ``0'' in the third position
of the CCN, we believe that placement of the ``B'' in this third
position, instead of the ``0'' for the subordinate campus, is the most
efficient method of identification and interferes the least with the
other, variable, digits in the CCN.
Comment: Several commenters strongly opposed the exclusion of seven
hospitals' wage data (we note that as previously stated, the data for
one of the eight hospitals excluded from the proposed rule PUF was
included in the April 30, 2019 PUF due to improved data). These
commenters stated that excluding accurate and verified data is
inconsistent with the extensive process established by CMS to ensure
the accuracy and reliability of hospital wage index data. In addition,
commenters specifically raised the following concerns: Section
1395ww(d)(3)(E) of the Statute does not provide the authority for CMS
to delete accurately-reported wage data; excluding hospitals without
any definable standards is an abuse of discretion, creates uncertainty,
and is arbitrary and capricious; the proposed exclusion is procedurally
improper without formal notice-and-comment rulemaking in accordance
with the Administrative Procedures Act (APA); excluding accurate wage
data disregards labor costs and improperly substitutes CMS' judgment of
reasonable wage levels for actual, free-market wage data; and singling
out a health system due to its collective bargaining practices
undermines the National Labor Relations Act (NLRA).
Several commenters stated that high labor costs are a true
reflection of the challenging labor markets in California and the fact
that wages are influenced by labor negotiations does not render them
any less valid. A commenter stated that the exclusion of these seven
hospitals raises constitutional concerns as it would impermissibly
apply a rule that is directed at and penalizes a single party.
Commenters also expressed concern regarding the far-reaching
effects of excluding the seven hospitals' wage data. A few commenters
stated that excluding the wage data for the seven hospitals will
decrease payments to hospitals in those CBSAs significantly,
jeopardizing access to care for Medicare beneficiaries across
California. Many commenters stated that excluding the seven hospitals'
wage data will also harm inpatient psychiatric facilities, inpatient
rehabilitation facilities, skilled nursing facilities, and other
provider types whose payments are impacted by the wage index, and noted
that CMS did not identify the fiscal impacts of the exclusions in its
respective regulatory impact analyses for the IPF, IRF, SNF, and the
IPPS proposed rules.
Additionally, commenters strongly opposed removing all 38 of the
Health System's hospitals from the wage index data beginning in FY
2021.
Response: In consideration of comments received, and to allow more
time to consider the appropriateness of including or excluding the wage
data of this unique health care chain, the wage data of all eight
hospitals in this health
[[Page 42304]]
care chain that were deleted from the proposed rule calculation (84 FR
19375 through 19376) are included in the FY 2020 final rule wage index.
D. Method for Computing the FY 2020 Unadjusted Wage Index
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 41365), we
indicated we were committed to transforming the health care delivery
system, including the Medicare program, by putting an additional focus
on patient-centered care and working with providers, physicians, and
patients to improve outcomes. One key to that transformation is
ensuring that the Medicare payment rates are as accurate and
appropriate as possible, consistent with the law. We invited the public
to submit comments, suggestions, and recommendations for regulatory and
policy changes to address wage index disparities. Our proposals for FY
2020 to address wage index disparities, to the extent permitted under
current law, are discussed in the FY 2020 IPPS/LTCH PPS proposed rule
(84 FR 19393 through 19399). We stated in the proposed rule that we
continue to believe that broader statutory wage index reform is needed.
1. Methodology for FY 2020
The method used to compute the proposed FY 2020 wage index without
an occupational mix adjustment follows the same methodology that we
used to compute the proposed wage indexes without an occupational mix
adjustment since FY 2012 (76 FR 51591 through 51593), except as
discussed in this final rule. Typically, we do not restate all of the
steps of the methodology to compute the wage indexes in each proposed
and final rulemaking; instead, we refer readers to the FY 2012 IPPS/
LTCH PPS final rule. However, in the FY 2020 IPPS/LTCH PPS proposed
rule (84 FR 19377 through 19379), we (1) restated the steps of the
methodology in order to update outdated references to certain cost
report lines which were then reflected on Medicare CMS Form 2552-96 but
are now reflected on Medicare CMS Form 2552-10; (2) proposed to change
the calculation of the Overhead Rate in Step 4; (3) proposed to modify
our methodology with regard to how dollar amounts, hours, and other
numerical values in the wage index calculation are rounded; and (4)
proposed a methodology for calculating the wage index for urban areas
without wage data. We otherwise did not propose to make any other
policy changes in this section to the methodology set forth in the FY
2012 IPPS/LTCH PPS proposed rule (76 FR 51591 through 51593) for
computing the proposed wage index without an occupational mix
adjustment. Our methodology, including our proposals (as set forth
above), is discussed below. Unless otherwise specified, all cost report
line references in this section of this final rule refer to CMS Form
2552-10.
Step 1.--We gathered data from each of the non-Federal, short-term,
acute care hospitals for which data were reported on the Worksheet S-3,
Parts II and III of the Medicare cost report for the hospital's cost
reporting period relevant to the proposed wage index (in this case, for
FY 2020, these were data from cost reports for cost reporting periods
beginning on or after October 1, 2015, and before October 1, 2016). In
addition, we included data from some hospitals that had cost reporting
periods beginning before October 2015 and reported a cost reporting
period covering all of FY 2016. These data were included because no
other data from these hospitals would be available for the cost
reporting period as previously described, and because particular labor
market areas might be affected due to the omission of these hospitals.
However, we generally describe these wage data as FY 2016 data. We note
that, if a hospital had more than one cost reporting period beginning
during FY 2016 (for example, a hospital had two short cost reporting
periods beginning on or after October 1, 2015, and before October 1,
2016), we include wage data from only one of the cost reporting
periods, the longer, in the wage index calculation. If there was more
than one cost reporting period and the periods were equal in length, we
included the wage data from the later period in the wage index
calculation.
Step 2.--Salaries.--The method used to compute a hospital's average
hourly wage excludes certain costs that are not paid under the IPPS.
(We note that, beginning with FY 2008 (72 FR 47315), we included what
were then Lines 22.01, 26.01, and 27.01 of Worksheet S-3, Part II of
CMS Form 2552-96 for overhead services in the wage index. Currently,
these lines are lines 28, 33, and 35 on CMS Form 2552-10. However, we
note that the wages and hours on these lines are not incorporated into
Line 101, Column 1 of Worksheet A, which, through the electronic cost
reporting software, flows directly to Line 1 of Worksheet S-3, Part II.
Therefore, the first step in the wage index calculation is to compute a
``revised'' Line 1, by adding to the Line 1 on Worksheet S-3, Part II
(for wages and hours respectively) the amounts on Lines 28, 33, and
35.) In calculating a hospital's Net Salaries (we note that we
previously used the term ``average'' salaries in the FY 2012 IPPS/LTCH
PPS final rule (76 FR 51592), but we now use the term ``net'' salaries)
plus wage-related costs, we first compute the following: Subtract from
Line 1 (total salaries) the GME and CRNA costs reported on CMS Form
2552-10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on
Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude
salaries reported on Lines 9 and 10 (that is, direct salaries
attributable to SNF services, home health services, and other
subprovider components not subject to the IPPS). We also subtract from
Line 1 the salaries for which no hours were reported. Therefore, the
formula for Net Salaries (from Worksheet S-3, Part II) is the
following: ((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 +
Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 +
Line 10)).
To determine Total Salaries plus Wage-Related Costs, we add to the
Net Salaries the costs of contract labor for direct patient care,
certain top management, pharmacy, laboratory, and nonteaching physician
Part A services (Lines 11, 12 and 13), home office salaries and wage-
related costs reported by the hospital on Lines 14.01, 14.02, and 15,
and nonexcluded area wage-related costs (Lines 17, 22, 25.50, 25.51,
and 25.52). We note that contract labor and home office salaries for
which no corresponding hours are reported are not included. In
addition, wage-related costs for nonteaching physician Part A employees
(Line 22) are excluded if no corresponding salaries are reported for
those employees on Line 4.
The formula for Total Salaries plus Wage-Related Costs (from
Worksheet S-3, Part II) is the following: ((Line 1 + Line 28 + Line 33
+ Line 35)-(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 +
Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13
+ Line 14.01 + 14.02 + Line 15) + (Line 17 + Line 22 + 25.50 + 25.51 +
25.52).
Step 3.--Hours.--With the exception of wage-related costs, for
which there are no associated hours, we compute total hours using the
same methods as described for salaries in Step 2.
The formula for Total Hours (from Worksheet S-3, Part II) is the
following: ((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 +
Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 +
Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line
15).
Step 4.--For each hospital reporting both total overhead salaries
and total
[[Page 42305]]
overhead hours greater than zero, we then allocate overhead costs to
areas of the hospital excluded from the wage index calculation. First,
we determine the ``excluded rate'', which is the ratio of excluded area
hours to Revised Total Hours (from Worksheet S-3, Part II) with the
following formula: (Line 9 + Line 10)/(Line 1 + Line 28 + Line 33 +
Line 35)-(Lines 2, 3, 4.01, 5, 6, 7, 7.01, and 8 and Lines 26 through
43).
We then compute the amounts of overhead salaries and hours to be
allocated to excluded areas by multiplying the above ratio by the total
overhead salaries and hours reported on Lines 26 through 43 of
Worksheet S-3, Part II. Next, we compute the amounts of overhead wage-
related costs to be allocated to excluded areas using three steps:
(1) We determine the ``overhead rate'' (from Worksheet S-3, Part
II), which is the ratio of overhead hours (Lines 26 through 43 minus
the sum of Lines 28, 33, and 35) to revised hours excluding the sum of
lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01, 5, 6,
7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008 and
subsequent wage index calculations, we have been excluding the overhead
contract labor (Lines 28, 33, and 35) from the determination of the
ratio of overhead hours to revised hours because hospitals typically do
not provide fringe benefits (wage-related costs) to contract personnel.
Therefore, it is not necessary for the wage index calculation to
exclude overhead wage-related costs for contract personnel. Further, if
a hospital does contribute to wage-related costs for contracted
personnel, the instructions for Lines 28, 33, and 35 require that
associated wage-related costs be combined with wages on the respective
contract labor lines.
The formula for the Overhead Rate (from Worksheet S-3, Part II) has
been the following: (Lines 26 through 43-Lines 28, 33 and 35) /
((((Line 1 + Lines 28, 33, 35)-(Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 26
through 43))-(Lines 9, 10, 28, 33, and 35)) + (Lines 26 through 43-
Lines 28, 33, and 35)).
We stated in the proposed rule that, for the calculation for FY
2020 and subsequent fiscal years, we were reexamining this step as
previously described regarding removal of the sum of overhead contract
labor hours on Lines 28, 33, and 35. In the denominator of this
calculation of the overhead rate, we have been subtracting out the sum
of the overhead contract labor hours from Revised Total Hours. However,
we stated in the proposed rule that this requires modification because
Revised Total Hours do not include these overhead contract labor hours.
We proposed to modify this step of the calculation of the overhead rate
as follows:
The formula for the Overhead Rate (from Worksheet S-3, Part II)
would be the following: (Lines 26 through 43-Lines 28, 33 and 35) /
((((Line 1 + Lines 28, 33, 35)-(Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, and
26 through 43))-(Lines 9 and 10)) + (Lines 26 through 43-Lines 28, 33,
and 35)).
(2) We compute overhead wage-related costs by multiplying the
overhead hours ratio by wage-related costs reported on Part II, Lines
17, 22, 25.50, 25.51, and 25.52.
(3) We multiply the computed overhead wage-related costs by the
previously described excluded area hours ratio.
Finally, we subtract the computed overhead salaries, wage-related
costs, and hours associated with excluded areas from the total salaries
(plus wage-related costs) and hours derived in Steps 2 and 3.
Step 5.--For each hospital, we adjust the total salaries plus wage-
related costs to a common period to determine total adjusted salaries
plus wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2015 through April 15, 2017,
for private industry hospital workers from the BLS' Compensation and
Working Conditions. We use the ECI because it reflects the price
increase associated with total compensation (salaries plus fringes)
rather than just the increase in salaries. In addition, the ECI
includes managers as well as other hospital workers. This methodology
to compute the monthly update factors uses actual quarterly ECI data
and assures that the update factors match the actual quarterly and
annual percent changes. We also note that, since April 2006 with the
publication of March 2006 data, the BLS' ECI uses a different
classification system, the North American Industrial Classification
System (NAICS), instead of the Standard Industrial Codes (SICs), which
no longer exist. We have consistently used the ECI as the data source
for our wages and salaries and other price proxies in the IPPS market
basket, and we did not propose to make any changes to the usage for FY
2020. The factors used to adjust the hospital's data were based on the
midpoint of the cost reporting period, as indicated in this final rule.
Step 6.--Each hospital is assigned to its appropriate urban or
rural labor market area before any reclassifications under section
1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each
urban or rural labor market area, we add the total adjusted salaries
plus wage-related costs obtained in Step 5 for all hospitals in that
area to determine the total adjusted salaries plus wage-related costs
for the labor market area.
Step 7.--We divide the total adjusted salaries plus wage-related
costs obtained under Step 6 by the sum of the corresponding total hours
(from Step 4) for all hospitals in each labor market area to determine
an average hourly wage for the area.
Step 8.--We add the total adjusted salaries plus wage-related costs
obtained in Step 5 for all hospitals in the Nation and then divide the
sum by the national sum of total hours from Step 4 to arrive at a
national average hourly wage.
Step 9.--For each urban or rural labor market area, we calculate
the hospital wage index value, unadjusted for occupational mix, by
dividing the area average hourly wage obtained in Step 7 by the
national average hourly wage computed in Step 8.
Step 10.--For each urban labor market area for which we do not have
any hospital wage data (either because there are no IPPS hospitals in
that labor market area, or there are IPPS hospitals in that area but
their data are either too new to be reflected in the current year's
wage index calculation, or their data are aberrant and are deleted from
the wage index), we proposed that, for FY 2020 and subsequent years'
wage index calculations, such CBSA's wage index would be equal to total
urban salaries plus wage-related costs (from Step 5) in the State,
divided by the total urban hours (from Step 4) in the State, divided by
the national average hourly wage from Step 8. We stated in the proposed
rule (84 FR 19378) that we believe that, in the absence of wage data
for an urban labor market area, it is reasonable to propose to use a
statewide urban average, which is based on actual, acceptable wage data
of hospitals in that State, rather than impute some other type of value
using a different methodology.
For calculation of the proposed FY 2020 wage index, we noted there
are 2 urban CBSAs for which we do not have IPPS hospital wage data. In
Table 3 associated with the proposed rule (which is available via the
internet on the CMS website) which contains the proposed area wage
indexes, we included a footnote to indicate to which CBSAs this
proposed policy would apply. We proposed that these CBSAs' wage indexes
would be equal to total urban salaries plus wage-related costs (from
Step 5) in the respective State,
[[Page 42306]]
divided by the total urban hours (from Step 4) in the respective State,
divided by the national average hourly wage (from Step 8). Under this
step, we also proposed to apply our proposed policy with regard to how
dollar amounts, hours, and other numerical values in the wage index
calculations are rounded.
We referred readers to section II. of the Appendix of the proposed
rule for the policy regarding rural areas that do not have IPPS
hospitals.
Step 11.--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision were
identified in Table 2 which was listed in section VI. of the Addendum
to the proposed rule and available via the internet on the CMS website.
As we noted previously in this section, we proposed to modify our
methodology with regard to how dollar amounts, hours, and other
numerical values in the unadjusted and adjusted wage index calculation
are rounded, in order to help ensure consistency in the calculation.
For example, we have received questions from stakeholders who use data
printed in our proposed and final rules and online in our public use
files (PUFs) to calculate the wage indexes, and as we noted in the
proposed rule, it has come to our attention that, due in part to
occasional inconsistencies in rounding of data, CMS' calculations and
stakeholders' calculations may not match. Therefore, to help ensure
consistency in the calculation, we proposed to modify how the wage data
numbers are rounded, as follows. For data that we consider to be ``raw
data,'' such as the cost report data on Worksheets S-3, Parts II and
III, and the occupational mix survey data, we proposed to use such data
``as is,'' and not round any of the individual line items or fields.
However, for any dollar amounts within the wage index calculations,
including any type of summed wage amount, average hourly wages, and the
national average hourly wage (both the unadjusted and adjusted for
occupational mix), we proposed to round the dollar amounts to 2
decimals. For any hour amounts within the wage index calculations, we
proposed to round such hour amounts to the nearest whole number. For
any numbers not expressed as dollars or hours within the wage index
calculations, which could include ratios, percentages, or inflation
factors, we proposed to round such numbers to 5 decimals. However, we
proposed to continue rounding the actual unadjusted and adjusted wage
indexes to 4 decimals, as we have done historically.
As discussed in the FY 2012 IPPS/LTCH PPS final rule, in ``Step
5,'' for each hospital, we adjust the total salaries plus wage-related
costs to a common period to determine total adjusted salaries plus
wage-related costs. To make the wage adjustment, we estimate the
percentage change in the employment cost index (ECI) for compensation
for each 30-day increment from October 14, 2015, through April 15,
2017, 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 of the
ECI for FY 2020. 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.
[GRAPHIC] [TIFF OMITTED] TR16AU19.154
For example, the midpoint of a cost reporting period beginning
January 1, 2016, and ending December 31, 2016, is June 30, 2016. An
adjustment factor of 1.01585 was applied to the wages of a hospital
with such a cost reporting period.
Previously, we also would provide a Puerto Rico overall average
hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25 percent
of the Puerto Rico-specific standardized amount. As a result, we
calculated a Puerto Rico-
[[Page 42307]]
specific wage index that was applied to the labor-related share of the
Puerto Rico-specific standardized amount. Section 601 of the
Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section
1886(d)(9)(E) of the Act to specify that the payment calculation with
respect to operating costs of inpatient hospital services of a
subsection (d) Puerto Rico hospital for inpatient hospital discharges
on or after January 1, 2016, shall use 100 percent of the national
standardized amount. As we stated in the FY 2017 IPPS/LTCH PPS final
rule (81 FR 56915 through 56916), because Puerto Rico hospitals are no
longer paid with a Puerto Rico-specific standardized amount as of
January 1, 2016, under section 1886(d)(9)(E) of the Act, as amended by
section 601 of the Consolidated Appropriations Act, 2016, there is no
longer a need to calculate a Puerto Rico-specific average hourly wage
and wage index. Hospitals in Puerto Rico are now paid 100 percent of
the national standardized amount and, therefore, are subject to the
national average hourly wage (unadjusted for occupational mix) and the
national wage index, which is applied to the national labor-related
share of the national standardized amount. Therefore, for FY 2020,
there is no Puerto Rico-specific overall average hourly wage or wage
index.
Based on the previously described methodology, we stated that the
proposed unadjusted national average hourly wage was the following:
------------------------------------------------------------------------
------------------------------------------------------------------------
Proposed FY 2020 Unadjusted National Average Hourly Wage..... $44.03
------------------------------------------------------------------------
Comment: A commenter appreciated and supported CMS's proposal to
provide more transparency and consistency by clarifying the rules of
rounding data in the wage index calculation. However, the commenter
suggested that average hourly wages be treated as a ratio rather than a
dollar amount, and alleged that average hourly wages are actually
imputed ratios and not actual dollar figures. The commenter believed
that rounding average hourly wages to two decimal places as proposed,
rather than the previous method of rounding to 5 decimals, decreases
the precision and accuracy of the wage indexes. The commenter provided
a hypothetical example to support their assertion.
Response: In the proposed rule (84 FR 19379 and 19380), we proposed
to modify our methodology with regard to how dollar amounts, hours, and
other numerical values in the unadjusted and adjusted wage index
calculation are rounded, in order to help ensure consistency in the
calculation. For data that we consider to be ``raw data,'' such as the
cost report data on Worksheets S-3, Parts II and III, and the
occupational mix survey data, we proposed to use such data ``as is,''
and not round any of the individual line items or fields. However, for
any dollar amounts within the wage index calculations, including any
type of summed wage amount, average hourly wages, and the national
average hourly wage (both the unadjusted and adjusted for occupational
mix), we proposed to round the dollar amounts to 2 decimals. For any
hour amounts within the wage index calculations, we proposed to round
such hour amounts to the nearest whole number. For any numbers not
expressed as dollars or hours within the wage index calculations, which
could include ratios, percentages, or inflation factors, we proposed to
round such numbers to 5 decimals. We proposed to continue rounding the
actual unadjusted and adjusted wage indexes to 4 decimals, as we have
done historically.
We appreciate the commenter's careful review of our proposal on
rounding, but we disagree with the commenter that average hourly wages
are actually imputed ratios and not actual dollar figures. While the
average hourly wage for each CBSA and the national average hourly wage
are computed by dividing summed wages in the numerator by summed hours
in the denominator, similar to a ratio, the purpose of this division is
to calculate a dollar amount, not a ratio, that is representative of a
typical wage per hour in that CBSA and nationally. Because dollar
amounts, if not expressed in whole numbers, are typically expressed
with 2 decimal places, we believe it is appropriate to compute average
hourly wages with 2 decimals. Regarding the commenter's concern that
average hourly wages rounded to 2 decimals may result in less precise
wage indexes, we note that our proposal to round to 2 decimals is not
inherently biasing any wage indexes to be artificially too high or too
low; neither is one wage index biased against another, since, as a
relative system, all wage indexes are rounded to 2 decimals. Therefore,
we believe that average hourly wages rounded to 2 decimals can and do
result in wage indexes for each CBSA that are an appropriate gage of
the wages in that area, which is an important feature of the wage index
adjustment.
Comment: We received a couple of other comments about home office/
related organization wages and hours reported on Worksheet S-3, Part
II, lines 14.01 and 14.02, and that these lines may improperly include
wages and hours for Part B and nonreimbursable areas of the hospital.
The commenters requested clarification of the cost report instructions
for these line items.
Response: Because we consider these comment to be outside the scope
of the FY 2020 wage index proposals, we are not directly responding to
these comments in this final rule. However, we will take that
commenter's concerns into consideration for future cost report
clarifications.
After consideration of public comments received, we are finalizing
without modification our proposed methodology as discussed above for
computing the FY 2020 unadjusted wage index, including our proposals
with respect to--(1) rounding dollar amounts, hours, and other
numerical values used in the wage index calculation; (2) revising the
Overhead Rate in Step 4; and (3) the methodology for calculating the
wage index for urban areas without wage data.
Based on the methodology finalized above, the final unadjusted
national average hourly wage is the following:
------------------------------------------------------------------------
------------------------------------------------------------------------
Final FY 2020 Unadjusted National Average Hourly Wage........ $44.19
------------------------------------------------------------------------
2. Policies Regarding Rural Reclassification and Special Statuses for
Multicampus Hospitals
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through
41374), we codified policies regarding rural reclassification and
special statuses for multicampus hospitals in the regulations at Sec.
412.92 for sole community hospitals (SCHs), Sec. 412.96 for rural
referral centers (RRCs), Sec. 412.103 for rural reclassification, and
Sec. 412.108 for Medicare-dependent, small rural hospitals (MDHs).
We stated that these policies apply to hospitals that have a main
campus and one or more remote locations under a single provider
agreement where services are provided and billed under the IPPS and
that meet the provider-based criteria at Sec. 413.65 as a main campus
and a remote location of a hospital, also referred to as multicampus
hospitals or hospitals with remote locations. As discussed in the FY
2019 IPPS/LTCH PPS final rule (83 FR 41369), a main campus of a
hospital cannot obtain an SCH, RRC, or MDH status or rural
reclassification independently or separately from its remote
location(s), and vice versa. Rather, if the criteria are met in the
regulations at Sec. 412.92 for SCHs, Sec. 412.96 for RRCs, Sec.
412.103 for rural reclassification, or Sec. 412.108 for MDHs,
[[Page 42308]]
the hospital (that is, the main campus and its remote location(s)) will
be granted the special treatment or rural reclassification afforded by
the aforementioned regulations.
We stated that, to qualify for rural reclassification or SCH, RRC,
or MDH status, a hospital with remote locations must demonstrate that
both the main campus and its remote location(s) satisfy the relevant
qualifying criteria. If the regulations at Sec. 412.92, Sec. 412.96,
Sec. 412.103, and Sec. 412.108 require data, such as bed count,
number of discharges, or case-mix index, for example, to demonstrate
that the hospital meets the qualifying criteria, the combined data from
the main campus and its remote location(s) are to be used.
For other qualifying criteria set forth in the regulations at
Sec. Sec. 412.92, 412.96, 412.103, and 412.108 that do not involve
data that can be combined, specifically qualifying criteria related to
location, mileage, travel time, and distance requirements, a hospital
would need to demonstrate that the main campus and its remote
location(s) each independently satisfy those requirements in order for
the entire hospital, including its remote location(s), to be
reclassified or obtain a special status.
We refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR
41369 through 41374) for a detailed discussion of our policies for
multicampus hospitals.
Comment: A few commenters referred to CMS' statement in the FY 2019
IPPS/LTCH PPS final rule (83 FR 41373 and 41374) that it will take the
feedback received regarding multicampus hospitals and SCH
determinations into consideration for potential future rulemaking. The
commenters ``wholeheartedly agreed'' with CMS' reasoning behind the use
of remote campus locations for purposes of determining whether the
distance criteria is met when evaluating SCH status criteria, but
stated that they had hoped for clarification in the FY 2020 Medicare
IPPS rulemaking regarding the definition of a remote location to be
used in this determination. The commenters stated that there remains
the potential that facilities that would otherwise qualify as a SCH may
be precluded from doing so by the presence of a remote location that
does not offer services originally intended in the creation of the SCH
framework. Specifically, the commenters requested that CMS consider the
following two policy clarifications:
CMS should define a remote location as one that provides
general acute care services to the community. If the remote location
does not offer general acute care services reasonably available to the
entire community, the campus should not be considered a remote location
for purposes of determining SCH mileage criteria under 412.92(a)(4).
For example, a facility providing only inpatient psychiatric services,
inpatient OB/GYN women's services, or a provider-based Rural Health
Clinic should not considered a remote location, according to the
commenters.
CMS should define a remote location as one that also meets
the criteria of Sec. 412.92(c)(2) which states, ``the term like
hospital means a hospital furnishing short term, acute care. CMS will
not consider the nearby hospital to be a like hospital if the total
inpatient days attributable to units of the nearby hospital that
provides a level of care characteristic of the level of care payable
under the acute care hospital inpatient prospective payment system are
less than or equal to 8 percent of the similarly calculated total
inpatient days of the hospital seeking sole community hospital
designation.''
Response: We appreciate the commenters input. However, because we
consider these comments to be outside the scope of the FY 2020 wage
index proposals, we are not finalizing any changes to these policies in
this final rule, but may consider these comments for future rulemaking.
E. Occupational Mix Adjustment to the FY 2020 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.
1. Use of 2016 Medicare Wage Index Occupational Mix Survey for the FY
2019, FY 2020, and FY 2021 Wage Indexes
Section 304(c) of the Consolidated Appropriations Act, 2001 (Pub.
L. 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 collected data in 2013 to compute the occupational mix
adjustment for the FY 2016, FY 2017, and FY 2018 wage indexes. As
discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19903) and
final rule (82 FR 38137), a new measurement of occupational mix (the
2016 survey) was required for FY 2019, FY 2020, and FY 2021.
The FY 2020 occupational mix adjustment is based on the calendar
year (CY) 2016 survey. Hospitals were required to submit their
completed 2016 surveys (Form CMS-10079, OMB Control Number 0938-0907
with expiration date 09/30/2019) to their MACs by July 3, 2017. The
preliminary, unaudited CY 2016 survey data were posted on the CMS
website on July 12, 2017. As with the Worksheet S-3, Parts II and III
cost report wage data, as part of the FY 2020 desk review process, the
MACs revised or verified data elements in hospitals' occupational mix
surveys that resulted in certain edit failures.
2. Calculation of the Occupational Mix Adjustment for FY 2020
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19380), for FY
2020, we proposed to calculate the occupational mix adjustment factor
using the same methodology that we have used since the FY 2012 wage
index (76 FR 51582 through 51586) and to apply the occupational mix
adjustment to 100 percent of the FY 2020 wage index. As we explained in
the proposed rule (84 FR 19378 through 19380), we proposed to modify
our methodology with regard to how dollar amounts, hours, and other
numerical values in the unadjusted and adjusted wage index calculation
are rounded, in order to ensure consistency in the calculation. For
data that we consider to be ``raw data,'' such as the cost report data
on Worksheets S-3, Parts II and III, and the occupational mix survey
data, we proposed to use these data ``as is'', and not round any of the
individual line items or fields. However, for any dollar amounts within
the wage index calculations, including any type of summed wage amount,
average hourly wages, and the national average hourly
[[Page 42309]]
wage (both the unadjusted and adjusted for occupational mix), we
proposed to round such dollar amounts to 2 decimals. We proposed to
round any hour amounts within the wage index calculations to the
nearest whole number. We proposed to round any numbers not expressed as
dollars or hours in the wage index calculations, which could include
ratios, percentages, or inflation factors, to 5 decimals. However, we
proposed to continue rounding the actual unadjusted and adjusted wage
indexes to 4 decimals, as we have done historically.
Similar to the method we use for the calculation of the wage index
without occupational mix, salaries and hours for a multicampus hospital
are allotted among the different labor market areas where its campuses
are located. Table 2 associated with this final rule (which is
available via the internet on the CMS website), which contains the
final FY 2020 occupational mix adjusted wage index, includes separate
wage data for the campuses of multicampus hospitals. We refer readers
to section III.C. of the preamble of this final rule for a chart
listing the multicampus hospitals and the FTE percentages used to allot
their occupational mix data.
Because the statute requires that the Secretary measure the
earnings and paid hours of employment by occupational category not less
than once every 3 years, 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 2020 wage index. For the proposed FY 2020 wage index, we used
the Worksheet S-3, Parts II and III wage data of 3,221 hospitals, and
we used the occupational mix surveys of 3,119 hospitals for which we
also have Worksheet S-3 wage data, which represented a ``response''
rate of 97 percent (3,119/3,221). For the proposed FY 2020 wage index,
we applied proxy data for noncompliant hospitals, new hospitals, or
hospitals 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). As a result of applying this
methodology, the proposed FY 2020 occupational mix adjusted national
average hourly wage was the following:
Proposed FY 2020 Occupational Mix Adjusted National Average $43.99
Hourly Wage.................................................
Comment: A 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
suggested that a penalty be instituted for nonsubmitters. This
commenter also requested that, pending CMS' analysis of the Commuting
Based Wage Index and given the Institute of Medicine's study on
geographic variation in hospital wage costs, CMS eliminate the
occupational mix survey and the significant reporting burden it
creates.
Response: We appreciate the commenter's concern about the accuracy
of the wage index. We have continually requested that all hospitals
complete and submit the occupational mix surveys, although we did not
establish a penalty for hospitals that did not submit the surveys. We
did not establish a penalty for hospitals that did not submit the 2016
surveys. However, we are continuing to consider for future rulemaking
various options for ensuring full compliance with future occupational
mix surveys. Regarding the commenter's concern about the administrative
burden of the occupational mix survey and the suggestion that we
eliminate it, this survey is necessary to meet the provisions of
section 1886(d)(3)(E) of the Act which requires us to measure the
earnings and paid hours of employment by occupational category.
After consideration of the public comments we received, for the
reasons discussed in the final rule and the proposed rule, for FY 2020,
we are adopting as final our proposal to calculate the occupational mix
adjustment factor using the same methodology that we have used since
the FY 2012 wage index. In addition, as proposed, we are modifying our
methodology with regard to how dollar amounts, hours, and other
numerical values in the unadjusted and adjusted wage index calculation
are rounded, in order to ensure greater consistency in the calculation.
For data that we consider to be ``raw data,'' such as the cost report
data on Worksheets S-3, Parts II and III, and the occupational mix
survey data, we will use these data ``as is'', and not round any of the
individual line items or fields. However, for any dollar amounts within
the wage index calculations, including any type of summed wage amount,
average hourly wages, and the national average hourly wage (both the
unadjusted and adjusted for occupational mix), we will round such
dollar amounts to 2 decimals. We will round any hour amounts within the
wage index calculations to the nearest whole number. We will round any
numbers not expressed as dollars or hours in the wage index
calculations, which could include ratios, percentages, or inflation
factors, to 5 decimals. However, we will continue rounding the actual
unadjusted and adjusted wage indexes to 4 decimals, as we have done
historically.
For the final rule FY 2020 wage index, we used the Worksheet S-3,
Parts II and III wage data of 3,239 hospitals, and we used the
occupational mix surveys of 3,136 hospitals for which we also have
Worksheet S-3 wage data, which represented a ``response'' rate of 97
percent (3,136/3,239). (We note that the number of occupational mix
surveys in this final rule differs from that of the proposed rule
because for this final rule we have generally been able to include the
occupational mix surveys of hospitals whose wage data were aberrant for
the proposed rule but have since been improved and were used for this
final rule. However, since a proportional number of occupational mix
surveys to the number of hospitals included in the wage index are
included, the response rate remains the same. For the final FY 2020
wage index, we applied proxy data for noncompliant hospitals, new
hospitals, or hospitals 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). As a result
of applying this methodology, the final FY 2020 occupational mix
adjusted national average hourly wage is the following:
------------------------------------------------------------------------
------------------------------------------------------------------------
Final FY 2020 Occupational Mix Adjusted National Average $44.15
Hourly Wage.................................................
------------------------------------------------------------------------
F. Analysis and Implementation of the Occupational Mix Adjustment and
the FY 2020 Occupational Mix Adjusted Wage Index
As discussed in section III.E. of the preamble of this final rule,
for FY 2020, we are applying the occupational mix adjustment to 100
percent of the FY 2020 wage index. We calculated the occupational mix
adjustment using data from the 2016 occupational mix survey data, using
the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51582 through 51586).
The FY 2020 national average hourly wages for each occupational mix
nursing subcategory as calculated in Step 2 of the occupational mix
calculation are as follows. (We note that the average hourly wage
figures are rounded to two decimal places as we are finalizing in
section III.D. of the preamble of this final rule.)
[[Page 42310]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.155
The national average hourly wage for the entire nurse category is
computed in Step 5 of the occupational mix calculation. 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 2016 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 42 percent,
and the national percentage of hospital employees in the all other
occupations category is 58 percent. At the CBSA level, the percentage
of hospital employees in the nurse category ranged from a low of 27
percent in one CBSA to a high of 82 percent in another CBSA.
We compared the FY 2020 occupational mix adjusted wage indexes for
each CBSA to the unadjusted wage indexes for each CBSA. Applying the
occupational mix adjustment to the wage data resulted in the following:
[GRAPHIC] [TIFF OMITTED] TR16AU19.156
These results indicate that a larger percentage of urban areas
(56.6 percent) would benefit from the occupational mix adjustment than
would rural areas (48.9 percent).
G. Application of the Rural Floor, Summary of Expired Imputed Floor
Policy, and Application of the State Frontier Floor
1. 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. Based
on the FY 2020 wage index associated with this final rule (which is
available via the internet on the CMS website) and, as discussed in
section III.N. of the preamble of this final rule, based on the
calculation of the rural floor without the wage data of hospitals that
have reclassified as rural under Sec. 412.103, we estimate that 166
hospitals will receive an increase in their FY 2020 wage index due to
the application of the rural floor.
2. Summary of Expired Imputed Floor Policy
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41376
through 41380), the imputed floor under both the original methodology
and the alternative methodology expired on September 30, 2018. As such,
the wage index and impact tables associated with this FY 2020 IPPS/LTCH
PPS final rule (which are available on the internet via the CMS
website) do not reflect the imputed floor policy, and we are not
applying a national budget neutrality adjustment for the imputed floor
for FY 2020. For a complete discussion, we refer readers to the FY 2019
IPPS/LTCH PPS final rule (83 FR 41376 through 41380). As discussed in
the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19393 through 19399), we
sought public comments on proposals to help address wage index
disparities under the IPPS. We refer readers to section III.N of this
final rule for a summary of these public comments and our responses. We
also sought public comments on how the expiration of the imputed floor
has impacted hospitals in FY 2019.
Comment: Multiple commenters stated that hospitals in all-urban
states are subject to financial and competitive disadvantage as they
face unique
[[Page 42311]]
conditions including close proximity to some of the most competitive
and densely populated labor markets in the country. Commenters stated
that residents of all-urban states have a multitude of options in
employment opportunities and, as such, competition further drives up
the cost of labor in the region. Multiple commenters stated that
without the imputed floor policy, all-urban states lack the protection
for hospitals located outside of predominant labor markets. Commenters
also stated that rural and urban populations have unique health needs
and access issues which should be addressed equitably to ensure that
all patients have sufficient access to care and that all physicians are
compensated fairly for their work. Multiple commenters also stated that
they support a permanent fix to the geographic disadvantage faced by
hospitals in all-urban states and that they urge CMS look at ways to
maintain the rural floor for urban hospitals while also addressing the
needs of rural hospitals. Commenters further stated that CMS should
maintain the imputed floor policy, just as it had for more than a
decade, since the policy was effective at addressing the competitive
disadvantage suffered by all-urban states in the absence of an imputed
floor index. Finally, multiple commenters urged CMS to consider the
significant negative impact of discontinuing the imputed floor policy,
and urged the agency to consider how this action has impacted the
ability of hospitals within all-urban states to compete in high-wage
labor markets while providing high-quality services to patients.
A commenter stated that prior to the expiration of the imputed
floor policy, hospitals in Rhode Island had some of the slimmest
operating margins in the nation and the immediate impact of the
elimination of the imputed floor to hospitals in Rhode Island was a 9.5
percent reduction in Medicare payments resulting in a direct loss of
$28 million in fee-for-service Medicare payments and an additional loss
of approximately $12 million in Medicare managed care payments. This
commenter stated that it is without question that the expiration of the
imputed floor policy has already had a dramatic impact on the financial
solvency of every hospital in Rhode Island that is evidenced by the
negative hospital operating margins reported in the first and second
quarter of FY 2019. According to the commenter, the decision to
eliminate the imputed floor policy did not consider the unique
characteristics of Rhode Island that exist in the labor market in
Southeastern New England which contributes to strong competition for
healthcare workers. The commenter stated that the hospitals in Rhode
Island operate and compete for workforce within a short distance of the
high wage labor markets in Massachusetts and Connecticut that currently
benefit from higher reimbursement rates due to their state's rural
floor. The commenter stated that every Rhode Island resident lives
within 30 minutes of either Massachusetts or Connecticut and the
commuter rail runs from Providence, Rhode Island to Boston,
Massachusetts and takes less than one hour resulting in thousands of
Rhode Island residents commuting to jobs in Massachusetts and
Connecticut every day. The commenter further stated that the Medicare
wage index policies in effect today placed their hospitals at a
distinct labor market disadvantage with Massachusetts and Connecticut
evidenced by the fact that Rhode Island currently exports 22 percent of
its nurses to Massachusetts and Connecticut, while Massachusetts
exports 3.5 percent to Connecticut and Rhode Island and Connecticut
exports 4.7 percent to Massachusetts and Rhode Island. The commenter
stated that if Rhode Island is unable to compete for skilled healthcare
professionals, it will ultimately impact the access to care for
Medicare beneficiaries and all Rhode Islanders. Finally the commenter
stated that they request that CMS restore the imputed floor policy
retroactively to October 1, 2018 in a non-budget neutral manner, due to
the tremendous immediate impact on the hospitals in Rhode Island.
Multiple commenters stated that it is important to note that the
discontinuation of the imputed floor policy for all-urban states
further exacerbates the disproportionate impact of the wage index
disparities proposals on hospitals within all-urban states. A commenter
stated that the imputed floor policy addressed the inequities in the
wage index, which CMS' FY 2020 wage index disparities proposals will
compound. A commenter explained that in FY 2019 CMS stated, ``By
allowing the imputed rural floor to expire for all urban states . . .
CMS has begun the process of making the wage index more equitable.''
The commenter explained, however, that in FY 2020, CMS recognized that
the FY 2020 wage index disparities proposals will have significant
adverse financial impacts on hospitals. More specifically, the
commenter stated that CMS' elimination of the imputed floor policy did
not account for the immediate impact to hospitals in Rhode Island;
however, CMS acknowledged with the FY 2020 wage index disparities
proposal that it is aware of and attempting to account for potential
impact of that proposal by proposing to cap any wage index decreases
for FY 2020 (including wage index decreases experienced by hospitals
with wage indexes in the top 25th percentile) at 5 percent under the
reasoning that hospitals so harmed should not face such immediate and
drastic cuts. The commenter stated that it is unfortunate that CMS did
not act with this same deliberation when it summarily eliminated the
imputed rural floor in FY 2019.
According to the commenter, as CMS continues to address what it
considers to be disparities in the wage index and how it is
implemented, it unfortunately creates yet another disparity for Rhode
Island hospitals. The commenter stated that if CMS is unable to develop
a reasonable alternative methodology, then the elimination of the
imputed floor policy should be considered as part of the broader
Medicare wage index disparities proposal which recognizes and includes
protection from significant losses in one year. The commenter also
requested consideration for reinstatement of the imputed floor policy
in FY 2020, and that the imputed floor policy be applied to the FY 2020
wage index.
A commenter stated that the expiration of the imputed floor policy
resulted in a loss of approximately $11 million for New Jersey
hospitals in areas that receive a lower overall wage index than
hospitals classified into major metropolitan areas. Another commenter
stated they estimated that the imputed floor policy's benefit to New
Jersey in FY 2019 would have been approximately $13 million. According
to commenters, the elimination of this policy is added to the total
tally of cuts and disadvantageous policies from which hospitals in high
wage and all-urban states suffer. According to a commenter, New
Jersey's geographic location bordering the first and sixth largest
cities in the country and the compact size of the state, along with
numerous commuting options, put further strain on the labor market. A
commenter stated that due to the expiration of the imputed floor
policy, their hospitals are now receiving $5.5 million less in payments
from Medicare that could have been used to benefit patient care in
myriad ways, particularly in the underserved areas, such as: Employment
of additional physicians including primary care and specialists to
ensure continued access to care; expansion of programs to provide
needed services such as addressing food
[[Page 42312]]
insecurity and childhood early intervention; and expansion of the
numerous health programs already subsidized by their hospitals. The
commenter stated not just one program was negatively affected by the
elimination of the imputed floor policy, as there are numerous programs
and opportunities to provide essential care in the communities they
serve.
Response: We thank the commenters for their comments regarding how
the expiration of the imputed floor has impacted hospitals in FY 2019.
As discussed in the FY 2019 final rule (83 FR 41378), we have expressed
reservations about the imputed floor considering that the imputed rural
floor methodology creates a disadvantage in the application of the wage
index to hospitals in States with rural hospitals but no urban
hospitals receiving the rural floor. As we discussed in the FY 2008
IPPS/LTCH PPS final rule (72 FR 47322), the FY 2012 IPPS/LTCH PPS final
rule (76 FR 51593), the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19905), and the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20363), the
application of the rural and imputed floors requires transfer of
payments from hospitals in States with rural hospitals but where the
rural floor is not applied to hospitals in States where the rural or
imputed floor is applied. While we continue to have such reservations
about the application of an imputed floor, we are summarizing the
comments we received in this final rule for the public's information.
3. State Frontier Floor for FY 2020
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 the 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).) In the FY 2020 IPPS/
LTCH PPS proposed rule, we did not propose any changes to the frontier
floor policy for FY 2020. We stated in the proposed rule that 45
hospitals would receive the frontier floor value of 1.0000 for their FY
2020 wage index. These hospitals are located in Montana, Nevada, North
Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the
State frontier floor for FY 2020. In this final rule, 45 hospitals will
receive the frontier floor value of 1.0000 for their FY 2020 wage
index. These hospitals are located in Montana, Nevada, North Dakota,
South Dakota, and Wyoming.
The areas affected by the final rural and frontier floor policies
for the final FY 2020 wage index are identified in Table 2 associated
with this final rule, which is available via the internet on the CMS
website.
H. FY 2020 Wage Index Tables
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49498 and 49807
through 49808), we finalized a proposal to streamline and consolidate
the wage index tables associated with the IPPS proposed and final rules
for FY 2016 and subsequent fiscal years. Prior to FY 2016, the wage
index tables had consisted of 12 tables (Tables 2, 3A, 3B, 4A, 4B, 4C,
4D, 4E, 4F, 4J, 9A, and 9C) that were made available via the internet
on the CMS website. Effective beginning FY 2016, with the exception of
Table 4E, we streamlined and consolidated 11 tables (Tables 2, 3A, 3B,
4A, 4B, 4C, 4D, 4F, 4J, 9A, and 9C) into 2 tables (Tables 2 and 3). As
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41380),
beginning with FY 2019, we added Table 4 which is titled and includes a
``List of Counties Eligible for the Out-Migration Adjustment under
Section 1886(d)(13) of the Act'' for the relevant fiscal year. We refer
readers to section VI. of the Addendum to this final rule for a
discussion of the final wage index tables for FY 2020.
I. 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 Medicare Geographic
Classification Review Board (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 (usually 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
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 and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596). In addition, 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.
On April 21, 2016, we published an interim final rule with comment
period (IFC) in the Federal Register (81 FR 23428 through 23438) that
included provisions amending our regulations to allow hospitals
nationwide to have simultaneous Sec. 412.103 and MGCRB
reclassifications. For reclassifications effective beginning FY 2018, a
hospital may acquire rural status under Sec. 412.103 and subsequently
apply for a reclassification under the MGCRB using distance and average
hourly wage criteria designated for rural hospitals. In addition, we
provided that a hospital that has an active MGCRB reclassification and
is then approved for redesignation under Sec. 412.103 will not lose
its MGCRB reclassification; such a hospital receives a reclassified
urban wage index during the years of its active MGCRB reclassification
and is still considered rural under section 1886(d) of the Act and for
other purposes.
We discussed that when there is both a Sec. 412.103 redesignation
and an MGCRB reclassification, the MGCRB reclassification controls for
wage index calculation and payment purposes. We exclude hospitals with
Sec. 412.103 redesignations from the calculation of the reclassified
rural wage index if they also have an active MGCRB reclassification to
another area. That is, if an application for urban reclassification
through the MGCRB is approved, and is not withdrawn or terminated by
the hospital within the established timelines, we consider the
hospital's geographic CBSA and the urban CBSA to which the hospital is
reclassified under the MGCRB for the wage index calculation. We refer
readers to the April 21, 2016 IFC (81 FR 23428 through 23438) and the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56922 through 56930) for a full
discussion of the effect of simultaneous reclassifications under both
the Sec. 412.103 and the MGCRB processes on wage index calculations.
[[Page 42313]]
2. MGCRB Reclassification and Redesignation Issues for FY 2020
a. FY 2020 Reclassification Application Requirements and Approvals
As previously stated, 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 2020 reclassification requests. Based on
such reviews, there are 294 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2020. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2020,
hospitals reclassified beginning in FY 2018 or FY 2019 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 290 hospitals approved for wage index reclassifications in
FY 2018 that will continue for FY 2020, and 275 hospitals approved for
wage index reclassifications in FY 2019 that will continue for FY 2020.
Of all the hospitals approved for reclassification for FY 2018, FY
2019, and FY 2020, based upon the review at the time of this final
rule, 859 hospitals are in a MGCRB reclassification status for FY 2020
(with 30 of these hospitals reclassified back to their geographic
location).
Under the regulations at 42 CFR 412.273, hospitals that have been
reclassified by the MGCRB are permitted to withdraw their applications
if the request for withdrawal is received by the MGCRB any time before
the MGCRB issues a decision on the application, or after the MGCRB
issues a decision, provided the request for withdrawal is received by
the MGCRB within 45 days of the date that CMS' annual notice of
proposed rulemaking is issued in the Federal Register concerning
changes to the inpatient hospital prospective payment system and
proposed payment rates for the fiscal year for which the application
has been filed. 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 Sec.
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) and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38148 through
38150).
Changes to the wage index that result from withdrawals of requests
for reclassification, terminations, wage index corrections, appeals,
and the Administrator's review process for FY 2020 are incorporated
into the wage index values published in this FY 2020 IPPS/LTCH PPS
final rule. These changes affect not only the wage index value for
specific geographic areas, but also the wage index value that
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.
Applications for FY 2021 reclassifications (OMB Control Number
0938-0573, expiration date January 31, 2021) are due to the MGCRB by
September 3, 2019 (the first working day of September 2019). We note
that this is also the deadline for canceling a previous wage index
reclassification withdrawal or termination under 42 CFR 412.273(d).
Applications and other information about MGCRB reclassifications may be
obtained beginning in mid-July 2019, via the internet on the CMS
website at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/index.html, or by calling the MGCRB at (410) 786-1174.
b. Elimination of Copy Requirement to CMS
Under regulations in effect prior to FY 2018 (42 CFR
412.256(a)(1)), applications for reclassification were required to be
mailed or delivered to the MGCRB, with a copy to CMS, and were not
allowed to be submitted through the facsimile (FAX) process or by other
electronic means. Because we believed this previous policy was outdated
and overly restrictive and to promote ease of application for FY 2018
and subsequent years, in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56928), we revised this policy to require applications and supporting
documentation to be submitted via the method prescribed in instructions
by the MGCRB, with an electronic copy to CMS.
We stated in the proposed rule (84 FR 19383) that, beginning with
applications from hospitals to reclassify for FY 2020, the MGCRB
requires applications, supporting documents, and subsequent
correspondence to be filed electronically through the MGCRB module of
the Office of Hearings Case and Document Management System (``OH
CDMS''). Also, we stated that the MGCRB issues all of its notices and
decisions via email and these documents are accessible electronically
through OH CDMS. Registration instructions and the system user manual
are available at: https://www.cms.gov/Regulations-and-Guidance/Review-Boards/MGCRB/Electronic-Filing.html.
Filing a reclassification application using OH CDMS entails
completing required fields electronically and uploading supporting
documentation. We stated in the proposed rule that we believe the
requirement for hospitals to submit a copy of the application to CMS
would now require hospitals to compile their application information in
a different format than what is required by the MGCRB, which would
result in additional burden for hospitals. Furthermore, we stated that
we believe CMS can forgo the copy of applications provided by hospitals
because the MGCRB's electronic module will facilitate CMS' verification
of reclassification statuses during the wage index development process.
Therefore, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19383), we
proposed to reduce burden for hospitals by eliminating the requirement
to copy CMS. Specifically, we proposed to revise Sec. 412.256(a)(1) to
delete the requirement that an electronic copy of the application be
sent to CMS, so that this section would specify that an application
must be submitted to the MGCRB according to the method prescribed by
the MGCRB.
Comment: Many commenters supported our proposal to no longer
require that a copy of the application be submitted to CMS. The
commenters stated that it will be less of a burden on hospitals. A few
commenters applauded the proposal as a positive effort by CMS toward
reducing administrative burden and duplication for hospitals, and
encouraged CMS to continue seeking ways to modernize processes.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, for the
reasons discussed in this final rule and the proposed rule, we are
finalizing as proposed, without modification, our revisions to Sec.
412.256(a)(1) to delete the requirement that an electronic copy of the
application be sent to CMS, so that this section specifies that an
application must be submitted to the MGCRB
[[Page 42314]]
according to the method prescribed by the MGCRB.
c. Revision To Clarify Criteria for a Hospital Seeking Reclassification
to Another Rural Area or Urban Area
Section 412.230(a)(4) of our regulations currently specifies that
the rounding of numbers to meet certain mileage or qualifying
percentage standards is not permitted when an individual hospital seeks
wage index reclassification through the MGCRB. In this section, the
regulation specifically cites paragraphs (b)(1), (b)(2), (d)(1)(iii),
and (d)(1)(iv)(A) and (B). The qualifying percentage standards included
in these paragraphs have been periodically updated, and additional
paragraphs have been added in Sec. 412.230 to reflect these changes.
Specifically, paragraphs (d)(1)(iv)(C), (D), and (E) have been added to
Sec. 412.230 to reflect changes in the percentage standards
implemented in FY 2002, FY 2010, and FY 2011, respectively. Although we
have continued to apply the policy set forth at Sec. 412.230(a)(4) to
the updated percentage standards set forth in paragraphs (d)(1)(iv)(C),
(D), and (E) in Sec. 412.230, conforming changes to Sec.
412.230(a)(4) were not made to reflect these new paragraphs. This
oversight has caused some confusion. Therefore, in the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19383), we proposed to revise Sec.
412.230(a)(4) to clarify that the policy prohibiting the rounding of
qualifying percentage standards applies to paragraphs (d)(1)(iv)(C),
(D), and (E) in Sec. 412.230. Specifically, we proposed to remove
specific references to paragraphs (d)(1)(iv)(A) and (B) and instead
cite paragraph (d)(1)(iv) as a more general reference to the specific
standards.
We did not receive any public comments regarding this proposal. For
the reasons discussed in this final rule and the proposed rule, we are
finalizing the proposal, without modification, to revise Sec.
412.230(a)(4) by removing specific references to paragraphs
(d)(1)(iv)(A) and (B) and instead cite paragraph (d)(1)(iv) as a more
general reference to the specific standards.
3. Redesignations Under Section 1886(d)(8)(B) of the Act
a. Lugar Status Determinations
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 effective for the
fiscal year in which the hospital receives the out-migration
adjustment. In addition, in that rule, we adopted a minor procedural
change that would allow a Lugar hospital that qualifies for and accepts
the out-migration 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. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56930), we
further clarified that if a hospital wishes to reinstate its urban
status for any fiscal year within this 3-year period, it must send a
request to CMS within 45 days of publication of the proposed rule for
that particular fiscal year. We indicated that such reinstatement
requests may be sent electronically to [email protected]. In the FY
2018 IPPS/LTCH PPS final rule (82 FR 38147 through 38148), we finalized
a policy revision to require a Lugar hospital that qualifies for and
accepts the out-migration adjustment, or that no longer wishes to
accept the out-migration adjustment and instead elects to return to its
deemed urban status, to notify CMS within 45 days from the date of
public display of the proposed rule at the Office of the Federal
Register. These revised notification timeframes were effective
beginning October 1, 2017. In addition, in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38148), we clarified that both requests to waive and
to reinstate ``Lugar'' status may be sent to [email protected]. To
ensure proper accounting, we request hospitals to include their CCN,
and either ``waive Lugar'' or ``reinstate Lugar'', in the subject line
of these requests.
b. Clarification Regarding Accepting the Out-Migration Adjustment When
the Out-Migration Adjustment Changes After Reclassification
Section 1886(d)(8)(B) of the Act provides that for purposes of a
reclassification under this subsection, the Secretary shall 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
criteria are met. Rural hospitals in these counties are commonly known
as ``Lugar'' hospitals. This statutory provision specifies that Lugar
status is mandatory (not optional) if the statutory criteria are met.
However, as discussed in the FY 2012 IPPS/LTCH PPS proposed and final
rules (76 FR 25885 through 25886 and 51599), Lugar hospitals located in
counties that qualify for the out-migration adjustment are required to
waive their Lugar urban status in its entirety in order to receive the
out-migration adjustment. We stated our belief that this represents one
permissible reading of the statute, given that section 1886(d)(13)(G)
of the Act states that a hospital in a county that has an out-migration
adjustment and that has not waived that adjustment under section
1886(d)(13)(F) of the Act is not eligible for reclassification under
section 1886(d)(8) or (10) of the Act. Therefore, a hospital may opt to
receive either its county's out-migration adjustment or the wage index
determined by its Lugar reclassification.
We stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19384)
that we have become aware of a potential issue with the current
election process that requires further clarification. As discussed in
the following section, the out-migration adjustment is calculated to
provide a positive adjustment to 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 a county is determined to
qualify for an out-migration adjustment, the final adjustment value is
determined in accordance with section 1886(d)(13)(D) of the Act and is
fixed by statute for a 3-year period under section 1886(d)(13)(F) of
the Act. CMS performs an annual analysis to evaluate all counties
without current out-migration adjustment values assigned, including
counties where the out-migration adjustment value will be expiring
after a 3-year period. Initial out-migration adjustment values are
published in Table 4 associated with the IPPS proposed and final rules
(which are available via the internet on the CMS website). We stated in
the proposed rule that, due to various factors, including hospitals
withdrawing or terminating MGCRB reclassifications, obtaining Sec.
412.103 rural reclassifications, or corrections to hospital wage data,
the amount of newly proposed (1st year) out-migration adjustment values
may fluctuate between the proposed rule and the final rule (and
subsequent correction notices). We stated that these fluctuations are
typically minimal. However, we explained that in certain
[[Page 42315]]
circumstances, after processing varying forms of reclassification, wage
index values may change so that a county would no longer qualify for an
out-migration adjustment. In particular, when changes in wage index
reclassification status alter the State rural floor so that multiple
CBSAs would be assigned the same wage index value, an out-migration
adjustment may no longer be indicated for a county as there would be
little, if any, differential in nearby wage index values. We stated in
the proposed rule that this can lead to a situation where a hospital
has opted to receive a nonexistent out-migration adjustment. We further
stated that we believe this situation is not compatible with
longstanding CMS policy preventing a hospital from waiving its deemed
urban Lugar status outside the prescribed out-migration adjustment
election process as previously described. Section 1886(d)(13)(G) of the
Act specifies that a hospital in a county that has a wage index
increase under section 1886(d)(13)(F) of the Act (the out-migration
adjustment) and that has not waived such increase under section
1886(d)(13)(F) of the Act is not eligible for reclassification under
section 1886(d)(8) or (10) of the Act during that period. As we
discussed in the proposed rule, if there is no out-migration adjustment
available to provide a wage index increase, the fact pattern for which
CMS established the process for a hospital to opt to receive a county
out-migration adjustment in lieu of its ``Lugar'' reclassification no
longer applies, and the hospital must be assigned its deemed urban
status. Therefore, in the proposed rule, we clarified that, in
circumstances where an eligible hospital elects to receive the out-
migration adjustment within 45 days of the public display date of the
proposed rule at the Office of the Federal Register in lieu of its
Lugar wage index reclassification, and the county in which the hospital
is located would no longer qualify for an out-migration adjustment when
the final rule (or a subsequent correction notice) wage index
calculations are completed, the hospital's request to accept the out-
migration adjustment would be denied, and the hospital would be
automatically assigned to its deemed urban status under section
1886(d)(8)(B) of the Act. Final rule wage index values would be
recalculated to reflect this reclassification, and in some instances,
after taking into account this reclassification, the out-migration
adjustment for the county in question could be restored in the final
rule. However, as the hospital is assigned a Lugar reclassification
under section 1886(d)(8)(B) of the Act, it would be ineligible to
receive the county out-migration adjustment under section
1886(d)(13)(G) of the Act. Because the out-migration adjustment, once
finalized, is locked for a 3-year period under section 1886(d)(13)(F)
of the Act, the hospital would be eligible to accept its out-migration
adjustment in either the second or third year.
c. Change to Lugar County Assignments
Section 1886(d)(8)(B) of the Act establishes a wage index
reclassification process by which the Secretary is required 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 (MSA), or
core based statistical area (CBSA), to which the greatest number of
workers in the county commute if certain criteria are met. Rural
hospitals in these counties are known as ``Lugar'' hospitals and the
counties themselves are often referred to as ``Lugar'' counties. These
Lugar counties are not located in any urban area, but are adjacent to
one or more urban CBSAs. In determining whether a county qualifies as a
Lugar county, sections 1886(d)(8)(B)(i) and (ii) of the Act require us
to use the standards for designating MSAs published in the Federal
Register by OMB based on the most recent available decennial population
data. Based on OMB definitions (75 FR 37246 through 37252), a CBSA is
composed of ``central'' counties and ``outlying'' counties. While
``central'' counties meet certain population density requirements and
other urban characteristics, a county qualifies as an ``outlying''
county of a CBSA if it meets one of the following commuting
requirements: (a) At least 25 percent of the workers living in the
county work in the central county or counties of the CBSA; or (b) at
least 25 percent of the employment in the county is accounted for by
workers who reside in the central county or counties of the CBSA. Given
the OMB standards, as previously discussed, when a county is located
between two or more urban centers, these ``central'' county commuting
patterns may be split between two or more CBSAs, and the 25-percent
thresholds to qualify as an outlying county for any single CBSA may not
be met. In such situations, the county would be considered rural
according to CMS, based on the OMB definitions as previously discussed,
as it would not be part of an urban CBSA. Section 1886(d)(8)(B) of the
Act addresses this issue where a county would have qualified as an
outlying urban county if all its central county commuting data to
adjacent urban CBSAs were combined. Specifically, section
1886(d)(8)(B)(i) of the Act requires CMS to consider a rural county to
be part of an adjacent CBSA if the rural county would otherwise be
considered part of an urban area under the OMB 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 counties of all contiguous MSAs.
Section 1886(d)(8)(B)(i) of the Act further requires CMS to assign
these Lugar counties to the CBSA to which the greatest number of
workers in the county commute. We stated in the proposed rule (84 FR
19385) that since the implementation of section 1886(d)(8)(B) of the
Act for discharges occurring after October 1, 1988, CMS' policy has
been that, once a county qualifies as Lugar, the proper methodology for
determining the CBSA to which the greatest number of workers in the
county commute should be based on the same OMB dataset used to
determine whether a county qualifies as an ``outlying'' county of a
CBSA. These data are a summary of commuting patterns between the
noncentral county being evaluated and the ``central'' county or
counties of an urban metropolitan area (without taking into account
outlying counties). We stated in the proposed rule that section
1886(d)(8)(B) of the Act clearly instructs CMS to use the OMB criteria
for determining ``outlying'' counties when determining the list of
qualifying Lugar counties. These criteria are limited to assessing
commuting patterns to and from central counties. Further, we further
stated that we do not believe the statute requires that CMS perform an
additional and separate community analysis, taking into account
outlying counties, to determine to which CBSA a Lugar county should be
assigned. We explained that when CMS updated the OMB labor market
delineations based on the 2010 decennial census in FY 2015, we were
made aware that a hospital in Henderson County, TX (a Lugar county)
disagreed with CMS' interpretation of the statute. In particular, the
hospital stated that section 1886(d)(8)(B)(i) of the Act requires that
CMS assign a qualified Lugar county to ``the urban metropolitan
statistical area to which the greatest number of workers in the county
commute,'' and that this instruction does not distinguish between an
urban
[[Page 42316]]
CBSA's central counties and outlying counties. The hospital claimed
that the assignment of a Lugar county to a CBSA should not be based
solely on commuting data and commuting patterns to and from the central
county or counties of a CBSA, but should consider outlying counties as
well.
We stated in the proposed rule that after consideration of this
matter, we continue to believe that CMS' methodology is a reasonable
interpretation of the statute. However, we stated that upon further
consideration and analysis, we have determined that the Henderson, TX
hospital's interpretation of section 1886(d)(8)(B) of the Act is a
reasonable alternative. We explained that, after reanalyzing the
commuting data used when developing the FY 2015 IPPS/LTCH PPS final
rule (the American Community Survey commuting data for 2006 to 2010),
we identified 10 instances where a rural county would have been
assigned to a different CBSA if we had considered outlying counties in
our analysis of the urban metropolitan statistical area to which the
greatest number of workers in the county commute, as shown in the table
in this section of this final rule.
[[Page 42317]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.157
Of these 10 counties, currently only 3 counties (Talladega, AL,
Pearl River, MS, and Henderson, TX) contain IPPS hospitals (4 hospitals
in total). We explained in the proposed rule (84 FR 19386) that when
including ``outlying''
[[Page 42318]]
counties in the commuting analysis, the analysis suggests that
generally (but not always) the revised CBSA assignment would be to a
larger CBSA, which would be expected as larger CBSAs generally include
a greater number of ``outlying'' counties. We stated in the proposed
rule (84 FR 19887 through 19387) that after further consideration of
this issue, we believe that inclusion of outlying counties in the
commuting analysis for purposes of assigning counties that qualify as
Lugar counties (the second step of the Lugar analysis), although not
unambiguously required by statute, is a reasonable, and arguably more
natural, reading of the language in section 1886(d)(8)(B)(i) of the
Act. Accordingly, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19387), we proposed to modify the assigned CBSA for the 10 Lugar
counties specified in the table set forth in the proposed rule for FY
2020. We stated in the proposed rule that we also planned to fully
reevaluate this proposed policy and underlying methodologies, if
finalized, when CMS updates Lugar county assignments, which typically
occurs after OMB labor market delineations are updated in response to
the next decennial census.
Comment: A commenter supported CMS' proposal to modify the assigned
CBSA for the 10 Lugar counties. The commenter concurred that inclusion
of both ``central'' and ``outlying'' counties in the commuting analysis
for purposes of assigning counties that qualify as Lugar counties is a
reasonable interpretation of section 1886(d)(8)(B)(i) of the Act.
Response: We appreciate the commenter's support of our proposal.
After consideration of the public comments we received, for the
reasons discussed in this final rule and the proposed rule, we are
finalizing as proposed, without modification, the revised CBSA
assignments as described in the table set forth in the proposed rule
(84 FR 19386) and as reflected in the table in this final rule. We
further intend to reevaluate this policy and underlying methodologies
when CMS updates Lugar county assignments after OMB labor market
delineations are updated in response to the next decennial census.
J. Out-Migration 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.
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. When the provision of section 1886(d)(13) of the
Act was implemented for the FY 2005 wage index, we analyzed commuting
data compiled by the U.S. Census Bureau that were derived from a
special tabulation of the 2000 Census journey-to-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 that time and which contained questions on where
residents in each county worked (69 FR 49062). However, the 2010 Census
was ``short form'' only; information on where residents in each county
worked was not collected as part of the 2010 Census. The Census Bureau
worked with CMS to provide an alternative dataset based on the latest
available data on where residents in each county worked in 2010, for
use in developing a new out-migration adjustment based on new commuting
patterns developed from the 2010 Census data beginning with FY 2016.
To determine the out-migration adjustments and applicable counties
for FY 2016, we analyzed commuting data compiled by the Census Bureau
that were derived from a custom tabulation of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year) Microdata. The data were compiled from responses to the
ACS questions regarding the county where workers reside and the county
to which workers commute. As we discussed in the FYs 2016, 2017, 2018,
and 2019 IPPS/LTCH PPS final rules (80 FR 49501, 81 FR 56930, 82 FR
38150, and 83 FR 41384, respectively), the same policies, procedures,
and computation that were used for the FY 2012 out-migration adjustment
were applicable for FYs 2016 through 2019, and in the FY 2020 IPPS/LTCH
PPS proposed rule (84 FR 19387), we proposed to use them again for FY
2020. We have applied the same policies, procedures, and computations
since FY 2012, and we believe they continue to be appropriate for FY
2020. We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR
49500 through 49502) for a full explanation of the revised data source.
For FY 2020, the out-migration adjustment will continue to be based
on the data derived from the custom tabulation of the ACS utilizing
2008 through 2012 (5-year) Microdata. For future fiscal years, we may
consider determining out-migration adjustments based on data from the
next Census or other available data, as appropriate. For FY 2020, we
did not propose any changes to the methodology or data source that we
used for FY 2016 (81 FR 25071). (We refer readers to a full discussion
of the out-migration 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).) We did not receive any
public comments on this proposed policy for FY 2020. Therefore, for FY
2020, we are finalizing our proposal, without modification, to continue
using the same policies, procedures, and computation that were used for
the FY 2012 outmigration adjustment and that were applicable for FY
2016, FY 2017, FY 2018, and FY 2019.
Table 2 associated with this final rule (which is available via the
internet on the CMS website) includes the final out-migration
adjustments for the FY 2020 wage index. In addition, as discussed in
the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20367), we have added a
Table 4, ``List of Counties Eligible for the Out-Migration Adjustment
under Section 1886(d)(13) of the Act.'' For this final rule, Table 4
consists of the following: A list of counties that are eligible for the
out-migration adjustment for FY 2020 identified by FIPS county code,
the final FY 2020 out-migration adjustment, and the number of years the
adjustment will be in effect. We believe this table makes this
information more transparent and provides the public with easier access
to this information. We note that we intend to make the information
available annually via Table 4 associated with the IPPS/LTCH PPS
proposed and final rules, and are including it among the tables
associated with this FY 2020 IPPS/LTCH PPS final rule that are
available via the internet on the CMS website.
[[Page 42319]]
K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of
the Act, Implemented at 42 CFR 412.103
1. Application for Rural Status and Lock-In Date
Under section 1886(d)(8)(E) of the Act, a qualifying prospective
payment hospital located in an urban area may apply for rural status
for payment purposes separate from reclassification through the MGCRB.
Specifically, section 1886(d)(8)(E) of the Act provides that, not later
than 60 days after the receipt of an application (in a form and manner
determined by the Secretary) from a subsection (d) hospital that
satisfies certain criteria, the Secretary shall treat the hospital as
being located in the rural area (as defined in paragraph (2)(D)) of the
State in which the hospital is located. We refer readers to the
regulations at 42 CFR 412.103 for the general criteria and application
requirements for a subsection (d) hospital to reclassify from urban to
rural status in accordance with section 1886(d)(8)(E) of the Act. The
FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes
our policies regarding the effect of wage data from reclassified or
redesignated hospitals.
Hospitals must meet the criteria to be reclassified from urban to
rural status under Sec. 412.103, as well as fulfill the requirements
for the application process. There may be one or more reasons that a
hospital applies for the urban to rural reclassification, and the
timeframe that a hospital submits an application is often dependent on
those reason(s). Because the wage index is part of the methodology for
determining the prospective payments to hospitals for each fiscal year,
we stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) that we
believed there should be a definitive timeframe within which a hospital
should apply for rural status in order for the reclassification to be
reflected in the next Federal fiscal year's wage data used for setting
payment rates.
Therefore, after notice of proposed rulemaking and consideration of
public comments, in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931
through 56932), we revised Sec. 412.103(b) by adding paragraph (6) to
specify that, in order for a hospital to be treated as rural in the
wage index and budget neutrality calculations under Sec. Sec.
412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the
next Federal fiscal year, the hospital's filing date (the lock-in date)
must be no later than 70 days prior to the second Monday in June of the
current Federal fiscal year and the application must be approved by the
CMS Regional Office in accordance with the requirements of Sec.
412.103.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41384 through
41386), we changed the lock-in date to provide for additional time in
the ratesetting process and to match the lock-in date with another
existing deadline, the usual public comment deadline for the IPPS
proposed rule. We revised Sec. 412.103(b)(6) to specify that, in order
for a hospital to be treated as rural in the wage index and budget
neutrality calculations under Sec. Sec. 412.64(e)(1)(ii), (e)(2),
(e)(4), and (h) for payment rates for the next Federal fiscal year, the
hospital's application must be approved by the CMS Regional Office in
accordance with the requirements of Sec. 412.103 no later than 60 days
after the public display date at the Office of the Federal Register of
the IPPS proposed rule for the next Federal fiscal year.
The lock-in date does not affect the timing of payment changes
occurring at the hospital-specific level as a result of
reclassification from urban to rural under Sec. 412.103. As we
discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56931) and the
FY 2019 IPPS/LTCH PPS final rule (83 FR 41385 through 41386), this
lock-in date also does not change the current regulation that allows
hospitals that qualify under Sec. 412.103(a) to request, at any time
during a cost reporting period, to reclassify from urban to rural. A
hospital's rural status and claims payment reflecting its rural status
continue to be effective on the filing date of its reclassification
application, which is the date the CMS Regional Office receives the
application, in accordance with Sec. 412.103(d). The hospital's IPPS
claims will be paid reflecting its rural status beginning on the filing
date (the effective date) of the reclassification, regardless of when
the hospital applies.
Comment: A commenter stated that denying rural reclassifications
based on an arbitrary date would have significant negative impacts on
the financial operations on many hospitals. The commenter also stated
that section 1886(d)(8)(E) of the Act and the regulation at Sec.
412.103 enable urban hospitals that meet certain criteria to reclassify
as rural, and that the hospital needs to submit the reclassification
request during the last quarter of a hospital's fiscal year.
Response: We reiterate that the lock-in date does not change the
current regulation that allows hospitals that qualify under Sec.
412.103(a) to request, at any time during a cost reporting period, to
reclassify from urban to rural. In other words, we will not deny rural
reclassifications after the lock-in date. Rather, the lock-in date is
for ratesetting purposes only. With regard to the comment that
hospitals need to submit a reclassification request during the last
quarter of a hospital's fiscal year, we believe the commenter may be
referring to the requirement at section 1886(d)(5)(C)(i) of the Act
pursuant to which a hospital must submit its application for rural
referral center (RRC) status during the last quarter of its cost
reporting period. No such timing requirement applies to rural
reclassifications under Sec. 412.103, even those applications meeting
the criteria at Sec. 412.103(a)(3).
2. Change to the Regulations To Allow for Electronic Submission of
Applications for Reclassification From Urban to Rural Status
The application requirements at Sec. 412.103(b)(3) for
reclassification from urban to rural status currently state that an
application must be mailed to the CMS Regional Office by the requesting
hospital and may not be submitted by facsimile or other electronic
means. We stated in the proposed rule (84 FR 19388) that we believe
that this policy is outdated and overly restrictive. In the interest of
burden reduction and to promote ease of application, in the FY 2020
IPPS/LTCH PPS proposed rule (84 FR 19388), we proposed to eliminate the
restriction on submitting an application by facsimile or other
electronic means so that hospitals may also submit applications to the
CMS Regional Office electronically. Accordingly, we proposed to revise
Sec. 412.103(b)(3) to allow a requesting hospital to submit an
application to the CMS Regional Office by mail or by facsimile or other
electronic means.
Comment: Many commenters supported this proposal to change the
rural reclassification application requirements to allow for electronic
submission. Commenters specifically expressed appreciation for the
added flexibility and applauded CMS' effort to reduce burden and
promote ease of application. A commenter stated that this proposal
signifies a positive effort by CMS toward reducing administrative
burden and duplication for hospitals, and encouraged the agency to
continue to seek ways to modernize processes. Commenters urged CMS to
finalize this proposed change to the regulations at Sec.
412.103(b)(3).
Response: We appreciate the commenters' support of our proposal.
After consideration of the public comments we received, for the
reasons discussed in this final rule and the proposed rule, we are
finalizing as
[[Page 42320]]
proposed, without modification, our change to the regulations at Sec.
412.103(b)(3) to allow a requesting hospital to submit an application
to the CMS Regional Office by mail or by facsimile or other electronic
means.
3. Changes to Cancellation Requirements for Rural Reclassifications
Under current regulations at Sec. 412.103(g)(1), hospitals, other
than those hospitals that are rural referral centers (RRCs), may cancel
a rural reclassification by submitting a written request to the CMS
Regional Office not less than 120 days before the end of its current
cost reporting period, effective beginning with the next full cost
reporting period. Under the current regulations at Sec. 412.103(g)(2),
a hospital that was classified as an RRC under Sec. 412.96 based on
rural reclassification under Sec. 412.103 may cancel its rural
reclassification by submitting a written request to the CMS Regional
Office not less than 120 days prior to the end of the Federal fiscal
year and after being paid as rural for at least one 12-month cost
reporting period. The RRC's cancellation of a Sec. 412.103 rural
reclassification is not effective until it has been paid as rural for
at least one 12-month cost reporting period, and not until the
beginning of the Federal fiscal year following both the request for
cancellation and the 12-month cost reporting period.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19388), we
proposed to revise the rural reclassification cancellation requirements
at Sec. 412.103(g) for hospitals classified as RRCs. Currently, Sec.
412.103(g)(2) requires that, for a hospital that has been classified as
an RRC based on rural reclassification under Sec. 412.103,
cancellation of a Sec. 412.103 rural reclassification is not effective
until the hospital that is classified as an RRC has been paid as rural
for at least one 12-month cost reporting period, and not until the
beginning of the Federal fiscal year following both the request for
cancellation and the 12-month cost reporting period. We stated in the
FY 2008 IPPS final rule (72 FR 47371 through 47373) that the goal of
creating this minimum time period was to disincentivize hospitals from
receiving a rural redesignation, obtaining RRC status to take advantage
of special MGCRB reclassification rules, and then terminating their
rural status. However, we stated in the proposed rule that, as
suggested by a commenter in response to the April 22, 2016 interim
final rule with comment period (81 FR 56926), this disincentive is no
longer necessary now that hospitals can have simultaneous MGCRB and
Sec. 412.103 reclassifications. Accordingly, in the proposed rule, we
proposed to revise Sec. 412.103(g)(2)(iii) to specify that the
provisions set forth at Sec. 412.103(g)(2)(i) and (ii) are effective
for all written requests submitted by hospitals on or after October 1,
2007 and before October 1, 2019 to cancel rural reclassifications.
Therefore, we stated in the proposed rule that the reclassification
cancellation requirements specific to RRCs at Sec. 412.103(g)(2) would
no longer apply for cancellation requests submitted on or after October
1, 2019. In addition, as further discussed below, we proposed to revise
Sec. 412.103(g) to include uniform reclassification cancellation
requirements that would be applied to all hospitals effective for
cancellation requests submitted on or after October 1, 2019.
As further discussed below, we proposed to revise the regulations
at Sec. 412.103(g) to set forth uniform requirements applicable to all
hospitals for cancelling rural reclassifications. Currently, for non-
RRCs, the cancellation of rural status is effective beginning with the
hospital's next cost reporting period. A hospital that has a Sec.
412.103 rural reclassification and that does not have an additional
MGCRB or ``Lugar'' reclassification is assigned the rural wage index
value for its State. We stated in the proposed rule (84 FR 19389) that
because wage index values are determined and assigned to hospitals on a
Federal fiscal year basis, when such an aforementioned hospital cancels
its rural reclassification, the wage index value must be manually
updated by the MAC to its appropriate urban wage index value. We
further started that because the end dates of cost reporting periods
vary among hospitals, this process can be cumbersome and some
cancellation requests may not be processed in time to be accurately
reflected in the IPPS final rule appendix tables. We stated that
because there is no apparent advantage to continuing to link the rural
reclassification cancellation date to a hospital's cost reporting
period, we believe that, in the interests of reducing overall
complexity and administrative burden, the cancellation of rural
reclassification should be effective for all hospitals beginning with
the next Federal fiscal year (that is, the Federal fiscal year
following the cancellation request). In addition, we explained in the
proposed rule that, similar to the current requirements at Sec.
412.103(g)(2), we believe it would be appropriate to require hospitals
to request cancellation not less than 120 days prior to the end of a
Federal fiscal year. We stated that we believe this proposed 120-day
timeframe would provide hospitals adequate time to assess and review
reclassification options, and provide CMS adequate time to incorporate
the cancellation in the wage index development process. As discussed in
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41384 through 41386), we
finalized a lock-in date for a new rural reclassification to be
approved in order for a hospital to be treated as rural in the wage
index and budget neutrality calculations under Sec. Sec.
412.64(e)(1)(ii), (e)(2), (e)(4), and (h) for payment rates for the
next Federal fiscal year. We stated that we considered using this
deadline, which is 60 days after the public display date at the Office
of the Federal Register of the IPPS proposed rule for the next Federal
fiscal year, as the deadline to submit cancellation requests effective
for the next Federal fiscal year. We explained that, while we see
certain advantages with aligning various wage index deadlines to the
same date, based on the public display date of the proposed rule, we
believe the proposed deadline of not less than 120 days prior to the
end of the Federal fiscal year would give hospitals adequate time to
assess and review reclassification options, and CMS adequate time to
incorporate the cancellation in the wage index and budget neutrality
calculations under Sec. Sec. 412.64(e)(1)(ii), (e)(2), (e)(4), and (h)
for payment rates for the next Federal fiscal year. In addition, we
stated that this proposed 120-day deadline is already familiar to many
hospitals because it is similar to the current deadline under Sec.
412.103(g)(2), and therefore, we believe implementation of the proposed
deadline may pose less of a burden overall for many hospitals. For
these reasons, we proposed to add paragraph (g)(3) to Sec. 412.103 to
specify that, for all written requests submitted by hospitals on or
after October 1, 2019 to cancel rural reclassifications, a hospital may
cancel its rural reclassification by submitting a written request to
the CMS Regional Office not less than 120 days prior to the end of a
Federal fiscal year, and the hospital's cancellation of the
classification would be effective beginning with the next Federal
fiscal year. In addition, we proposed to add paragraph (g)(1)(iii) to
Sec. 412.103 to specify that the provisions of paragraphs (g)(1)(i)
and (ii) of Sec. 412.103 are effective only for written requests
submitted by hospitals before October 1, 2019 to cancel rural
reclassification.
[[Page 42321]]
In addition, we proposed to codify into regulations a longstanding
CMS policy regarding canceling a Sec. 412.103 reclassification when a
hospital opts to accept and receives its county out-migration
adjustment in lieu of its ``Lugar'' reclassification. As discussed in
the proposed rule (84 FR 19383), a hospital may opt to receive either
its ``Lugar'' county reclassification established under section
1886(d)(8)(B) of the Act, or the county out-migration adjustment
determined under section 1886(d)(13) of the Act. Such requests may be
submitted to CMS by email to [email protected] within 45 days of
the public display date of the proposed rule for the next Federal
fiscal year. We established this process because section 1886(d)(13)(G)
of the Act prohibits a hospital from having both an out-migration wage
index adjustment and reclassification under section 1886(d)(8) or (10)
of the Act. Because Sec. 412.103 reclassifications were established
under section 1886(d)(8)(E) of the Act, a hospital cannot
simultaneously have an out-migration adjustment and be reclassified as
rural under Sec. 412.103. In the FY 2012 IPPS/LTCH PPS final rule (76
FR 51600), we addressed a commenter's concern regarding timing issues
for some hospitals that wish to receive their county out-migration
adjustment, but would not have adequate time to also cancel their rural
reclassification. In that rule, we stated that ``we will allow the act
of waiving Lugar status for the out-migration adjustment to
simultaneously waive the hospital's deemed urban status and cancel the
hospital's acquired rural status, thus treating the hospital as a rural
provider effective on October 1.'' We explained in the proposed rule
(84 FR 19389) that, while this policy modification was initially
discussed in the FY 2012 IPPS/LTCH PPS final rule in the context of
hospitals wishing to obtain or maintain sole community hospital (SCH)
or Medicare-dependent hospital (MDH) status, its application has not
been limited to current or potential SCHs or MDHs. We stated that we
continue to believe this policy of automatically canceling rural
reclassifications when a hospital waives its Lugar reclassification to
receive its out-migration adjustment reduces overall burden on
hospitals by not requiring them to file a separate rural
reclassification cancellation request. We also stated that we believe
this policy reduces overall complexity for CMS, avoiding the need to
track and process multiple cancellation requests. Accordingly, we
stated that we believe this policy should be codified in the
regulations at Sec. 412.103.
Therefore, we proposed to add paragraph (g)(4) to Sec. 412.103 to
specify that a rural reclassification will be considered cancelled
effective for the next Federal fiscal year when a hospital opts (by
submitting a request to CMS within 45 days of the date of public
display of the proposed rule for the next Federal fiscal year at the
Office of the Federal Register in accordance with the procedure
described in section III.I.3. of the preamble of the FY 2020 proposed
rule) to accept and receives its county out-migration wage index
adjustment determined under section 1886(d)(13) of the Act in lieu of
its geographic reclassification described under section 1886(d)(8)(B)
of the Act. We stated that if the hospital wishes to once again obtain
a Sec. 412.103 rural reclassification, it would have to reapply
through the CMS Regional Office in accordance with Sec. 412.103, and
the hospital would once again be ineligible to receive its out-
migration adjustment. We noted that, in a case where a hospital
reclassified as rural under Sec. 412.103 wishes to receive its out-
migration adjustment but does not qualify for a ``Lugar''
reclassification, the hospital would need to formally cancel its Sec.
412.103 rural reclassification by written request to the CMS Regional
Office within the timeframe specified at Sec. 412.103. Finally, in
order to address the scenario described in section III.I.3.b. of the
preamble of the proposed rule (84 FR 19384), we noted that, in proposed
Sec. 412.103(g)(4), we were providing that the hospital must not only
opt to accept, but also receive, its county out-migration wage index
adjustment to trigger cancellation of rural reclassification under that
provision. We stated that in such cases where an out-migration
adjustment is no longer applicable based on the wage index in the final
rule, a hospital's rural reclassification remains in effect (unless
otherwise cancelled by written request to the CMS Regional Office
within the timeframe specified at Sec. 412.103).
Comment: Many commenters supported the proposal to apply uniform
cancellation requirements that would allow all hospitals to cancel
reclassifications 120 days before the end of the federal fiscal year,
without having to be paid as rural for one 12 month cost reporting
period. Some commenters specifically applauded CMS' efforts to reduce
administrative burden.
Response: We appreciate the commenters' support and the
acknowledgment of CMS' administrative burden reduction efforts.
After consideration of the public comments we received, for the
reasons discussed in this final rule and in the proposed rule, we are
finalizing, without modification, our proposed revisions discussed
above with respect to cancellation of rural reclassification.
Specifically, as proposed, our reclassification cancellation
requirements specific to RRCs at Sec. 412.103(g)(2) will no longer
apply for cancellation requests submitted on or after October 1, 2019.
As proposed, we are revising Sec. 412.103(g)(2)(iii) to specify that
the provisions set forth at Sec. 412.103(g)(2)(i) and (ii) are
effective for all written requests submitted by hospitals on or after
October 1, 2007 and before October 1, 2019 to cancel rural
reclassifications. In addition, as proposed, we are finalizing uniform
reclassification cancellation requirements that will be applied to all
hospitals effective for cancellation requests submitted on or after
October 1, 2019. Specifically, we are adding paragraph (g)(3) to Sec.
412.103 to specify that, for all written requests submitted by
hospitals on or after October 1, 2019 to cancel rural
reclassifications, a hospital may cancel its rural reclassification by
submitting a written request to the CMS Regional Office not less than
120 days prior to the end of a Federal fiscal year, effective beginning
with the next Federal fiscal year. Furthermore, as proposed, we are
adding paragraph (g)(1)(iii) to Sec. 412.103 to specify that the
provisions of paragraphs (g)(1)(i) and (ii) of Sec. 412.103 are
effective only for written requests submitted by hospitals before
October 1, 2019 to cancel rural reclassification.
We are also finalizing our proposal, without modification, to add
paragraph (g)(4) to Sec. 412.103 to codify our longstanding policy
that a rural reclassification will be considered cancelled effective
for the next Federal fiscal year when a hospital opts (by submitting a
request to CMS within 45 days of the date of public display of the
proposed rule for the next Federal fiscal year at the Office of the
Federal Register in accordance with the procedure described in section
III.I.3. of the preamble of the FY 2020 proposed rule) to accept and
receives its county out-migration wage index adjustment determined
under section 1886(d)(13) of the Act in lieu of its geographic
reclassification described under section 1886(d)(8)(B) of the Act.
When these changes go into effect, there will not be a minimum
period that a hospital must maintain its rural reclassification before
it is eligible to cancel it. Currently, RRCs are required to maintain a
rural reclassification for at
[[Page 42322]]
least 1 year. As previously described above, this policy was finalized
in the FY 2008 IPPS final rule (72 FR 47371 through 47373) to
disincentivize hospitals from receiving a rural redesignation to obtain
a certain benefit, and then immediately cancel the rural redesignation.
While we no longer believe it is necessary to retain this specific
policy to maintain acquired rural status for 1 year, we are aware of
other potential situations where hospitals may attempt to exploit the
rural reclassification process in order to obtain higher wage index
values. For example, a hospital may obtain a rural reclassification
with the intention of receiving its State's rural wage index. If the
application is approved by the CMS Regional Office after our
ratesetting ``lock-in date'', the final rule rural wage index value
would most likely not include the data for this hospital in the
ratesetting calculation. This may incentivize relatively low wage index
hospitals to time their applications to avoid reducing the State's
rural wage index. These hospitals could then conceivably cancel their
rural reclassifications (effective for next FY), and then reapply again
after the ``lock date.'' We plan to monitor this situation over the
course of FY 2020, and determine if it is necessary to take action to
prevent this type of gaming in future rulemaking.
L. Process for Requests for Wage Index Data Corrections
1. Process for Hospitals To Request Wage Index Data Corrections
The preliminary, unaudited Worksheet S-3 wage data files and the
preliminary CY 2016 occupational mix data files for the proposed FY
2020 wage index were made available on June 5, 2018 through the
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html.
On January 31, 2019, we posted a public use file (PUF) at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html containing FY 2020 wage index data available as of January
30, 2019. This PUF contains a tab with the Worksheet S-3 wage data
(which includes Worksheet S-3, Parts II and III wage data from cost
reporting periods beginning on or after October l, 2015 through
September 30, 2016; that is, FY 2016 wage data), a tab with the
occupational mix data (which includes data from the CY 2016
occupational mix survey, Form CMS-10079), a tab containing the
Worksheet S-3 wage data of hospitals deleted from the January 31, 2019
wage data PUF, and a tab containing the CY 2016 occupational mix data
of the hospitals deleted from the January 31, 2019 occupational mix
PUF. In a memorandum dated January 18, 2019, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 31, 2019 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2020 Wage Index
Timetable.
In the interest of meeting the data needs of the public, beginning
with the proposed FY 2009 wage index, we post an additional PUF on the
CMS website that reflects the actual data that are 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 about the dates of the Hospital
Open Door Forums at the CMS website at: http://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/index.html.
In a memorandum dated April 20, 2018, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
preliminary wage index data files and the CY 2016 occupational mix
survey data files posted on May 18, 2018, and the process and timeframe
for requesting revisions.
In a memorandum dated June 6, 2018, we corrected and reposted the
preliminary wage file on our website because we realized that the PUF
originally posted on May 18, 2018 did not include new line items that
were first included in cost reports for cost reporting periods
beginning on or after October 1, 2015 (and will be used for the first
time in the FY 2020 wage index). Specifically, the lines are: Worksheet
S-3, Part II, lines 14.01 and 14.02, and 25.50, 25.51, 25.52, and
25.53; and Worksheet S-3, Part IV, lines 8.01, 8.02, 8.03. In the same
memorandum, we instructed all MACs to inform the IPPS hospitals that
they service of the availability of the corrected and reposted
preliminary wage index data files and the CY 2016 occupational mix
survey data files posted on June 6, 2018, and the process and timeframe
for requesting revisions.
If a hospital wished to request a change to its data as shown in
the June 6, 2018 preliminary wage and occupational mix data files, the
hospital had to submit corrections along with complete, detailed
supporting documentation to its MAC by September 4, 2018. 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 letters sent to them by their MACs. November 16, 2018 was
the deadline for MACs to complete all desk reviews for hospital wage
and occupational mix data and transmit revised Worksheet S-3 wage data
and occupational mix data to CMS.
November 6, 2018 was the date by when MACs notified State hospital
associations regarding hospitals that failed to respond to issues
raised during the desk reviews. Additional revisions made by the MACs
were transmitted to CMS throughout January 2019. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
31, 2019. Hospitals had until February 15, 2019, to submit requests to
the MACs to correct errors in the January 31, 2019 PUF due to CMS or
MAC mishandling of the wage index data, or to revise desk review
adjustments to their wage index data as included in the January 31,
2019 PUF. 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 March 22, 2019. Under our
current policy as adopted in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38153), the deadline for a hospital to request CMS intervention in
cases where a hospital disagreed with a MAC's handling of wage data on
any basis (including a policy, factual, or other dispute) was April 4,
2019. Data that were incorrect in the preliminary or January 31, 2019
wage index data PUFs, but for which no correction request was received
by the February 15, 2019 deadline, are not considered for correction at
this stage. In addition, April 4, 2019 was the deadline for hospitals
to dispute data corrections made by CMS of which the hospital is
notified after the January 31, 2019 PUF and at least 14 calendar days
prior to April 4, 2019 (that is, March 21, 2018), that do not arise
from a hospital's request for revisions. We note that, as with previous
years, for the proposed FY 2020 wage index, in accordance with the FY
2020 wage index timeline posted on the CMS website at: https://
www.cms.gov/Medicare/Medicare-Fee-
[[Page 42323]]
for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-
Wage-Index-Home-Page.html, 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 associated
with the proposed rule, which was listed in section VI. of the Addendum
to the proposed rule and available via the internet on the CMS website
at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html. Table 2 associated with the proposed rule contained each
hospital's proposed adjusted average hourly wage used to construct the
wage index values for the past 3 years, including the FY 2016 data used
to construct the proposed FY 2020 wage index. We noted in the proposed
rule (84 FR 19390) 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 early February 2019.
We posted the final wage index data PUFs on April 30, 2019 via the
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html. The April 2019 PUFs were 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 previously described (the
process for disputing revisions submitted to CMS by the MACs by March
21, 2019, and the process for disputing data corrections made by CMS
that did not arise from a hospital's request for wage data revisions as
discussed earlier).
After the release of the April 2019 wage index data PUFs, 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 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 March 21, 2018.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 31,
2019 wage index PUFs.
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 April 2019 final wage index data PUFs, 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 believed 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 May 30, 2019. May 30, 2019
was also the deadline for hospitals to dispute data corrections made by
CMS of which the hospital was notified on or after 13 calendar days
prior to April 4, 2019 (that is, March 22, 2019), and at least 14
calendar days prior to May 30, 2019 (that is, May 16, 2019), that did
not arise from a hospital's request for revisions. (Data corrections
made by CMS of which a hospital was notified on or after 13 calendar
days prior to May 30, 2019 (that is, May 17, 2019) may be appealed to
the Provider Reimbursement Review Board (PRRB).) Similar to the April
appeals, beginning with the FY 2015 wage index, in accordance with the
FY 2020 wage index timeline posted on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Wage-Index-Files-Items/FY2020-Wage-Index-Home-Page.html, the May 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.
Verified corrections to the wage index data received timely (that
is, by May 30, 2019) by CMS and the MACs were incorporated into the
final FY 2020 wage index, which is effective October 1, 2019.
We created the processes previously described to resolve all
substantive wage index data correction disputes before we finalize the
wage and occupational mix data for the FY 2020 payment rates.
Accordingly, hospitals that did not meet the procedural deadlines set
forth earlier 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 previously set forth (requiring
requests to MACs by the specified date in February and, where such
requests are unsuccessful, requests for intervention by CMS by the
specified date in April) will not be permitted to challenge later,
before the PRRB, the failure of CMS to make a requested data revision.
We refer 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. As finalized in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38154 through 38156), this policy also applies to a hospital
disputing corrections made by CMS that do not arise from a hospital's
request for a wage index data revision. That is, a hospital disputing
an adjustment made by CMS that did not arise from a hospital's request
for a wage index data revision would be required to request a
correction by the first applicable deadline. Hospitals that do not meet
the procedural deadlines set forth earlier will not be afforded a later
opportunity to submit wage index data corrections or to dispute CMS'
decision with respect to requested changes.
Again, we believe the wage index data correction process described
earlier 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
PUFs by late April 2019, 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 2020 wage index by August
2019, and the implementation of the FY 2020 wage index on October 1,
2019. 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 May 30,
2019, 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
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 May
deadline for making corrections to the wage data for the following
fiscal year's wage index (for example, May 30, 2019 for the FY 2020
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
[[Page 42324]]
index for the labor market area. As indicated earlier, because CMS
makes the wage index data available to hospitals on the CMS website
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 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 May 30, 2019 deadline for the
FY 2020 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 May 30, 2019 deadline for the FY 2020 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.
2. Process for Data Corrections by CMS After the January 31 Public Use
File (PUF)
The process set forth with the wage index timeline discussed in
section III.L.1. of the preamble of this final rule allows hospitals to
request corrections to their wage index data within prescribed
timeframes. In addition to hospitals' opportunity to request
corrections of wage index data errors or MACs' mishandling of data, CMS
has the authority under section 1886(d)(3)(E) of the Act to make
corrections to hospital wage index and occupational mix data in order
to ensure the accuracy of the wage index. As we explained in the FY
2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY
2017 IPPS/LTCH PPS final rule (81 FR 56914), 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 areas of
the hospital compared to the national average hospital wage level. We
believe that, under section 1886(d)(3)(E) of the Act, we have
discretion to make corrections to hospitals' data to help ensure that
the costs attributable to wages and wage-related costs in fact
accurately reflect the relative hospital wage level in the hospitals'
geographic areas.
We have an established multistep, 15-month process for the review
and correction of the hospital wage data that is used to create the
IPPS wage index for the upcoming fiscal year. 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. As a standard practice, after each
annual desk review, CMS reviews the results of the MACs' desk reviews
and focuses on items flagged during the desk review, requiring that, if
necessary, hospitals provide additional documentation, adjustments, or
corrections to the data. This ongoing communication with hospitals
about their wage data may result in the discovery by CMS of additional
items that were reported incorrectly or other data errors, even after
the posting of the January 31 PUF, and throughout the remainder of the
wage index development process. In addition, the fact that CMS analyzes
the data from a regional and even national level, unlike the review
performed by the MACs that review a limited subset of hospitals, can
facilitate additional editing of the data that may not be readily
apparent to the MACs. In these occasional instances, an error may be of
sufficient magnitude that the wage index of an entire CBSA is affected.
Accordingly, CMS uses its authority to ensure that the wage index
accurately reflects the relative hospital wage level in the geographic
area of the hospital compared to the national average hospital wage
level, by continuing to make corrections to hospital wage data upon
discovering incorrect wage data, distinct from instances in which
hospitals request data revisions.
We note that CMS corrects errors to hospital wage data as
appropriate, regardless of whether that correction will raise or lower
a hospital's average hourly wage. For example, as discussed in section
III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR
41364), in situations where a hospital did not have documentable
salaries, wages, and hours for housekeeping and dietary services, we
imputed estimates, in accordance with policies established in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). Furthermore,
if CMS discovers after conclusion of the desk review, for example, that
a MAC inadvertently failed to incorporate positive adjustments
resulting from a prior year's wage index appeal of a hospital's wage-
related costs such as pension, CMS would correct that data error and
the hospital's average hourly wage would likely increase as a result.
While we maintain CMS' authority to conduct additional review and
make resulting corrections at any time during the wage index
development process, in accordance with the policy finalized in the FY
2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first
implemented with the FY 2019 wage index (83 FR 41389), hospitals are
able to request further review of a correction made by CMS that did not
arise from a hospital's request for a wage index data correction.
Instances where CMS makes a correction to a hospital's data after the
January 31 PUF based on a different understanding than the hospital
about certain reported costs, for example, could potentially be
resolved using this process before the final wage index is calculated.
We believe this process and the timeline for requesting such
corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS
final rule) promote additional transparency to
[[Page 42325]]
instances where CMS makes data corrections after the January 31 PUF,
and provide opportunities for hospitals to request further review of
CMS changes in time for the most accurate data to be reflected in the
final wage index calculations. These additional appeals opportunities
are described earlier and in the FY 2020 Wage Index Development Time
Table, as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154
through 38156).
M. Labor-Related Share for the FY 2020 Wage Index
Section 1886(d)(3)(E) of the Act directs the Secretary to adjust
the proportion of the national prospective payment system base payment
rates that are attributable to wages and wage-related costs by a factor
that reflects the relative differences in labor costs among geographic
areas. It also directs the Secretary to estimate from time to time the
proportion of hospital costs that are labor-related and to adjust the
proportion (as estimated by the Secretary from time to time) of
hospitals' costs that 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 62-percent labor-related share, or
the labor-related share estimated from time to time by the Secretary,
depending on which labor-related share resulted in a higher payment.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38158 through
38175), we rebased and revised the hospital market basket. We
established a 2014-based IPPS hospital market basket to replace the FY
2010-based IPPS hospital market basket, effective October 1, 2017.
Using the 2014-based IPPS market basket, we finalized a labor-related
share of 68.3 percent for discharges occurring on or after October 1,
2017. In addition, in FY 2018, we implemented this revised and rebased
labor-related share in a budget neutral manner (82 FR 38522). 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. In the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41389 and 41390), for FY 2019, we continued
to use a labor-related share of 68.3 percent for discharges occurring
on or after October 1, 2018.
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. We include a cost category in the labor-related share if the
costs are labor intensive and vary with the local labor market. In the
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19393), for FY 2020, we did
not propose to make any further changes to the national average
proportion of operating costs that are attributable to wages and
salaries, employee benefits, professional fees: Labor-related,
administrative and facilities support services, installation,
maintenance, and repair services, and all other labor-related services.
Therefore, for FY 2020, we proposed to continue to use a labor-related
share of 68.3 percent for discharges occurring on or after October 1,
2019.
As discussed in section IV.B. of the preamble of this final rule,
prior to January 1, 2016, Puerto Rico hospitals were paid based on 75
percent of the national standardized amount and 25 percent of the
Puerto Rico-specific standardized amount. As a result, we applied the
Puerto Rico-specific labor-related share percentage and nonlabor-
related share percentage to the Puerto Rico-specific standardized
amount. Section 601 of the Consolidated Appropriations Act, 2016 (Pub.
L. 114-113) amended section 1886(d)(9)(E) of the Act to specify that
the payment calculation with respect to operating costs of inpatient
hospital services of a subsection (d) Puerto Rico hospital for
inpatient hospital discharges on or after January 1, 2016, shall use
100 percent of the national standardized amount. Because Puerto Rico
hospitals are no longer paid with a Puerto Rico-specific standardized
amount as of January 1, 2016, under section 1886(d)(9)(E) of the Act as
amended by section 601 of the Consolidated Appropriations Act, 2016,
there is no longer a need for us to calculate a Puerto Rico-specific
labor-related share percentage and nonlabor-related share percentage
for application to the Puerto Rico-specific standardized amount.
Hospitals in Puerto Rico are now paid 100 percent of the national
standardized amount and, therefore, are subject to the national labor-
related share and nonlabor-related share percentages that are applied
to the national standardized amount. Accordingly, for FY 2020, we did
not propose a Puerto Rico-specific labor-related share percentage or a
nonlabor-related share percentage.
We did not receive any public comments on our proposals related to
the labor-related share percentage. Therefore, we are finalizing our
proposals, without modification, to continue to use a labor-related
share of 68.3 percent for discharges occurring on or after October 1,
2019 for all hospitals (including Puerto Rico hospitals) whose wage
indexes are greater than 1.0000.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2020 IPPS/LTCH PPS final rule and available via the
internet on the CMS website, reflect the national labor-related share,
which is also applicable to Puerto Rico hospitals. For FY 2020, for all
IPPS hospitals (including Puerto Rico 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 (including Puerto Rico hospitals) whose wage
indexes are greater than 1.000, for FY 2020, we are applying the wage
index to a labor-related share of 68.3 percent of the national
standardized amount.
N. Policies To Address Wage Index Disparities Between High and Low Wage
Index Hospitals
In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20372), we
invited the public to submit further comments, suggestions, and
recommendations for regulatory and policy changes to the Medicare wage
index. Many of the responses received from this request for information
(RFI) reflect a common concern that the current wage index system
perpetuates and exacerbates the disparities between high and low wage
index hospitals. Many respondents also expressed concern that the
calculation of the rural floor has allowed a limited number of States
to manipulate the wage index system to achieve higher wages for many
urban hospitals in those states at the expense of hospitals in other
states, which also contributes to wage index disparities. For a summary
of these comments and public comments received on wage index
disparities in previous rules, see the FY 2020 IPPS/LTCH PPS proposed
rule (84
[[Page 42326]]
FR 19393 through 19394) and the references therein.
To help mitigate these wage index disparities, including those
resulting from the inclusion of hospitals with rural reclassifications
under 42 CFR 412.103 in the calculation of the rural floor, in the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19393), we proposed to reduce
the disparity between high and low wage index hospitals by increasing
the wage index values for certain hospitals with low wage index values
and decreasing the wage index values for certain hospitals with high
wage index values to maintain budget neutrality, and changing the
calculation of the rural floor, as further discussed below. We also
proposed a transition for hospitals experiencing significant decreases
in their wage index values.
1. Policies To Address Wage Index Disparities
a. Providing an Opportunity for Low Wage Index Hospitals To Increase
Employee Compensation
As CMS and other entities have stated in the past, comprehensive
wage index reform would require both statutory and regulatory changes,
and could require new data sources. We stated in the proposed rule (84
FR 19394) that notwithstanding the challenges associated with
comprehensive wage index reform, we agree with respondents to the
request for information who indicated that some current wage index
policies create barriers to hospitals with low wage index values from
being able to increase employee compensation due to the lag between
when hospitals increase the compensation and when those increases are
reflected in the calculation of the wage index. (We noted that this lag
results from the fact that the wage index calculations rely on
historical data.) We also agreed that addressing this systemic issue
does not need to wait for comprehensive wage index reform given the
growing disparities between low and high wage index hospitals,
including rural hospitals that may be in financial distress and facing
potential closure. Therefore, in response to these concerns, in the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19395), we proposed a policy
that would provide certain low wage index hospitals with an opportunity
to increase employee compensation without the usual lag in those
increases being reflected in the calculation of the wage index.
In general terms, we proposed to increase the wage index values for
hospitals with a wage index value in the lowest quartile of the wage
index values across all hospitals. As we discussed in the proposed
rule, quartiles are a common way to divide a distribution, and
therefore, we stated in the proposed rule we believe it is appropriate
to divide the wage indexes into quartiles for this purpose. For
example, the interquartile range is a common measure of variability
based on dividing data into quartiles. Furthermore, quartiles are used
to divide distributions for other purposes under the Medicare program.
For example, when determining Medicare Advantage benchmarks, excluding
quality bonuses, counties are organized into quartiles based on their
Medicare fee-for-service (FFS) spending. Also, Congress chose the worst
performing quartile of hospitals for the Hospital-Acquired Condition
Reduction Program penalty. (We refer readers to section IV.J. of the
preamble of this final rule for a discussion of the Hospital-Acquired
Condition Reduction Program.) Having determined that quartiles are a
reasonable method of dividing the distribution of hospitals' wage index
values, we stated in the proposed rule that we believe that identifying
hospitals in the lowest quartile as low wage index hospitals, hospitals
in the second and third ``middle'' quartiles as hospitals with wages
index values that are neither low nor high, and hospitals in the
highest quartile as hospitals with high wage index values, is then a
reasonable method of determining low wage index and high wage index
hospitals for purposes of our proposals (discussed below) addressing
wage index disparities. We stated that while we acknowledge there is no
set standard for identifying hospitals as having low or high wage index
values, we believe our proposed quartile approach is reasonable for
this purpose, given that, as previously discussed, quartiles are a
common way to divide distributions, and that our proposed approach is
consistent with approaches used in other areas of the Medicare program.
We stated in the proposed rule that, based on the data for the
proposed rule, for FY 2020, the 25th percentile wage index value across
all hospitals was 0.8482. We stated in the proposed rule that if this
policy is adopted in the final rule, this number would be updated in
the final rule based on the final wage index values.
Under our proposed methodology, we proposed to increase the wage
index for hospitals with a wage index value below the 25th percentile
wage index. In the proposed rule (84 FR 19395), we proposed that the
increase in the wage index for these hospitals would be equal to half
the difference between the otherwise applicable final wage index value
for a year for that hospital and the 25th percentile wage index value
for that year across all hospitals. For example, as described in the
proposed rule, assume the otherwise applicable final FY 2020 wage index
value for a geographically rural hospital in Alabama is 0.6663, and the
25th percentile wage index value for FY 2020 is 0.8482. Half the
difference between the otherwise applicable wage index value and the
25th percentile wage index value is 0.0910 (that is, (0.8482-0.6663)/
2). Under our proposal, the FY 2020 wage index value for such a
hospital would be 0.7573 (that is, 0.6663 + 0.0910).
We explained in the proposed rule (84 FR 19395) that some
respondents to the request for information had indicated that CMS
should establish a wage index floor for hospitals with low wage index
values. However, as stated in the proposed rule, we believe that it is
important to preserve the rank order of the wage index values under the
current policy and, therefore, we proposed to increase the wage index
for the low-wage index hospitals previously described by half the
difference between the otherwise applicable final wage index value and
the 25th percentile wage index value. We stated that we believe the
rank order generally reflects meaningful distinctions between the
employee compensation costs faced by hospitals in different geographic
areas. We noted that although wage index value differences between
areas may be artificially magnified by the current wage index policies,
we do not believe those differences are nonexistent. For example, if we
were to instead create a floor to address the lag issue previously
discussed, it does not seem likely that hospitals in Puerto Rico and
Alabama would have the same wage index value after hospitals in both
areas have had the opportunity increase their employee compensation
costs. We stated that we believe a distinction between their wage index
values would remain because hospitals in these areas face different
employee compensation costs in their respective labor market areas.
We proposed that this policy would be effective for at least 4
years, beginning in FY 2020, in order to allow employee compensation
increases implemented by these hospitals sufficient time to be
reflected in the wage index calculation. For the FY 2020 wage index, we
proposed to use data from the FY 2016 cost reports. We stated in the
proposed rule (84 FR 19395) that 4 years is the minimum time before
increases in employee compensation
[[Page 42327]]
included in the Medicare cost report could be reflected in the wage
index data, and additional time may be necessary. We stated in the
proposed rule that we intend to revisit the issue of the duration of
the policy in future rulemaking as we gain experience under the policy
if adopted.
The following are summaries of the comments we received regarding
our proposal to provide an opportunity for low wage index hospitals to
increase employee compensation, and our responses.
Comment: Many commenters expressed their support of our proposal to
provide an opportunity for low wage index hospitals to increase
employee compensation and indicated the negative impact low wage index
values have on their local hospital's ability to attract and maintain a
sufficient labor force. Many commenters indicated that the increase in
wage index would allow employee compensation at low wage hospitals to
rise to more competitive levels to help attract and retain skilled
health care workers. Many commenters indicated that although the
increase in the wage index is not permanent, it would still allow low
wage hospitals to increase compensation and must be in place for 4
years to allow the employee compensation changes to be reflected in the
wage index data. Many low wage index hospitals indicated that they have
long desired to increase wages for employees and reinvest in their
communities, and our proposal will give them the opportunity to do so.
Response: We appreciate the commenters' support of our proposal to
provide an opportunity for low wage index hospitals to increase
employee compensation. We agree with the commenters that in order to
attract and maintain a sufficient labor force a hospital must provide
adequate employee compensation. As further discussed later in this
section, we believe our proposal to increase the wage index for low
wage index hospitals will increase the accuracy of the wage index by
appropriately reflecting the increased employee compensation that would
occur (to attract and maintain a sufficient labor force) if not for the
lag in the process between when a hospital increases its employee
compensation and when that increase is reflected in the calculation of
the wage index.
Comment: Some commenters who supported our proposal to provide an
opportunity for low wage index hospitals to increase employee
compensation also requested the proposal be expanded to address other
hospitals, such as hospitals that have seen a significant decrease in
their wage index over the past twenty years. In particular, some
commenters argued that hospitals in eight specific CBSAs struggle to
raise employee wages for many of the same reasons hospitals in low wage
index areas struggle to raise employee wages. These commenters
requested that over the next 4 years, for CBSAs meeting all of the
following criteria:
The CBSA does not benefit from implementation of our
adjustment to the lowest quartile of wage index values.
The CBSAs' wage index is less than 1.0000.
The CBSA's wage index has fallen more than 10 percent from
FY 2000 to FY 2019.
CMS increase the wage index in those CBSAs by half of the
difference of the twenty year decline (that is, half of the difference
in the FY 2000 wage index and the FY 2020 wage index).
Response: We disagree with these commenters. Raising the wage index
values of certain hospitals above the 25th percentile and not other
hospitals with similar wage index values distorts the rank order of the
wage index, which for the reasons discussed above is a critical aspect
of our proposal.
Comment: Many commenters objected to our proposal to provide an
opportunity for low wage index hospitals to increase employee
compensation. Such commenters generally noted that since we did not
propose any method to ensure such hospitals increase employee
compensation, there is no guarantee benefiting hospitals will increase
employee compensation. Other commenters argued against the notion that
a lag in wage data suppresses a hospital's ability to increase wages,
and stated that any potential impact of this lag on a given hospital is
mitigated by other factors, including the presence of other hospitals
in their labor market area, and our proposal would therefore have
little impact on the average hourly wage rates of low wage hospitals.
Other commenters asserted that doing this through an increase in the
wage index for low wage index hospitals removes the wage index's
ability to provide a relative measure for wages across different
geographic regions.
Response: We disagree with these commenters. In response to
commenters who indicated that there is no method to ensure that
hospitals increase their employee compensation, we note the policy is
intended to provide an opportunity for low wage hospitals to increase
their employee compensation, and we expect them to do so based on
responses received to the request for information indicating that the
lag between when hospitals increase the compensation and when those
increases are reflected in the calculation of the wage index creates
barriers to hospitals with low wage index values from being able to
increase employee compensation as well as comments received on our
proposal as summarized previously. However, as we indicated in the
proposed rule, this was not proposed as a permanent policy. Once there
has been sufficient time for that increased employee compensation to be
reflected in the wage data, there should not be a continuing need for
this policy. At the expiration of the policy, hospitals that have not
increased their employee compensation in response to the wage index
increase may experience a reduction in their wage index compared to
when the policy was in effect. Conversely, at the expiration of the
policy, hospitals that have increased their employee compensation may
experience relatively little change in their wage index compared to
when the policy was in effect. The future wage data from those
hospitals will help us assess our reasonable expectation based on
comments received in response to the request for information as well as
proposal that low wage hospitals would increase employee compensation
as a result of our proposal. This wage data will also help us and the
public to assess the assertion by some commenters opposed to our
proposal that any potential impact of the wage index data lag on a
given hospital is mitigated by other factors and our proposal would
have little impact on the average hourly wage rates of low wage
hospitals. We disagree with these commenters. Based on the comments
received from the low wage hospitals, we do expect them to increase
their employee compensation and this increased compensation is expected
to increase their average hourly wages.
In response to commenters who asserted that increasing the wage
index for low wage index hospitals removes the wage index's ability to
provide a relative measure for wages across different geographic
regions, we believe, as noted earlier, that our proposal increases the
accuracy of the wage index as a relative measure. As we discussed in
the proposed rule (84 FR 19394 through 19395), under our current cost
reporting process, there is a lag between the time a hospital makes
employee compensation adjustments and the time these adjustments are
reflected in the wage index. As we stated in the proposed rule, 4 years
is the minimum time before increases in employee
[[Page 42328]]
compensation included in the Medicare cost report could be reflected in
the wage index data. We believe that if the lag did not exist and
employee compensation increases could be more quickly reflected in the
wage index values, low wage index hospitals would have been able to
increase employee compensation. Our proposal will increase the accuracy
of the wage index as a relative measure because it allows low wage
index hospitals to increase their employee compensation in ways that we
would expect if there were no lag in reflecting compensation
adjustments in the wage index. Furthermore, as we stated in the
proposed rule (84 FR 19395), our proposal to increase the wage index
values for low wage index hospitals continues to preserve the rank
order of wage index values and thus continues to reflect meaningful
distinctions between the employee compensation costs faced by hospitals
in different geographic areas. Based on comments received in response
to our request for information and comments received on our proposed
policy, we expect low wage hospitals to increase their employee
compensation as a result of our proposed wage index increase. Our
proposed policy will allow these expected increases to be more timely
reflected in the wage index.
Comment: Some commenters indicated that the proposal is not
consistent with the quartile system used in the Hospital-Acquired
Condition Reduction Program as referenced in the proposed rule, noting
that the Hospital-Acquired Condition Reduction Program uses quartiles
based on ranking hospital performance against a particular metric.
Commenters stated that in programs such as the Hospital-Acquired
Condition Reduction Program, quartiles are used to incentivize or
decentivize certain behaviors, but they do not augment or replace
existing measures.
Response: As we noted in the proposed rule, the reference to the
Hospital-Acquired Condition Reduction Program was intended just to show
that quartiles are a common way to divide distributions, as the
Hospital-Acquired Condition Reduction Program is a program that divides
a distribution based on quartiles. It is immaterial that the Hospital-
Acquired Condition Reduction Program itself serves a different purpose
than our wage index proposal, in the same way it is immaterial the
Medicare Advantage program serves a different purpose. The main point
is not any commonality of purpose of the underlying programs, but that
those programs use quartiles as a way a dividing a distribution. As we
stated in the proposed rule, while we acknowledge there is no set
standard for identifying hospitals as having low or high wage index
values, we believe this quartile approach is reasonable for this
purpose because it is a common way to divide distributions and is
consistent with approaches used in other areas of the Medicare program.
Comment: Many commenters asserted that the rationale for our
proposal was to address non-wage issues related to rural hospitals, the
overall financial health of hospitals in low wage areas, or the broader
issue of wage index reform. These commenters critiqued our proposal
according to its effect on these issues and indicated that CMS should
pursue alternative means to address these issues rather than the policy
under consideration here.
Response: The wage index is a technical payment adjustment. The
intent of our proposal is to increase the accuracy of the wage index as
a technical adjustment, and not to use the wage index as a policy tool
to address non-wage issues related to rural hospitals, or the laudable
goals of the overall financial health of hospitals in low wage areas or
broader wage index reform. As noted earlier, our proposal increases the
accuracy of the wage index as a relative measure because it allows low
wage index hospitals to increase their employee compensation in ways
that we would expect if there were no lag between the time a hospital
increases employee compensation and the time these increases are
reflected in the wage index, and allows those increases to be more
timely reflected in the wage index. While one effect of our proposal
may be to improve the overall well-being of low wage hospitals, and we
would welcome that effect, that is not the primary rationale for our
proposal.
Comment: While many commenters were supportive of CMS' proposal to
make this policy effective for 4 years, many other commenters objected.
Some commenters pointed to the difficulty in sunsetting a policy that
has been in effect for a number of years. Others argued there is no
certainty that wage data 4 years from implementation would show that
benefiting hospitals have raised wages (that is, the data may show
benefiting hospitals gradually raised wages or not at all). Some argued
that not all low wage hospitals will be able to raise wages
immediately.
Response: As noted earlier, our proposal to increase the wage index
for low wage index hospitals is intended to provide an opportunity for
low wage hospitals to increase their employee compensation, which we
believe, based on responses to the request for information as well as
comments received on this proposal, that low wage index hospitals have
been prevented from doing because of the lag between the time hospitals
increase employee compensation and the time these increases are
reflected in the wage index. Based on responses to the request for
information as well as comments received on our proposal, we expect
such hospitals to increase employee compensation as a result of this
policy as noted previously. Once that increased employee compensation
is reflected in the wage data, there may be no need for the
continuation of the policy, given that we would expect the resulting
increases in the wage index to continue after the temporary policy is
discontinued.
We still intend to revisit the issue of the duration of the policy
in future rulemaking as we gain experience under the policy. In
response to commenters who indicated that it is difficult to sunset a
policy that has been in effect for a number of years, we have routinely
allowed transition policies related to changes in the wage index as a
result of updated labor market areas to expire, and in the FY 2019 IPPS
final rule we allowed the temporary imputed floor policy to expire.
Just as it is within our rulemaking authority to adopt this policy, it
also lies within our authority to discontinue it after it no longer
serves to increase the accuracy of the wage index.
After consideration of the public comments we received, for the
reasons discussed in this final rule and in the proposed rule, we are
finalizing our proposal to increase the wage index for hospitals with a
wage index value below the 25th percentile wage index by half the
difference between the otherwise applicable final wage index value for
a year for that hospital and the 25th percentile wage index value for
that year across all hospitals, as proposed without modification. Based
on the data for this final rule, for FY 2020, the 25th percentile wage
index value across all hospitals is 0.8457. As proposed, this policy
will be in effect for at least 4 fiscal years beginning October 1,
2019. As discussed above, we intend to revisit the issue of the
duration of this policy in future rulemaking as we gain experience
under the policy.
b. Budget Neutrality for Providing an Opportunity for Low Wage Index
Hospitals To Increase Employee Compensation
As noted earlier and discussed in the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19393 through 19399), in
[[Page 42329]]
response to the request for information on wage index disparities in
the FY 2019 IPPS/LTCH PPS proposed rule, some respondents recommended
that CMS create a wage index floor for low wage index hospitals, and
that, in order to maintain budget neutrality, CMS reduce the wage index
values for high wage index hospitals through the creation of a wage
index ceiling.
In the proposed rule (84 FR 19395 through 19396), we stated our
belief that while it would not be appropriate to create a wage index
floor or a wage index ceiling as suggested in the previously summarized
comment, we believed the suggestion that we provide a mechanism to
increase the wage index of low wage index hospitals (as finalized in
section III.N.2.a. of this final rule) while maintaining budget
neutrality for that increase through an adjustment to the wage index of
high wage index hospitals has two key merits. First, by compressing the
wage index for hospitals on the high and low ends, that is, those
hospitals with a low wage index and those hospitals with a high wage
index, such a methodology increases the impact on existing wage index
disparities more than by simply addressing one end. Second, such a
methodology ensures those hospitals in the middle, that is, those
hospitals whose wage index is not considered high or low, do not have
their wage index values affected by this proposed policy. Thus, given
the growing disparities between low wage index hospitals and high wage
index hospitals, consistent with the previously summarized comment, we
stated in the proposed rule our belief that it would be appropriate to
maintain budget neutrality for the low wage index policy proposed in
section III.N.3.a. of the preamble of the proposed rule by adjusting
the wage index for high wage index hospitals.
As discussed earlier, we believe it is important to preserve the
rank order of wage index values because the rank order generally
reflects meaningful distinctions between the employee compensation
costs faced by hospitals in different geographic areas. As indicated in
the proposed rule, although wage index value differences between areas
(including areas with high wage index hospitals) may be artificially
magnified by the current wage index policies, we do not believe those
differences are nonexistent, and therefore, we do not believe it would
be appropriate to set a wage index ceiling or floor. Accordingly, in
order to offset the estimated increase in IPPS payments to hospitals
with wage index values below the 25th percentile under our proposal in
section III.N.3.a. of the preamble of the proposed rule, we proposed to
decrease the wage index values for hospitals with high wage index
values, but preserve the rank order among those values, as further
discussed in this final rule.
As discussed in section III.N.3.a. of the preamble of the proposed
rule, we believe it is reasonable to divide all hospitals into
quartiles based on their wage index value whereby we identify hospitals
in the lowest quartile as low wage index hospitals, hospitals in the
second and third ``middle'' quartiles as hospitals with wage index
values that are neither high nor low, and hospitals in the highest
quartile as hospitals with high wage index values. We stated in the
proposed rule we believe our proposed quartile approach is reasonable
for this purpose, given that, as previously discussed, quartiles are a
common way to divide distributions, and this proposed approach is
consistent with approaches used in other areas of the Medicare program.
Therefore, we proposed to identify high wage index hospitals as
hospitals in the highest quartile, and in the budget neutrality
discussion that follows, we refer to hospitals with wage index values
above the 75th percentile wage index value across all hospitals for a
fiscal year as ``high wage index hospitals.''
To ensure our proposal in section III.N.3.a. of the preamble of the
proposed rule is budget neutral, we proposed to reduce the wage index
values for high wage index hospitals using a methodology analogous to
the methodology used to increase the wage index values for low wage
index hospitals described in section III.N.3.a. of the preamble of the
proposed rule; that is, we proposed to decrease the wage index values
for high wage index hospitals by a uniform factor of the distance
between the hospital's otherwise applicable wage index and the 75th
percentile wage index value for a fiscal year across all hospitals.
We stated in the proposed rule that we believe we have authority to
implement our lowest quartile wage index proposal in section III.N.3.a.
of the preamble of the proposed rule and our budget neutrality proposal
in section III.N.3.b. of the preamble of the proposed rule under
section 1886(d)(3)(E) of the Act (which gives the Secretary broad
authority to adjust 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, and requires those adjustments to
be budget neutral), and under our exceptions and adjustments authority
under section 1886(d)(5)(I) of the Act.
Comment: The vast majority of commenters believed CMS should not
apply budget neutrality at all to our proposed increase in the wage
index for low wage hospitals as there are strong policy reasons not to
do so, CMS does not have the statutory authority to do so, and/or it is
not required by law. Many commenters specifically objected to our
proposal to reduce the wage index values for hospitals in the top
quartile indicating that it arbitrarily results in an inaccurate wage
index for high wage hospitals, and it ignores the CMS audited wage data
from high wage hospitals reflecting the actual labor costs of these
hospitals. These commenters indicated that our proposed reduction to
high wage hospitals undermines and is inconsistent with a wage index
that is required to reflect real differences in labor costs based on
data collected from IPPS hospitals.
Some commenters indicated that while they appreciate CMS'
recognition of the fact that certain hospitals, including rural
hospitals, may be in financial distress, facing potential closure, and
in need of relief, there are high wage hospitals that have negative
margins and also are struggling financially. Therefore, these
commenters questioned whether a link can be made between the level of
the Medicare wage index and hospitals' financial performance. These
commenters stated that CMS has conducted no analysis or study
establishing such a link, making the proposal a poorly researched,
expensive, redistributive experiment. These commenters indicated our
proposal effectively means that a struggling community hospital in a
high-wage area would have to sustain Medicare payment cuts in order to
subsidize arbitrary and possibly unfounded positive payment adjustments
for hospitals in low-wage areas. These commenters questioned whether
the Medicare wage index is the appropriate mechanism to attempt to
improve the financial performance of low-wage index hospitals at the
expense of high wage index hospitals.
Many commenters indicated that there is a high and increasing cost
of living in high wage areas, and that high cost of living is reflected
in the compensation provided to hospitals employees in those areas.
These commenters indicated that our proposed budget neutrality
adjustment targeted on high wage hospitals arbitrarily
[[Page 42330]]
disregards these actual cost of living differences.
Many commenters indicated that the agency should not apply budget
neutrality at all given the below-cost reimbursement that all inpatient
PPS hospitals face and the lack of evidence to justify reductions to
wage index values. Specifically, many of these commenters stated that
Medicare currently reimburses IPPS hospitals less than the cost of care
as evidenced both by survey data and declining Medicare margins over
time. Many also stated that CMS did not indicate or provide evidence to
show that wage index values above the 75th percentile are inaccurate or
that those values do not reflect the wages paid by those hospitals.
They indicated that CMS did not make any claims that these higher wage
hospitals have wage index values that are unrepresentative of real wage
information. They indicated that a policy that penalizes certain
hospitals simply because of where they fall in the wage index
distribution is not based on evidence and is arbitrary. They indicated
that our proposed budget neutrality on high wage hospitals contradicts
the efforts that both hospitals and CMS make in order to have
consistent and accurate wage data reporting, including regular data
submissions, revisions and audits.
Some commenters asserted that CMS has acknowledged that it is not
required to increase the wage index values for low wage hospitals
budget neutrally. Rather, CMS stated that ``it would be appropriate to
maintain budget neutrality'' for the policy.
Some commenters indicated that our proposed budget neutrality
adjustment on high wage hospitals penalizes certain rural hospitals.
Specifically, these commenters indicated that the 75th percentile
policy would reduce payments to 5 percent of rural IPPS hospitals,
putting them at even more financial risk and likely worsening financial
health and access concerns in certain rural areas. Other commenters
indicated that it would negatively impact some safety net hospitals. A
few commenters indicated that the proposal would negatively impact
hospitals in all-urban states already suffering from the expiration of
the imputed floor policy.
Commenters disagreed as to the budget neutrality approach CMS
should take if our proposed increase in the wage index for low wage
hospitals was implemented in a budget neutral manner. Some commenters
supported our proposed budget neutrality adjustment on the top quartile
indicating that hospitals in the middle two quartiles should not be
impacted by increases in the lowest quartile. Other commenters,
however, indicated that CMS should fund the increase through a national
budget neutrality adjustment as is CMS's usual policy. (We note
national budget neutrality on the standardized amount was one of the
alternatives considered in the proposed rule (84 FR 19672)). These
commenters claimed ``selective'' budget neutrality, as proposed by CMS,
whereby a small subset of hospitals bears the entire burden of budget
neutrality for a given CMS policy change is unprecedented, and it
violates both the statutory purpose of the wage index and CMS' own
long-standing policy of ensuring budget neutrality by spreading the
cost of payment adjustments across all hospitals equally.
Similar to some comments made regarding our increase of the wage
index values of hospitals in the lowest quartile, many commenters
stated that the law does not provide CMS with the authority to reduce
the wage index values of the high wage index hospitals and/or any wage
index values to offset the increase in payments to the hospitals in the
lowest quartile. Many of these commenters discussed both our authority
under section 1886(d)(3)(E) and (d)(5)(I) of the Act. The legal
comments included the following arguments.
With respect to our authority under 1886(d)(3)(E) of the Act, these
commenters asserted that CMS states, but does not explain why, the
statute setting forth the wage index provision gives it broad authority
to institute a wage compression policy that, in essence, makes
inaccurate the wage data values for half of the nation's hospitals.
These commenters indicated that section 1886(d)(3)(E) of the Act
provides a process for the adjustment of hospital payments to account
``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[,]'' and requires those adjustments to be budget
neutral. These commenters indicated that the wage compression proposal
violates the plain language of the statute because it will not result
in an adjustment to the payment rates that reflect the actual wage data
difference between the relative hospital wage levels in a geographic
area compared to the national average, subject only to those
adjustments that have been specifically set forth by Congress. The
commenters indicated that our proposal clearly contradicts Congress'
mandate.
Some commenters indicated that while certain of the details of the
creation and implementation of the wage index may have been delegated
by Congress to the agency, the statute nevertheless requires the
Secretary to develop a mechanism to remove the effects of local wage
differences. These commenters indicated that the payment adjustments to
reflect area wage differences must be accurate. These commenters
indicated that CMS' wage compression proposal does not remove the
effects of local wage differences, but instead disregards accurately
reported wage data for 50% of the nation's hospitals. These commenters
asserted this is beyond the authority delegated to the agency and
ignores the text of the statute whereby CMS is to adjust IPPS payments
by a factor ``reflecting the relative hospital wage level in the
geographic area of the hospital compared to the national average
hospital wage level.''
These commenters indicated that Congress instituted this statutory
provision to identify actual differences in geographic labor costs
relative to the national average and to account for them in the
payments to hospitals, subject only to those adjustments that Congress
has specifically authorized. These commenters indicated that Congress
has authorized several adjustments in section 1886(d)(3)(E) of the Act
to the hospital wage index adjustment, such as a budget neutrality
adjustment, an adjustment to fix the wage-related portion at 62
percent, and a floor for frontier hospitals. These commenters stated
that CMS has acted consistently with Congress' directives in the past,
and has calculated the wage index based on actual wage data, subject
only to those modifications specifically permitted by Congress and
Congress has not authorized the wage compression adjustment. Moreover,
these commenters asserted that CMS has instituted a process--the Wage
Index Development Timetable--with detailed instructions for the sole
purpose of ensuring that CMS has accurate wage index data from all IPPS
hospitals. These commenters also noted that the data reported on
Worksheet S-3 of the Medicare cost report are the only section of the
cost report that is subject to a Medicare administrative contractor
(MAC) review every single year. In addition to the MAC review, there is
a subsequent additional secondary auditor with oversight of the MACs to
ensure data are reported accurately. They indicated CMS has invested
significant resources to ensure that the data reported and reflected in
each
[[Page 42331]]
year's cost reports are reliable and valid for the purposes of payment.
However, these commenters believe CMS is now proposing a policy
that would use the wage data in a manner to rank the various hospitals
so that the data of 25 percent of hospitals will be inaccurately and
artificially pushed downwards to allow the data of a different 25
percent of hospitals to be inaccurately and artificially pushed
upwards. They indicated that nothing in section 1886(d)(3)(E) of the
Act suggests that Congress authorized CMS to institute a policy whereby
half of the hospitals would receive wage index values that did not
accurately match their actual values. Thus, these commenters asserted
that CMS' proposal is beyond the authority granted by Congress, and CMS
cannot lawfully institute our proposal under section 1886(d)(3)(E) of
the Act.
These commenters also asserted that CMS' proposed action is ultra
vires. They indicated that section 1886(d)(3)(E) of the Act contains
only two exceptions. They indicated that Congress writes rules as well
as exceptions. They stated that in section 1886(d)(3)(E) of the Act,
Congress did both, establishing the basic rule in clause (i), and
exceptions in clauses (ii) and (iii). Commenters stated these are the
only exceptions that Congress has made, and that. Congress has not made
any type of special exception to the first clause that would allow CMS
to institute the wage compression policy. Thus, these commenters
asserted that Congress did not give CMS the authority to implement the
wage compression policy. As such, these commenters stated that the CMS-
proposed action is ultra vires, and that the agency could not institute
this proposal in conformance with section 1886(d)(3)(E) of the Act.
These commenters further stated that, if Congress wanted to change the
wage index in the manner proposed by CMS, it could have.
With respect to our exceptions and adjustments authority under
section 1886(d)(5)(I) of the Act, these commenters stated--(1) this
``catchall'' cannot be used in a manner that vitiates the language and
purpose of the rest of the statute, including section 1886(d)(5)(A)
through (H) of the Act, as there must be limits to the authority
granted to CMS under this section; (2) CMS is not acting by regulation,
and, therefore, is not following 1886(d)(5)(I); and (3) if CMS does
have the authority to make this change, this special authority is not
required to be done in a budget neutral manner, as is clear from the
statute where paragraph (d)(5)(I)(ii) references budget neutrality, but
paragraph (d)(5)(I)(i) does not, and as is clear from relevant case
law.
Response: As noted earlier, the intent of our proposal to increase
the wage index for low wage hospitals is to increase the accuracy of
the wage index as a technical adjustment, and not to use the wage index
as a policy tool to address non-wage issues related to rural hospitals,
or the laudable goals of the overall financial health of hospitals in
low wage areas or broader wage index reform. As discussed previously,
our proposal to increase the wage index for low wage index hospitals
increases the accuracy of the wage index as a relative measure because
it will allow low wage index hospitals to increase their employee
compensation in ways that we would expect if there were no lag in
reflecting compensation adjustments in the wage index. As we noted
previously, we believe that many low wage index hospitals have been
prevented from increasing compensation because of the lag under our
cost reporting process between the time hospitals increase employee
compensation and the time these increases are reflected in the wage
index. Thus, under our proposal, we believe the wage index for low wage
index hospitals will appropriately reflect the relative hospital wage
level in those areas compared to the national average hospital wage
level. Because our proposal is based on the actual wages that we expect
low wage hospitals to pay, it falls within the scope of the authority
of section 1886(d)(3)(E) of the Act. In particular, since our proposal
will increase the accuracy of the wage index, we disagree with
commenters' assertions that our proposal does not remove the effects of
local wage differences, that it disregards accurately reported wage
data, or that our proposal is beyond the authority granted to the
agency under section 1886(d)(3)(E) of the Act whereby CMS is to adjust
IPPS payments by a factor ``reflecting the relative hospital wage level
in the geographic area of the hospital compared to the national average
hospital wage level.''
Under section 1886(d)(3)(E) of the Act, the wage index adjustment
is required to be implemented in a budget neutral manner. However, even
if the wage index were not required to be budget neutral under section
1886(d)(3)(E) of the Act, we would consider it inappropriate to use the
wage index to increase or decrease overall IPPS spending. As noted
above, the wage index not a policy tool but rather a technical
adjustment designed to be a relative measure of the wages and wage-
related costs of subsection (d) hospitals in the United States. As a
result, if it is determined that section 1886(d)(3)(E) of the Act does
not require the wage index to be budget neutral, we invoke our
authority at 1886(d)(5)(I) of the Act in support of such a budget
neutrality adjustment. Contrary to the suggestions of many commenters,
we believe we could use our broad authority under that provision to
promulgate such an adjustment to the extent it was determined that
section 1886(d)(3)(E) of the Act was not available for that purpose.
We acknowledge, however, that some commenters have presented
reasonable policy arguments that we should consider further regarding
the relationship between our proposed budget neutrality adjustment
targeting high wage hospitals and the design of the wage index to be a
relative measure of the wages and wage-related costs of subsection (d)
hospitals in the United States. Therefore, given that budget neutrality
is required under section 1886(d)(3)(E) of the Act, given that even if
it were not required, we believe it would be inappropriate to use the
wage index to increase or decrease overall IPPS spending, and given
that we wish to consider further the policy arguments raised by
commenters regarding our budget neutrality proposal, we are finalizing
a budget neutrality adjustment for our low wage hospital policy, but we
are not finalizing our proposal to target that budget neutrality
adjustment on high wage hospitals. Instead, consistent with CMS's
current methodology for implementing wage index budget neutrality under
section 1886(d)(3)(E) of the Act and the alternative approach we
considered in the proposed rule (84 FR 19672), we are finalizing a
budget neutrality adjustment to the national standardized amount for
all hospitals so that the increase in the wage index for low wage index
hospitals, as finalized in this rule, is implemented in a budget
neutral manner.
As discussed above, some commenters asserted that the only
adjustments to the wage index that are permitted under section 1886(d)
of the Act are those specified by Congress in the statute (commenters
specifically referred to the budget neutrality adjustment, the
adjustment to set an alternative wage-related portion of 62 percent,
and the floor for frontier hospitals). As we discussed in the proposed
rule (84 FR 19396), section 1886(d)(3)(E) of the Act gives the
Secretary broad authority to adjust 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
[[Page 42332]]
hospital compared to the national average hospital wage level. The fact
that section 1886(d) of the Act sets forth certain adjustments to the
wage index calculation, such as those referred to by commenters, does
not limit the exercise of our discretion under section 1886(d)(3)(E) of
the Act in other respects.
After consideration of the public comments received, for the
reasons discussed in this final rule and in the proposed rule, we are
finalizing a budget neutrality adjustment for our low wage index
hospital policy finalized in section III.N.2.a. of this final rule, but
we are not finalizing our proposal to target that budget neutrality
adjustment on high wage hospitals as we proposed (84 FR 19395 through
19396). Instead, consistent with CMS's current methodology for
implementing wage index budget neutrality under section 1886(d)(3)(E)
of the Act, and consistent with the alternative we considered in the
proposed rule, we are finalizing a budget neutrality adjustment to the
national standardized amount for all hospitals so that the increase in
the wage index for low wage index hospitals, as finalized in this rule,
is implemented in a budget neutral manner.
c. Preventing Inappropriate Payment Increases Due to Rural
Reclassifications Under the Provisions of 42 CFR 412.103
We stated in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19396
through 19399) that we also agree with respondents to the request for
information who indicated that another contributing systemic factor to
wage index disparities is the rural floor. As discussed in the proposed
rule, 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. Section 3141 of Public Law 111-148 also requires
that a national budget neutrality adjustment be applied in implementing
the rural floor.
As we explained in the proposed rule, the rural floor policy was
addressed by the Office of the Inspector General (OIG) in its recent
November 2018 report, ``Significant Vulnerabilities Exist in the
Hospital Wage Index System for Medicare Payment'' (A-01-17-00500),
which is available on the OIG website at: https://oig.hhs.gov/oas/reports/region1/11700500.pdf. The OIG stated (we note that the footnote
references included here are in the original document but are not
carried here):
``The stated legislative intent of the rural floor was to correct
the `anomaly' of `some urban hospitals being paid less than the average
rural hospital in their States.' \9\ However, we noted that MedPAC, an
independent congressional advisory board, has since stated that it is
`not aware of any empirical support for this policy,\10\ and that the
policy is built on the false assumption that hospital wage rates in all
urban labor markets in a State are always higher than the average
hospital wage rate in rural areas of that State.'' \11\
As one simplified example that we presented in the proposed rule,
for purposes of illustrating the rural floor policy, assume that the
rural wage index for a State is 1.1000. Therefore, as we stated in the
proposed rule, under current policy, the rural floor for that State
would be 1.1000. Any urban hospital with a wage index value below
1.1000 in that State would have its wage index value raised to 1.1000.
We further explained that the additional Medicare payments to those
urban hospitals in that State increase the national budget neutrality
adjustment for the rural floor provision.
As we discussed in the proposed rule (84 FR 19397), for a real
world example of the impact of the rural floor policy, we point to FY
2018, in which 366 urban hospitals benefitted from the rural floor. The
increase in the wage indexes of urban hospitals receiving the rural
floor was offset by a nationwide decrease in all hospitals' wage
indexes of approximately 0.67 percent. In Massachusetts, that meant
that 36 urban hospitals received a wage index based on hospital wages
in Nantucket, an island that is home to the only rural hospital
contributing to the State's rural floor wage index. In the FY 2018
IPPS/LTCH PPS final rule (82 FR 38557), we estimated that those 36
hospitals would receive an additional $44 million in inpatient payments
for the year. These increased payments were offset by decreased
payments to hospitals nationwide, and those decreases were not based on
actual local wage rates but on the current rural floor calculation.
We stated that as acknowledged by the OIG, CMS has long recognized
the disparate impacts and unintended outcomes of the rural floor. We
have stated that the rural floor creates a benefit for a minority of
States that is then funded by a majority of States, including States
that are overwhelmingly rural in character (73 FR 23528 and 23622). We
also have stated that ``as a result of hospital actions not envisioned
by Congress, the rural floor is resulting in significant disparities in
wage index and, in some cases, resulting in situations where all
hospitals in a State receive a wage index higher than that of the
single highest wage index urban hospital in the State'' (76 FR 42170
and 42212).
As explained in the proposed rule, in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41748), we indicated that wage index disparities
associated with the rural floor significantly increased in FY 2019 with
the urban to rural reclassification of an urban hospital in
Massachusetts. We also noted that Massachusetts is not the only State
where urban hospitals reclassified as rural under Sec. 412.103 have a
significant impact on the State's rural floor. We stated that this also
occurs, for example, in Arizona and Connecticut. As discussed in the
proposed rule, the rural floor policy was meant to address anomalies of
some urban hospitals being paid less than the average rural hospital in
their States, not to raise the payments of many hospitals in a State to
the high wage level of a geographically urban hospital.
We noted in the proposed rule that, for FY 2020, the urban
Massachusetts hospital reclassified as rural under Sec. 412.103 has an
approved MGCRB reclassification back to its geographic location, and,
therefore, its MGCRB reclassification was used for wage index
calculation and payment purposes in the proposed rule (that is, this
hospital was not considered rural for wage index purposes). However, we
stated in the proposed rule that under our current wage index policy as
of the time of the FY 2020 proposed rule, the hospital would be able to
influence the Massachusetts rural floor by withdrawing or terminating
its MGCRB reclassification in accordance with the regulation at Sec.
412.273 for FY 2020 or subsequent years. We note that this hospital did
in fact withdraw its MGCRB reclassification back to its geographic
location for the FY 2020 final rule, so absent our proposal, the
Massachusetts rural floor would have been calculated using the high
wages of this hospital.
Returning to our simplified example presented in the proposed rule,
for purposes of illustrating the impact of an urban to rural
reclassification on the calculation of the rural floor under current
policy as of the time of the FY 2020 proposed rule, again assume that
the rural wage index for a State is 1.1000. Therefore, under current
policy, the rural floor for that State would be 1.1000. Any urban
hospital with a wage index value below 1.1000 in that State would have
its wage index value raised to 1.1000. However, now assume that one
urban hospital in that State
[[Page 42333]]
subsequently reclassifies from urban to rural and raises the rural wage
index from 1.1000 to 1.2000. Now, solely because of a geographically
urban hospital, the rural floor in that State would go from 1.1000 to
1.2000 under current policy.
As previously noted by OIG in the November 2018 report referenced,
the stated legislative intent of the rural floor was to correct the
``anomaly'' of ``some urban hospitals being paid less than the average
rural hospital in their States.'' (Report 105-149 of the Committee on
the Budget, House of Representatives, to Accompany H.R. 2015, June 24,
1997, section 10205, page 1305.) We stated in the proposed rule that we
believe that urban to rural reclassifications have stretched the rural
floor provision beyond a policy designed to address such anomalies. We
explained that, rather than raising the payment of some urban hospitals
to the level of the average rural hospital in their State, urban
hospitals may have their payments raised to the relatively high level
of one or more geographically urban hospitals reclassified as rural. We
further stated that the current state of affairs with respect to urban
to rural reclassifications goes beyond the general criticisms of the
rural floor policy by MedPAC, CMS, OIG, and many stakeholders. We
stated in the proposed rule we believe an adjustment is necessary to
address the unanticipated effects of urban to rural reclassifications
on the rural floor and the resulting wage index disparities, including
the inappropriate wage index disparities caused by the manipulation of
the rural floor policy by some hospitals.
Therefore, given the circumstances, as previously described, the
comments received on the request for information, and that urban to
rural reclassifications have stretched the rural floor provision beyond
a policy designed to address anomalies of some urban hospitals being
paid less than the average rural hospital in their States, in the FY
2020 IPPS/LTCH PPS proposed rule (84 FR 19397), we proposed to remove
urban to rural reclassifications from the calculation of the rural
floor. In other words, we stated that under our proposal, beginning in
FY 2020, the rural floor would be calculated without including the wage
data of urban hospitals that have reclassified as rural under section
1886(d)(8)(E) of the Act (as implemented at Sec. 412.103). We stated
in the proposed rule we believe our proposed calculation methodology is
permissible under section 1886(d)(8)(E) of the Act and the rural floor
statute (section 4410 of Pub. L. 105-33). We stated that section
1886(d)(8)(E) of the Act does not specify where the wage data of
reclassified hospitals must be included. Therefore, we stated that we
believe we have discretion to exclude the wage data of such hospitals
from the calculation of the rural floor. Furthermore, we explained that
the rural floor statute does not specify how the rural floor wage index
is to be calculated or what data are to be included in the calculation.
Therefore, we stated that we also believe we have discretion under the
rural floor statute to exclude the wage data of hospitals reclassified
under section 1886(d)(8)(E) of the Act from the calculation of the
rural floor. We stated that we believe this proposed policy is
necessary and appropriate to address the unanticipated effects of rural
reclassifications on the rural floor and the resulting wage index
disparities, including the effects of the manipulation of the rural
floor by certain hospitals. As discussed in the proposed rule, the
inclusion of reclassified hospitals in the rural floor calculation has
had the unforeseen effect of exacerbating the wage index disparities
between low and high wage index hospitals. Therefore, we explained that
under our proposal, in the case of Massachusetts, for example, the
geographically rural hospital in Nantucket would still be included in
the calculation of the rural floor for Massachusetts, but a
geographically urban hospital reclassified under Sec. 412.103 would
not.
Returning to our simplified example presented in the proposed rule
for purposes of illustrating the impact of the proposed policy, again
assume that the rural wage index for a State is 1.1000 without any
hospital in the State having reclassified from urban to rural.
Therefore, the rural floor for that State would be 1.1000. Any urban
hospital with a wage index value below 1.1000 in that State would have
its wage index value raised to 1.1000. However, again assume that one
urban hospital in that State subsequently reclassifies from urban to
rural and raises the rural wage index from 1.1000 to 1.2000. We stated
that under our proposed policy, the rural floor in that State would not
go from 1.1000 to 1.2000, but would remain at 1.1000 because urban to
rural reclassifications would no longer impact the rural floor.
As we discussed earlier, we stated in the proposed rule that the
purpose of our proposal to calculate the rural floor without including
the wage data of urban hospitals reclassified as rural under section
1886(d)(8)(E) of the Act (as implemented at Sec. 412.103) was to
address wage index disparities that result when urban hospitals may
have their payments raised to the relatively high level of one or more
geographically urban hospitals reclassified as rural. In particular, we
stated in the proposed rule we believe that no urban hospital not
reclassified as rural should have its payments raised to the relatively
high level of one or more geographically urban hospitals reclassified
as rural, and we believe it would be inappropriate to prevent this for
one class of urban hospitals not reclassified as rural (that is, under
the rural floor provision) but allow this for another. As such, for
consistent treatment of urban hospitals not reclassified as rural, we
also proposed to apply the provisions of section 1886(d)(8)(C)(iii) of
the Act without including the wage data of urban hospitals that have
reclassified as rural under section 1886(d)(8)(E) of the Act (as
implemented at Sec. 412.103). We stated that because section
1886(d)(8)(C)(iii) of the Act provides that reclassifications under
section 1886(d)(8)(B) of the Act and section 1886(d)(10) of the Act may
not reduce any county's wage index below the wage index for rural areas
in the State, we made this proposal to help ensure no urban hospitals
not reclassified as rural, including those hospitals with no
reclassification as well as those hospitals reclassified under section
1886(d)(8)(B) of the Act or section 1886(d)(10) of the Act, have their
payments raised to the relatively high level of one or more
geographically urban hospitals reclassified as rural. Specifically, for
purposes of applying the provisions of section 1886(d)(8)(C)(iii) of
the Act, we proposed to remove urban to rural reclassifications from
the calculation of ``the wage index for rural areas in the State in
which the county is located'' referred to in section 1886(d)(8)(C)(iii)
of the Act.
Comment: Many commenters, including MedPAC, supported our proposal
to remove urban to rural reclassifications from the calculation of the
rural floor wage index. Some commenters asserted that CMS has the
regulatory authority to determine how it calculates the rural floor,
and the calculation should mirror the spirit and intent of law
resulting in only the natural rural providers in a state to be
considered when calculating a rural floor. Commenters strongly
commended CMS for curbing the manipulative practice of some hospitals
abusing the rural floor provision to inappropriately influence the
rural floor wage index value, which many commenters stated exacerbates
the wage index disparity between urban and rural hospitals.
[[Page 42334]]
Commenters agreed with CMS that the use of urban to rural
reclassifications to artificially inflate the rural floor has stretched
the rural floor provision beyond its original intent. They stated that
hospitals should not be penalized and bear the burden of declining
reimbursement due to other hospitals manipulating their state wage
index.
Many commenters stated that, in particular, the three states cited
as examples in the proposed rule have benefitted to the detriment of
hospitals in every other state due to budget neutrality. Commenters
also stated they hope CMS will not be swayed by comments from hospitals
that have been ``unjustly enriched'' by this policy over a number of
years.
Several commenters stated that including urban to rural
reclassifications in the rural floor calculation especially
disadvantaged small, more rural states and financially distraught,
struggling rural hospitals. In the words of a commenter, this
``egregious loophole'' has consistently disadvantaged rural and low
wage hospitals.
Commenters stated that geographically urban hospitals should have
no impact on the rural floor, and the proposal fairly achieves CMS'
intent to address wage index disparities. Similarly, several commenters
stated that the proposal allows hospitals to still seek designations
requiring rural status and keeps the rural floor concept intact while
preventing improper influencing of the area wage index. A commenter
stated that removing the wage data of urban hospitals that have
reclassified as rural from the rural floor is a ``step in the right
direction'' to have the wage index reflect local labor prices.
A commenter stated that the proposal seems reasonable, but
suggested that CMS monitor its impacts and reassess whether it
accomplishes the intended policy goals.
Response: We appreciate the many comments in support of our
proposal to remove the wage data of hospitals reclassified under Sec.
412.103 from the rural floor calculation. As stated in the proposed
rule, we believe this proposed policy is necessary and appropriate to
address the unanticipated effects of rural reclassifications on the
rural floor and the resulting wage index disparities, including the
effects of the manipulation of the rural floor by certain hospitals. We
intend to monitor whether the proposal accomplishes the aforementioned
policy goals.
Comment: We also received many comments in opposition of this
proposal. Many commenters requested that CMS continue to consider the
wage data of hospitals reclassified under Sec. 412.103 in the rural
floor calculation. A few commenters requested CMS leave the current
calculation of the rural floor in place until there is a broader
solution resulting from CMS working with Congress. A commenter stated
the proposal would actually penalize many rural states, rather than
support them because many hospitals in states that are mostly rural in
character benefit from the inclusion of urban hospitals reclassified as
rural in the wage index rural floor. Commenters also stated that
excluding reclassified hospitals from the rural floor is plainly
inconsistent with the statutory language. Commenters stated that the
statute does not draw any distinction between the ``rural areas'' used
to calculate the rural floor under section 4410(a) of the Balanced
Budget Act of 1997 and the ``rural areas'' that reclassified hospitals
are to be treated as located in under section 1886(d)(8)(E) of the Act.
According to these commenters, Congress intended the term ``rural
area'' to have the same definition when applied to the rural floor and
section 1886(d)(8)(E) of the Act. A commenter specifically stated that
Congress did not create a subcategory of rural hospitals that are
eligible for the rural wage index, but whose wages are not included in
the calculation of a state's rural floor. Furthermore, this commenter
stated that the precedent set by two cases, Geisinger Community Medical
Center v. Burwell, and Lawrence + Memorial Hospital v. Burwell
establishes that a reclassified hospital should be treated as a rural
hospital for all purposes under IPPS, including wage reclassification.
Response: In the absence of broader wage index reform from
Congress, we believe it is appropriate to revise the rural floor
calculation as part of an effort to reduce wage index disparities. In
response to the comment that many hospitals in states that are mostly
rural benefit from the inclusion of urban hospitals in the wage index
rural floor, the volume of comments that we received from stakeholders
in mostly rural states supporting our proposal indicate that hospitals
in such states were hurt more than helped by including hospitals with
urban to rural reclassifications in the calculation of the rural floor.
While urban hospitals in mostly rural states may benefit from an
increase in the rural floor due to urban to rural reclassification, as
the commenters suggest, other states with high wage urban hospitals
using Sec. 412.103 reclassifications to raise the rural floor can
mitigate those gains for mostly rural states, due to budget neutrality.
Regarding CMS' statutory authority, as stated in the proposed rule,
we believe our proposed calculation methodology is permissible under
section 1886(d)(8)(E) of the Act (as implemented in Sec. 412.103) and
the rural floor statute (section 4410 of Pub. L. 105-33). Section
1886(d)(8)(E) of the Act does not specify where the wage data of
reclassified hospitals must be included. Therefore, we believe we have
discretion to exclude the wage data of such hospitals from the
calculation of the rural floor. Furthermore, the rural floor statute
does not specify how the rural floor wage index is to be calculated or
what data are to be included in the calculation. Therefore, we also
believe we have discretion under the rural floor statute to exclude the
wage data of hospitals reclassified under section 1886(d)(8)(E) of the
Act from the calculation of the rural floor. We note that under our
proposal we would continue to calculate the rural floor based on the
physical non-MSA area of a state, which is the same rural area to which
a hospital is reclassified under section 1886(d)(8)(E) of the Act.
However, for purposes of calculating the rural floor wage index for a
state, we would not include in the rural area the data of hospitals
that have reclassified as rural under section 1886(d)(8)(E) of the Act.
As we discussed in the proposed rule (84 FR 19397), the stated
legislative intent of the rural floor was to correct the ``anomaly'' of
``some urban hospitals being paid less than the average rural hospital
in their States.'' (Report 105-149 of the Committee on the Budget,
House of Representatives, to Accompany H.R. 2015, June 24, 1997,
section 10205, page 1305). Under the current rural floor wage index
calculation, rather than raising the payment of some urban hospitals to
the level of the average rural hospital in their State, urban hospitals
may have their payments raised to the relatively high level of one or
more geographically urban hospitals reclassified as rural. We believe
excluding the data of hospitals that reclassify as rural under section
1886(d)(8)(E) of the Act from the rural floor wage index is necessary
and appropriate to address these unanticipated effects of rural
reclassifications on the rural floor and the resulting wage index
disparities, and is consistent with our authority under section
1886(d)(8)(E) of the Act and the rural floor statute.
We also note that our proposal is consistent with the decisions in
Geisinger Community Medical Center v. Secretary, United States
Department of Health and Human Services, 794 F.3d
[[Page 42335]]
383 (3d Cir. 2015) and Lawrence + Memorial Hospital v. Burwell, 812
F.3d 257 (2d Cir. 2016) in which the courts found that hospitals
reclassified under Sec. 412.013 must be considered rural for all
purposes. Accordingly, it is CMS policy to consider hospitals
reclassified as rural under Sec. 412.103 as having rural status. For
example, a hospital with a Sec. 412.103 rural reclassification would
receive the rural wage index and would use the rural mileage and wage
criteria when applying for an MGCRB reclassification. But the issue
whether to include the hospital's wage data for purposes of calculating
the rural floor is separate from issues of the treatment of the
hospital itself. The hospital is being treated as rural for section
1886(d) purposes regardless of whether its data is included for
purposes of calculating the rural floor. We do not believe that the
decisions in Geisinger and Lawrence+Memorial require any particular
treatment of the wage data of hospitals reclassified under Sec.
412.103 for purposes of calculating the rural floor. Those hospitals
are being treated as rural because they are being allowed to reclassify
through the MGCRB based on their rural designation under Sec. 412.103,
regardless of the treatment of their wage data for purposes of
calculating the rural floor.
We believe that the strict reading of ``rural for all purposes'' to
which the commenters subscribe is neither required by the text of the
court decisions they cite nor appropriate from a policy perspective.
For example, the wage data of a hospital with a Sec. 412.103 rural
redesignation is considered in its home geographic area in addition to
the rural area to which it is reclassified for purposes of calculating
the wage index. We believe that the commenters' reading would
inappropriately require that the wage data for hospitals reclassified
under Sec. 412.103 be excluded from the wage index calculation of
their geographic locations. Similarly, we believe that the commenters'
reading that hospitals redesignated under Sec. 412.103 must be treated
as rural for all purposes could, if taken to its logical extreme, mean
we must treat those hospitals as geographically located in the rural
area. That could in turn potentially reduce a State's rural wage index
value. The rural area wage index is held harmless from decreases due to
any effect of wage index reclassification, but the hold harmless
protection does not apply to the effect on the area wage index of
hospitals geographically located in the area.
Comment: A commenter stated that rather than eliminating the
benefit of gaming, CMS has created a competitive advantage for large,
high cost urban hospitals that are able to reclassify as rural and
receive the benefit of an increased rural area wage index while their
lower cost competitors in their urban home geographic area that are not
reclassified as rural are left with a reduced area wage index. Another
commenter suggested reducing the potential for gaming by applying the
rural floor only to rural hospitals in primarily urban states with only
one or two rural facilities. Similarly, a commenter stated that any
proposal should not disincentivize hospitals from reporting accurate
data. Another commenter expressed understanding for CMS' concerns about
the potential for gaming by engineering a rural floor for a state that
is not reflective of the overall labor market for the state, but
believed that the proposed solution ``swings the pendulum too far in
the other direction'' by failing to recognize the unique healthcare
skillset that requires urban and rural hospitals to compete in the same
labor market. This commenter suggested the following alternative
solutions:
Allow urban hospitals to apply for reclassification to
rural under the MGCRB for wage index purposes only. To prevent
inflating the reclassified wage index, threshold criteria to show that
the hospital operates in the same labor market as the State's rural
hospitals could include an additional test that the hospital's average
hourly wage is not more than 108 percent of the statewide rural average
hourly wage.
Set the floor for both urban and rural hospitals at the
statewide average hourly wage. The commenter stated that state
licensure of healthcare professions promotes a statewide healthcare
labor market, and that this would therefore be a more realistic concept
for a floor than a rural floor (even if comprised solely of
geographically rural hospitals) which perpetuates the possibly
erroneous perception that urban wages should not be lower than rural
wages.
Another commenter requested that CMS calculate each rural
reclassified wage index independently, by excluding all other
reclassified hospitals from the calculation.
Response: We appreciate the commenters' recognition of our efforts
to address gaming. In response to the first commenter who was concerned
that CMS is creating a competitive advantage for large, high cost urban
hospitals that are able to reclassify as rural and receive the benefit
of an increased rural area wage index while their lower cost
competitors in the home urban geographic area that are not reclassified
as rural are left with a reduced area wage index, we note that the wage
data of reclassified hospitals are included in both the hospital's
geographic CBSA and the CBSA to which the hospital is reclassified for
the wage index calculation. Accordingly, the wage data for a hospital
with a Sec. 412.103 redesignation are included in the wage index for
its home geographic area and are also included in its State rural wage
index (if including wage data for hospitals with a reclassification to
a rural area raises the state's rural wage index). Therefore, we are
unsure why the commenter believes that lower cost competitors are left
with a reduced area wage index when a hospital reclassifies out of the
urban area. In response to the second commenter, we do not believe we
can apply the rural floor to rural hospitals because section 4410(a) of
Public Law 105-33 provides that the area wage index applicable to any
hospital that is located in an urban (emphasis added) area of a State
may not be less than the area wage index applicable to hospitals
located in rural areas in that State. With regard to the third comment,
we agree that any proposal should not disincentivize hospitals from
reporting accurate data and do not believe that our proposal
disincentivizes accurate data reporting. Finally, with regard to the
commenters' suggested alternatives, because we consider these comments
to be outside the scope of the FY 2020 wage index proposals, we are not
addressing them in this final rule but may consider them in future
rulemaking.
Comment: A commenter requested that CMS completely eliminate the
national budget neutral impact of the rural floor policy, but
recognized this may be difficult to achieve absent legislative action.
Response: We agree with the commenter that this would be difficult
to achieve without legislative action, as section 3141 of Public Law
111-148 requires that a national budget neutrality adjustment be
applied in implementing the rural floor.
Comment: A commenter specifically supported CMS' proposed
``thoughtful changes'' to the rural floor wage index methodology so
that the wage index of a State rural area could be differentiated from
the state rural floor wage index. Several other commenters requested
that CMS clarify the examples given in the proposed rule to confirm
that the urban hospital reclassified as rural does obtain a wage index
inclusive of that hospital's wage data.
Response: We appreciate the first commenter's support. In response
to the commenters requesting clarification, we are confirming that an
urban hospital
[[Page 42336]]
reclassified as rural would obtain a wage index inclusive of that
hospital's wage data under the proposed rural floor wage index policy.
In the example in the proposed rule referred to by the commenter, where
one urban hospital in a State reclassifies from urban to rural and
raises the rural wage index from 1.1000 to 1.2000, the rural floor in
that State would not go from 1.1000 to 1.2000, but would remain at
1.1000 because urban to rural reclassifications would no longer impact
the rural floor. The rural wage index, however, would be raised to
1.2000 for the geographically rural hospitals and for hospitals
reclassified as rural.
Comment: A commenter stated that hospitals that are reclassified as
rural hospitals by CMS did so under allowable HHS authority and should
not be penalized. Another commenter stated CMS' proposal will adversely
impact urban hospitals that have made decisions to reclassify as rural
under current policy and urged CMS to consider a three-year hold
harmless period during which urban hospitals that have already
reclassified as rural would be counted in each state's rural floor.
Response: We do not believe that this proposal penalizes or
adversely impacts urban hospitals that have reclassified as rural.
Hospitals reclassified as rural under Sec. 412.103 would continue to
maintain the benefits conferred by rural reclassification, as well as
receive the rural wage index calculated including their data (provided
that the hospital does not also have an MGCRB reclassification under
section 1886(d)(10) of the Act or Lugar status under section
1886(d)(8)(B) of the Act).
After consideration of the public comments we received, for the
reasons discussed in this final rule and in the proposed rule, we are
finalizing without modification our proposal to calculate the rural
floor without including the wage data of urban hospitals reclassified
as rural under section 1886(d)(8)(E) of the Act (as implemented at
Sec. 412.103). Additionally, we are finalizing without modification
our proposal, for purposes of applying the provisions of section
1886(d)(8)(C)(iii) of the Act, to remove the wage data of urban
hospitals reclassified as rural under section 1886(d)(8)(E) of the Act
(as implemented at Sec. 412.103) from the calculation of ``the wage
index for rural areas in the State in which the county is located''
referred to in section 1886(d)(8)(C)(iii) of the Act.
d. Transition for Hospitals Negatively Impacted
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19398), we stated
we recognize that, absent further adjustments, the combined effect of
the proposed changes to the FY 2020 wage index could lead to
significant decreases in the wage index values for some hospitals
depending on the data for the final rule. In the past, we have proposed
and finalized budget neutral transition policies to help mitigate any
significant negative impacts on hospitals of certain wage index
proposals, and we stated in the proposed rule we believe it would be
appropriate to propose a transition policy here for the same purpose.
For example, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49957
through 49963), we finalized a budget neutral transition to address
certain wage index changes that occurred under the new OMB CBSA
delineations.
Therefore, for FY 2020, we proposed a transition wage index to help
mitigate any significant decreases in the wage index values of
hospitals compared to their final wage indexes for FY 2019.
Specifically, for FY 2020, we proposed to place a 5-percent cap on any
decrease in a hospital's wage index from the hospital's final wage
index in FY 2019. In other words, we proposed that a hospital's final
wage index for FY 2020 would not be less than 95 percent of its final
wage index for FY 2019. We stated that this proposed transition would
allow the effects of our proposed policies to be phased in over 2 years
with no estimated reduction in the wage index of more than 5 percent in
FY 2020 (that is, no cap would be applied the second year). We stated
in the proposed rule we believe 5 percent is a reasonable level for the
cap because it would effectively mitigate any significant decreases in
the wage index for FY 2020. However, we sought public comments on
alternative levels for the cap and accompanying rationale. We stated
that, under the proposed transition policy, we would compute the
proposed FY 2020 wage index for each hospital as follows.
Step 1.--Compute the proposed FY 2020 ``uncapped'' wage index that
would result from the implementation of proposed changes to the FY 2020
wage index.
Step 2.--Compute a proposed FY 2020 ``capped'' wage index which
would equal 95 percent of that provider's FY 2019 final wage index.
Step 3.--The proposed FY 2020 wage index is the greater of the
``uncapped'' wage index computed in Step 1 or the ``capped'' wage index
computed in Step 2.
Comment: Commenters, including MedPAC, commended CMS for proposing
the 5 percent cap to help transition providers through the proposed
wage index changes. A commenter specifically agreed that the cap should
only be applied for one year, while other commenters requested that
hospitals negatively impacted should be given a longer transition to
support hospitals continuing to experience a significant decrease, so
as not to inflict financial harm on community hospitals.
Several commenters stated that the funding cliff created by the
proposed policies for impacted hospitals is of sufficient magnitude
that it will not be mitigated by a 5 percent cap. A commenter
specifically recommended that the cap be extended for the entire
proposal and that a cumulative cap be added as well to ensure no
hospital loses more than 10 percent of its current cap overall. Another
commenter stated that even a reduction of 5 percent could create
significant financial problems for rural IPPS hospitals and that the
cap does not provide long-term protection from reductions after one
year, so CMS should exempt rural IPPS hospitals from any wage index
reduction for FY 2020 and subsequent years. Additionally, MedPAC stated
that the cap on wage index movements of more than 5 percent in one year
should also be applied to increases in the wage index.
Some commenters indicated that there should be no transition policy
because the transition policy benefits hospitals that have historically
seen increases in their wage index due to one or more urban hospital in
a state reclassifying as rural and increasing the rural floor in that
state.
Response: We appreciate the commenters' input. We agree that a
transition policy to help mitigate significant negative impacts on
hospitals would be appropriate here. We believe that the proposed
transition, which caps a hospital's final wage index for FY 2020 at not
less than 95 percent of its final wage index for FY 2019, is sufficient
to allow the effects of our proposed policies to be phased in over 2
years (that is, no cap would be applied the second year). As we stated
in the proposed rule, we believe that 5 percent is a reasonable level
for the cap because it would effectively mitigate any significant
decreases in the wage index for FY 2020. We note that commenters did
not suggest any alternate levels for the cap that they believed would
be more appropriate. Regarding the commenter advocating for an
additional cumulative cap, it is unclear what is
[[Page 42337]]
meant by ``10 percent of the current cap overall''. We are unsure what
the commenter intended or how the commenter believes such a cumulative
cap would work. As we stated above, we believe the 5 percent cap would
effectively mitigate significant decreases in the wage index for FY
2020 and provide sufficient time for hospitals to adapt to the wage
index policies that will be effective October 1, 2019.
Additionally, we do not believe it would be necessary or
appropriate to have a longer transition. We believe a one year cap
provides hospitals with declining payments sufficient time to plan
appropriately for FY 2021 and future years, especially because some
hospitals may be able to make reclassification choices to mitigate the
decline. Furthermore, we disagree that there should be no transition.
Because we are finalizing wage index changes that have significant
payment implications, and consistent with our provision of transition
periods in the past to mitigate large negative impacts on hospitals, we
believe it would be appropriate to provide a wage index transition as
proposed for FY 2020.
In response to the commenter requesting that CMS exempt IPPS rural
hospitals from any wage index reduction for FY 2020 and subsequent
years, we do not believe that such an exemption for all IPPS rural
hospitals from any wage index reduction would promote an accurate wage
index. Such an exemption for all IPPS rural hospitals would ignore the
reality that average hourly wages may sometimes decline relative to the
national average. Furthermore, such an exemption is not necessary as we
believe that a 5 percent cap on wage index decreases for one year is
sufficient to allow such hospitals to adjust to the wage index policies
that will be effective October 1, 2019.
Finally, we appreciate MedPAC's suggestion that the cap on wage
index movements of more than 5 percent should also be applied to
increases in the wage index. However, as we discussed in the proposed
rule, the purpose of the proposed transition policy, as well as those
we have implemented in the past, is to help mitigate the significant
negative impacts of certain wage index changes, not to curtail the
positive impacts of such changes, and thus we do not think it would be
appropriate to apply the 5 percent cap on wage index increases as well.
Comment: A few commenters sought clarification whether the 5
percent cap will be applied to all hospitals experiencing a wage index
decrease from FY 2019 to FY 2020 regardless of circumstance, not just
as a result of the proposals to address wage index disparities. The
commenters specifically questioned whether hospitals that experience a
wage index decrease for reasons such as losing an MGCRB
reclassification, reclassifying from urban to rural under Sec.
412.103, or changes to their wage index data would also have any
decrease in their FY 2020 wage indexes compared to their final FY 2019
wage indexes capped at 5 percent. A commenter suggested that CMS move
the budget neutrality computation and comparison earlier in the
calculation so that it is only comparing the changes resulting from the
proposed modifications to address wage index disparities, to eliminate
the unintended consequences of the ``flawed'' approach in the proposed
rule which limits losses even from normal, anticipated changes in the
wage index calculations.
A few commenters also requested clarification regarding the
applicability of the 5 percent cap on the wage index of a provider if
it changes from urban to rural reclassification after the FY 2020 final
rule is issued. For example, commenters questioned whether the
hospital's wage index decrease would also be capped at a -5 percent
change from their FY 2019 wage index if a decrease to a hospital's wage
index occurs midyear during FY 2020 due to an urban to rural
reclassification under Sec. 412.103.
Additionally, a few commenters requested that CMS define the term
``the hospital's final wage index in FY 2019'' to clarify whether that
refers to the final amount published in the FY 2019 IPPS final rule,
the wage index paid to the hospital on the final day of FY 2019, or
something else.
Response: We are clarifying that all hospitals will have any
decrease in their wage indexes capped at 5 percent for FY 2020,
regardless of circumstance causing the decline. With regard to the
commenter who suggested that CMS only apply the transition to changes
resulting from the proposed modifications to address wage index
disparities, we note that it would be difficult to isolate changes due
to the wage index disparities proposals because these proposals
influence wage index and rural floor values, which may change
hospitals' reclassification decisions as a result. Therefore, we
believe that it is preferable in the interest of administrative
simplicity, ease of implementation, and hospital financial planning, to
apply the cap universally to all decreases in the wage index that occur
during FY 2020, not just those resulting from our proposals to address
wage index disparities.
In response to the commenters' requests for clarification regarding
how the cap would be applied to midyear wage index changes, we will
also apply this transition policy for FY 2020 to decreases in the FY
2020 final wage indexes that occur after FY 2020 final rule
ratesetting. For example, a decrease in a hospital's wage index caused
by a midyear FY 2020 wage index change would also be capped at a -5
percent change from FY 2019.
In response to the commenters who requested that we define the term
``the hospital's final wage index in FY 2019'', we are clarifying that
this refers to the final amount published in the FY 2019 IPPS final
rule. We believe that using the publicly available wage indexes from
the FY 2019 IPPS final rule facilitates transparency. A hospital can
contact its MAC for assistance if it believes the incorrect wage index
value was used as the basis for its transition and the MAC can make any
appropriate correction.
After consideration of the public comments we received, for the
reasons discussed in this final rule and the proposed rule, we are
finalizing without modification our proposal, as clarified previously,
to place a 5 percent cap on any decrease in a hospital's wage index
from the hospital's final wage index in FY 2019 so that a hospital's
final wage index for FY 2020 will not be less than 95 percent of its
final wage index for FY 2019.
e. Transition Budget Neutrality
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19398), we proposed to apply a budget neutrality adjustment to the
standardized amount so that our proposed transition (as previously
described and in section III.N.3.d. of the preamble of the proposed
rule (84 FR 19398)) for hospitals that could be negatively impacted is
implemented in a budget neutral manner under our authority in section
1886(d)(5)(I) of the Act. We noted that implementing the proposed
transition wage index in a budget neutral manner is consistent with
past practice (for example, 79 FR 50372) where CMS has used its
exceptions and adjustments authority under section 1886(d)(5)(I)(i) of
the Act to budget neutralize transition wage index policies when such
policies allow for the application of a transitional wage index only
when it benefits the hospital. We stated that we believed, and continue
to believe, that it would be appropriate to ensure that such policies
do not increase estimated aggregate Medicare payments beyond the
payments that would be made had we
[[Page 42338]]
never proposed these transition policies (79 FR 50732). Therefore, for
FY 2020, we proposed to use our exceptions and adjustments authority
under section 1886(d)(5)(I)(i) of the Act to apply a budget neutrality
adjustment to the standardized amount so that our proposed transition
(described previously and in section III.N.3.d. of the preamble of the
proposed rule) for hospitals negatively impacted is implemented in a
budget neutral manner.
Specifically, we proposed to apply a budget neutrality adjustment
to ensure that estimated aggregate payments under our proposed
transition (as previously described in section III.N.3.d. of the
preamble of the proposed rule) for hospitals negatively impacted by our
proposed wage index policies would equal what estimated aggregate
payments would have been without the proposed transition for hospitals
negatively impacted. To determine the associated budget neutrality
factor, we compared estimated aggregate IPPS payments with and without
the proposed transition. To achieve budget neutrality for the proposed
transition policy, we proposed to apply a budget neutrality adjustment
factor of 0.998349 to the FY 2020 standardized amount, as further
discussed in the Addendum to the proposed rule (84 FR 19398). We stated
in the proposed rule that if this policy is adopted in the final rule,
this number would be updated based on the final rule data.
We noted in the proposed rule (84 FR 19398 through 19399) that our
proposal, discussed in section III.N.3.c. of the preamble of the
proposed rule (84 FR 19396 through 19398), to prevent inappropriate
payment increases due to rural reclassifications under Sec. 412.103
would also be budget neutral, but this budget neutrality would occur
through the proposed budget neutrality adjustments for geographic
reclassifications and the rural floor that were discussed in the
Addendum to the proposed rule.
Comment: MedPAC agreed that the 5 percent cap should be applied in
a budget-neutral manner. Another commenter requested that CMS budget
neutralize the impact of the 5 percent cap transition by reducing the
wage indexes of the upper quartile rather than the standardized amount.
The commenter stated that it would be much more appropriate to increase
the upper quartile budget neutrality factor to whatever factor would be
necessary to fund the 5 percent cap.
Response: We appreciate MedPAC and the commenter's input. As
discussed previously, in order to further consider policy arguments
raised by commenters, we are not finalizing our proposal to apply an
adjustment to the wage index of high wage index hospitals to budget
neutralize the wage index increase for low wage index hospitals
(finalized in section III.N.3.b. of this final rule). We would need to
further consider the same policy arguments before applying an
adjustment to the wage indexes of high wage index hospitals to budget
neutralize the transition policy finalized in this final rule. However,
we continue to believe that it is appropriate and consistent with past
practice (for example, 79 FR 50372) to budget neutralize this
transition wage index policy by applying an adjustment to the
standardized amount for all hospitals.
After consideration of the public comments we received, for the
reasons discussed in this final rule and the proposed rule, we are
finalizing our proposal, without modification, to apply a budget
neutrality adjustment factor to the FY 2020 standardized amount for all
hospitals to achieve budget neutrality for the transition policy, as
further discussed in the Addendum of this final rule. Based on the
final rule data, the budget neutrality adjustment factor to achieve
budget neutrality for the transition policy is 0.998838. We refer
readers to the Addendum of this final rule for further information
regarding this budget neutrality calculation.
f. Alternatives Considered in the Proposed Rule
In the proposed rule (84 FR 19672), we considered a number of
alternatives to our proposed policies to address wage index
disparities. First, as an alternative to the proposed approach to
budget neutralize the wage index increase for low wage index hospitals,
we considered applying a budget neutrality adjustment factor to the
standardized amount rather than focusing the adjustment on the wage
index of high wage index hospitals. Second, we also considered
mirroring our proposed approach of raising the wage index for low wage
index hospitals by reducing the wage index values for high wage index
hospitals by half the difference between the otherwise applicable final
wage index value for these hospitals and the 75th percentile wage index
value across all hospitals. We stated we would then make the estimated
net effect on payments of--(1) the increase in the wage index for low
wage index hospitals; and (2) the decrease in the wage index for high
wage index hospitals budget neutral through an adjustment to the
standardized amount. Finally, we considered creating a single national
rural wage index area and rural wage index value, as further described
in the proposed rule (84 FR 19672). We considered whether there
currently exists a national rural labor market for hospital labor and,
if not, whether we should facilitate the creation of such a national
rural labor market through the establishment of this national rural
wage index area.
Comments: In section III.N.2.b. of the preamble of this final rule,
we summarized comments regarding the first alternative considered to
budget neutralize the wage index increase for low wage index hospitals
by applying a budget neutrality adjustment factor to the standardized
amount rather than focusing the adjustment on the wage index of high
wage index hospitals.
A few commenters provide feedback on the other two alternatives to
CMS' wage index disparities proposals discussed in the proposed rule,
namely (1) mirroring CMS' approach of raising the wage index for low
wage index hospitals by reducing the wage index values for high wage
index hospitals by half the difference between the otherwise applicable
final wage index value for these hospitals and the 75th percentile wage
index value, and (2) creating a national rural wage index area and
national rural wage index. Some commenters who indicated that they
supported a national rural wage index area indicated that they compete
with bordering states for labor, or that a national rural wage index
area would result in a higher wage index for many hospitals in their
state. There was little support for the other alternative considered
regarding reducing the wage index values for high wage index hospitals
by half the difference between the otherwise applicable final wage
index value for these hospitals and the 75th percentile wage index
value due to the substantial redistributive effects of this
alternative.
Response: In section III.N.2.b. of the preamble of this final rule,
we address comments regarding the first alternative considered to
budget neutralize the wage index increase for low wage index hospitals
by applying a budget neutrality adjustment factor to the standardized
amount rather than focusing the adjustment on the wage index of high
wage index hospitals. For the reasons discussed in section III.N.2.b.
of the preamble to this final rule, we are adopting this alternative
considered in this final rule.
We appreciate the comments supporting the creation of a national
rural wage index area and national rural
[[Page 42339]]
wage index, but as we do not have evidence a national rural labor
market exists or would be created if we were to adopt this alternative,
this alternative would not increase the accuracy of the wage index.
With respect to the comments we received on the alternative of reducing
the wage index values for high wage index hospitals by half the
difference between the otherwise applicable final wage index value for
these hospitals and the 75th percentile wage index value, we believe
the commenters' concerns regarding this alternative merit further
consideration.
IV. Other Decisions and Changes to the IPPS for Operating System
A. Changes to MS-DRGs Subject to Postacute Care Transfer Policy and MS-
DRG Special Payments Policies (Sec. 412.4)
1. Background
Existing regulations at 42 CFR 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 Sec. 412.4(c) defines postacute care
transfers. Our policy set forth in Sec. 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 MS-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 (Sec. 412.4(f)(1)). Transfer cases also are
eligible for outlier payments. In general, the outlier threshold for
transfer cases, as described in Sec. 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 1
day.
We established the criteria set forth in Sec. 412.4(d) for
determining which DRGs 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. The statute directs us to identify MS-DRGs based on a
high volume of discharges to postacute care facilities and a
disproportionate use of postacute care services. As discussed in the FY
2006 IPPS final rule (70 FR 47416), we determined that the 55th
percentile is an appropriate level at which to establish these
thresholds. In that same 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 MS-DRG.
To account for MS-DRGs subject to the postacute care policy that
exhibit exceptionally higher shares of costs very early in the hospital
stay, Sec. 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 (Sec. 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 severity level
group will qualify under the MS-DRG special payment methodology policy
if any one of the MS-DRGs that share that same base MS-DRG qualifies
(Sec. 412.4(f)(6)).
Prior to the enactment of the Bipartisan Budget Act of 2018 (Pub.
L. 115-123), under section 1886(d)(5)(J) of the Act, a discharge was
deemed a ``qualified discharge'' if the individual was discharged to
one of the following postacute care settings:
A hospital or hospital unit that is not a subsection (d)
hospital.
A skilled nursing facility.
Related home health services provided by a home health
agency provided within a timeframe established by the Secretary
(beginning within 3 days after the date of discharge).
Section 53109 of the Bipartisan Budget Act of 2018 amended section
1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care
provided by a hospice program as a qualified discharge, effective for
discharges occurring on or after October 1, 2018. Accordingly,
effective for discharges occurring on or after October 1, 2018, if a
discharge is assigned to one of the MS-DRGs subject to the postacute
care transfer policy and the individual is transferred to hospice care
by a hospice program, the discharge is subject to payment as a transfer
case. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41394), we made
conforming amendments to Sec. 412.4(c) of the regulation to include
discharges to hospice care occurring on or after October 1, 2018 as
qualified discharges. We specified that hospital bills with a Patient
Discharge Status code of 50 (Discharged/Transferred to Hospice--Routine
or Continuous Home Care) or 51 (Discharged/Transferred to Hospice,
General Inpatient Care or Inpatient Respite) are subject to the
postacute care transfer policy in accordance with this statutory
amendment. Consistent with our policy for other qualified discharges,
CMS claims processing software has been revised to identify cases in
which hospice benefits were billed on the date of hospital discharge
without the appropriate discharge status code. Such claims will be
returned as unpayable to the hospital and may be rebilled with a
corrected discharge code.
2. Changes for FY 2020
As discussed in section II.F. of the preamble of the FY 2020 IPPS/
LTCH PPS proposed rule (84 FR 19399 through 19401), based on our
analysis of FY 2018 MedPAR claims data, we proposed to make changes to
a number of MS-DRGs, effective for FY 2020. Specifically, we proposed
to:
Reassign procedure codes from MS-DRGs 216 through 218
(Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac
Catheterization with MCC, CC and without CC/MCC, respectively), MS-DRGs
219 through 221 (Cardiac Valve and Other Major Cardiothoracic
Procedures without Cardiac Catheterization with MCC, CC and without CC/
MCC, respectively), and MS-DRGs 273 and 274 (Percutaneous Intracardiac
Procedures with and
[[Page 42340]]
without MCC, respectively) and create new MS-DRGs 319 and 320 (Other
Endovascular Cardiac Valve Procedures with and without MCC,
respectively); and
Delete MS-DRGs 691 and 692 (Urinary Stones with ESW
Lithotripsy with CC/MCC and without CC/MCC, respectively) and revise
the titles for MS-DRGs 693 and 694 to ``Urinary Stones with MCC'' and
``Urinary Stones without MCC'', respectively.
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19400), in light of the proposed changes to these MS-DRGs for FY 2020,
according to the regulations under Sec. 412.4(d), we evaluated these
MS-DRGs using the general postacute care transfer policy criteria and
data from the FY 2018 MedPAR file. 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 Sec.
412.4(f)(6). We stated in the proposed rule that we continue to believe
it is appropriate to reassess MS-DRGs when proposing reassignment of
procedure codes or diagnosis codes that would result in material
changes to an MS-DRG. We noted that MS-DRGs 216, 217, 218, 219, 220,
and 221 are currently subject to the postacute care transfer policy. We
stated that as a result of our review, these MS-DRGs, as proposed to be
revised, would continue to qualify to be included on the list of MS-
DRGs that are subject to the postacute care transfer policy. In
addition, we noted that MS-DRGs 273 and 274 are also currently subject
to the postacute care transfer policy and MS-DRGs 693 and 694 are
currently not subject to the postacute care transfer policy. We stated
that as a result of our review, these MS-DRGs, as proposed to be
revised, would not qualify to be included on the list of MS-DRGs that
are subject to the postacute care transfer policy. We noted that
proposed new MS-DRGs 319 and 320 also would not qualify to be included
on the list of MS-DRGs that are subject to the postacute care transfer
policy. Therefore, we proposed to remove MS-DRGs 273 and 274 from the
list of MS-DRGs that are subject to the postacute care transfer policy.
We note that, as discussed in section II.F. of the preamble of this
final rule, we are finalizing these proposed changes to the MS-DRGs.
We note that MS-DRGs that are subject to the postacute care
transfer policy for FY 2019 and are not revised will continue to be
subject to the policy in FY 2020. Using the December 2018 update of the
FY 2018 MedPAR file, we developed a chart for the proposed rule (84 FR
19400) which set forth the analysis of the postacute care transfer
policy criteria completed for the proposed rule with respect to each of
these proposed new or revised MS-DRGs. We stated that, for the FY 2020
final rule, we intended to update this analysis using the most recent
available data at that time. The following chart reflects our updated
analysis for the finalized new and revised MS-DRGs using the postacute
care transfer policy criteria and the March 2019 update of the FY 2018
MedPAR file.
[[Page 42341]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.158
[[Page 42342]]
During our annual review of proposed new or revised MS-DRGs and
analysis of the December 2018 update of the FY 2018 MedPAR file, we
reviewed the list of proposed revised or new MS-DRGs that qualify to be
included on the list of MS-DRGs subject to the postacute care transfer
policy for FY 2020 to determine if any of these MS-DRGs would also be
subject to the special payment methodology policy for FY 2020. Based on
our analysis of proposed changes to MS-DRGs included in the proposed
rule, we determined that proposed revised MS-DRGs 216, 217, 218, 219,
220, and 221 would continue to meet the criteria for the MS-DRG special
payment methodology. Because we proposed to remove MS-DRGs 273 and 274
from the list of MS-DRGs subject to the postacute care transfer policy,
we also proposed to remove these MS-DRGs from the list of MS-DRGs
subject to the MS-DRG special payment methodology, effective FY 2020
(84 FR 19400).
In the proposed rule, we indicated that, for the FY 2020 final
rule, we intended to update this analysis using the most recent
available data at that time. The following chart reflects our updated
analysis for the finalized new and revised MS-DRGs using our criteria
and the March 2019 update of the FY 2018 MedPAR file.
[GRAPHIC] [TIFF OMITTED] TR16AU19.159
Comment: A commenter stated that CMS has applied the postacute care
transfer policy criteria consistently with the regulation and agreeing
with the assignment of post-acute care transfer policy and special
payment policy status for the proposed new or revised MS-DRGs under the
proposed rule.
Response: We appreciate the commenter's support.
After consideration of the public comments we received, and review
of updated MedPAR data, we are finalizing the proposal to remove MS-
DRGs 273 and 274 from the list of MS-DRGs that are subject to the
postacute care transfer policy and the special payment policy.
The postacute care transfer and special payment policy status of
these MS-DRGs is reflected in Table 5 associated with this final rule,
which is listed in section VI. of the Addendum to this final rule and
available via the internet on the CMS website.
B. Changes in the Inpatient Hospital Update for FY 2020 (Sec.
412.64(d))
1. FY 2020 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 hospital
operating costs by a factor called the ``applicable percentage
increase.'' For FY 2020, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2019. (We note that section
1886(b)(3)(B)(xii) of the Act required an additional reduction each
year only for FYs 2010 through 2019.) Specifically, 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. The applicable percentage increase under the IPPS
for FY 2020 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;
A reduction of three-quarters 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
An adjustment based on changes in economy-wide
productivity (the
[[Page 42343]]
multifactor productivity (MFP) adjustment).
Section 1886(b)(3)(B)(xi) of the Act, as added by section 3401(a)
of the Affordable Care Act, states that application of the MFP
adjustment may result in the applicable percentage increase being less
than zero.
In compliance with section 404 of the MMA, in the FY 2018 IPPS/LTCH
PPS final rule (82 FR 38158 through 38175), we replaced the FY 2010-
based IPPS operating market basket with the rebased and revised 2014-
based IPPS operating market basket, effective with FY 2018.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19401), we
proposed to base the proposed FY 2020 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Inc.'s (IGI's) fourth quarter 2018 forecast of the 2014-based IPPS
market basket rate-of-increase with historical data through third
quarter 2018, which was estimated to be 3.2 percent. We also proposed
that if more recent data subsequently became 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 2020 market
basket update and the MFP adjustment in the final rule.
Based on the most recent data available for this FY 2020 IPPS/LTCH
PPS final rule (that is, IGI's second quarter 2019 forecast of the
2014-based IPPS market basket rate-of-increase with historical data
through the first quarter of 2019), we estimate that the FY 2020 market
basket update used to determine the applicable percentage increase for
the IPPS is 3.0 percent.
For FY 2020, 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 standardized amount.
Based on the most recent data available as previously described, we
determined final applicable percentage increases to the standardized
amount for FY 2020, as specified in the table that appears later in
this section.
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. As we explained in that rule, section
1886(b)(3)(B)(xi)(II) of the Act, as added by section 3401(a) of the
Affordable Care Act, defines this productivity adjustment as equal to
the 10-year moving average of changes in annual economy-wide, private
nonfarm business MFP (as projected by the Secretary for the 10-year
period ending with the applicable fiscal year, calendar year, cost
reporting period, or other annual period). The Bureau of Labor
Statistics (BLS) publishes the official measure of private nonfarm
business MFP. We refer readers to the BLS website at http://www.bls.gov/mfp for the BLS historical published MFP data.
MFP is derived by subtracting the contribution of labor and capital
input growth from output growth. The projections of the components of
MFP are currently produced by IGI, a nationally recognized economic
forecasting firm with which CMS contracts to forecast the components of
the market baskets and MFP. As we discussed in the FY 2016 IPPS/LTCH
PPS final rule (80 FR 49509), beginning with the FY 2016 rulemaking
cycle, the MFP adjustment is calculated using the revised series
developed by IGI to proxy the aggregate capital inputs. Specifically,
in order to generate a forecast of MFP, IGI forecasts BLS aggregate
capital inputs using a regression model. A complete description of the
MFP projection methodology is available on the CMS website at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html. As
discussed in the FY 2016 IPPS/LTCH PPS final rule, if IGI makes changes
to the MFP methodology, we will announce them on our website rather
than in the annual rulemaking.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19402), for FY
2020, we proposed an MFP adjustment of 0.5 percentage point. Similar to
the market basket update, for the proposed rule, we used IGI's fourth
quarter 2018 forecast of the MFP adjustment to compute the proposed FY
2020 MFP adjustment. As noted previously, we proposed that if more
recent data subsequently became available, we would use such data, if
appropriate, to determine the FY 2020 market basket update and the MFP
adjustment for the final rule.
Based on the most recent data available for this FY 2020 IPPS/LTCH
PPS final rule (that is, IGI's second quarter 2019 forecast of the MFP
adjustment), the current estimate of the MFP adjustment for FY 2020 is
0.4 percentage point.
We did not receive any public comments on our proposal to use the
most recent available data to determine the final market basket update
and the MFP adjustment. Therefore, for this final rule, we are
finalizing a market basket update of 3.0 percent and an MFP adjustment
of 0.4 percentage point for FY 2020 based on the most recent available
data.
Based on these most recent data available, for this final rule, we
have determined four applicable percentage increases to the
standardized amount for FY 2020, as specified in the following table:
[[Page 42344]]
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In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19402), we
proposed to revise the existing regulations at 42 CFR 412.64(d) to
reflect the current law for the update for FY 2020 and subsequent
fiscal years. Specifically, in accordance with section 1886(b)(3)(B) of
the Act, we proposed to add paragraph (viii) to Sec. 412.64(d)(1) to
set forth the applicable percentage increase to the operating
standardized amount for FY 2020 and subsequent fiscal years as the
percentage increase in the market basket index, subject to the
reductions specified under Sec. 412.64(d)(2) for a hospital that does
not submit quality data and Sec. 412.64(d)(3) for a hospital that is
not a meaningful EHR user, less an MFP adjustment. (As previously
noted, section 1886(b)(3)(B)(xii) of the Act required an additional
reduction each year only for FYs 2010 through 2019.)
We did not receive any public comments on our proposal and
therefore, we are finalizing our proposed changes to Sec. 412.64(d) as
proposed.
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 also 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. (Under current law, the MDH
program is effective for discharges on or before September 30, 2022, as
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41429 through
41430).)
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19402), for FY
2020, we proposed the following updates to the hospital-specific rates
applicable to SCHs and MDHs: a proposed update of 2.7 percent for a
hospital that submits quality data and is a meaningful EHR user; a
proposed update of 1.9 percent for a hospital that fails to submit
quality data and is a meaningful EHR user; a proposed update of 0.3
percent for a hospital that submits quality data and is not a
meaningful EHR user; and a proposed update of -0.5 percent for a
hospital that fails to submit quality data and is not a meaningful EHR
user. As noted previously, for the FY 2020 IPPS/LTCH PPS proposed rule,
we used IGI's fourth quarter 2018 forecast of the 2014-based IPPS
market basket update with historical data through third quarter 2018.
Similarly, we used IGI's fourth quarter 2018 forecast of the MFP
adjustment. We proposed that if more recent data subsequently became
available (for example, a more recent estimate of the market basket
increase and the MFP adjustment), we would use such data, if
appropriate, to determine the update in the final rule.
We did not receive any public comments on our proposal. Therefore
are finalizing the proposal to determine the update to the hospital-
specific rates for SCHs and MDHs in this final rule using the most
recent available data.
For this final rule, based on the most recent available data, we
are finalizing the following updates to the hospital specific rates
applicable to SCHs and MDHs: An update of 2.6 percent for a hospital
that submits quality data and is a meaningful EHR user; an update of
1.85 percent for a hospital that fails to submit quality data and is a
meaningful EHR user; an update of 0.35 percent for a hospital that
submits quality data and is not a meaningful EHR user; and an update of
-0.4 percent for a hospital that fails to submit quality data and is
not a meaningful EHR user.
2. FY 2020 Puerto Rico Hospital Update
As discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56937
through 56938), prior to January 1, 2016, Puerto Rico hospitals were
paid based on 75 percent of the national standardized amount and 25
percent of the Puerto Rico-specific standardized amount. Section 601 of
Public Law 114-113 amended section 1886(d)(9)(E) of the Act to specify
that the payment calculation with respect to operating costs of
inpatient hospital services of a subsection (d) Puerto Rico hospital
for inpatient hospital discharges on or after January 1, 2016, shall
use 100 percent of the national standardized amount. Because Puerto
Rico hospitals are no longer paid with a Puerto Rico-specific
standardized amount under the amendments to section 1886(d)(9)(E) of
the Act, there is no longer a need for us to determine an update to the
Puerto Rico standardized amount. Hospitals in Puerto Rico are now paid
100 percent of the national standardized amount and, therefore, are
subject to the same update to the national standardized amount
discussed under section IV.B.1. of the preamble of this final rule.
Accordingly, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19402
through 19403), for FY 2020, we proposed an applicable percentage
increase of 2.7 percent to the standardized amount for hospitals
located in Puerto Rico.
We did not receive any public comments on our proposal.
Based on the most recent data available for this final rule (as
discussed previously in section IV.B.1. of the preamble of this final
rule), we are finalizing an applicable percentage increase of 2.6
percent to the
[[Page 42345]]
standardized amount for hospitals located in Puerto Rico.
We note that section 1886(b)(3)(B)(viii) of the Act, which
specifies the adjustment to the applicable percentage increase for
``subsection (d)'' hospitals that do not submit quality data under the
rules established by the Secretary, is not applicable to hospitals
located in Puerto Rico.
In addition, section 602 of Public Law 114-113 amended section
1886(n)(6)(B) of the Act to specify that Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016, and also to apply the
adjustments to the applicable percentage increase under section
1886(b)(3)(B)(ix) of the Act to Puerto Rico hospitals that are not
meaningful EHR users, effective FY 2022. Accordingly, because the
provisions of section 1886(b)(3)(B)(ix) of the Act are not applicable
to hospitals located in Puerto Rico until FY 2022, the adjustments
under this provision are not applicable for FY 2020.
C. Rural Referral Centers (RRCs) Annual Updates to Case-Mix Index and
Discharge Criteria (Sec. 412.96)
Under the authority of section 1886(d)(5)(C)(i) of the Act, the
regulations at Sec. 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 also are 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 hourly wage must exceed, by a certain
percentage, the average hourly wage of the labor market area in which
the hospital is located.
Section 4202(b) of Public Law 105-33 states, in part, that any
hospital classified as an RRC by the Secretary for FY 1991 shall be
classified as such an RRC for FY 1998 and each subsequent fiscal year.
In the August 29, 1997 IPPS final rule with comment period (62 FR
45999), we reinstated RRC status for all hospitals that lost that
status due to triennial review or MGCRB reclassification. However, we
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 (Sec.
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 case-mix index (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 Sec. 412.96(c)(1) through
(c)(5) and the September 30, 1988 Federal Register (53 FR 38513) for
additional discussion.) 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 Sec. 412.96(c)(1)(ii). The national median CMI
value for FY 2020 is based on the CMI values of all urban hospitals
nationwide, and the regional median CMI values for FY 2020 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 Sec. 413.75). These values are based on discharges
occurring during FY 2018 (October 1, 2017 through September 30, 2018),
and include bills posted to CMS' records through March 2019.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19403), 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,
2019, they must have a CMI value for FY 2018 that is at least--
1.68555 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 413.75) calculated by CMS for the census region in
which the hospital is located.
The proposed median CMI values by region were set forth in a table
in the proposed rule (84 FR 19403). We stated in the proposed rule that
we intended to update the proposed CMI values in the FY 2020 final rule
to reflect the updated FY 2018 MedPAR file, which will contain data
from additional bills received through March 2019.
We did not receive any public comments on our proposals. Based on
the latest available data (FY 2018 bills received through March 2019),
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, 2019, they must have a CMI
value for FY 2018 that is at least:
1.68645 (national--all urban); or
The median CMI value (not transfer-adjusted) for urban
hospitals (excluding hospitals with approved teaching programs as
identified in Sec. 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.
[[Page 42346]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.161
A hospital seeking to qualify as an RRC should obtain its hospital-
specific CMI value (not transfer-adjusted) from its 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.
2. Discharges
Section 412.96(c)(2)(i) provides that CMS set forth the national
and regional numbers of discharges criteria 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 2020 IPPS/LTCH
PPS proposed rule (84 FR 19404), for FY 2020, we proposed to update the
regional standards based on discharges for urban hospitals' cost
reporting periods that began during FY 2017 (that is, October 1, 2016
through September 30, 2017), which were the latest cost report data
available at the time the proposed rule was developed. Therefore, we
proposed that, in addition to meeting other criteria, a hospital, if it
is to qualify for initial RRC status for cost reporting periods
beginning on or after October 1, 2019, must have, as the number of
discharges for its cost reporting period that began during FY 2017, at
least--
5,000 (3,000 for an osteopathic hospital); or
If less, 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 2020 IPPS/LTCH PPS
proposed rule at 84 FR 19404.) In the proposed rule, we stated we
intended to update these numbers in the FY 2020 final rule based on the
latest available cost report data.
We did not receive any public comments on our proposals.
Based on the latest discharge data available at this time, that is,
for cost reporting periods that began during FY 2017, the final median
number of discharges for urban hospitals by census region are set forth
in the following table.
[GRAPHIC] [TIFF OMITTED] TR16AU19.162
We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this final rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
D. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Background
[[Page 42347]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.162
>We note that because the median number of discharges for hospitals
in each census region is greater than the national standard of 5,000
discharges, under this final rule, 5,000 discharges is the minimum
criterion for all hospitals, except for osteopathic hospitals for which
the minimum criterion is 3,000 discharges.
D. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
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 additional payment adjustment to a low-volume hospital
provided for under section 1886(d)(12) of the Act is in addition to any
payment calculated under section 1886 of the Act. Therefore, the
additional payment adjustment is based on the per discharge amount paid
to the qualifying hospital under section 1886 of the Act. In other
words, the low-volume hospital payment adjustment is based on total per
discharge payments made under section 1886 of the Act, including
capital, DSH, IME, and outlier payments. For SCHs and MDHs, the low-
volume hospital payment adjustment is based in part on either the
Federal rate or the hospital-specific rate, whichever results in a
greater operating IPPS payment.
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398
through 41399), section 50204 of the Bipartisan Budget Act of 2018
(Pub. L. 115-123) modified the definition of a low-volume hospital and
the methodology for calculating the payment adjustment for low-volume
hospitals for FYs 2019 through 2022. (Section 50204 also extended prior
changes to the definition of a low-volume hospital and the methodology
for calculating the payment adjustment for low-volume hospitals through
FY 2018.) Beginning with FY 2023, the low-volume hospital qualifying
criteria and payment adjustment will revert to the statutory
requirements that were in effect prior to FY 2011. (For additional
information on the low-volume hospital payment adjustment prior to FY
2018, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR
56941 through 56943). For additional information on the low-volume
hospital payment adjustment for FY 2018, we refer readers to the FY
2018 IPPS notice (CMS-1677-N) that appeared in the Federal Register on
April 26, 2018 (83 FR 18301 through 18308).) In section IV.D.2. of the
preamble of this final rule, we discuss the low-volume hospital payment
adjustment policies for FY 2020.
2. Temporary Changes to the Low-Volume Hospital Definition and Payment
Adjustment Methodology for FYs 2019 Through 2022
As discussed earlier, section 50204 of the Bipartisan Budget Act of
2018 further modified the definition of a low-volume hospital and the
methodology for calculating the payment adjustment for low-volume
hospitals for FYs 2019 through 2022. Specifically, the qualifying
criteria for low-volume hospitals under section 1886(d)(12)(C)(i) of
the Act were amended to specify that, for FYs 2019 through 2022, a
subsection (d) hospital qualifies as a low-volume hospital if it is
more than 15 road miles from another subsection (d) hospital and has
less than 3,800 total discharges during the fiscal year. Section
1886(d)(12)(D) of the Act was also amended to provide that, for
discharges occurring in FYs 2019 through 2022, the Secretary shall
determine the applicable percentage increase using a continuous, linear
sliding scale ranging from an additional 25 percent payment adjustment
for low-volume hospitals with 500 or fewer discharges to a zero percent
additional payment for low-volume hospitals with more than 3,800
discharges in the fiscal year. Consistent with the requirements of
section 1886(d)(12)(C)(ii) of the Act, the term ``discharge'' for
purposes of these provisions refers to total discharges, regardless of
payer (that is, Medicare and non-Medicare discharges).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399), to implement
this requirement, we specified a continuous, linear sliding scale
formula to determine the low-volume hospital payment adjustment for FYs
2019 through 2022 that is similar to the continuous, linear sliding
scale formula used to determine the low-volume hospital payment
adjustment originally established by the Affordable Care Act and
implemented in the regulations at Sec. 412.101(c)(2)(ii) in the FY
2011 IPPS/LTCH PPS final rule (75 FR 50240 through 50241). Consistent
with the statute, we provided that qualifying hospitals with 500 or
fewer total discharges will receive a low-volume hospital payment
adjustment of 25 percent. For qualifying hospitals with fewer than
3,800 discharges but more than 500 discharges, the low-volume payment
adjustment is calculated by subtracting from 25 percent the proportion
of payments associated with the discharges in excess of 500. As such,
for qualifying hospitals with fewer than 3,800 total discharges but
more than 500 total discharges, the low-volume hospital payment
adjustment for FYs 2019 through 2022 is calculated using the following
formula:
Low-Volume Hospital Payment Adjustment = 0.25-[0.25/3300] x (number
of total discharges-500) = (95/330)-(number of total discharges/
13,200).
For this purpose, we specified that the ``number of total
discharges'' is determined as total discharges, which includes Medicare
and non-Medicare discharges during the fiscal year, based on the
hospital's most recently submitted cost report. The low-volume hospital
payment adjustment for FYs 2019 through 2022 is set forth in the
regulations at 42 CFR 412.101(c)(3).
Comment: Commenters expressed continued support of the low-volume
hospital adjustment changes included in the Bipartisan Budget Act of
2018.
[[Page 42348]]
Response: While these changes are statutory, we appreciate
commenters' support.
3. Process for Requesting and Obtaining the Low-Volume Hospital Payment
Adjustment
In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50238 through 50275
and 50414) and subsequent rulemaking (for example, the FY 2019 IPPS/
LTCH PPS final rule (83 FR 41399 through 41401)), we discussed the
process for requesting and obtaining the low-volume hospital payment
adjustment. Under this previously established process, a hospital makes
a written request for the low-volume payment adjustment under Sec.
412.101 to its MAC. This request must contain sufficient documentation
to establish that the hospital meets the applicable mileage and
discharge criteria. The MAC will determine if the hospital qualifies as
a low-volume hospital by reviewing the data the hospital submits with
its request for low-volume hospital status in addition to other
available data. Under this approach, a hospital will know in advance
whether or not it will receive a payment adjustment under the low-
volume hospital policy. The MAC and CMS may review available data such
as the number of discharges, in addition to the data the hospital
submits with its request for low-volume hospital status, in order to
determine whether or not the hospital meets the qualifying criteria.
(For additional information on our existing process for requesting the
low-volume hospital payment adjustment, we refer readers to the FY 2019
IPPS/LTCH PPS final rule (83 FR 41399 through 41401)).
As explained earlier, for FY 2019 and subsequent fiscal years, the
discharge determination is made based on the hospital's number of total
discharges, that is, Medicare and non-Medicare discharges, as was the
case for FYs 2005 through 2010. Under Sec. 412.101(b)(2)(i) and Sec.
412.101(b)(2)(iii), a hospital's most recently submitted cost report is
used to determine if the hospital meets the discharge criterion to
receive the low-volume payment adjustment in the current year. As
discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41399 and
41400), we use cost report data to determine if a hospital meets the
discharge criterion because this is the best available data source that
includes information on both Medicare and non-Medicare discharges. (For
FYs 2011 through 2018, the most recently available MedPAR data were
used to determine the hospital's Medicare discharges because non-
Medicare discharges were not used to determine if a hospital met the
discharge criterion for those years.) Therefore, a hospital should
refer to its most recently submitted cost report for total discharges
(Medicare and non-Medicare) in order to decide whether or not to apply
for low-volume hospital status for a particular fiscal year.
As also discussed in the FY 2019 IPPS/LTCH PPS final rule, in
addition to the discharge criterion, for FY 2019 and for subsequent
fiscal years, eligibility for the low-volume hospital payment
adjustment is also dependent upon the hospital meeting the applicable
mileage criterion specified in Sec. 412.101(b)(2)(i) or Sec.
412.101(b)(2)(iii) for the fiscal year. Specifically, to meet the
mileage criterion to qualify for the low-volume hospital payment
adjustment for FY 2020, as was the case for FY 2019, a hospital must be
located more than 15 road miles from the nearest subsection (d)
hospital. (We define in Sec. 412.101(a) the term ``road miles'' to
mean ``miles'' as defined in Sec. 412.92(c)(1) (75 FR 50238 through
50275 and 50414).) For establishing that the hospital meets the mileage
criterion, the use of a web-based mapping tool as part of the
documentation is acceptable. The MAC will determine if the information
submitted by the hospital, 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, is sufficient to document that
it meets the mileage criterion. If not, the MAC will follow up with the
hospital to obtain additional necessary information to determine
whether or not the hospital meets the applicable mileage criterion.
In accordance with our previously established process, a hospital
must make a written request for low-volume hospital status that is
received by its MAC by September 1 immediately preceding the start of
the Federal fiscal year for which the hospital is applying for low-
volume hospital status in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges for the
fiscal year beginning on or after October 1 immediately following the
request (that is, the start of the Federal fiscal year). For a hospital
whose request for low-volume hospital status is received after
September 1, if the MAC determines the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital payment adjustment to determine payment for the
hospital's discharges for the fiscal year, effective prospectively
within 30 days of the date of the MAC's low-volume status
determination.
Consistent with this previously established process, in the FY 2020
IPPS/LTCH PPS proposed rule (84 FR 19405), for FY 2020, we proposed
that a hospital must submit a written request for low-volume hospital
status to its MAC that includes sufficient documentation to establish
that the hospital meets the applicable mileage and discharge criteria
(as described earlier). Consistent with historical practice, for FY
2020, we proposed that a hospital's written request must be received by
its MAC no later than September 1, 2019 in order for the low-volume
hospital payment adjustment to be applied to payments for its
discharges beginning on or after October 1, 2019. If a hospital's
written request for low-volume hospital status for FY 2020 is received
after September 1, 2019, and if the MAC determines the hospital meets
the criteria to qualify as a low-volume hospital, the MAC would apply
the low-volume hospital payment adjustment to determine the payment for
the hospital's FY 2020 discharges, effective prospectively within 30
days of the date of the MAC's low-volume hospital status determination.
We noted in the proposed rule that this proposal was consistent with
the process for requesting and obtaining the low-volume hospital
payment adjustment for FY 2019 (83 FR 41399 through 41400).
Under this process, a hospital receiving the low-volume hospital
payment adjustment for FY 2019 may continue to receive a low-volume
hospital payment adjustment for FY 2020 without reapplying if it
continues to meet the applicable mileage and discharge criteria (which,
as discussed previously, are the same qualifying criteria that apply
for FY 2019). In this case, a hospital's request can include a
verification statement that it continues to meet the mileage criterion
applicable for FY 2020. (Determination of meeting the discharge
criterion is discussed earlier in this section.) We noted in the
proposed rule that a hospital must continue to meet the applicable
qualifying criteria as a low-volume hospital (that is, the hospital
must meet the applicable discharge criterion and mileage criterion for
the fiscal year) in order to receive the payment adjustment in that
fiscal year; that is, low-volume hospital status is not based on a
``one-time'' qualification (75 FR 50238 through 50275). Consistent with
historical policy, a hospital must submit its request, including this
written verification, for each fiscal year for which it seeks to
receive the low-volume hospital payment adjustment,
[[Page 42349]]
and in accordance with the timeline described earlier.
Comment: A commenter suggested we alter our previously established
process for requesting and obtaining the low-volume hospital payment
adjustment for providers who have previously qualified for the low-
volume hospital payment adjustment with the process used for sole
community hospitals whereby hospitals would be required to notify the
MAC within 30 days of any changes as opposed to a yearly verification
statement.
Response: We appreciate the comment and will consider this
suggestion for future rulemaking.
After consideration of the public comments we received, we are
finalizing our proposals relating to the process for requesting and
obtaining the low-volume hospital payment adjustment as previously
described, without modification.
4. Conforming Changes To Codify Certain Changes to the Low-Volume
Hospital Payment Adjustment for FYs 2011 Through 2017 Provided by
Section 429 of the Consolidated Appropriations Act, 2018
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38188 through
38189), for the reasons discussed in that rule, we adopted a parallel
adjustment in the regulations at Sec. 412.101(e) which specifies that,
for discharges occurring in FY 2018 and subsequent years, only the
distance between Indian Health Service (IHS) and Tribal hospitals
(collectively referred to here as ``IHS hospitals'') will be considered
when assessing whether an IHS hospital meets the mileage criterion
under Sec. 412.101(b)(2), and similarly, only the distance between
non-IHS hospitals would be considered when assessing whether a non-IHS
hospital meets the mileage criterion under Sec. 412.101(b)(2). Section
429 of the Consolidated Appropriations Act, 2018, which was enacted on
March 23, 2018, subsequently amended section 1886(d)(12)(C) of the Act
by adding a new clause (iii) specifying that, for purposes of
determining whether an IHS or a non-IHS hospital meets the mileage
criterion under section 1886(d)(12)(C)(i) of the Act with respect to FY
2011 or a succeeding year, the Secretary shall apply the policy
described in the regulations at Sec. 412.101(e) (as in effect on the
date of enactment). In other words, under this statutory change, the
special treatment with respect to the proximities between IHS and non-
IHS hospitals as set forth in Sec. 412.101(e) for discharges occurring
in FY 2018 and subsequent fiscal years is also applicable for purposes
of applying the mileage criterion for the low-volume hospital payment
adjustment for FYs 2011 through 2017. We refer readers to the notice
that appeared in the Federal Register on August 23, 2018 (83 FR 42596
through 42600) for further detail on the process for requesting the
low-volume hospital payment adjustment for any applicable fiscal years
between FY 2011 and FY 2017 under the provisions of section 429 of the
Consolidated Appropriations Act, 2018, including the details on the
limitations under the reopening rules at 42 CFR 405.1885.
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19406), we
proposed to make conforming changes to the regulatory text at Sec.
412.101(e) to reflect the changes to the low-volume hospital payment
adjustment policy in accordance with the amendments made by section 429
of the Consolidated Appropriations Act, 2018. Specifically, we proposed
to revise Sec. 412.101(e) to specify that, subject to the reopening
rules at 42 CFR 405.1885, a qualifying hospital may request the
application of the policy set forth in proposed amended Sec.
412.101(e)(1) for FYs 2011 through 2017. As noted previously, the
process for requesting the low-volume hospital payment adjustment for
any applicable fiscal years between FY 2011 and FY 2017 under the
provisions of section 429 of the Consolidated Appropriations Act, 2018,
as well as further discussion on the limitations under the reopening
rules at 42 CFR 405.1885, are described in the August 23, 2018 Federal
Register notice (83 FR 42596 through 42600). We noted that proposed
amended Sec. 412.101(e) would apply to discharges occurring in FY 2011
through FY 2017, consistent with the provisions of section 429 of the
Consolidated Appropriations Act, 2018. We stated that to the extent
that these proposed revisions could be viewed as retroactive
rulemaking, they would be authorized under section 1871(e)(1)(A)(i) of
the Act as the Secretary has determined that these changes are
necessary to comply with the statute as amended by the Consolidated
Appropriations Act, 2018.
We did not receive any public comments on our proposal. Therefore,
we are finalizing, without modification, our proposed conforming
changes to paragraph (e) of Sec. 412.101 as previously discussed.
E. Indirect Medical Education (IME) Payment Adjustment Factor (Sec.
412.105)
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 Sec. 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)(ii)(XII) of the Act provides that, for discharges
occurring during FY 2008 and fiscal years thereafter, the IME formula
multiplier is 1.35. Accordingly, for discharges occurring during FY
2020, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2020 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: A commenter stated they agreed with and supported the
proposal regarding the IME adjustment factor.
Response: We appreciate the commenter's support. As previously
noted, the IME adjustment factor is statutory. Accordingly, for
discharges occurring during FY 2020, the IME formula multiplier is
1.35.
F. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2020 (Sec. 412.106)
1. General Discussion
Section 1886(d)(5)(F) of the Act provides for additional Medicare
payments to subsection (d) hospitals 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
[[Page 42350]]
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
statutory references to ``days'' in section 1886(d)(5)(F) of the Act
have been interpreted to apply only to hospital acute care inpatient
days. Regulations located at 42 CFR 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 Sec. 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 Sec. 412.105(b).
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
section 1886(r) to the Act that modifies the methodology for computing
the Medicare DSH payment adjustment. (For purposes of this final rule,
we refer to these provisions collectively as section 3133 of the
Affordable Care Act.) 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 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 DSH
payments made under section 1886(d)(5)(F) of the Act receives two
separately calculated payments. Specifically, section 1886(r)(1) of the
Act provides that the Secretary shall pay to such 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
DSH payments, which represents the empirically justified amount for
such payment, as determined by the MedPAC in its March 2007 Report to
Congress. We refer to this payment as the ``empirically justified
Medicare DSH payment.''
In addition to this empirically justified Medicare DSH 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
payments that would be made to subsection (d) hospitals under section
1886(d)(5)(F) of the Act if subsection (r) did not apply and the
aggregate amount of payments that are made to subsection (d) hospitals
under section 1886(r)(1) of the Act for such 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 FY 2018 and subsequent fiscal years, 1
minus the percent change in the percent of individuals who are
uninsured, as determined by comparing the percent of individuals who
were 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 were uninsured in the most recent period for
which data are available (as so estimated and certified), minus 0.2
percentage point for FYs 2018 and 2019.
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 estimated
by the Secretary, based on appropriate data), including the use of
alternative data where the Secretary determines that alternative data
are available which are 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 section 1886(r) of the Act. 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 the
applicable 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 Medicare 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 section 1886(r)(2) of the Act 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
[[Page 42351]]
payments, or the periods selected in order to develop such estimates.
2. Eligibility for Empirically Justified Medicare DSH Payments and
Uncompensated Care Payments
As explained earlier, the payment methodology under section 3133 of
the Affordable Care Act applies to ``subsection (d) hospitals'' that
would otherwise receive a DSH payment made under section 1886(d)(5)(F)
of the Act. Therefore, hospitals must receive empirically justified
Medicare DSH payments in a fiscal year in order to receive an
additional Medicare uncompensated care payment for that year.
Specifically, section 1886(r)(2) of the Act states that, in addition to
the payment made to a subsection (d) hospital under section 1886(r)(1)
of the Act, the Secretary shall pay to such subsection (d) hospitals an
additional amount. Because section 1886(r)(1) of the Act refers to
empirically justified Medicare DSH payments, the additional payment
under section 1886(r)(2) of the Act 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 will be based on
the hospital's actual DSH status at cost report settlement for that
payment year.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50622) and in the
rulemaking for subsequent fiscal years, we have specified our policies
for several specific classes of hospitals within the scope of section
1886(r) of the Act. In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19408), we discussed our specific policies for FY 2020 with respect to
the following hospitals:
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 (78 FR 50623 and 79 FR 50006).
Maryland hospitals are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
the payment methodology of section 1886(r) of the Act because they are
not paid under the IPPS. As discussed in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41402 through 41403), CMS and the State have entered
into an agreement to govern payments to Maryland hospitals under a new
payment model, the Maryland Total Cost of Care (TCOC) Model, which
began on January 1, 2019. Under the Maryland TCOC Model, Maryland
hospitals will not be paid under the IPPS in FY 2020, and will be
ineligible to receive empirically justified Medicare DSH payments and
uncompensated care payments under section 1886(r) of the Act.
Sole community hospitals (SCHs) that are paid under their
hospital-specific rate are not eligible for Medicare DSH payments. SCHs
that are paid under the IPPS Federal rate receive interim payments
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, and
if they receive interim empirically justified Medicare DSH payments in
a fiscal year, they also will 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 (78 FR 50624
and 79 FR 50007).
Medicare-dependent, small rural hospitals (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 hospital-specific rate from certain specified base years
(76 FR 51684). The IPPS Federal rate that is used in the MDH payment
methodology is the same IPPS Federal rate that is used in the SCH
payment methodology. Section 50205 of the Bipartisan Budget Act of 2018
(Pub. L. 115-123), enacted on February 9, 2018, extended the MDH
program for discharges on or after October 1, 2017, through September
30, 2022. Because MDHs are paid based on the IPPS Federal rate, they
continue to be eligible to receive empirically justified Medicare DSH
payments and uncompensated care payments if their DPP is at least 15
percent, and we apply the same process to determine MDHs' eligibility
for empirically justified Medicare DSH and uncompensated care payments
as we do for all other IPPS hospitals. Due to the extension of the MDH
program, MDHs will continue to be 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 hospital-specific
rate from certain specified base years. Accordingly, we will continue
to 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). Our final determination on the hospital's eligibility
for uncompensated care payments will be based on the hospital's actual
DSH status at cost report settlement for that payment year. In
addition, as we do for all IPPS hospitals, we will calculate a
numerator for Factor 3 for all MDHs, regardless of whether they are
projected to be eligible for Medicare DSH payments during the fiscal
year, but the denominator for Factor 3 will be based on the
uncompensated care data from the hospitals that we have projected to be
eligible for Medicare DSH payments during the fiscal year.
IPPS hospitals that elect to participate in the Bundled
Payments for Care Improvement Advanced Initiative (BPCI Advanced) model
starting October 1, 2018, will continue to be paid under the IPPS and,
therefore, are eligible to receive empirically justified Medicare DSH
payments and uncompensated care payments. For further information
regarding the BPCI Advanced model, we refer readers to the CMS website
at: https://innovation.cms.gov/initiatives/bpci-advanced/.
IPPS hospitals that are participating in the Comprehensive
Care for Joint Replacement Model (80 FR 73300) continue to be paid
under the IPPS and, therefore, are eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments.
Hospitals participating in the Rural Community Hospital
Demonstration Program are not eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under section
1886(r) of the Act because they are not paid under the IPPS (78 FR
50625 and 79 FR 50008). The Rural Community Hospital Demonstration
Program was originally authorized for a 5-year period by section 410A
of the Medicare Prescription Drug,
[[Page 42352]]
Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173), and
extended for another 5-year period by sections 3123 and 10313 of the
Affordable Care Act (Pub. L. 114-255). The period of performance for
this 5-year extension period ended December 31, 2016. Section 15003 of
the 21st Century Cures Act (Pub. L. 114-255), enacted December 13,
2016, again amended section 410A of Public Law 108-173 to require a 10-
year extension period (in place of the 5-year extension required by the
Affordable Care Act), therefore requiring an additional 5-year
participation period for the demonstration program. Section 15003 of
Public Law 114-255 also required a solicitation for applications for
additional hospitals to participate in the demonstration program. At
the time of issuance of the proposed rule, there were 29 hospitals
participating in the demonstration program. At the time of development
of this final rule, there are 28 hospitals participating in the
demonstration program. Under the payment methodology that applies
during the second 5 years of the extension period under the
demonstration program, participating hospitals do not receive
empirically justified Medicare DSH payments, and they are also excluded
from receiving interim and final uncompensated care payments.
We received a comment in response to the discussion in the proposed
rule 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).
Comment: A commenter stated that CMS had wrongly calculated its
disproportionate patient percentage due to a ``slight shift in the SSI
percent and a delay in the pending Medicaid approvals,'' which
contributed to the determination of DSH eligible ``NO'' in Table 18
from the FY 2020 IPPS/LTCH proposed rule. The commenter urged CMS to
consider its history of meeting the DSH threshold and reverse the
``NO'' to a ``YES'' for FY 2020 DSH payments, further noting that the
DSH payment calculation for FY 2020 combines Medicaid utilization and
an SSI percent from 2 years prior. The commenter noted that its amended
Medicare cost report shows an increased disproportionate patient
percentage ratio.
Response: In response to the comment concerning the hospital's
projection of DSH eligibility, we note that regulations located at 42
CFR 412.106 govern the Medicare DSH payment adjustment and specify how
the disproportionate patient percentage is calculated. Further, a
hospital's eligibility to receive empirically justified DSH payments,
can change throughout the year as the MACs receive and review updated
data. Consistent with historical policy, an estimate of DSH eligibility
is used to determine eligibility to receive interim uncompensated care
payments prior to the start of the fiscal year based on each hospital's
estimated DSH status for the applicable fiscal year (using the most
recent data that are available at the time of the development of the
proposed and final rules). The final determination on the hospital's
eligibility for uncompensated care payments will be based on the
hospital's actual DSH status at cost report settlement for that payment
year.
3. 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 Medicare
DSH payment that would otherwise be made under section 1886(d)(5)(F) of
the Act 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 not believe that it was
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 by advising MACs to simply 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 FY 2014 IPPS/
LTCH PPS final rule that are available on the CMS website at: http://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
4. Uncompensated Care Payments
a. Calculation of Factor 1 for FY 2020
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 this factor is equal to the difference between: (1)
The aggregate amount of payments that would be made to subsection (d)
hospitals under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year (as estimated by the
Secretary); and (2) the aggregate amount of payments that are made to
subsection (d) hospitals under section 1886(r)(1) of the Act for such
fiscal year (as so estimated). Therefore, section 1886(r)(2)(A)(i) of
the Act represents the estimated Medicare DSH payments that would have
been made under section 1886(d)(5)(F) of the Act if section 1886(r) of
the Act did not apply for such fiscal year. 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.
As we did for FY 2019, in the FY 2020 IPPS/LTCH PPS proposed rule,
in order to determine Factor 1 in the uncompensated care payment
formula for FY 2020, we proposed to continue the policy established 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)
of determining Factor 1 by developing estimates of both the aggregate
amount of Medicare DSH payments that would be made in the
[[Page 42353]]
absence of section 1886(r)(1) of the Act and the aggregate amount of
empirically justified Medicare DSH payments to hospitals under
1886(r)(1) of the Act. These estimates will not be revised or updated
after we know the final Medicare DSH payments for FY 2020.
Therefore, in order to determine the two elements of proposed
Factor 1 for FY 2020 (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), for the
proposed rule, we used the most recently available projections of
Medicare DSH payments for the fiscal year, as calculated by CMS' Office
of the Actuary using the most recently filed Medicare hospital cost
reports with Medicare DSH payment information and the most recent
Medicare DSH patient percentages and Medicare DSH payment adjustments
provided in the IPPS Impact File. The determination of the amount of
DSH payments is partially based on the Office of the Actuary's Part A
benefits projection model. One of the results of this model is
inpatient hospital spending. Projections of DSH payments require
projections for expected increases in utilization and case-mix. The
assumptions that were used in making these projections and the
resulting estimates of DSH payments for FY 2017 through FY 2020 are
discussed in the table titled ``Factors Applied for FY 2017 through FY
2020 to Estimate Medicare DSH Expenditures Using FY 2016 Baseline.''
For purposes of calculating our proposal for Factor 1 and modeling
the impact of the FY 2020 IPPS/LTCH PPS proposed rule, we used the
Office of the Actuary's December 2018 Medicare DSH estimates, which
were based on data from the September 2018 update of the Medicare
Hospital Cost Report Information System (HCRIS) and the FY 2019 IPPS/
LTCH PPS final rule IPPS Impact File, published in conjunction with the
publication of the FY 2019 IPPS/LTCH PPS final rule. Because SCHs that
are projected to be paid under their hospital-specific rate are
excluded from the application of section 1886(r) of the Act, these
hospitals also were excluded from the December 2018 Medicare DSH
estimates. Furthermore, because section 1886(r) of the Act specifies
that the uncompensated care payment is in addition to the empirically
justified Medicare DSH payment (25 percent of DSH payments that would
be made without regard to section 1886(r) of the Act), Maryland
hospitals, which are not eligible to receive DSH payments, were also
excluded from the Office of the Actuary's December 2018 Medicare DSH
estimates. The 29 hospitals that are participating in the Rural
Community Hospital Demonstration Program were also excluded from these
estimates because, under the payment methodology that applies during
the second 5 years of the extension period, these hospitals are not
eligible to receive empirically justified Medicare DSH payments or
interim and final uncompensated care payments.
For the proposed rule, using the data sources that were previously
discussed, the Office of the Actuary's December 2018 estimate for
Medicare DSH payments for FY 2020, without regard to the application of
section 1886(r)(1) of the Act, was approximately $16.857 billion.
Therefore, also based on the December 2018 estimate, the estimate of
empirically justified Medicare DSH payments for FY 2020, with the
application of section 1886(r)(1) of the Act, was approximately $4.214
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for FY 2020). Under Sec. 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 the proposed rule, we proposed that Factor 1
for FY 2020 would be $12,643,011,209.74, which is equal to 75 percent
of the total amount of estimated Medicare DSH payments for FY 2020
($16,857,348,279.65 minus $4,214,337,069.91).
Comment: A few commenters discussed our proposals regarding Factor
1 in their FY 2020 IPPS/LTCH PPS public comment submissions. A common
theme, carrying over from comments in previous years, was the request
for greater transparency in the methodology used by CMS and the OACT.
This request was made with respect to the calculation of estimated
Medicare DSH payments for purposes of determining Factor 1, and in
particular the ``Other'' factor that is used to estimate Medicare DSH
expenditures. Some commenters believed that the lack of opportunity
afforded to hospitals to review the data used to develop our estimate
is in violation of the Administrative Procedure Act.
Some commenters requested that CMS use the traditional payment
reconciliation process to calculate final Medicare uncompensated care
payments. A commenter asserted that reconciliation of Factor 1 and
Factor 3 was necessary as a result of underestimates of Factor 1 in FY
2017 and FY 2018, resulting in underpayment of uncompensated care
payments for those years. The commenter asserted that the section
1886(r)(2) of the Act allows for the Factors 1, 2, and 3 to be based on
actual data for the specific fiscal year. The commenter stated using
actual data from the specific fiscal year in which those costs are
incurred, would result in more accurate estimates of these factors,
instead of projections from prior-period figures.
Some commenters expressed concern about whether underreporting of
Medicaid coverage was factored into the calculation of Factor 1, as it
was for Factor 2. However, others noted that, from the FY 2020 proposed
rule, it can be presumed that the Medicaid population decreased because
the ``Other'' adjustment is less than 1.0. However, these commenters
urged CMS to provide a detailed explanation, including calculations, of
the assumptions used to make these projections.
A commenter noted that the adjustments made by CMS include an
adjustment to account for the estimated effects of Medicaid expansion,
but do not include the impact of including days for individuals who are
entitled to benefits under Part A but received Medicare benefits
through enrollment in a Medicare Advantage plan under Part C (Part C
days) in the Part A/SSI fraction, thus leaving Factor 1 substantially
understated. This commenter referenced the recent Supreme Court
decision in which the Court held that the question of how to count Part
C enrollees had to be addressed through notice and comment rulemaking.
The commenter asserted that the inclusion of these Part C days in the
Part A/SSI fraction could materially impact the DSH reimbursement used
for Factor 1 by nearly 10 percent. The commenter suggested that CMS
should estimate and adjust for the impact of removing Part C days from
the Part A/SSI fraction. Similarly, another commenter asserted that,
since FY 2014, hospitals have been deprived of DSH funding because of
what the commenter perceives to be underestimates of Factor 1.
Response: We thank the commenters for their input. Regarding the
comments referencing the Administrative Procedure Act, we note that
under the Administrative Procedure Act, a proposed rule is required to
include either the terms or substance of the proposed rule or a
description of the subjects and issues involved. In this case, the FY
2020 IPPS/LTCH PPS proposed rule did include a detailed discussion of
our proposed Factor 1 methodology and the data sources that would be
used in making our estimate. Furthermore, we have been, and continue to
be, transparent with respect
[[Page 42354]]
to the methodology and data used to estimate Factor 1 and we disagree
with commenters who assert otherwise. To provide context, we first note
that Factor 1 is not estimated in isolation from other OACT
projections. The Factor 1 estimates for proposed rules are generally
consistent with the economic assumptions and actuarial analysis used to
develop the President's Budget estimates under current law, and the
Factor 1 estimates for the final rule are generally consistent with
those used for the Midsession Review of the President's Budget. As we
have in the past, for additional information on the development of the
President's Budget, we refer readers to the Office of Management and
Budget website at: https://www.whitehouse.gov/omb/budget. For
additional information on the specific economic assumptions used in the
Midsession Review of the President's FY 2020 Budget, we refer readers
to the ``Midsession Review of the President's FY 2020 Budget''
available on the Office of Management and Budget website at: https://www.whitehouse.gov/omb/budget. We recognize that our reliance on the
economic assumptions and actuarial analysis used to develop the
President's Budget and the Midsession Review of the President's Budget
in estimating Factor 1 has an impact on stakeholders who wish to
replicate the Factor 1 calculation, such as modelling the relevant
Medicare Part A portion of the budget, but we believe commenters are
able to meaningfully comment on our proposed estimate of Factor 1
without replicating the budget.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the ``2019 Annual Report of the Boards of Trustees of the Federal
Hospital Insurance and Federal Supplementary Medical Insurance Trust
Funds'' available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html under ``Downloads.'' We note that the
annual reports of the Medicare Boards of Trustees to Congress represent
the Federal Government's official evaluation of the financial status of
the Medicare Program. The actuarial projections contained in these
reports are based on numerous assumptions regarding future trends in
program enrollment, utilization and costs of health care services
covered by Medicare, as well as other factors affecting program
expenditures. In addition, although the methods used to estimate future
costs based on these assumptions are complex, they are subject to
periodic review by independent experts to ensure their validity and
reasonableness.
We also refer the public to the Actuarial Report on the Financial
Outlook for Medicaid for a discussion of general issues regarding
Medicaid projections.
Second, as described in more detail later in this section, in the
FY 2020 IPPS/LTCH PPS proposed rule, we included information regarding
the data sources, methods, and assumptions employed by the actuaries in
determining the OACT's estimate of Factor 1. In summary, we indicated
the historical HCRIS data update OACT used to identify Medicare DSH
payments, explained that the most recent Medicare DSH payment
adjustments provided in the IPPS Impact File were used, and provided
the components of all the update factors that were applied to the
historical data to estimate the Medicare DSH payments for the upcoming
fiscal year, along with the associated rationale and assumptions. This
discussion also included a description of the ``Other'' and
``Discharges'' assumptions, and also provided additional information
regarding how we address the Medicaid and CHIP expansion.
In response to the commenters' assertion that Medicaid expansion is
not adequately accounted for in the ``Other'' column, we note that the
discussion in the proposed rule made clear that, based on data from the
Midsession Review of the President's Budget, the OACT assumed per
capita spending for Medicaid beneficiaries who enrolled due to the
expansion to be 50 percent of the average per capita expenditures for a
pre-expansion Medicaid beneficiary due to the better health of these
beneficiaries. Taken as a whole, this description of our proposed
methodology for estimating Factor 1 and the data sources used in making
this estimate was entirely consistent with the requirements of the
Administrative Procedure Act, and gave stakeholders adequate notice of,
and a meaningful opportunity to comment on, the proposed estimate of
Factor 1.
Regarding the commenters' assertion that, similar to the adjustment
for Medicaid underreporting on survey data in the estimation of Factor
2, we should also account for this underreporting in our estimate of
Factor 1, we note that the Factor 1 calculation uses Medicaid
enrollment data and estimates and does not require the adjustment
because it does not use survey data.
Regarding commenters' assertion that Factor 1 would be higher if
Part C days were treated different, and their suggestion that CMS
should estimate and adjust for the impact of removing Part C days from
the Medicare/SSI fraction, we note that in the FY 2014 IPPS/LTCH PPS
final rule (78 FR 50614 through 50620), we readopted the policy of
counting Medicare Advantage days in the SSI ratio for FY 2014 and all
subsequent fiscal years (79 FR 50012). Accordingly, the rulemaking
required by Azar v. Allina Health Services was completed for FY 2014
and all subsequent fiscal years in the FY 2014 IPPS/LTCH final rule.
Thus, consistent with the policy adopted in that final rule, our
estimate of Factor 1 for FY 2020 appropriately accounts for Medicare
Advantage days by including them in the SSI ratio.
Lastly, regarding the commenters' perception that Factor 1 has been
underestimated and their suggestion that CMS consider reconciling the
estimates of Factors 1, 2, and 3, we continue to believe that applying
our best estimates prospectively is most conducive to administrative
efficiency, finality, and predictability in payments (78 FR 50628; 79
FR 50010; 80 FR 49518; 81 FR 56949; and 82 FR 38195). We believe that,
in affording the Secretary the discretion to estimate the three factors
used to determine uncompensated care payments and by including a
prohibition against administrative and judicial review of those
estimates in section 1886(r)(3) of the Act, Congress recognized the
importance of finality and predictability under a prospective payment
system. As a result, we do not agree with the commenters' suggestion
that we should establish a process for reconciling our estimates of the
three factors, which would be contrary to the notion of prospectivity.
We also address comments specifically requesting that we establish
procedures for reconciling Factor 3 later in this section, as part of
the discussion of the comments received on the proposed methodology for
Factor 3.
After consideration of the public comments we received, we are
finalizing, as proposed, the methodology for calculating Factor 1 for
FY 2020. We discuss the resulting Factor 1 amount for FY 2020 in this
final rule. For this final rule, the OACT used the most recently
submitted Medicare cost report data from the March 2019 update of HCRIS
to identify Medicare DSH payments and the most recent Medicare DSH
payment adjustments provided in the Impact File published in
conjunction with the
[[Page 42355]]
publication of the FY 2019 IPPS/LTCH PPS final rule and applied update
factors and assumptions for future changes in utilization and case-mix
to estimate Medicare DSH payments for the upcoming fiscal year. The
June 2019 OACT estimate for Medicare DSH payments for FY 2020, without
regard to the application of section 1886(r)(1) of the Act, was
approximately $16.583 billion. This estimate excluded Maryland
hospitals participating in the Maryland All-Payer Model, hospitals
participating in the Rural Community Hospital Demonstration, and SCHs
paid under their hospital-specific payment rate. Therefore, based on
the June 2019 estimate, the estimate of empirically justified Medicare
DSH payments for FY 2020, with the application of section 1886(r)(1) of
the Act, was approximately $4.146 billion (or 25 percent of the total
amount of estimated Medicare DSH payments for FY 2020). Under Sec.
412.106(g)(1)(i) of the regulations, Factor 1 is the difference between
these two estimates of the OACT. Therefore, in this final rule, Factor
1 for FY 2020 is $12,437,591,742.69, which is equal to 75 percent of
the total amount of estimated Medicare DSH payments for FY 2020
($16,583,455,656.92 minus $4,145,863,914.23).
The Office of the Actuary's final estimates for FY 2020 began with
a baseline of $13.981 billion in Medicare DSH expenditures for FY 2016.
The following table shows the factors applied to update this baseline
through the current estimate for FY 2020:
[GRAPHIC] [TIFF OMITTED] TR16AU19.163
In this table, the discharges column shows the increase in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The figures for FY 2017 and FY 2018 are based on Medicare claims data
that have been adjusted by a completion factor. The discharge figure
for FY 2019 is based on preliminary data for 2019. The discharge figure
for FY 2020 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-mix figures
for FY 2017 and FY 2018 are based on actual data adjusted by a
completion factor. The FY 2019 increase is based on preliminary data.
The FY 2020 increase is an estimate based on the recommendation of the
2010-2011 Medicare Technical Review Panel. The ``Other'' column shows
the increase in other factors that contribute to the Medicare DSH
estimates. These factors include the difference between the total
inpatient hospital discharges and the IPPS discharges, and various
adjustments to the payment rates that have been included over the years
but are not reflected in the other columns (such as the change in rates
for the 2-midnight stay policy). In addition, the ``Other'' column
includes a factor for the Medicaid expansion due to the Affordable Care
Act. The factor for Medicaid expansion was developed using public
information and statements for each State regarding its intent to
implement the expansion. Based on this information, it is assumed that
50 percent of all individuals who were potentially newly eligible
Medicaid enrollees in 2016 resided in States that had elected to expand
Medicaid eligibility and, for 2017 and thereafter, that 55 percent of
such individuals would reside in expansion States. In the future, these
assumptions may change based on actual participation by States. For a
discussion of general issues regarding Medicaid projections, we refer
readers to the 2017 Actuarial Report on the Financial Outlook for
Medicaid, which is available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/MedicaidReport2017.pdf. We note that, in
developing their estimates of the effect of Medicaid expansion on
Medicare DSH expenditures, our actuaries have assumed that the new
Medicaid enrollees are healthier than the average Medicaid recipient
and, therefore, use fewer hospital services. Specifically, based on
data from the President's Budget, the OACT assumed per capita spending
for Medicaid beneficiaries who enrolled due to the expansion to be 50
percent of the average per capita expenditures for a pre-expansion
Medicaid beneficiary due to the better health of these beneficiaries.
This assumption is consistent with recent internal estimates of
Medicaid per capita spending pre-expansion and post-expansion.
This table shows the factors that are included in the ``Update''
column of the previous table:
[[Page 42356]]
[GRAPHIC] [TIFF OMITTED] TR16AU19.164
b. Calculation of Factor 2 for FY 2020
(1) Background
Section 1886(r)(2)(B) of the Act establishes Factor 2 in the
calculation of the uncompensated care payment. Section
1886(r)(2)(B)(ii) of the Act provides that, for FY 2018 and subsequent
fiscal 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 were 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 were uninsured in
the most recent period for which data are available (as so estimated
and certified), minus 0.2 percentage point for FYs 2018 and 2019. In FY
2020 and subsequent fiscal years, there is no longer a reduction. We
note that, unlike section 1886(r)(2)(B)(i) of the Act, which governed
the calculation of Factor 2 for FYs 2014, 2015, 2016, and 2017, section
1886(r)(2)(B)(ii) of the Act permits the use of a data source other
than the CBO estimates to determine the percent change in the rate of
uninsurance beginning in FY 2018. In addition, for FY 2018 and
subsequent years, the statute does not require that the estimate of the
percent of individuals who are uninsured be limited to individuals who
are under 65 years of age.
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38197), in our analysis of a potential data source for the rate of
uninsurance for purposes of computing Factor 2 in FY 2018, we
considered the following: (1) The extent to which the source accounted
for the full U.S. population; (2) the extent to which the source
comprehensively accounted for both public and private health insurance
coverage in deriving its estimates of the number of uninsured; (3) the
extent to which the source utilized data from the Census Bureau; (4)
the timeliness of the estimates; (5) the continuity of the estimates
over time; (6) the accuracy of the estimates; and (7) the availability
of projections (including the availability of projections using an
established estimation methodology that would allow for calculation of
the rate of uninsurance for the applicable Federal fiscal year). As we
explained in the FY 2018 IPPS/LTCH PPS final rule, these considerations
are consistent with the statutory requirement that this estimate be
based on data from the Census Bureau or other sources the Secretary
determines appropriate and help to ensure the data source will provide
reasonable estimates for the rate of uninsurance that are available in
conjunction with the IPPS rulemaking cycle. In the FY 2020 IPPS/LTCH
PPS proposed rule, we proposed to use the same methodology as was used
in FY 2018 and FY 2019 to determine Factor 2 for FY 2020.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we
explained that we determined the source that, on balance, best meets
all of these considerations is the uninsured estimates produced by CMS'
Office of the Actuary (OACT) as part of the development of the National
Health Expenditure Accounts (NHEA). The NHEA represents the
government's official estimates of economic activity (spending) within
the health sector. The information contained in the NHEA has been used
to study numerous topics related to the health care sector, including,
but not limited to, changes in the amount and cost of health services
purchased and the payers or programs that provide or purchase these
services; the economic causal factors at work in the health sector; the
impact of policy changes, including major health reform; and
comparisons to other countries' health spending. Of relevance to the
determination of Factor 2 is that the comprehensive and integrated
structure of the NHEA creates an ideal tool for evaluating changes to
the health care system, such as the mix of the insured and uninsured
because this mix is integral to the well-established NHEA methodology.
In the FY 2020 IPPS/LTCH PPS proposed rule, we described some aspects
of the methodology used to develop the NHEA that were particularly
relevant in estimating the percent change in the rate of uninsurance
for FY 2018 and FY 2019 that we believe continue to be relevant in
developing the estimate for FY 2020. A full description of the
methodology used to develop the NHEA is available on the CMS website
at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/DSM-15.pdf.
The NHEA estimates of U.S. population reflect the Census Bureau's
definition of the resident-based population, which includes all people
who usually reside in the 50 States or the District of Columbia, but
excludes residents living in Puerto Rico and areas under U.S.
sovereignty, members of the U.S. Armed Forces overseas, and U.S.
citizens whose usual place of residence is outside of the United
States, plus a small (typically less than 0.2 percent of population)
adjustment to reflect Census undercounts. In past years, the estimates
for Factor 2 were made using the CBO's uninsured population estimates
for the under 65 population. For FY 2018 and subsequent years, the
statute does not restrict the estimate to the measurement of the
percent of individuals under the age of 65 who are uninsured.
Accordingly, as we explained in the FY 2018 IPPS/LTCH PPS proposed and
final rules, we believe it is appropriate to use an estimate that
reflects the rate of uninsurance in the United States across all age
groups. In addition, we continue to believe that a resident-based
population estimate more fully reflects the levels of uninsurance in
the United States that influence uncompensated care for hospitals than
an estimate that reflects only legal residents. The NHEA estimates of
uninsurance are for the total U.S. population (all ages) and not by
specific age cohort, such as the population under the age of 65.
The NHEA includes comprehensive enrollment estimates for total
private health insurance (PHI) (including direct
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and employer-sponsored plans), Medicare, Medicaid, the Children's
Health Insurance Program (CHIP), and other public programs, and
estimates of the number of individuals who are uninsured. Estimates of
total PHI enrollment are available for 1960 through 2017, estimates of
Medicaid, Medicare, and CHIP enrollment are available for the length of
the respective programs, and all other estimates (including the more
detailed estimates of direct-purchased and employer-sponsored
insurance) are available for 1987 through 2017. The NHEA data are
publicly available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/index.html.
In order to compute Factor 2, the first metric that is needed is
the proportion of the total U.S. population that was uninsured in 2013.
In developing the estimates for the NHEA, OACT's methodology included
using the number of uninsured individuals for 1987 through 2009 based
on the enhanced Current Population Survey (CPS) from the State Health
Access Data Assistance Center (SHADAC). The CPS, sponsored jointly by
the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS),
is the primary source of labor force statistics for the population of
the United States. (We refer readers to the website at: http://www.census.gov/programs-surveys/cps.html.) The enhanced CPS, available
from SHADAC (available at: http://datacenter.shadac.org) accounts for
changes in the CPS methodology over time. OACT further adjusts the
enhanced CPS for an estimated undercount of Medicaid enrollees (a
population that is often not fully captured in surveys that include
Medicaid enrollees due to a perceived stigma associated with being
enrolled in the Medicaid program or confusion about the source of their
health insurance).
To estimate the number of uninsured individuals for 2010 through
2014, the OACT extrapolates from the 2009 CPS data using data from the
National Health Interview Survey (NHIS). The NHIS is one of the major
data collection programs of the National Center for Health Statistics
(NCHS), which is part of the Centers for Disease Control and Prevention
(CDC). The U.S. Census Bureau is the data collection agent for the
NHIS. The NHIS results have been instrumental over the years in
providing data to track health status, health care access, and progress
toward achieving national health objectives. For further information
regarding the NHIS, we refer readers to the CDC website at: https://www.cdc.gov/nchs/nhis/index.htm.
The next metrics needed to compute Factor 2 are projections of the
rate of uninsurance in both calendar years 2019 and 2020. On an annual
basis, OACT projects enrollment and spending trends for the coming 10-
year period. Those projections (currently for years 2018 through 2027)
use the latest NHEA historical data, which presently run through 2017.
The NHEA projection methodology accounts for expected changes in
enrollment across all of the categories of insurance coverage
previously listed. The sources for projected growth rates in enrollment
for Medicare, Medicaid, and CHIP include the latest Medicare Trustees
Report, the Medicaid Actuarial Report, or other updated estimates as
produced by OACT. Projected rates of growth in enrollment for private
health insurance and the uninsured are based largely on OACT's
econometric models, which rely on the set of macroeconomic assumptions
underlying the latest Medicare Trustees Report. Greater detail can be
found in OACT's report titled ``Projections of National Health
Expenditure: Methodology and Model Specification,'' which is available
on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/ProjectionsMethodology.pdf.
The use of data from the NHEA to estimate the rate of uninsurance
is consistent with the statute and meets the criteria we have
identified for determining the appropriate data source. Section
1886(r)(2)(B)(ii) of the Act instructs the Secretary to estimate the
rate of uninsurance for purposes of Factor 2 based on data from the
Census Bureau or other sources the Secretary determines appropriate.
The NHEA utilizes data from the Census Bureau; the estimates are
available in time for the IPPS rulemaking cycle; the estimates are
produced by OACT on an annual basis and are expected to continue to be
produced for the foreseeable future; and projections are available for
calendar year time periods that span the upcoming fiscal year.
Timeliness and continuity are important considerations because of our
need to be able to update this estimate annually. Accuracy is also a
very important consideration and, all things being equal, we would
choose the most accurate data source that sufficiently meets our other
criteria.
(2) Factor 2 for FY 2020
Using these data sources and the methodologies as previously
described, the OACT has estimated that the uninsured rate for the
historical, baseline year of 2013 was 14 percent and for CYs 2019 and
2020 is 9.4 percent and 9.4 percent, respectively.\316\ As required by
section 1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS has
certified these estimates.
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\316\ Certification of Rates of Uninsured. March 28, 2019.
Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh.html.
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As with the CBO estimates on which we based Factor 2 in prior
fiscal years, the NHEA estimates are for a calendar year. In the
rulemaking for FY 2014, many commenters noted that the uncompensated
care payments are made for the fiscal year and not on a calendar year
basis and requested that CMS normalize the CBO estimate to reflect a
fiscal year basis. Specifically, commenters requested that CMS
calculate a weighted average of the CBO estimate for October through
December 2013 and the CBO estimate for January through September 2014
when determining Factor 2 for FY 2014. We agreed with the commenters
that normalizing the estimate to cover FY 2014 rather than CY 2014
would more accurately reflect the rate of uninsurance that hospitals
would experience during the FY 2014 payment year. Accordingly, we
estimated the rate of uninsurance for FY 2014 by calculating a weighted
average of the CBO estimates for CY 2013 and CY 2014 (78 FR 50633). We
have continued this weighted average approach in each fiscal year since
FY 2014.
We continue to believe that, in order to estimate the rate of
uninsurance during a fiscal year more accurately, Factor 2 should
reflect the estimated rate of uninsurance that hospitals will
experience during the fiscal year, rather than the rate of uninsurance
during only one of the calendar years that the fiscal year spans.
Accordingly, we proposed to continue to apply the weighted average
approach used in past fiscal years in order to estimate the rate of
uninsurance for FY 2020. The OACT has certified this estimate of the
fiscal year rate of uninsurance to be reasonable and appropriate for
purposes of section 1886(r)(2)(B)(ii) of the Act.
The calculation of the proposed Factor 2 for FY 2020 using a
weighted average of the OACT's projections for CY 2019 and CY 2020 was
as follows:
Percent of individuals without insurance for CY 2013: 14
percent.
Percent of individuals without insurance for CY 2019: 9.4
percent.
Percent of individuals without insurance for CY 2020: 9.4
percent.
[[Page 42358]]
Percent of individuals without insurance for FY 2020 (0.25
times 0.094) + (0.75 times 0.094): 9.4 percent.
1-[verbar]((0.094-0.14)/0.14)[verbar] = 1-0.3286 = 0.6714 (67.14
percent).
For FY 2020 and subsequent fiscal years, section 1886(r)(2)(B)(ii)
of the Act no longer includes any reduction to the above calculation.
Therefore, we proposed that Factor 2 for FY 2020 would be 67.14
percent.
The proposed FY 2020 uncompensated care amount was
$12,643,011,209.74 x 0.6714 = $8,488,517,726.22.
Proposed FY 2020 Uncompensated Care Amount: $8,488,517,726.22.
We invited public comments on our proposed methodology for
calculating Factor 2 for FY 2020.
Comment: A few commenters asserted that CMS did not adequately
explain how the OACT derived the estimates that were used in
calculating Factor 2. According to commenters, the coverage level and
underlying assumptions used by the agency resulted in the
underestimation of Factor 2, which in turn diminished uncompensated
care payments for hospitals. Commenters also expressed concerns
generally about the amount of money available to make uncompensated
payments and noted that the amount of money available for overall
Medicare DSH payments, including both empirically justified DSH
payments and uncompensated care payments, drastically changed under the
new methodology established in the Affordable Care Act. They pointed
out that as the number of uninsured people in the country increases, it
is imperative that hospitals receive adequate Medicare DSH payments to
cover the costs of increasing numbers of underinsured and uninsured
patients. A commenter requested that CMS either revise Factor 2 to
account for the estimated reduction in Medicaid enrollment as suggested
by the 0.9932 ``Other'' adjustment in determining Factor 1 or explain
why such a revision is unnecessary.
Response: We have been and continue to be transparent with respect
to the methodology and data used to estimate Factor 2, and we disagree
with commenters who assert otherwise. The FY 2020 IPPS/LTCH PPS
proposed rule included a detailed discussion of our proposed Factor 2
methodology and the data sources that would be used in making our
estimate. Section 1886(r)(2)(B)(ii) of the Act permits us to use a data
source other than CBO estimates to determine the percent change in the
rate of uninsurance beginning in FY 2018. As we explained in the
proposed rule, we believe that the NHEA data, on balance, best meets
all of our considerations, including the statutory requirement that the
estimate be based on data from the Census Bureau or other sources the
Secretary determines appropriate, and will allow reasonable estimates
of the rate of uninsurance to be available in conjunction with the IPPS
rulemaking cycle.
In response to the commenter that requested that CMS either revise
Factor 2 to account for the estimated reduction in Medicaid enrollment
as suggested by the 0.9932 ``Other'' adjustment in determining Factor 1
or explain why such a revision is unnecessary, we note that the
``Other'' adjustment relates to a number of factors, and does not
represent only the effects of Medicaid expansion under the Affordable
Care Act. As discussed in the proposed rule, the ``Other'' column shows
the increase or decrease in certain other factors that also contribute
to the estimate of Medicare DSH payments. These factors include the
difference between total inpatient hospital discharges and IPPS
discharges (particularly those in DSH hospitals) and various
adjustments to the payment rates that have been included over the years
but are not picked up in the other columns (such as the increase in
rates for the two midnight policy). We note that the ``Other'' factor
used in determining Factor 1 in this FY 2020 final rule is 1.0012.
After consideration of the public comments we received, we are
finalizing the calculation of Factor 2 for FY 2020 as proposed. The
estimates of the percent of uninsured individuals have been certified
by the Chief Actuary of CMS, as discussed in the proposed rule. The
calculation of the final Factor 2 for FY 2020 using a weighted average
of OACT's projections for CY 2019 and CY 2020 is as follows:
Percent of individuals without insurance for CY 2013: 14
percent.
Percent of individuals without insurance for CY 2019: 9.4
percent.
Percent of individuals without insurance for CY 2020: 9.4
percent.
Percent of individuals without insurance for FY 2020 (0.25
times 0.094).
Percent of individuals without insurance for FY 2020 (0.25
times 0.094) + (0.75 times 0.094): 9.4 percent.
1-[bond]((0.094-0.14)/0.14)[bond] = 1-0.3286 = 0.6714 (67.14
percent).
Therefore, the final Factor 2 for FY 2020 is 67.14 percent.
The final FY 2020 uncompensated care amount is $12,437,591,742.69 x
0.6714 = $8,350,599,096.04.
FY 2020 Uncompensated Care Amount: $8,350,599,096.04.
c. Calculation of Factor 3 for FY 2020
(1) General Background
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: (1) 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 are available that are a better proxy for
the costs of subsection (d) hospitals for treating the uninsured, the
use of such alternative data)); and (2) the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act for such period (as so
estimated, based on such data).
Therefore, Factor 3 is a hospital-specific 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 Medicare DSH payments relative to the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare 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 the denominator (that is, the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare 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 Medicare DSH payments. The statute instructs the Secretary
to estimate the amounts of uncompensated care for a period based on
appropriate data. In addition, we
[[Page 42359]]
note that the statute permits the Secretary to use alternative data in
the case where the Secretary determines that such alternative data are
available that are a better proxy for the costs of subsection (d)
hospitals for treating individuals who are uninsured.
In the course of considering how to determine Factor 3 during the
rulemaking process for FY 2014, the first year this provision was in
effect, we considered defining the amount of uncompensated care for a
hospital as the uncompensated care costs of that hospital and
determined that Worksheet S-10 of the Medicare cost report potentially
provides the most complete data regarding uncompensated care costs for
Medicare hospitals. However, because of concerns regarding variations
in the data reported on Worksheet S-10 and the completeness of these
data, we did not use Worksheet S-10 data to determine Factor 3 for FY
2014, or for FYs 2015, 2016, or 2017. Instead, we believed that the
utilization of insured low-income patients, as measured by patient
days, would be a better proxy for the costs of hospitals in treating
the uninsured and therefore appropriate to use in calculating Factor 3
for these years. Of particular importance in our decision making was
the relative newness of Worksheet S-10, which went into effect on May
1, 2010. At the time of the rulemaking for FY 2014, the most recent
available cost reports would have been from FYs 2010 and 2011, which
were submitted on or after May 1, 2010, when the new Worksheet S-10
went into effect. We believed that concerns about the standardization
and completeness of the Worksheet S-10 data could be more acute for
data collected in the first year of the Worksheet's use (78 FR 50635).
In addition, we believed that it would be most appropriate to use data
elements that have been historically publicly available, subject to
audit, and used for payment purposes (or that the public understands
will be used for payment purposes) to determine the amount of
uncompensated care for purposes of Factor 3 (78 FR 50635). At the time
we issued the FY 2014 IPPS/LTCH PPS final rule, we did not believe that
the available data regarding uncompensated care from Worksheet S-10 met
these criteria and, therefore, we believed they were not reliable
enough to use for determining FY 2014 uncompensated care payments. For
FYs 2015, 2016, and 2017, the cost reports used for calculating
uncompensated care payments (that is, FYs 2011, 2012, and 2013) were
also submitted prior to the time that hospitals were on notice that
Worksheet S-10 could be the data source for calculating uncompensated
care payments. Therefore, we believed it was also appropriate to use
proxy data to calculate Factor 3 for these years. We indicated our
belief 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 were submitting more
accurate and consistent data through this reporting mechanism.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38202), we stated
that we could no longer conclude that alternative data to the Worksheet
S-10 are available for FY 2014 that are a better proxy for the costs of
subsection (d) hospitals for treating individuals who are uninsured.
Hospitals were on notice as of FY 2014 that Worksheet S-10 could
eventually become the data source for CMS to calculate uncompensated
care payments. Furthermore, hospitals' cost reports from FY 2014 had
been publicly available for some time, and CMS had analyses of
Worksheet S-10, conducted both internally and by stakeholders,
demonstrating that Worksheet S-10 accuracy had improved over time.
Analyses performed by MedPAC had already shown that the correlation
between audited uncompensated care data from 2009 and the data from the
FY 2011 Worksheet S-10 was over 0.80, as compared to a correlation of
approximately 0.50 between the audited uncompensated care data and 2011
Medicare SSI and Medicaid days. Based on this analysis, MedPAC
concluded that use of Worksheet S-10 data was already better than using
Medicare SSI and Medicaid days as a proxy for uncompensated care costs,
and that the data on Worksheet S-10 would improve over time as the data
are actually used to make payments (81 FR 25090). In addition, a 2007
MedPAC analysis of data from the Government Accountability Office (GAO)
and the American Hospital Association (AHA) had suggested that Medicaid
days and low-income Medicare days are not an accurate proxy for
uncompensated care costs (80 FR 49525).
Subsequent analyses from Dobson/DaVanzo, originally commissioned by
CMS for the FY 2014 rulemaking and updated in later years, compared
Worksheet S-10 and IRS Form 990 data and assessed the correlation in
Factor 3s derived from each of the data sources. Our analyses on
balance led us to believe that we had reached a tipping point in FY
2018 with respect to the use of the Worksheet S-10 data. We refer
readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38201 through
38203) for a complete discussion of these analyses.
We found further evidence for this tipping point when we examined
changes to the FY 2014 Worksheet S-10 data submitted by hospitals
following the publication of the FY 2017 IPPS/LTCH PPS final rule. In
the FY 2017 IPPS/LTCH PPS final rule, as part of our ongoing quality
control and data improvement measures for the Worksheet S-10, we
referred readers to Change Request 9648, Transmittal 1681, titled ``The
Supplemental Security Income (SSI)/Medicare Beneficiary Data for Fiscal
Year 2014 for Inpatient Prospective Payment System (IPPS) Hospitals,
Inpatient Rehabilitation Facilities (IRFs), and Long Term Care
Hospitals (LTCHs),'' issued on July 15, 2016 (available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R1681OTN.pdf). In this transmittal, as part of the process for ensuring
complete submission of Worksheet S-10 by all eligible DSH hospitals, we
instructed MACs to accept amended Worksheets S-10 for FY 2014 cost
reports submitted by hospitals (or initial submissions of Worksheet S-
10 if none had been submitted previously) and to upload them to the
Health Care Provider Cost Report Information System (HCRIS) in a timely
manner. The transmittal stated that, for revisions to be considered,
hospitals were required to submit their amended FY 2014 cost report
containing the revised Worksheet S-10 (or a completed Worksheet S-10 if
no data were included on the previously submitted cost report) to the
MAC no later than September 30, 2016. For the FY 2018 IPPS/LTCH PPS
proposed rule (82 FR 19949 through 19950), we examined hospitals' FY
2014 cost reports to see if the Worksheet S-10 data on those cost
reports had changed as a result of the opportunity for hospitals to
submit revised Worksheet S-10 data for FY 2014. Specifically, we
compared hospitals' FY 2014 Worksheet S-10 data as they existed in the
first quarter of CY 2016 with data from the fourth quarter of CY 2016.
We found that the FY 2014 Worksheet S-10 data had changed over that
time period for approximately one quarter of hospitals that receive
uncompensated care payments. The fact that the Worksheet S-10 data
changed for such a significant number of hospitals following a review
of the cost report data they originally submitted and that the revised
Worksheet S-10 information is available to be used in determining
uncompensated care costs contributed
[[Page 42360]]
to our belief that we could no longer conclude that alternative data
are available that are a better proxy than the Worksheet S-10 data for
the costs of subsection (d) hospitals for treating individuals who are
uninsured.
We also recognized commenters' concerns that, in using Medicaid
days as part of the proxy for uncompensated care, it would be possible
for hospitals in States that choose to expand Medicaid to receive
higher uncompensated care payments because they may have more Medicaid
patient days than hospitals in a State that does not choose to expand
Medicaid. Because the earliest Medicaid expansions under the Affordable
Care Act began in 2014, the 2011, 2012, and 2013 Medicaid days used to
calculate uncompensated care payments in FYs 2015, 2016, and 2017 are
the latest available data on Medicaid utilization that do not reflect
the effects of these Medicaid expansions. Accordingly, if we had used
only low-income insured days to estimate uncompensated care in FY 2018,
we would have needed to hold the time period of these data constant and
use data on Medicaid days from 2011, 2012, and 2013 in order to avoid
the risk of any redistributive effects arising from the decision to
expand Medicaid in certain States. As a result, we would have been
using older data that may provide a less accurate proxy for the level
of uncompensated care being furnished by hospitals, contributing to our
growing concerns regarding the continued use of low-income insured days
as a proxy for uncompensated care costs in FY 2018.
In summary, as we stated in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38203), when weighing the new information regarding the
correlation between the Worksheet S-10 data and IRS 990 data that
became available to us after the FY 2017 rulemaking in conjunction with
the information regarding Worksheet S-10 data and the low-income days
proxy that we analyzed as part of our consideration of this issue in
prior rulemaking, we determined that we could no longer conclude that
alternative data to the Worksheet S-10 are available for FY 2014 that
are a better proxy for the costs of subsection (d) hospitals for
treating individuals who are uninsured. We also stated that we believe
that continued use of Worksheet S-10 will improve the accuracy and
consistency of the reported data, especially in light of CMS' concerted
efforts to allow hospitals to review and resubmit their Worksheet S-10
data for past years and the use of trims for potentially aberrant data
(82 FR 38207, 38217, and 38218). We also committed to continue to work
with stakeholders to address their concerns regarding the accuracy of
the reporting of uncompensated care costs through provider education
and refinement of the instructions to Worksheet S-10.
For FY 2019, as discussed in the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41413), we continued to monitor the reporting of Worksheet S-10
data in anticipation of using Worksheet S-10 data from hospitals' FY
2014 and FY 2015 cost reports in the calculation of Factor 3. We
acknowledged the concerns that had been raised regarding the
instructions for Worksheet S-10. In particular, commenters had
expressed concerns that the lack of clear and concise line-level
instructions prevented accurate and consistent data from being reported
on Worksheet S-10. We noted that, in November 2016, CMS issued
Transmittal 10, which clarified and revised the instructions for the
Worksheet S-10, including the instructions regarding the reporting of
charity care charges. Transmittal 10 is available for download on the
CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R10P240.pdf. In Transmittal 10, we clarified
that hospitals may include discounts given to uninsured patients who
meet the hospital's charity care criteria in effect for that cost
reporting period. This clarification applied to cost reporting periods
beginning prior to October 1, 2016, as well as cost reporting periods
beginning on or after October 1, 2016. As a result, nothing prohibits a
hospital from considering a patient's insurance status as a criterion
in its charity care policy. A hospital determines its own financial
criteria as part of its charity care policy. The instructions for the
Worksheet S-10 set forth that hospitals may include discounts given to
uninsured patients, including patients with coverage from an entity
that does not have a contractual relationship with the provider, who
meet the hospital's charity care criteria in effect for that cost
reporting period. In addition, we revised the instructions for the
Worksheet S-10 for cost reporting periods beginning on or after October
1, 2016, to provide that charity care charges must be determined in
accordance with the hospital's charity care criteria/policy and written
off in the cost reporting period, regardless of the date of service.
During the FY 2018 rulemaking, commenters pointed out that, in the
FY 2017 IPPS/LTCH PPS final rule (81 FR 56963), CMS agreed to institute
certain additional quality control and data improvement measures prior
to moving forward with incorporating Worksheet S-10 data into the
calculation of Factor 3. However, the commenters indicated that, aside
from a brief window in 2016 for hospitals to submit corrected data on
their FY 2014 Worksheet S-10 by September 30, 2016, and the issuance of
revised instructions (Transmittal 10) in November 2016 that are
applicable to cost reports beginning on or after October 1, 2016, CMS
had not implemented any additional quality control and data improvement
measures. We stated in the FY 2018 IPPS/LTCH PPS final rule that we
would continue to work with stakeholders to address their concerns
regarding the reporting of uncompensated care through provider
education and refinement of the instructions to the Worksheet S-10 (82
FR 38206).
On September 29, 2017, we issued Transmittal 11, which clarified
the definitions and instructions for uncompensated care, non-Medicare
bad debt, non-reimbursed Medicare bad debt, and charity care, as well
as modified the calculations relative to uncompensated care costs and
added edits to ensure the integrity of the data reported on Worksheet
S-10. Transmittal 11 is available for download on the CMS website at:
https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R11p240.pdf. We further clarified that full or partial
discounts given to uninsured patients who meet the hospital's charity
care policy or financial assistance policy/uninsured discount policy
(hereinafter referred to as Financial Assistance Policy or FAP) may be
included on Line 20, Column 1 of Worksheet S-10. These clarifications
apply to cost reporting periods beginning on or after October 1, 2013.
We also modified the application of the CCR. We specified that the CCR
will not be applied to the deductible and coinsurance amounts for
insured patients approved for charity care and non-reimbursed Medicare
bad debt. The CCR will be applied to the charges for uninsured patients
approved for charity care or an uninsured discount, non-Medicare bad
debt, and charges for noncovered days exceeding a length of stay limit
imposed on patients covered by Medicaid or other indigent care
programs.
We also provided another opportunity for hospitals to submit
revisions to their Worksheet S-10 data for FY 2014 and FY 2015 cost
reports. We refer readers to Change Request 10378, Transmittal 1981,
titled ``Fiscal Year (FY) 2014 and 2015 Worksheet S-10 Revisions:
Further Extension for All Inpatient Prospective
[[Page 42361]]
Payment System (IPPS) Hospitals,'' issued on December 1, 2017
(available at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2017Downloads/R1981OTN.pdf). In this transmittal, we
instructed MACs to accept amended Worksheets S-10 for FY 2014 and FY
2015 cost reports submitted by hospitals (or initial submissions of
Worksheet S-10 if none had been submitted previously) and to upload
them to the Health Care Provider Cost Report Information System (HCRIS)
in a timely manner. The transmittal included the deadlines by which
hospitals needed to submit their amended FY 2014 and FY 2015 cost
reports containing the revised Worksheet S-10 (or a completed Worksheet
S-10 if no data were included on the previously submitted cost report)
to the MAC, as well as the dates by which MACs must have accepted these
data and uploaded the revised cost report to the HCRIS, in order for
the data to be considered for purposes of the FY 2019 rulemaking.
(2) Background on the Methodology Used To Calculate Factor 3 for FY
2019
Section 1886(r)(2)(C) of the Act governs both the selection of the
data to be used in calculating Factor 3, and 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. 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 section 1886(r) of the Act for such period. 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 hospitals that we estimate will qualify for Medicare DSH
payments 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 2017 IPPS/LTCH PPS final rule, in order to mitigate undue
fluctuations in the amount of uncompensated care payments to hospitals
from year to year and smooth over anomalies between cost reporting
periods, we finalized a policy of calculating a hospital's share of
uncompensated care based on an average of data derived from three cost
reporting periods instead of one cost reporting period. As explained in
the preamble to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56957
through 56959), instead of determining Factor 3 using data from a
single cost reporting period as we did in FY 2014, FY 2015, and FY
2016, we used data from three cost reporting periods (Medicaid data for
FYs 2011, 2012, and 2013 and SSI days from the three most recent
available years of SSI utilization data (FYs 2012, 2013, and 2014)) to
compute Factor 3 for FY 2017. Furthermore, instead of determining a
single Factor 3 as we had done since the first year of the
uncompensated care payment in FY 2014, we calculated an individual
Factor 3 for each of the three cost reporting periods, which we then
averaged by the number of cost reporting years with data to compute the
final Factor 3 for a hospital. Under this policy, if a hospital had
merged, we would combine data from both hospitals for the cost
reporting periods in which the merger was not reflected in the
surviving hospital's cost report data to compute Factor 3 for the
surviving hospital. Moreover, to further reduce undue fluctuations in a
hospital's uncompensated care payments, if a hospital filed multiple
cost reports beginning in the same fiscal year, we combined data from
the multiple cost reports so that the hospital could have a Factor 3
calculated using more than one cost report within a cost reporting
period. We codified these changes for FY 2017 by amending the
regulation at Sec. 412.106(g)(1)(iii)(C).
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38213 through
38214), to address the issue of both long and short cost reporting
periods, we finalized a policy of annualizing cost reports that do not
have 12 months of data. As stated in the FY 2018 IPPS/LTCH PPS final
rule, if the time between the start date of a hospital's cost reporting
year and the end date of its cost reporting year is less than 12
months, we annualize the data so that the hospital has 12 months of
data included in its Factor 3 calculation. Conversely, if the time
between the aforementioned start date and the end date is greater than
12 months, we annualize the Medicaid days to achieve 12 months of
Medicaid day's data. Under the policy adopted in the FY 2018 IPPS/LTCH
PPS final rule, if a hospital filed more than one cost report beginning
in the same fiscal year, we would first combine the data across the
multiple cost reports before determining the difference between the
start date and the end date to see if annualization is needed.
To address the effects of averaging Factor 3s calculated for three
separate fiscal years, in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38214 through 38215), we finalized a policy under which we apply a
scaling factor to the Factor 3 values of all DSH eligible hospitals so
that total uncompensated care payments will be consistent with the
estimated amount available to make uncompensated care payments for the
fiscal year. Specifically, we adopted a policy under which we divide 1
(the expected sum of all eligible hospitals' Factor 3 values) by the
actual sum of all eligible hospitals' Factor 3 values and multiply the
quotient by each hospital's total uncompensated care payment to obtain
scaled uncompensated care payment amounts whose sum is consistent with
the estimate of the total amount available to make uncompensated care
payments.
As we stated in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41414),
with the additional steps we had taken to ensure the accuracy and
consistency of the data reported on Worksheet S-10 since the
publication of the FY 2018 IPPS/LTCH PPS final rule, we continued to
believe that we can no longer conclude that alternative data to the
Worksheet S-10 are currently available for FY 2014 that are a better
proxy for the costs of subsection (d) hospitals for treating
individuals who are uninsured. Similarly, the actions that we have
taken to improve the accuracy and consistency of the Worksheet S-10
data, including the opportunity for hospitals to resubmit Worksheet S-
10 data for FY 2015, led us to conclude that there are no alternative
data to the Worksheet S-10 data currently available for FY 2015 that
are a better proxy for the costs of subsection (d) hospitals for
treating uninsured individuals. As such, in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41428), we finalized our proposal to advance the time
period of the data used in the calculation of Factor 3 forward by 1
year and to use data from FY 2013, FY 2014, and FY 2015 cost reports to
determine Factor 3 for FY 2019. For the reasons we described earlier,
we stated that we continue to believe it is inappropriate to use
Worksheet S-10
[[Page 42362]]
data for periods prior to FY 2014. Rather, for cost reporting periods
prior to FY 2014, we indicated that we believe it is appropriate to
continue to use low-income insured days. Accordingly, with a time
period that includes 3 cost reporting years consisting of FY 2013, FY
2014, and FY 2015, we used Worksheet S-10 data for the FY 2014 and FY
2015 cost reporting periods and the low-income insured days proxy data
for the earliest cost reporting period. As in previous years, in order
to perform this calculation for the FY 2019 final rule, we drew three
sets of data (1 year of Medicaid utilization data and 2 years of
Worksheet S-10 data) from the most recent available HCRIS extract,
which was the June 30, 2018 update of HCRIS, due to the unique
circumstances related to the impact of the hurricanes in 2017 (Harvey,
Irma, Maria, and Nate) and the extension of the deadline to resubmit
Worksheet S-10 data through January 2, 2018, and the subsequent impact
on the MAC review timeline (83 FR 41421).
Accordingly, for FY 2019, in addition to the Worksheet S-10 data
for FY 2014 and FY 2015, we used Medicaid days from FY 2013 cost
reports and FY 2016 SSI ratios. We noted that cost report data from
Indian Health Service and Tribal hospitals are included in HCRIS
beginning in FY 2013 and no longer need to be incorporated from a
separate data source. We also continued the policies that were
finalized in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020) to
address several specific issues concerning the process and data to be
employed in determining Factor 3 in the case of hospital mergers. In
addition, we continued the policies that were finalized in the FY 2018
IPPS/LTCH PPS final rule to address technical considerations related to
the calculation of Factor 3 and the incorporation of Worksheet S-10
data (82 FR 38213 through 38220). In that final rule, we adopted a
policy, for purposes of calculating Factor 3, under which we annualize
Medicaid days data and uncompensated care cost data reported on the
Worksheet S-10 if a hospital's cost report does not equal 12 months of
data. As in FY 2018, for FY 2019, we did not annualize SSI days because
we do not obtain these data from hospital cost reports in HCRIS.
Rather, we obtained these data from the latest available SSI ratios
posted on the Medicare DSH homepage (https://www.cms.gov/Medicare/
Medicare-fee-for-service-payment/AcuteInpatientPPS/dsh.html), which
were aggregated at the hospital level and did not include the
information needed to determine if the data should be annualized. To
address the effects of averaging Factor 3s calculated for 3 separate
fiscal years, we continued to apply a scaling factor to the Factor 3
values of all DSH eligible hospitals such that total uncompensated care
payments are consistent with the estimated amount available to make
uncompensated care payments for the applicable fiscal year. With
respect to the incorporation of data from Worksheet S-10, we indicated
that we believe that the definition of uncompensated care adopted in FY
2018 is still appropriate because it incorporates the most commonly
used factors within uncompensated care as reported by stakeholders,
including charity care costs and non-Medicare bad debt costs, and
correlates to Line 30 of Worksheet S-10. Therefore, for purposes of
calculating Factor 3 and uncompensated care costs in FY 2019, we again
defined ``uncompensated care'' as the amount on Line 30 of Worksheet S-
10, which is the cost of charity care (Line 23) and the cost of non-
Medicare bad debt and nonreimbursable Medicare bad debt (Line 29).
We noted that we were discontinuing the policy finalized in the FY
2017 IPPS/LTCH PPS final rule concerning multiple cost reports
beginning in the same fiscal year (81 FR 56957). Under this policy, we
would first combine the data across the multiple cost reports before
determining the difference between the start date and the end date to
determine if annualization was needed. This policy was developed in
response to commenters' concerns regarding the unique circumstances of
hospitals that file cost reports that are shorter or longer than 12
months. As we explained in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56957 through 56959) and in the FY 2018 IPPS/LTCH PPS proposed rule (82
FR 19953), we believed that, for hospitals that file multiple cost
reports beginning in the same year, combining the data from these cost
reports had the benefit of supplementing the data of hospitals that
filed cost reports that are less than 12 months, such that the basis of
their uncompensated care payments and those of hospitals that filed
full-year 12-month cost reports would be more equitable. As we stated
in the FY 2019 IPPS/LTCH PPS proposed and final rules, we now believe
that concerns about the equitability of the data used as the basis of
hospital uncompensated care payments are more thoroughly addressed by
the policy finalized in the FY 2018 IPPS/LTCH PPS final rule, under
which CMS annualizes the Medicaid days and uncompensated care cost data
of hospital cost reports that do not equal 12 months of data. Based on
our experience, we stated that we believe that in many cases where a
hospital files two cost reports beginning in the same fiscal year,
combining the data across multiple cost reports before annualizing
would yield a similar result to choosing the longer of the two cost
reports and then annualizing the data if the cost report is shorter or
longer than 12 months. Furthermore, even in cases where a hospital
files more than one cost report beginning in the same fiscal year, it
is not uncommon for one of those cost reports to span exactly 12
months. In this case, if Factor 3 is determined using only the full 12-
month cost report, annualization would be unnecessary as there would
already be 12 months of data. Therefore, for FY 2019, we stated that we
believed it was appropriate to eliminate the additional step of
combining data across multiple cost reports if a hospital filed more
than one cost report beginning in the same fiscal year. Instead, for
purposes of calculating Factor 3, we used data from the cost report
that is equivalent to 12 months or, if no such cost report existed, the
cost report that was closest to 12 months, and annualized the data.
Furthermore, we acknowledged that, in rare cases, a hospital may have
more than one cost report beginning in one fiscal year, where one
report also spans the entirety of the following fiscal year, such that
the hospital has no cost report beginning in that fiscal year. For
instance, a hospital's cost reporting period may have started towards
the end of FY 2012 but cover the duration of FY 2013. In these rare
situations, we would use data from the cost report that spans both
fiscal years in the Factor 3 calculation for the latter fiscal year as
the hospital would already have data from the preceding cost report
that could be used to determine Factor 3 for the previous fiscal year.
In FY 2019, we also continued to apply statistical trims to
anomalous hospital CCRs using a similar methodology to the one adopted
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38217 through 38219),
where we stated our belief that, just as we apply trims to hospitals'
CCRs to eliminate anomalies when calculating outlier payments for
extraordinarily high cost cases (Sec. 412.84(h)(3)(ii)), it is
appropriate to apply statistical trims to the CCRs on Worksheet S-10,
Line 1, that are considered anomalies. Specifically, Sec.
412.84(h)(3)(ii) states that the Medicare contractor may use a
statewide CCR for hospitals whose operating or capital CCR is in excess
of
[[Page 42363]]
3 standard deviations above the corresponding national geometric mean
(that is, the CCR ``ceiling''). The geometric means for purposes of the
Worksheet S-10 trim of CCRs and for purposes of Sec. 412.84(h)(3)(ii)
are separately calculated annually by CMS and published in the
applicable sections of the proposed and final IPPS rules each year. We
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41415) for
a detailed description of the CCR trim methodology for purposes of the
Worksheet S-10 trim of CCRs, which included calculating 3 standard
deviations above the national geometric mean CCR for each of the
applicable cost report years (FY 2014 and FY 2015) that were part of
the Factor 3 methodology for FY 2019.
Similar in concept to the policy that we adopted for FY 2018, for
FY 2019, we stated that we continued to believe that uncompensated care
costs that represent an extremely high ratio of a hospital's total
operating expenses (such as the ratio of 50 percent used in the FY 2018
IPPS/LTCH PPS final rule) may be potentially aberrant, and that using
the ratio of uncompensated care costs to total operating costs to
identify potentially aberrant data when determining Factor 3 amounts
has merit. We noted that we had instructed the MACs to review
situations where a hospital has an extremely high ratio of
uncompensated care costs to total operating costs with the hospital,
but also indicated that we did not intend to make the MACs' review
protocols public (83 FR 41416). Similarly, we believe that situations
where there were extremely large dollar increases or decreases in a
hospital's uncompensated care costs when it resubmitted its FY 2014
Worksheet S-10 or FY 2015 Worksheet S-10 data, or when the data it had
previously submitted were reprocessed by the MAC, may reflect
potentially aberrant data and warrant further review. In the FY 2019
IPPS/LTCH PPS proposed rule (83 FR 20399), we noted that our
calculation of Factor 3 for the final rule would be contingent on the
results of the ongoing MAC reviews of hospitals' Worksheet S-10 data,
and in the event those reviews necessitate supplemental data edits, we
would incorporate such edits in the final rule for the purpose of
correcting aberrant data. After the completion of the MAC reviews, we
did not incorporate any additional edits to the Worksheet S-10 data
that we did not propose in the FY 2019 IPPS/LTCH PPS proposed rule. We
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41416) for
a detailed discussion of our policies for trimming aberrant data. In
brief summary, in cases where a hospital's uncompensated care costs for
FY 2014 or FY 2015 were an extremely high ratio of its total operating
costs, and the hospital could not justify the amount it reported, we
determined the ratio of uncompensated care costs to the hospital's
total operating costs from another available cost report, and applied
that ratio to the total operating expenses for the potentially aberrant
fiscal year to determine an adjusted amount of uncompensated care
costs. For example, if the FY 2015 cost report was determined to
include potentially aberrant data, data from the FY 2016 cost report
would be used for the ratio calculation. In this case, the hospital's
uncompensated care costs for FY 2015 would be trimmed by multiplying
its FY 2015 total operating costs by the ratio of uncompensated care
costs to total operating costs from the hospital's FY 2016 cost report
to calculate an estimate of the hospital's uncompensated care costs for
FY 2015 for purposes of determining Factor 3 for FY 2019.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41416), for Indian
Health Service and Tribal hospitals, subsection (d) Puerto Rico
hospitals, and all-inclusive rate providers, we continued the policy we
first adopted for FY 2018 of substituting data regarding FY 2013 low-
income insured days for the Worksheet S-10 data when determining Factor
3. As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38209), the use of data from Worksheet S-10 to calculate the
uncompensated care amount for Indian Health Service and Tribal
hospitals may jeopardize these hospitals' uncompensated care payments
due to their unique funding structure. With respect to Puerto Rico
hospitals, we indicated that we continue to agree with concerns raised
by commenters that the uncompensated care data reported by these
hospitals need to be further examined before the data are used to
determine Factor 3 (82 FR 38209). Finally, we acknowledged that the
CCRs for all-inclusive rate providers are potentially erroneous and
still in need of further examination before they can be used in the
determination of uncompensated care amounts for purposes of Factor 3
(82 FR 38212). For the reasons described earlier related to the impact
of the Medicaid expansion beginning in FY 2014, we stated that we also
continue to believe that it is inappropriate to calculate a Factor 3
using FY 2014 and FY 2015 low-income insured days. Because we did not
believe it was appropriate to use the FY 2014 or FY 2015 uncompensated
care data for these hospitals and we also did not believe it was
appropriate to use the FY 2014 or FY 2015 low-income insured days, we
stated that the best proxy for the costs of Indian Health Service and
Tribal hospitals, subsection (d) Puerto Rico hospitals, and all-
inclusive rate providers for treating the uninsured continues to be the
low-income insured days data for FY 2013. Accordingly, for these
hospitals, we determined Factor 3 only on the basis of low-income
insured days for FY 2013. We stated our belief that this approach was
appropriate as the FY 2013 data reflect the most recent available
information regarding these hospitals' low-income insured days before
any expansion of Medicaid. In addition, because we continued to use 1
year of insured low-income patient days as a proxy for uncompensated
care and residents of Puerto Rico are not eligible for SSI benefits, we
continued to use a proxy for SSI days for Puerto Rico hospitals
consisting of 14 percent of the hospital's Medicaid days, as finalized
in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56953 through 56956).
Therefore, for FY 2019, we computed Factor 3 for each hospital by--
Step 1: Calculating Factor 3 using the low-income insured days
proxy based on FY 2013 cost report data and the FY 2016 SSI ratio (or,
for Puerto Rico hospitals, 14 percent of the hospital's FY 2013
Medicaid days);
Step 2: Calculating Factor 3 based on the FY 2014 Worksheet S-10
data;
Step 3: Calculating Factor 3 based on the FY 2015 Worksheet S-10
data; and
Step 4: Averaging the Factor 3 values from Steps 1, 2, and 3; that
is, adding the Factor 3 values from FY 2013, FY 2014, and FY 2015 for
each hospital, and dividing that amount by the number of cost reporting
periods with data to compute an average Factor 3 (or for Puerto Rico
hospitals, Indian Health Service and Tribal hospitals, and all-
inclusive rate providers, using the Factor 3 value from Step 1).
We also amended the regulations at Sec. 412.106(g)(1)(iii)(C) by
adding a new paragraph (5) to reflect the previously discussed
methodology for computing Factor 3 for FY 2019.
In the FY 2019 IPPS/LTCH PPS final rule, we noted that if a
hospital does not have both Medicaid days for FY 2013 and SSI days for
FY 2016 available for use in the calculation of Factor 3 in Step 1, we
would consider the hospital not to have data available for the fiscal
year, and would remove that fiscal year from the calculation and divide
by the number of years with data. A hospital would be considered to
have both Medicaid days and SSI days data
[[Page 42364]]
available if it reported zero days for either component of the Factor 3
calculation in Step 1. However, if a hospital was missing data due to
not filing a cost report in one of the applicable fiscal years, we
would divide by the remaining number of fiscal years.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), we noted
that we did not make any proposals with respect to the development of
Factor 3 for FY 2020 and subsequent fiscal years. However, we noted
that the previously discussed methodology would have the effect of
fully transitioning the incorporation of data from Worksheet S-10 into
the calculation of Factor 3 if used in FY 2020, and therefore, the use
of low-income insured days would be phased out by FY 2020 if the same
methodology were to be proposed and finalized for that year. We also
indicated that it was possible that when we examine the FY 2016
Worksheet S-10 data, we might determine that the use of multiple years
of Worksheet S-10 data is no longer necessary in calculating Factor 3
for FY 2020. We stated that, given the efforts hospitals have already
undertaken with respect to reporting their Worksheet S-10 data and the
subsequent reviews by the MACs that had already been conducted prior to
the development of the FY 2019 IPPS/LTCH PPS final rule, along with
additional review work that might take place following the issuance of
the FY 2019 final rule, we might consider using 1 year of Worksheet S-
10 data as the basis for calculating Factor 3 for FY 2020.
For new hospitals that did not have data for any of the three cost
reporting periods used in the Factor 3 calculation for FY 2019, we
continued to apply the new hospital policy finalized in the FY 2014
IPPS/LTCH PPS final rule (78 FR 50643). That is, the hospital would not
receive either interim empirically justified Medicare DSH payments or
interim uncompensated care payments. However, if the hospital is later
determined to be eligible to receive empirically justified Medicare DSH
payments based on its FY 2019 cost report, the hospital would also
receive an uncompensated care payment calculated using a Factor 3,
where the numerator is the uncompensated care costs reported on
Worksheet S-10 of the hospital's FY 2019 cost report, and the
denominator is the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2015 cost reports for all DSH eligible
hospitals (that is, the most recent year of the 3-year time period used
in the development of Factor 3 for FY 2019). We noted that, given the
time period of the data used to calculate Factor 3, any hospitals with
a CCN established after October 1, 2015, would be considered new and
subject to this policy.
(3) Methodology for Calculating Factor 3 for FY 2020
(a) Use of Audited FY 2015 Data
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19418 through 19419), since the publication of the FY 2019 IPPS/LTCH
PPS final rule, we have continued to monitor the reporting of Worksheet
S-10 data in order to determine the most appropriate data to use in the
calculation of Factor 3 for FY 2020. As stated in the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41424), due to the overwhelming feedback from
commenters emphasizing the importance of audits in ensuring the
accuracy and consistency of data reported on the Worksheet S-10, we
expected audits of the Worksheet S-10 to begin in the Fall of 2018. The
audit protocol instructions were still under development at the time of
the FY 2019 IPPS/LTCH PPS final rule; yet, we noted the audit protocols
would be provided to the MACs in advance of the audit. Once the audit
protocol instructions were complete, we began auditing the Worksheet S-
10 data for selected hospitals in the Fall of 2018 so that the audited
uncompensated care data from these hospitals would be available in time
for use in the FY 2020 proposed rule. We chose to audit 1 year of data
(that is, FY 2015) in order to maximize the available audit resources
and not spread those audit resources over multiple years, potentially
diluting their effectiveness. We chose to focus the audit on the FY
2015 cost reports primarily because this was the most recent year of
data that we had broadly allowed to be resubmitted by hospitals, and
many hospitals had already made considerable efforts to amend their FY
2015 reports for the FY 2019 rulemaking. We also considered that we had
previously used the FY 2015 data as part of the calculation of the FY
2019 uncompensated care payments; therefore, the data had previously
been subject to public comment and scrutiny.
Given that we have conducted audits of the FY 2015 Worksheet S-10
data and have previously used the FY 2015 data to determine
uncompensated care payments, and the fact that the FY 2015 data are the
most recent data that we have allowed to be resubmitted to date, in the
FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19419), we stated that we
believe, on balance, that the FY 2015 Worksheet S-10 data are the best
available data to use for calculating Factor 3 for FY 2020. However, as
discussed in more detail later in the next section, we also considered
using the FY 2017 data. In the proposed rule, we sought public comments
on this alternative and stated that, based on the public comments we
received, we could adopt this alternative in the FY 2020 final rule.
In the FY 2020 proposed rule, we recognized that, in FY 2019, we
used 3 years of data in the calculation of Factor 3 in order to smooth
over anomalies between cost reporting periods and to mitigate undue
fluctuations in the amount of uncompensated care payments from year to
year. However, we stated that, for FY 2020, we believe mixing audited
and unaudited data for individual hospitals by averaging multiple years
of data could potentially lead to a less smooth result, which is
counter to our original goal in using 3 years of data. As we stated in
the proposed rule, to the extent that the audited FY 2015 data for a
hospital are relatively different from its unaudited FY 2014 data and/
or its unaudited FY 2016 data, we potentially would be diluting the
effect of our considerable auditing efforts and introducing unnecessary
variability into the calculation if we continued to use 3 years of data
to calculate Factor 3. As an example, we noted that approximately 10
percent of audited hospitals have more than a $20 million difference
between their audited FY 2015 data and their unaudited FY 2016 data.
Accordingly, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19419), we proposed to use a single year of Worksheet S-10 data from FY
2015 cost reports to calculate Factor 3 in the FY 2020 methodology. We
also noted that the proposed uncompensated care payments to hospitals
whose FY 2015 Worksheet S-10 data were audited represented
approximately half of the proposed total uncompensated care payments
for FY 2020. For purposes of the FY 2020 proposed rule, we used the
most recent available HCRIS extract available, which was the HCRIS data
updated through February 15, 2019. We stated in the proposed rule that
we expected to use the March 2019 update of HCRIS for the final rule.
Comment: Many commenters expressed support for CMS' proposal to
utilize FY 2015 Worksheet S-10 data to determine each hospital's share
of overall uncompensated care costs (UCC) in FY 2020. These commenters
argued that data from the FY 2015 Worksheet S-10 are most appropriate
for calculating Factor 3 because the data have been at least partially
audited, and the audits result in data that are appropriate for use in
determining
[[Page 42365]]
uncompensated care payments. These commenters reiterated the discussion
in the proposed rule, in which we explained that the audited hospitals
were projected to receive approximately 50 percent of the total amount
of the uncompensated care payments, and that CMS has afforded hospitals
several opportunities to revise and resubmit FY 2015 Worksheet S-10
data to make it more accurate. To this end, a commenter indicated that
uncompensated care costs calculated from the FY 2015 cost reports for
DSH-eligible hospitals had declined nearly 18 percent between last year
and this year as a result of amended data reported on the Worksheet S-
10. These commenters believe that the corrective actions resulting from
the FY 2015 Worksheet S-10 data audits outweigh the improved cost
reporting instructions for the FY 2017 Worksheet S-10.
Conversely, many commenters opposed the proposed policy of using 1
year of FY 2015 Worksheet S-10 data to determine UCC. These commenters
asserted that the instructions for completing the FY 2015 Worksheet S-
10 were unclear and confusing, resulting in incomplete and inaccurate
uncompensated care data. They believe that since the audited hospitals
represent only half of the proposed total uncompensated care payments
for FY 2020, the remaining half is highly susceptible to errors, due to
the concerns with the instructions for the FY 2015 Worksheet S-10. In
addition, many commenters voiced concerns with the auditing of the FY
2015 Worksheet S-10 data and opposed its use as a result of these
concerns. Some commenters asserted that as a result of selective and
inconsistent audits the FY 2015 Worksheet S-10 data may not be reliable
for some providers. Additionally, some commenters stated that the
mixing of data from audited and unaudited hospitals results in an
uneven playing field, harming those hospitals that were audited to the
benefit of those that were not. Finally, some commenters believed that
the FY 2015 Worksheet S-10 data have already been used for FY 2019
uncompensated care payments and that more updated information needs to
be used for FY 2020. These commenters also stated that continuing to
use FY 2015 Worksheet S-10 data as the source of UCC creates a
substantial lag in compensating hospitals for charity care that was
provided in prior years.
Response: We thank commenters for their support of our proposal to
use the FY 2015 Worksheet S-10 data to determine each hospital's share
of UCC in FY 2020. We also appreciate the input from commenters who
disagreed with the proposal. Given that we have conducted audits of the
FY 2015 Worksheet S-10 data and have previously used the FY 2015 data
to determine uncompensated care payments and the fact that the proposed
uncompensated care payments to hospitals whose FY 2015 Worksheet S-10
data were audited represent approximately half of the total proposed
uncompensated care payments for FY 2020, we believe that, on balance,
the FY 2015 Worksheet S-10 data are the best available data to use for
calculating Factor 3 for FY 2020. In response to the comment that the
FY 2015 Worksheet S-10 data are outdated, we note that at the time we
began auditing the FY 2015 Worksheet S-10 data in the Fall of 2018, the
FY 2017 Worksheet S-10 data were incomplete as some hospitals were
still submitting their cost reports. We chose to focus the audit on the
FY 2015 cost reports primarily because this was the most recent year of
data that we had broadly allowed to be resubmitted by hospitals, and
many hospitals had already made considerable efforts to amend their FY
2015 reports prior to the FY 2019 rulemaking. We acknowledge that FY
2015 Worksheet S-10 data has not been audited for all hospitals . To
the extent commenters believe that all hospitals' Worksheet S-10 data
must be audited for there to be ``level playing field'' and for the
data to be appropriate to use for FY 2020, we do not agree. We note
that it was not feasible to audit all hospitals' FY 2015 report data
for the FY 2020 rulemaking. The selection of hospitals for the FY 2015
Worksheet S-10 audits was based on a risk-based assessment process,
which we believe was effective and appropriate. Regarding the
commenter's assertion that the FY 2015 Worksheet S-10 data became
unreliable as a result of the audit selection, process and/or
adjustments, we refer readers to the discussion below. With respect to
the commenters' concerns with Worksheet S-10 instructions for the FY
2015 cost reporting period, we refer readers to the discussion of these
instructions in the later section on methodological considerations,
where we address the comments related to the Worksheet S-10
instructions. We note that we will consider further commenters'
concerns regarding data lag in future rulemaking in the determination
of the best available data to calculate Factor 3 for future years.
Comment: A great number of commenters, whether in support of or in
opposition to the proposed policy and the alternative considered,
stated that as CMS moves from using a 3-year average to a single year
of Worksheet S-10 data, the potential for anomalies and undue
fluctuations in uncompensated care payments increases. Commenters
stated that bad debt and charity write-offs can vary significantly from
year to year for a given hospital, even if data are clean and accurate,
and can cause large variations in uncompensated care payments. Several
of these commenters questioned whether the proposal to move to a single
year of the Worksheet S-10 data is a permanent decision by CMS, and
many commenters recommended that CMS continue using a 3-year average to
mitigate year-over-year volatility in uncompensated care payments,
either now or in the future when additional years of audited Worksheet
S-10 data become available. Some commenters remarked that the proposed
CMS policy of relying on data from a single year increases the
possibility of aberrant data from any 1 year or any one provider
skewing the distribution of uncompensated care payments. They stated
that a 3-year average could offer a stop-gap approach by providing a
transition to a major change in the distribution of uncompensated care
payments. A number of commenters requested that, if CMS does move to
using 1 year of Worksheet S-10 data to calculate Factor 3, it also
implement a stop-loss policy to protect hospitals that have a decrease
of 5 to 10 percent in uncompensated care payments for any given year.
Additionally, some commenters stated that there is variability in the
amount of the per-discharge uncompensated care payment among hospitals,
with the amount of the uncompensated care payment being higher than all
other inpatient payments combined for some hospitals. These commenters
recommended placing a limit on per-discharge uncompensated care
payments, regardless of a hospital's Factor 3.
At the same time, other commenters stated that mixing audited and
unaudited data is counterintuitive and would result in a poorly
constructed 3-year average, in which the audited data would be diluted.
Thus, many commenters believe that CMS should ultimately strive to
average three years of audited data to determine hospitals' UCC. In
contrast, other commenters supported the use of 1 year of data rather
than a 3-year average. A commenter stated that if a provider has UCC
that are rapidly changing, a 3-year average makes for a slow response.
Additionally, the commenter believed that using a 3-year average hurts
the
[[Page 42366]]
newest of providers that don't have a full complement of data to
report.
Response: We appreciate the commenters' support for our proposal to
use 1 year of Worksheet S-10 data, as well as the requests from some
commenters that we continue to use a 3-year average in the calculation
of Factor 3 for FY 2020. Our primary reason for using a 3-year average
in the past was to provide assurance that hospitals' uncompensated care
payments would remain reasonably stable and predictable, and less
subject to unpredictable swings and anomalies in a hospital's low-
income insured days or reported uncompensated care costs between
reporting periods. However, as we stated in the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19419), we believe that, for FY 2020, mixing
audited and unaudited data for individual hospitals by averaging
multiple years of data could potentially lead to a less smooth result,
which is counter to our original goal in using 3 years of data. To the
extent that the audited FY 2015 data for a hospital are relatively
different from its unaudited FY 2014, FY 2016, and/or FY 2017 data, we
potentially would be diluting the effect of our considerable auditing
efforts and introducing unnecessary variability into the calculation if
we were to continue to use three years of data to calculate Factor 3.
Still, given concerns raised by commenters regarding our proposal to
use 1 year of data from the FY 2015 Worksheet S-10 to calculate Factor
3 for FY 2020, CMS may consider returning to the use of a 3-year
average in rulemaking for future years, if appropriate.
Regarding commenters' recommendation that we adopt a stop-loss
policy, we note that section 1886(r) does not provide CMS with
authority to implement a stop-loss policy. Rather, section
1886(r)(2)(C) requires that we determine Factor 3 for each hospital
based upon the ratio of the amount of uncompensated care furnished by
the hospital compared to the uncompensated care furnished by all DSH-
eligible hospitals, and there is no authority under section 1886(r) to
adjust this amount. In the absence of such authority, we believe that
the use of three years of data to determine Factor 3 for FYs 2018 and
2019, as discussed in the FY 2018 and FY 2019 IPPS/LTCH PPS final
rules, provided a mechanism that had the effect of smoothing the
transition from the use of low-income insured days to the use of
Worksheet S-10 data. However, as we explained in the FY 2020 IPPS/LTCH
PPS proposed rule (84 FR 19419), for FY 2020, we believe mixing audited
and unaudited data for individual hospitals by averaging multiple years
of data could potentially lead to a less smooth result, which is
counter to our original goal in using 3 years of data. When more years
of audited data are available, we may consider returning to the use an
average of more than 1 year (for example, a 3-year average), in
rulemaking for future years. Regarding the comments recommending that
CMS place a cap on the amount of per-discharge uncompensated care
payments, we may consider the issue of per-discharge uncompensated care
payments in future rulemaking including whether modifying the amount of
interim uncompensated care payments would be administratively feasible
in specific situations.
Comment: Many commenters proposed alternative ways to blend prior
years' data for purposes of incorporating Worksheet S-10 data into the
calculation of Factor 3. These alternative methodologies included
suggestions to use data from the FY 2014, FY 2015, FY 2016, and FY 2017
Worksheet S-10 averaged together in various 3-year combinations, as
well as suggestions to use later years when available. In addition to
these suggestions, there were also commenters who supported the use of
the FY 2015 Worksheet S-10 data, or the FY 2017 Worksheet S-10 data,
but only in the context of an approach that also involved sources of
data other than the Worksheet S-10. For example, some commenters
recommended that CMS implement a blend utilizing low-income insured
days, FY 2014 Worksheet S-10 data, and audited FY 2015 Worksheet S-10
data to calculate uncompensated care payments in FY 2020. A number of
commenters suggested using a blend consisting of two-thirds of the
uncompensated care payments hospitals received in FY 2019 and one third
of hospitals' share of UCC based on the FY 2017 Worksheet S-10 data.
Similarly, other commenters suggested using a blend of one-third low-
income days and two-thirds UCC, including but not limited to using
updated SSI days or FY 2019 Factor 3 shares, to calculate Factor 3 for
FY 2020, in order to reduce payment variability. Some commenters
believed a SSI day based proxy would produce a better estimate of
uncompensated care costs Although these alternative methodologies were
not proposed by CMS, commenters believe that CMS would have the
authority to adopt one of the blends proposed by commenters as a
logical outgrowth of the policies discussed in the proposed rule. Some
commenters believed that ultimately, CMS should develop a review
process similar to the one used to determine the hospital wage index,
under which by FY 2023, CMS would utilize fully audited Worksheet S-10
data from FY 2017, FY 2018, and FY 2019 to determine Factor 3.
Response: We appreciate the comments regarding alternative ways to
blend prior years' data for purposes of incorporating Worksheet S-10
data into the calculation of Factor 3 and the suggestions for
alternative methods for computing proxies for uncompensated care costs.
However, as we stated in the FY 2020 IPPS/LTCH PPS proposed rule, we
can no longer conclude that alternative data to the Worksheet S-10 are
available that are a better proxy for the costs of subsection (d)
hospitals for treating individuals who are uninsured. As stated
previously, we also believe that the FY 2015 Worksheet S-10 data are
the best available data to use for calculating Factor 3 for FY 2020. As
we continue to audit additional years of the Worksheet S-10 data and
monitor the stability of uncompensated care payments, we may consider
the use of multiple years of audited Worksheet S-10 data in rulemaking
for future years. Regarding the comments recommending that CMS develop
an audit process similar to hospital wage index reviews, we refer
readers to the discussion below, which addresses the comments and
suggestions on the audit process.
Comment: The auditing process for the FY 2015 Worksheet S-10 was a
common topic within the public comments, and many commenters raised
concerns regarding the audit process, in general, as well as with
specific adjustments. Some commenters believed that auditing FY 2016
data would have been more effective than auditing FY 2015 data, because
hospitals would have had an additional year of experience in
understanding the reporting requirements and refining their data,
resulting in fewer occasions for subjective audit differences. Another
commenter expressed concern that the roughly 600 providers that were
audited represented only approximately 25 percent of those eligible to
receive Medicare DSH. Although some commenters acknowledged that these
roughly 600 providers represented a large share of the total amount of
uncompensated care payments, others observed that this sample of
audited hospitals resulted in the proposed use of both audited and
unaudited data for FY 2020. Some commenters believed that our proposal
to use a mix of audited and unaudited FY 2015 data to be ``arbitrary
and capricious'' and beyond the agency's legal authority. Other
[[Page 42367]]
commenters believe that this mixture of data was disadvantageous to
audited hospitals, to the benefit of those not audited.
A commenter believed that the auditing process for the FY 2015
Worksheet S-10 data was subjective and biased against providers with
either high uncompensated care costs or with uncompensated care costs
that may have changed significantly for good reason. Some commenters
asserted that the audits lacked standardization, and that there were
inconsistencies in the review adjustments made by the MACs and/or
subcontractors, as well as variation across MACs in documentation
requirements. According to these commenters, MACs made inconsistent
adjustments across audited hospitals' UCC because they did not apply
CMS's audit guidelines in a standardized and comprehensive manner. In
addition, some commenters stated that cost report instructions still
need to be clarified for issues that were addressed in the guidance
included in the Worksheet S-10 Q&A issued following the FY 2018 final
rule and in the audit protocols, and stated that the data elements
needed for the audits should also be spelled out, like those required
for bad debt logs.
Many commenters asserted that the audits of the FY 2015 Worksheet
S-10 data were intense and rushed. Some commenters asserted that audit
adjustments seemed inconsistent with the Worksheet S-10 instructions
and were beyond the scope of the audit and the authority of the MACs.
Examples of the types of concerns raised regarding the adjustments,
include assertions that the adjustments were made under tight deadlines
without providing hospitals the opportunity to review or appeal MAC
decisions and that MACs made adjustments based on their own
interpretation of language in hospitals' financial assistance policies,
including disallowing discounts given to uninsured patients under the
hospital's own financial assistance policy. The commenters believed
these issues were a result of the MACs' lack of training and/or
understanding of the charity care process. The issue of adjustments to
charity care amounts for copayments was also prevalent among the
comments related to adjustments. Commenters also described MAC
adjustments related to increases made to expected patient payment
amounts in Line 22 of Worksheet S-10 such that expected payments for
patients provided with uninsured discounts exceeded the computed cost
for charity care, in contradiction of what providers actually
experience. (For example, some hospitals believed the expected payment
amount would usually become bad debt in a future cost report.)
Commenters also raised a concern that sizeable adjustments to the
uncompensated care costs reported by a hospital were often based on
extrapolations from small samples of hospital data.
Despite these perceived audit-related concerns and issues, many
commenters were supportive of CMS' efforts in the continued auditing of
Worksheet S-10 data and applauded the efforts to improve the data
accuracy and integrity. Many commenters also recommended auditing the
FY 2017 Worksheet S-10 data for use in FY 2021 rulemaking. Commenters
also provided recommendations for future audits. They suggested that
CMS audit all hospitals and utilize a single auditor, or at least
establish and enforce a formal and uniform audit process, similar to
the desk reviews conducted for the purposes of the wage index.
Commenters requested that the standardized audit process include
standardized timelines for information submission with adequate lead
time, standardized documentation to meet information requirements, and
adequate communication about expectations. Several commenters also
urged CMS to consider targeting specific data elements, reducing the
scope of the audits to reduce the burden placed on providers, and
making audit instructions publicly available to improve accuracy in
reporting and make the interpretation of audit guidelines by the MACs
and providers more consistent. These commenters claimed that not making
audit instructions public only results in the various MACs and
providers taking different interpretations of CMS audit guidance, which
results in inconsistent reporting.
In addition, some commenters requested that CMS make public the
results of the audits of the FY 2015 Worksheet S-10 data so that all
providers might benefit from the lessons learned. Other commenters
suggested using findings from the audits to develop outreach and
educational materials for providers. Some commenters requested that CMS
provide examples of acceptable language for financial assistance
policies to increase the reliability of provider reporting and MAC
review, in light of the adjustments that have been made as a result of
MAC interpretation of language in some hospitals' financial assistance
policies.
Many commenters, particularly those that believed that claims
sampling, extrapolations, determination of adjustments, and the impact
of adjustments were different across hospitals subject to review of the
FY 2015 Worksheet S-10 data, recommended that CMS consider statistical
relevance and apply standard extrapolation in finding thresholds to
ensure audit consistency across all providers.
Finally, a number of commenters expressed the need for an appeals
process and recommended the use of an experienced third party to
mediate audit adjustment disputes.
Response: We thank commenters for their feedback on the audits of
the FY 2015 Worksheet S-10 data. As we stated in the FY 2019 IPPS/LTCH
PPS final rule, due to the overwhelming feedback from commenters
emphasizing the importance of audits in ensuring the accuracy and
consistency of data reported on the Worksheet S-10, we expected audits
of the Worksheet S-10 to begin in the Fall of 2018. The audit protocol
instructions were still under development at the time of the FY 2019
IPPS/LTCH PPS final rule; yet, we noted the audit protocols would be
provided to the MACs in advance of the audit. Once the audit protocol
instructions were complete, we began auditing the Worksheet S-10 data
for selected hospitals in the Fall of 2018 so that the audited
uncompensated care data from these hospitals would be available in time
for use in the FY 2020 proposed rule. As discussed in the FY 2020 IPPS/
LTCH PPS proposed rule, we chose to audit 1 year of data (that is, FY
2015) in order to maximize the available audit resources and not spread
those audit resources over multiple years, potentially diluting their
effectiveness. At that time, the FY 2016 Worksheet S-10 data and the FY
2017 Worksheet S-10 data were incomplete, as not all providers would
necessarily have submitted those cost reports. We therefore chose to
focus the audit on the FY 2015 cost reports primarily because this was
the most recent year of data that we had broadly allowed to be
resubmitted by hospitals, and many hospitals had already made
considerable efforts to amend their FY 2015 reports prior to their use
for the FY 2019 rulemaking. We also considered that we had previously
used the FY 2015 data as part of the calculation of the FY 2019
uncompensated care payments; therefore, the data had previously been
subject to public comment and scrutiny. We note again that, while
limited resources meant that auditing all hospitals was not feasible,
the proposed uncompensated care payments to hospitals whose FY 2015
Worksheet S-10 data were audited
[[Page 42368]]
represented a significant portion (approximately half) of the total
proposed uncompensated care payments for FY 2020. As a result, we have
more confidence in the accuracy of the FY 2015 data, as a whole, from
the combined efforts from hospitals, who may not have been part of
audit selection but resubmitted cost reports, as well as the results of
the audits of the FY 2015 reports, in contrast to the data for later
years which have not yet been audited, at this time.
As acknowledged by some commenters, we believe that the audits of
the FY 2015 Worksheet S-10 data have resulted in improvements to the
accuracy and integrity of reported hospital uncompensated care costs.
We acknowledge that some hospitals have raised concerns with the audit
process for Worksheet S-10 of the FY 2015 cost reports. With respect to
the comments raising concerns regarding the timeframe of audits, it is
not generally possible for providers to have extensions for additional
time, during the audit process, as that would lead to excessive
administrative inefficiencies and potentially delay the timeline for
completing the audits across all audited providers. We strive for
increased standardization as MACs continue to gain experience with
these audits. Regarding the adjustments made by MACs during audits,
when a provider has no documentation or insufficient documentation to
support the information reported on its Worksheet S-10, then the MAC
must adjust the information reported on the applicable lines to reflect
only those uncompensated care costs that can be documented. This
approach is necessary in order to be equitable to other hospitals that
did maintain adequate documentation to support their reported
uncompensated care information.
Regarding comments on the instructions for reporting on the
Worksheet S-10 in effect for FY 2015, especially compared to the
reporting instructions that were effective for cost reporting periods
beginning on or after October 1, 2016, and how some of the FY 2015
report adjustments would not have been necessary if CMS had chosen as
an alternative to audit the FY 2017 reports, we recognize that there
were many comments and suggestions on the cost report instructions and/
or auditing process of Worksheet S-10 data for FY 2015 reports. CMS
strives to use the lessons learned from the audits of the FY 2015 data
to improve the instructions and/or audits of Worksheet S-10 data in the
future. For example, in recognition of the importance of additional
audits and to allow for additional lead time, the audits of the FY 2017
Worksheet S-10 data have already begun and are currently in progress.
Regarding commenters' requests that CMS release the audit
instructions, as noted in the FY 2017 IPPS/LTCH PPS final rule (81 FR
56964), we stated that we do not make the MACs' review protocol public,
as all CMS desk review and audit protocols are confidential and are for
CMS and MAC use only. However, we will continue to work with
stakeholders to address their concerns regarding the accuracy and
consistency of data reported on the Worksheet S-10 through provider
education and further refinement of the instructions for the Worksheet
S-10 as appropriate. Regarding the comments requesting that we
establish an appeal process, we note that for the reasons discussed
previously, we have confidence in the reviews of FY 2015 reports.
Moreover, we believe that the audit process will continue to improve.
As a result, we do not believe, on balance, that the creation of an
appeals process justifies an additional delay in the use of an entire
year's Worksheet S-10 data at this time. We may consider this topic
further in the future as we gain more experience with the use of
Worksheet S-10 data in determining uncompensated care payments.
After consideration of the public comments we received, we are
finalizing our proposal to use the FY 2015 Worksheet S-10 cost report
data in the methodology of Factor 3, as discussed further in later
sections.
(b) Alternative Considered to Use FY 2017 Data
Although we proposed to use Worksheet S-10 data from the FY 2015
cost reports, in the proposed rule we acknowledged that some hospitals
raised concerns regarding some of the adjustments made to the FY 2015
cost reports following the audits of these reports (for example,
adjustments made to Line 22 of Worksheet S-10). These hospitals contend
that there are issues regarding the instructions in effect for FY 2015,
especially compared to the reporting instructions that were effective
for cost reporting periods beginning on or after October 1, 2016, and
certain adjustments would not have been made if CMS had chosen as an
alternative to audit the FY 2017 reports.
Accordingly, in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19419), we sought public comments on whether the changes in the
reporting instructions between the FY 2015 cost reports and the FY 2017
cost reports have resulted in a better common understanding among
hospitals of how to report uncompensated care costs and improved
relative consistency and accuracy across hospitals in reporting these
costs. We also sought public comments on whether, due to the changes in
the reporting instructions, we should use a single year of
uncompensated care cost data from the FY 2017 reports, instead of the
FY 2015 reports, to calculate Factor 3 for FY 2020. We note that we did
not propose to use FY 2016 reports because the reporting instructions
for that year were similar to the reporting instructions for the FY
2015 reports. In the proposed rule, we stated that if, based on the
public comments received, we were to adopt a final policy in which we
use Worksheet S-10 data from the FY 2017 cost reports to determine
Factor 3 for FY 2020, we would also expect to use the March 2019 update
of HCRIS for the final rule.
Under the alternative on which we sought public comment, the FY
2017 Worksheet S-10 data would be used instead of the FY 2015 Worksheet
S-10 data, but, in general, the proposed Factor 3 methodology would be
unchanged. In the proposed rule, we explained that the limited
circumstances where the methodology would need to differ from the
proposed methodology using FY 2015 data, if we were to adopt the
alternative of using FY 2017 data in the final rule based on the public
comments received, were outlined in section IV.F.4.c.(3)(d) of the
preamble of the proposed rule (Methodological Considerations for
Calculating Factor 3). We specified that if an aspect of the proposed
methodology did not specifically indicate that we would modify it under
the alternative considered, that aspect of the methodology would be
unchanged, regardless of whether we were to use FY 2015 data or FY 2017
data. We note that in the proposed rule we provided all of the same
public information regarding the alternative considered, including the
Factor 3 values for each hospital and the impact information, that we
provided for our proposal to use FY 2015 data.
Comment: Many commenters who opposed the use of FY 2015 Worksheet
S-10 data supported the use of the alternative approach of using FY
2017 Worksheet S-10 data to determine Factor 3 for FY 2020. In general,
supporters of the alternative policy believe that the increased clarity
in the cost reporting instructions in place for the FY 2017 Worksheet
S-10 outweighs the benefit derived from the audit work performed on a
subset of the FY 2015 data. These commenters believe that FY 2017
Worksheet S-10 data were
[[Page 42369]]
reported based on revised and improved instructions established through
Transmittal 11, which some commenters indicated were easier to follow
and improved providers' reporting of UCC. Specifically, commenters
stated that the new instructions to report charity care based on write-
off dates, consistent with reporting of bad debt based write-off dates,
are less confusing and use hospital financial data that are more
commonly available to hospital personnel. These commenters provided
analyses which indicated that there are fewer reporting errors using
the FY 2017 Worksheet S-10 instructions than the FY 2015 Worksheet S-10
instructions, in particular regarding reporting of high amounts of
charity care coinsurance and deductibles. Specifically, a commenter
asserted that fewer hospitals reported coinsurance and deductible
amounts greater than 25 percent of total charity care charges on the FY
2017 Worksheet S-10 than on the FY 2015 Worksheet S-10. Other
commenters believe that using data from the FY 2017 Worksheet S-10
would better address the issue of data lag, which could be a concern
with the FY 2015 data.
In contrast, other commenters stated that FY 2017 Worksheet S-10
data may benefit from improvements in cost reporting instructions but
with unknown precision. That is, the commenters stated that the FY 2017
data have not yet been audited, pointed to analyses that identify cases
in which hospitals' uncompensated care costs account for more than 50
percent of their total operating expenses, and suggested that these
data aberrancies indicate that the use of unaudited data is not
appropriate. Furthermore, these commenters stated that there is no
indication that providers whose FY 2015 Worksheet S-10 data were not
audited would have been given the guidance necessary to improve the
accuracy of their FY 2017 data, nor is there any indication that
providers whose FY 2015 data were audited had the time to make
corrections when filing their FY 2017 cost reports. Furthermore, a
commenter expressed concern that the instructions for Worksheet S-10
had changed for FY 2017 in a way that created an incentive for
hospitals to inflate charges, while other commenters stated that
implementing new instructions is problematic as a general matter, as
providers have varied interpretations of how to report data every time
instructions change.
Some commenters further reflected that the Worksheet S-10
instructions have been revised several times in the last few years, and
so the use of data from the FY 2017 Worksheet S-10 should be delayed
until there are final and consistent instructions and the data have
been reviewed. These commenters pointed specifically to problems with
the reporting of coinsurance and deductibles in FY 2017, as well as
significant increases in uncompensated care costs for some hospitals
between FY 2015 and FY 2017. The commenters believe that these problems
provide an example of the residual misreporting of data that remains
even after the issuance of improved cost reporting instructions for FY
2017. Furthermore, commenters stated that only trims and some recent
requests to some hospitals for additional information regarding
potentially aberrant data had occurred for the FY 2017 data, and it was
unclear to the commenters whether CMS would receive a timely response
to these requests for use as part of this rulemaking. However, many
commenters believed that the FY 2017 Worksheet S-10 data, once audited,
would be appropriate for use in calculating Factor 3. These commenters
recommended that CMS begin the auditing process as soon as possible and
incorporate audited FY 2017 data into the methodology for FY 2021.
Response: We appreciate the input from commenters who expressed
their support for the alternative policy of using the FY 2017 Worksheet
S-10 data to determine each hospital's share of UCC in FY 2020. As
noted in the FY 2019 IPPS/LTCH PPS final rule, on September 29, 2017,
we issued Transmittal 11, which clarified the definitions and
instructions for reporting uncompensated care, non-Medicare bad debt,
non-reimbursed Medicare bad debt, and charity care, as well as modified
the calculations relative to uncompensated care costs and added edits
to improve the integrity of the data reported on Worksheet S-10. We
agree that these revisions have improved the reporting of uncompensated
care costs. However, due to the feedback from commenters in response to
last year's proposed rule and also in response to the FY 2020 IPPS/LTCH
PPS proposed rule, emphasizing the importance of audits in ensuring the
accuracy and consistency of data reported on the Worksheet S-10, we
believe that the FY 2017 Worksheet S-10 data should be audited before
they are used in determining Factor 3. To this end, we began auditing
the FY 2017 Worksheet S-10 data in July 2019, with the goal having the
FY 2017 audited data available for future rulemaking.
(c) Definition of ``Uncompensated Care''
We continue to believe that the definition of ``uncompensated
care'' first adopted in FY 2018 when we started to incorporate data
from Worksheet S-10 into the determination of Factor 3 and used again
in FY 2019 is appropriate, as it incorporates the most commonly used
factors within uncompensated care as reported by stakeholders, namely,
charity care costs and bad debt costs, and correlates to Line 30 of
Worksheet S-10. Therefore, in the FY 2020 IPPS/LTCH PPS proposed rule
(84 FR 19419), we proposed that, for purposes of determining
uncompensated care costs and calculating Factor 3 for FY 2020,
``uncompensated care'' would continue to be defined as the amount on
Line 30 of Worksheet S-10, which is the cost of charity care (Line 23)
and the cost of non-Medicare bad debt and non-reimbursable Medicare bad
debt (Line 29).
Comment: Several commenters supported the proposed definition of
uncompensated care as charity care plus non-Medicare bad debt and non-
reimbursable Medicare bad debt. However, as in the past, some
commenters suggested that uncompensated care should include shortfalls
from Medicaid, CHIP, and State and local indigent care programs, as the
commenters believed these inclusions would make the distribution of
uncompensated care payments more equitable. As a result, several of
these commenters urged CMS to use Worksheet S-10, Line 31 to identify a
hospital's share of uncompensated care costs rather than Line 30, as
Line 31 includes Medicaid unreimbursed costs. The commenters stated
that the purpose of uncompensated care payments is to partially
subsidize unmet costs for treating low-income patients and the
exclusion of Medicaid shortfalls exacerbates the problems faced by
hospitals in states with lower Medicaid rates and locks in financing
inequities that currently exist.
Furthermore, commenters stated their view that excluding Medicaid
shortfalls from the definition of uncompensated care severely penalizes
hospitals that care for large numbers of Medicaid patients because many
States do not fully cover the costs associated with newly insured
Medicaid recipients. Commenters believed that patients covered by
Medicaid may still have uncompensated care costs. Some commenters
believe that under the proposed policy, which did not include Medicaid
shortfalls in the definition of uncompensated care costs, Medicare
would significantly subsidize those
[[Page 42370]]
States with Medicaid payment rates that cover the cost of care relative
to those with lower Medicaid payment rates that do not cover the cost
of care. The commenters indicated that this concern is further
compounded if a state has higher Medicaid enrollment either because it
has expanded its Medicaid program under the Affordable Care Act, has
more permissive Medicaid eligibility criteria, or simply has a high
proportion of its citizens that qualify for Medicaid. Finally, some
commenters believed that Worksheet S-10 provides an incomplete picture
of Medicaid shortfalls and should be revised to instruct hospitals to
deduct inter-governmental transfers, certified public expenditures, and
provider taxes from their Medicaid revenue.
Response: In response to the comments regarding Medicaid
shortfalls, we recognize commenters' concerns but continue to believe
there are compelling arguments for excluding Medicaid shortfalls from
the definition of uncompensated care, including the fact that several
key stakeholders, such as MedPAC, do not consider Medicaid shortfalls
in their definition of uncompensated care, and that it is most
consistent with section 1886(r)(2) of the Act for Medicare
uncompensated care payments to target hospitals that incur a
disproportionate share of uncompensated care for patients with no
insurance coverage. Conceptual issues aside, we note that even if we
were to adjust the definition of uncompensated care to include Medicaid
shortfalls, this would not be a feasible option at this time due to
computational limitations. Specifically, computing such shortfalls is
operationally problematic because Medicaid pays hospitals a single DSH
payment that in part covers the hospital's costs in providing care to
the uninsured and in part covers estimates of the Medicaid
``shortfalls.'' Therefore, it is not clear how CMS would determine how
much of the ``shortfall'' is left after the Medicaid DSH payment is
made. In addition, in some States, hospitals return a portion of their
Medicaid revenues to the State via provider taxes, making the
computation of ``shortfalls'' even more complex.
We refer readers to the next section for our responses to
additional comments on the Worksheet S-10 cost report instructions. In
general, we will attempt to address commenters' concerns through future
cost report clarifications to further improve and refine the
information that is reported on Worksheet S-10 in order to support
collection of the information necessary to implement section 1886(r)(2)
of the Act.
Accordingly, after consideration of the public comments we received
and for the reasons discussed in the proposed rule and previously in
this final rule, we are finalizing our proposal to define uncompensated
care costs as the amount on Line 30 of Worksheet S-10, which is the
cost of charity care (Line 23) and the cost of non-Medicare bad debt
and non-reimbursable Medicare bad debt (Line 29).
(d) Methodological Considerations for Calculating Factor 3
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19419 through
19422), we proposed to continue the merger policies that were finalized
in the FY 2015 IPPS/LTCH PPS final rule (79 FR 50020). In addition, we
proposed to continue the policy that was finalized in the FY 2018 IPPS/
LTCH PPS final rule of annualizing uncompensated care cost data
reported on the Worksheet S-10 if a hospital's cost report does not
equal 12 months of data.
We proposed to modify the new hospital policy first adopted in the
FY 2014 IPPS/LTCH PPS final rule (78 FR 50643) and continued through
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), for new hospitals
that do not have data for the cost reporting period(s) used in the
proposed Factor 3 calculation. As we discussed in the proposed rule,
for FY 2020, new hospitals that are projected to be eligible for
Medicare DSH will receive interim empirically justified DSH payments.
Generally, new hospitals do not yet have available data to project
their eligibility for DSH payments because there is a lag until the SSI
ratio and the Medicaid ratio become available. However, we noted that
there are some new hospitals (that is, hospitals with CCNs established
after October 1, 2015) that have a preliminary projection of being
eligible for DSH payments based on their most recent available DSH
percentages. Because these hospitals do not have a FY 2015 cost report
to use in the Factor 3 calculation and the projection of eligibility
for DSH payments is still preliminary, we proposed that the MAC would
make a final determination concerning whether the hospital is eligible
to receive Medicare DSH payments at cost report settlement based on its
FY 2020 cost report. We stated if the hospital is ultimately determined
to be eligible for Medicare DSH payments for FY 2020, the hospital
would receive an uncompensated care payment calculated using a Factor
3, where the numerator is the uncompensated care costs reported on
Worksheet S-10 of the hospital's FY 2020 cost report, and the
denominator is the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2015 cost reports for all DSH-eligible
hospitals. This denominator would be the same denominator that is
determined prospectively for purposes of determining Factor 3 for all
DSH-eligible hospitals, excluding Puerto Rico hospitals and Indian
Health Service and Tribal hospitals. The new hospital would not receive
interim uncompensated care payments before cost report settlement
because we would have no FY 2015 uncompensated care data on which to
determine what those interim payments should be. We noted that, given
the time period of the data we proposed to use to calculate Factor 3,
any hospitals with a CCN established on or after October 1, 2015, would
be considered new and subject to this policy. However, we stated that
under the alternative policy considered of using FY 2017 data, we would
modify the new hospital policy, such that any hospital with a CCN
established on or after October 1, 2017, would be considered new and
subject to this policy with conforming changes to provide for the use
of FY 2017 uncompensated care data.
As discussed in the proposed rule, we have received questions
regarding the new hospital policy for new Puerto Rico hospitals. In FY
2018 and FY 2019, Factor 3 for all Puerto Rico hospitals, including new
Puerto Rico hospitals, was based on the low-income insured proxy data.
Under this approach, the MAC will calculate a Factor 3 for new Puerto
Rico hospitals at cost report settlement for the applicable fiscal year
using the Medicaid days from the hospital's cost report and the SSI day
proxy (that is, 14 percent of the hospital's Medicaid days) divided by
the low-income insured proxy data denominator that was established for
that fiscal year. For FY 2020, we proposed that Puerto Rico hospitals
that do not have a FY 2013 report would be considered new hospitals and
would be subject to the proposed new hospital policy, as previously
discussed. Specifically, the numerator would be the uncompensated care
costs reported on Worksheet S-10 of the hospital's FY 2020 cost report
and the denominator would be the same denominator that is determined
prospectively for purposes of determining Factor 3 for all DSH-eligible
hospitals. As we stated in the proposed rule, we believe the notice of
our intent in the proposed rule will provide sufficient time for all
new
[[Page 42371]]
Puerto Rico hospitals to take the steps necessary to ensure that their
uncompensated care costs for FY 2020 are accurately reported on their
FY 2020 Worksheet S-10. In addition, we indicated that we expect MACs
to review FY 2020 reports from new hospitals, as necessary, which will
address past commenters' concerns regarding the need for further review
of Puerto Rico hospitals' uncompensated care data before the data are
used to determine Factor 3. Therefore, we stated our belief that the
uncompensated care costs reported on the FY 2020 Worksheet S-10 for new
Puerto Rico hospitals are the best available and most appropriate data
to use to calculate Factor 3 for these hospitals. We indicated this
proposal would also allow our new hospital policy to be more uniform,
given that Worksheet S-10 would be the source of the uncompensated care
cost data across all new hospitals.
For Indian Health Service and Tribal hospitals and subsection (d)
Puerto Rico hospitals that have a FY 2013 cost report, we proposed to
adapt the policy first adopted for the FY 2018 rulemaking regarding FY
2013 low-income insured days when determining Factor 3. As we discussed
in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38209), the use of data
from Worksheet S-10 to calculate the uncompensated care amount for
Indian Health Service and Tribal hospitals may jeopardize these
hospitals' uncompensated care payments due to their unique funding
structure. With respect to Puerto Rico hospitals that would not be
subject to the proposed new hospital policy, we explained that we
continue to agree with concerns raised by commenters that the
uncompensated care data reported by these hospitals need to be further
examined before the data are used to determine Factor 3. Accordingly,
for these hospitals, we proposed to determine Factor 3 based on
Medicaid days from FY 2013 and the most recent update of SSI days. The
aggregate amount of uncompensated care that is used in the Factor 3
denominator for these hospitals would continue to be based on the low-
income patient proxy; that is, the aggregate amount of uncompensated
care determined for all DSH eligible hospitals using the low-income
insured days proxy. We indicated that we believe this approach is
appropriate because the FY 2013 data reflect the most recent available
information regarding these hospitals' Medicaid days before any
expansion of Medicaid. At the time of development of the proposed rule,
for modeling purposes, we computed Factor 3 for these hospitals using
FY 2013 Medicaid days and the most recent available FY 2017 SSI days.
In addition, because we proposed to continue to use 1 year of insured
low-income patient days as a proxy for uncompensated care for Puerto
Rico hospitals and residents of Puerto Rico are not eligible for SSI
benefits, we proposed to continue to use a proxy for SSI days for
Puerto Rico hospitals, consisting of 14 percent of a hospital's
Medicaid days, as finalized in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56953 through 56956).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41417), we noted
that further examination of the CCRs for all-inclusive rate providers
was necessary before we considered incorporating Worksheet S-10 into
the Factor 3 calculation for these hospitals. In the FY 2020 IPPS/LTCH
PPS proposed rule (84 FR 19420), we stated that we had examined the
CCRs from the FY 2015 cost reports and believe the risk that all-
inclusive rate providers will have aberrant CCRs and, consequently,
aberrant uncompensated care data, is mitigated by the proposal to apply
trim methodologies for potentially aberrant uncompensated care costs
for all hospitals. Therefore, we stated that we believe it is no longer
necessary to propose specific Factor 3 policies for all-inclusive rate
providers.
As discussed in the proposed rule, because we proposed to use 1
year of cost report data, as opposed to averaging 3 cost report years,
it is also no longer necessary to propose to apply a scaling factor to
the Factor 3 of all DSH eligible hospitals similar to the scaling
factor that was finalized in the FY 2018 IPPS/LTCH PPS final rule (82
FR 38214) and also applied in the FY 2019 IPPS/LTCH PPS final rule. The
primary purpose of the scaling factor was to account for the averaging
effect of the use of 3 years of data on the Factor 3 calculation.
However, in the FY 2020 IPPS/LTCH PPS proposed rule, we did propose
to continue certain other policies finalized in the FY 2019 IPPS/LTCH
PPS final rule, specifically: (1) For providers with multiple cost
reports, beginning in the same fiscal year, using the longest cost
report and annualizing Medicaid data and uncompensated care data if a
hospital's cost report does not equal 12 months of data; (2) in the
rare case where a provider has multiple cost reports, beginning in the
same fiscal year, but one report also spans the entirety of the
following fiscal year, such that the hospital has no cost report for
that fiscal year, using the cost report that spans both fiscal years
for the latter fiscal year; and (3) applying statistical trim
methodologies to potentially aberrant CCRs and potentially aberrant
uncompensated care costs reported on the Worksheet S-10. Thus, if a
hospital's uncompensated care costs for FY 2015 are an extremely high
ratio of its total operating costs, and the hospital cannot justify the
amount it reported, we proposed to determine the ratio of uncompensated
care costs to the hospital's total operating costs from another
available cost report, and apply that ratio to the total operating
expenses for the potentially aberrant fiscal year to determine an
adjusted amount of uncompensated care costs. For example, if the FY
2015 cost report is determined to include potentially aberrant data,
data from the FY 2016 cost report would be used for the ratio
calculation. In this case, similar to the trim methodology used for FY
2019, the hospital's uncompensated care costs for FY 2015 would be
trimmed by multiplying its FY 2015 total operating costs by the ratio
of uncompensated care costs to total operating costs from the
hospital's FY 2016 cost report to calculate an estimate of the
hospital's uncompensated care costs for FY 2015 for purposes of
determining Factor 3 for FY 2020.
In support of the alternative policy considered of using
uncompensated care data from FY 2017 and to improve the quality of the
Worksheet S-10 data generally, we explained in the proposed rule that
we were then in the process of outreach to hospitals related to
potentially aberrant data reported in their FY 2017 cost reports. For
example, a significant positive or negative difference in the percent
of total uncompensated care costs to total operating costs when
comparing the hospital's FY 2015 cost report to its FY 2017 cost report
may indicate potentially aberrant data. While hospitals may have
uncompensated care cost fluctuations from year to year, if a hospital
experiences a significant change compared to other comparable
hospitals, this could be an indication of potentially aberrant data. A
hospital with such changes would have the opportunity to justify its
reporting fluctuation to the MAC and, if necessary, to amend its FY
2017 cost report. If a hospital's FY 2017 cost report remains unchanged
without an acceptable response or explanation from the provider, under
the alternative policy considered, we stated we would trim the data in
the provider's FY 2017 cost report using data from the provider's FY
2015 cost report in order to determine Factor 3 for purposes of the
final rule.
[[Page 42372]]
We stated in the proposed rule that while we expect all providers
will have FY 2017 cost reports in HCRIS by the time that any data would
be taken from HCRIS for the final rule, if such data are not reflected
in HCRIS for an unforeseen reason unrelated to any inappropriate action
or improper reporting on the part of the hospital, we would substitute
the Worksheet S-10 data from its FY 2015 cost report for the data from
the FY 2017 cost report.
Similar to the process used in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38217 through 38218) and the FY 2019 IPPS/LTCH PPS final rule
(83 FR 41415 and 41416) for trimming CCRs, in the FY 2020 IPPS/LTCH PPS
proposed rule (84 FR 19421 through 19422), we proposed the following
steps:
Step 1: Remove Maryland hospitals. In addition, we would remove
all-inclusive rate providers because their CCRs are not comparable to
the CCRs calculated for other IPPS hospitals.
Step 2: For FY 2015 cost reports, calculate a CCR ``ceiling'' with
the following data: For each IPPS hospital that was not removed in Step
1 (including non-DSH eligible hospitals), we would use cost report data
to calculate a CCR by dividing the total costs on Worksheet C, Part I,
Line 202, Column 3 by the charges reported on Worksheet C, Part I, Line
202, Column 8. (Combining data from multiple cost reports from the same
fiscal year is not necessary, as the longer cost report would be
selected.) The ceiling would be calculated as 3 standard deviations
above the national geometric mean CCR for the applicable fiscal year.
This approach is consistent with the methodology for calculating the
CCR ceiling used for high-cost outliers. Remove all hospitals that
exceed the ceiling so that these aberrant CCRs do not skew the
calculation of the statewide average CCR. (For the proposed rule, this
trim would have removed 8 hospitals that have a CCR above the
calculated ceiling of 0.925 for FY 2015 cost reports.) (Under the
alternative policy considered, the trim would have removed 13 hospitals
that have a CCR above the calculated ceiling of 0.942 for FY 2017 cost
reports.)
Step 3: Using the CCRs for the remaining hospitals in Step 2,
determine the urban and rural statewide average CCRs for FY 2015 for
hospitals within each State (including non-DSH eligible hospitals),
weighted by the sum of total inpatient discharges and outpatient visits
from Worksheet S-3, Part I, Line 14, Column 14.
Step 4: Assign the appropriate statewide average CCR (urban or
rural) calculated in Step 3 to all hospitals, excluding all-inclusive
rate providers, with a CCR for FY 2015 greater than 3 standard
deviations above the national geometric mean for that fiscal year (that
is, the CCR ``ceiling''). For the proposed rule, the statewide average
CCR would therefore have been applied to 8 hospitals, of which 4
hospitals had FY 2015 Worksheet S-10 data. (Under the alternative
policy considered, the statewide average CCR would have been applied to
13 hospitals, of which 5 hospitals had FY 2017 Worksheet S-10 data.).
We note that in the proposed rule, we inadvertently omitted the
information noted earlier regarding the exclusion of all-inclusive rate
providers from this calculation, but have corrected this omission in
the description of Step 4 in this final rule to clarify that the CCR
trim methodology excludes all-inclusive rate providers.
For providers that did not report a CCR on Worksheet S-10, Line 1,
we would assign them the statewide average CCR in step 4.
After applying the applicable trims to a hospital's CCR as
appropriate, we proposed that we would calculate a hospital's
uncompensated care costs for the applicable fiscal year as being equal
to Line 30, which is the sum of Line 23, Column 3, and Line 29
determined using the hospital's CCR or the statewide average CCR (urban
or rural), if applicable.
Therefore, for FY 2020, we proposed to compute Factor 3 for each
hospital by--
Step 1: Selecting the provider's longest cost report from its
Federal fiscal year (FFY) 2015 cost reports. (Alternatively, in the
rare case when the provider has no FFY 2015 cost report because the
cost report for the previous Federal fiscal year spanned the FFY 2015
time period, the previous Federal fiscal year cost report would be used
in this step.)
Step 2: Annualizing the uncompensated care costs (UCC) from
Worksheet S-10 Line 30, if the cost report is more than or less than 12
months. (If applicable, use the statewide average CCR (urban or rural)
to calculate uncompensated care costs.)
Step 3: Combining annualized uncompensated care costs for hospitals
that merged.
Step 4: Calculating Factor 3 for Indian Health Service and Tribal
hospitals and Puerto Rico hospitals using the low-income insured days
proxy based on FY 2013 cost report data and the most recent available
SSI ratio (or, for Puerto Rico hospitals, 14 percent of the hospital's
FY 2013 Medicaid days). The denominator is calculated using the low-
income insured days proxy data from all DSH eligible hospitals.
Step 5: Calculating Factor 3 for the remaining DSH eligible
hospitals using annualized uncompensated care costs (Worksheet S-10
Line 30) based on FY 2015 cost report data (from Step 3). The hospitals
for which Factor 3 was calculated in Step 4 are excluded from this
calculation.
We also proposed to amend the regulations at Sec.
412.106(g)(1)(iii)(C) by adding a new paragraph (6) to reflect the
proposed methodology for computing Factor 3 for FY 2020.
In the FY 2020 IPPS/LTCH PPS proposed rule, we proposed that if a
hospital does not have Worksheet S-10 data for FY 2015 and the hospital
is not a new hospital (that is, its CCN was established before October
1, 2015) nor has the rare case of no FY 2015 cost report, we would
apply the steps as previously discussed with uncompensated care costs
of zero for the hospital. In addition, if, in the course of the
Worksheet S-10 reviews by MACs, a hospital is unable to provide
sufficient documentation or is unwilling to justify its cost report,
which subsequently results in the hospital's Worksheet S-10 being
adjusted to zero, we also proposed to use the previously discussed
steps to calculate Factor 3. We recognized that, under this proposal,
these hospitals would be treated as having reported no uncompensated
care costs on the Worksheet S-10 for FY 2015, which would result in
their not receiving uncompensated care payments for FY 2020. However,
we explained our belief that this proposal would be equitable to other
hospitals because all short-term acute care hospitals are required to
report Worksheet S-10 and must maintain sufficient documentation to
support the information reported. In addition, we noted that hospitals
have been on notice since the beginning of FY 2014 that Worksheet S-10
could eventually become the data source for CMS to calculate
uncompensated care payments. Furthermore, we have previously given
hospitals the opportunity to amend their Worksheet S-10 for FY 2015
cost reports (or to submit a Worksheet S-10 for FY 2015 if none had
been submitted previously).
As we have done for every proposed and final rule beginning in FY
2014, we stated that in conjunction with both the FY 2020 IPPS/LTCH PPS
proposed rule and final rule, we will publish on the CMS website a
table listing Factor 3 for all hospitals that we estimate would receive
empirically justified Medicare DSH payments in FY 2020 (that is, those
hospitals that would receive interim uncompensated care payments during
[[Page 42373]]
the fiscal year), and for the remaining subsection (d) hospitals and
subsection (d) Puerto Rico hospitals that have the potential of
receiving a Medicare DSH payment in the event that they receive an
empirically justified Medicare DSH payment for the fiscal year as
determined at cost report settlement. For purposes of the proposed
rule, the table published on the CMS website included Factor 3 computed
using both the proposed methodology and the potential alternative
methodology. We noted that, at the time of development of the proposed
rule, the FY 2017 SSI ratios were available. Accordingly, for purposes
of the proposed rule, we computed Factor 3 for Indian Health Service
and Tribal hospitals and Puerto Rico hospitals using the most recent
available data regarding SSI days from the FY 2017 SSI ratios. We
stated that we would also publish in the supplemental data file a list
of the mergers that we were aware of and the computed uncompensated
care payment for each merged hospital.
Hospitals had 60 days from the date of public display of the FY
2020 IPPS/LTCH PPS proposed rule to review the table and supplemental
data file published on the CMS website in conjunction with the proposed
rule and to notify CMS in writing of any inaccuracies. We stated that
comments that are specific to the information included in the table and
supplemental data file could be submitted to the CMS inbox at
[email protected]. We indicated we would address these
comments as appropriate in the table and the supplemental data file
that we publish on the CMS website in conjunction with the publication
of the FY 2020 IPPS/LTCH PPS final rule. After the publication of this
FY 2020 IPPS/LTCH PPS final rule, hospitals will have until August 31,
2019, to review and submit comments on the accuracy of the table and
supplemental data file published in conjunction with this final rule.
Comments may be submitted to the CMS inbox at
[email protected] through August 31, 2019, and any changes to
Factor 3 will be posted on the CMS website prior to October 1, 2019.
We invited public comments on our proposed methodology for
calculating Factor 3 for FY 2020, including, but not limited to, our
proposed use of the FY 2015 Worksheet S-10 data and the alternative
policy considered of using the FY 2017 Worksheet S-10 data instead of
the FY 2015 Worksheet S-10 data.
We also note that, consistent with the policy adopted in FY 2014
and applied in each subsequent fiscal year, a 3-year average of
discharges is used to produce an estimate of the amount of the
uncompensated care payment per discharge. Specifically, the hospital's
total uncompensated care payment amount from Factor 3, is divided by
the hospital's historical 3-year average of discharges computed using
most recent available data. The result of that calculation for each
projected DSH eligible hospital is used to make interim uncompensated
care payments through a per discharge payment amount. The interim
uncompensated care payments made to the hospital during the fiscal year
are reconciled following the end of the year to ensure that the final
payment amount is consistent with the hospital's prospectively
determined uncompensated care payment for the Federal fiscal year.
Comment: A commenter recommended that CMS apply a growth factor,
such as the CBO's projected average monthly Part A fee-for-service
enrollment, to the claims average in the FY 2020 proposed rule DSH
Public Use File. The commenter notes that the 3-year discharge average,
does not currently consider the growth of Medicare eligibility due to
the aging of baby boomers since 2018. As a result, approximately 7.3-8
million new Medicare beneficiaries will be incurring additional
inpatient claims by the end of FY 2020. To mitigate these risks, the
commenter recommended CMS incorporate a growth factor designed to
adjust for the increase in Medicare discharges caused by the growth in
the number of Medicare eligible beneficiaries between 2018 and 2020 and
apply this factor to the 3-year claims average for each hospital. The
commenter stated that, in their view, discharge growth discrepancies
create the risk of overpayments of uncompensated care payments and
unstable cash flows for CMS, hospitals, and MA plans.
Response: We thank the commenter for their suggestions related to
the 3-year discharge average. Although we did not propose any new
policy related to determination of the discharge average for FY 2020,
this is a topic we may consider in future rulemaking. For FY 2020, we
will continue to calculate the interim uncompensated care payments on a
per discharge basis using historical 3-year average of discharges
without a growth factor. Consistent with the cost report settlement
process that we have used since FY 2014, we note that a hospital's
total amount of interim uncompensated care payments for the cost
reporting period will be reconciled, in order to ensure consistency
with the hospital's prospectively determined uncompensated care payment
for the Federal fiscal year.
Comment: Some commenters recommended that CMS use the traditional
payment reconciliation process to calculate final payments for
uncompensated care costs pursuant to section 1886(r)(2) of the Act. In
general, commenters did not object to CMS using prospective estimates,
derived from the best data available, to calculate interim payments for
uncompensated care costs in a Federal fiscal year after 2013. However,
some commenters stated that these interim payments should be subject to
later reconciliation based on estimates derived from actual data from
the Federal fiscal year.
Response: Consistent with the position that we have taken in the
rulemaking for previous years, we continue to believe that applying our
best estimates prospectively is most conducive to administrative
efficiency, finality, and predictability in payments (78 FR 50628; 79
FR 50010; 80 FR 49518; 81 FR 56949; and 82 FR 38195). We believe that,
in affording the Secretary the discretion to estimate the three factors
used to determine uncompensated care payments and by including a
prohibition against administrative and judicial review of those
estimates in section 1886(r)(3) of the Act, Congress recognized the
importance of finality and predictability under a prospective payment
system. As a result, we do not agree with the commenters' suggestion
that we should establish a process for reconciling our estimates of
uncompensated care payments, as this would be contrary to the overall
framework of a prospective payment system like the IPPS.
The following comments relate to the Worksheet S-10 instructions:
Comment: Many commenters acknowledged the efforts CMS has taken to
improve the guidance and the instructions for Worksheet S-10.
Commenters commended the instructional clarifications implemented via
Transmittals 10 and 11, and recognized that these improved instructions
have allowed hospitals to better understand the intent of CMS'
guidelines. In addition, some commenters stated that the information
requested by auditors in reviewing the FY 2015 Worksheet S-10 data and
the corresponding clarifications in the instructions have given
facilities a better understanding of reporting requirements, which has
led to more accurate reporting. Conversely, some commenters recognized
that there are remaining issues with Worksheet S-10 and requested that
CMS continue to
[[Page 42374]]
revise the instructions to ensure additional clarity going forward.
Some commenters provided general suggestions to improve the
Worksheet S-10 instructions. For example, several commenters urged CMS
to implement fatal edits to ensure that the information reported on
Worksheet S-10 is complete and internally consistent, and to instruct
the MAC to audit negative, missing or suspicious information. A
commenter requested that CMS provide further guidance regarding the
Worksheet S-10 reporting requirements so as to avoid leaving the
interpretation of the cost report instructions to the discretion of
hospital reimbursement staff and/or MAC auditors, which would
ultimately lead to inconsistent treatment of uncompensated care costs
across hospitals. According to the commenter, CMS' clarification on
this issue would also improve the comparability of uncompensated care
cost data collected across hospitals. Similarly, another commenter
noted that there remains hospital variation in the interpretation of a
bad debt ``write-off.'' While the commenter recognized that all bad
debt amounts should be net of recovery, in the absence a standard
definition of what a ``write-off'' is, it is in the hands of individual
provider accounting practices to arrive at such determination. Other
commenters also requested that CMS release further clarification and
guidance regarding its expectations as to what is charity care as
opposed to other uncompensated care costs that may not match the spirit
of the DSH program, and stated that this clarification is important as
some providers may have an incentive to report other forms of cost as
uncompensated care. Lastly, a commenter requested confirmation of
whether the wording, ``total facility, except physician and other
professional services,'' in relation to charity care and bad debt
write-offs includes acute inpatient, exempt inpatient, outpatient, and
long-term care services.
A few commenters stated that the instructions still need to be
revised to clarify the issues that were addressed in the Worksheet S-10
Q&A issued following the FY 2018 final rule and in the audit protocols.
To this end, a commenter asserted that several such issues, including
expected patient payments and the definition of ``uninsured,'' were not
included or clarified in Worksheet S-10 instructions nor, in the
commenters' view, had CMS addressed these issues in rulemaking. A
commenter specifically stated that one of the audit adjustments that
was made during its audit was moving charity write-offs from Insured
charity care in Worksheet S-10, Line 20, Column 2, to Uninsured charity
care in Line 20, Column 1, when an insurance payment had not been made
on the account. In this case, the commenter stated that definition of
``uninsured'' being used in Worksheet S-10 is different from the
definition of ``uninsured'' that is used for the hospital-specific DSH
limit at 42 CFR 447.295(c) which states that, ``individuals who have no
source of third party coverage for specific inpatient or outpatient
hospital services must be considered, for purposes of that service, to
be uninsured. This determination is not dependent on the receipt of
payment by the hospital from the third party.''
Another area of concern raised by commenters was the potential for
gaming of costs related to charity care and partial discounts. To
ameliorate this problem, a commenter suggested that CMS develop more
specific definitions of ``uninsured'' and ``non-covered'' in the
reporting instructions as well as a standard format for providers to
submit more detailed data about their charity care write-offs and non-
Medicare bad debt. The commenter further stated that additional
specificity could also be helpful in the determination of which costs
are and are not allowable as part of future audits.
Some commenters also requested that CMS provide specific guidance,
either regulatory or subregulatory, regarding the treatment of costs
associated with patients insured under a third-party insurance.
Commenters requested that CMS provide guidance both for patients with
coverage from third-party companies that have a contractual
relationship with the hospital, and patients with coverage from third-
party companies that do not have a contractual relationship with the
hospital. Commenters also requested clarification regarding the
treatment of costs associated with patients that have a responsibility
related to noncovered charges under a third-party insurance company,
and patients covered under a catastrophic plan or limited benefit plan
with a limited amount covered daily. A commenter posed questions
regarding comprehensive examples of multiple coverage scenarios.
In addition to these concerns, many commenters had more specific
suggestions, which would require column and line level modifications to
Worksheet S-10. One of the most prevalent suggestions among commenters
involved the application of the CCR to non-reimbursed Medicare bad debt
and non-Medicare bad debt, which commenters classified as
``unjustifiable'' since Medicare bad debt and insured bad debt should
be recorded at the full amount of the deductibles and/or coinsurance
written-off. Specifically, commenters explained that applying a
provider's CCR to Line 28 understates the cost of bad debt because
``deductibles, coinsurances based on the negotiated payment rate, and
the portion of allowable, non-reimbursable Medicare bad debt are not
marked up to reflect the charged amount.'' Given this, attempting to
arrive at the cost of bad debt expense from ``multiplying uncollectable
deductibles, coinsurance based on the negotiated rate, and the portion
of allowable Medicare bad debt that is non-reimbursable times a
hospital's cost-to-charge ratio'' is inappropriate and understates the
``true cost of forgone revenue resulting from uncollectible accounts.''
Commenters' general recommendation to resolve this issue was for CMS to
create separate columns for insured and uninsured patients, with the
column for ``uninsured patients being multiplied by a hospital's cost-
to-charge ratio to arrive at the cost of bad debt . . . and the column
for insured patients (which should include amounts related to Medicare
allowable, non-reimbursable bad debt) not being multiplied by the
CCR.'' In connection with these recommendations regarding the structure
of Worksheet S-10, another commenter suggested that CMS add two new
columns in the charity care section, before Column 2, so that hospitals
can separately report charges subject to adjustment by the CCR
(currently Line 25) and charges that are not subject to adjustment by
the CCR. The commenter suggested similar changes to the bad debt
section, creating two columns before the total column in which
hospitals would separately report bad debt charges that should be
adjusted by the CCR and bad debt write offs for cost-sharing that
should not be multiplied by the CCR.
A topic broadly raised by commenters was the clarification of
charity care, such as in the context of public programs, especially
Medicaid, as well as third-party insurance. A commenter specifically
requested clarification of which types of denials by state Medicaid FFS
and managed care payers can be included as charity care, also asking if
``charity care eligibility [can] be inferred by enrollment in Medicaid
manage care plan?'' The commenter also requested clarification of
whether discounts or reductions to the standard managed care rate can
be reported as charity care or an uninsured discount for patients who
are eligible for discounts under a given hospital's
[[Page 42375]]
charity care policy. In addition, the commenter sought clarification of
the definition of ``non-covered'' charges related to days exceeding the
length of stay limit and with respect to Medicare, Medicaid, Workers'
Compensation/No Fault, and commercial plans with which the hospital has
a contractual relationship, but for which it is not allowed to pursue
patient collections for losses (for example unpaid claims). The
commenter questioned whether a hospital is permitted to include such
losses on Line 20 of Worksheet S-10, if it includes them in its
financial assistance policy (FAP).
Several commenters perceived that there appears to be a general
misunderstanding regarding non-covered Medicaid charges. A commenter
pointed out that hospitals rely on different sources of information to
report non-covered Medicaid services; for example, sources can
primarily be patient transaction detail from hospital records or
remittance advice (R/A) reports provided by Medicaid Fee for Service
and Managed Care payers. The commenter believed that each source comes
with a set of limitations, and stated it is important that the
definition of uncompensated care for non-covered Medicaid services be
further clarified. Given this, the commenter suggested that CMS provide
definitive guidance to prevent inconsistent provider reporting of non-
covered Medicaid charges, which can ultimately impact uncompensated
care payment distributions.
A commenter specifically suggested that reporting charges from
Medicaid days beyond the length of stay limit with insured patient
coinsurance and deductibles may cause erroneous reporting (those three
items are currently reported in Line 20 Column 2), such as when
providers inadvertently do not report these same charges in Worksheet
S-10 Line 25, where the CCR applies. According to the commenter, the
instruction to report these charges on Worksheet S-10 Line 25 appears
to be unnecessary; and they recommend that CMS could avoid misreporting
of this information by requesting that providers report Medicaid days
exceeding the length of stay limit with the rest of non-covered charges
for Medicaid patients on Line 20 Column 1 to ensure the CCR is applied.
A commenter requested that CMS clarify recent guidance on Medicaid
cross over bad debt and confirm the commenter's understanding regarding
hospitals claiming Medicaid cross over bad debt for an unpaid Medicare
deductible or coinsurance amount. The commenter stated that currently
the deductible or coinsurance amount must be written-off to a bad debt
expense account. According to the commenter, hospitals have
historically written-off Medicare cross over bad debts to contractual
allowance accounts because they considered these amounts an adjustment
to the Medicaid allowed amount. Accordingly, the commenter perceived
the CMS guidance on Medicare crossover bad debt as requiring hospitals
to modify their own current patient account practices.
Finally, several commenters requested that CMS clarify whether
there are implications for Worksheet S-10 from the recent Financial
Accounting Standards Board Topic 606 on Medicare bad debt reporting.
Response: We appreciate commenters' concerns regarding the need for
further clarification of the Worksheet S-10 instructions, as well as
their suggestions on how to revise the form to continue improving
provider reporting. As noted by some commenters, our continued efforts
to refine the instructions and guidance have improved provider
understanding of the Worksheet S-10. We also recognize that there are
always continuing opportunities for further improvement, and to the
extent that commenters have raised new questions and concerns, we will
attempt to address them through future refinements to the Worksheet S-
10 and the accompanying instructions. Nevertheless, we continue to
believe that the Worksheet S-10 instructions are sufficiently clear to
allow hospitals to accurately complete Worksheet S-10.
Regarding the commenter who referenced the Medicaid definition of
``uninsured'' used for purposes of the hospital-specific DSH limit at
42 CFR 447.295(c), we note the Medicare cost report instructions do not
reference a Medicaid definition of uninsured patient.
As a general matter, hospitals have the discretion to design their
charity care policies as they deem appropriate. However, we note that
hospitals are not permitted to report Medicaid shortfalls (that is,
situations where Medicaid payment is made for the patient care, but
that reimbursement may be less than the actual cost of care or the
billed amount) as charity care on line 20 column 1 or as bad debt on
line 26, as that would not comply with the Worksheet S-10 cost
reporting instructions nor the definition of uncompensated care we are
adopting in this final rule and that has applied for every fiscal year
starting with the FY 2014, even if under the hospitals' charity care
policy a Medicaid shortfall would be considered charity care. We refer
the reader to the earlier section for further discussion of the
finalized definition of uncompensated care. In general, Medicaid
patient charges should be reported on Worksheet S-10 line 6. However,
charges for non-covered services provided to patients eligible for
Medicaid or other indigent care programs may be reported on line 20, if
such inclusion is specified in the hospital's charity care policy or
FAP and the patient meets the hospital's charity care or FAP criteria.
Additionally, non-covered charges for days exceeding a length-of-stay
limit for patients covered by Medicaid or other indigent care program
may be reported on line 25 and line 20 column 2, if such inclusion is
specified in the hospital's charity care policy or FAP. We note a stay
that exceeds the length-of-stay limit imposed on patients covered by
Medicaid or other indigent care program does not mean a length of stay
that just happens to be longer than an individual hospital's average
length of stay, but is one that exceeds a Medicaid or other indigent
care program's length of stay limit. In addition, a DRG-based Medicaid
payment that is less than the cost of the services furnished to a
Medicaid patient is considered a Medicaid shortfall and would not be
for a non-covered service or charity care; therefore, the related
charges must not be reported as charity care on line 20 column 1 of
Worksheet S-10. As previously explained, a Medicaid shortfall, or a
Medicaid contractual allowance, must not be re-characterized as charity
care.
In conclusion, we note that the comments recommending structural
changes to Worksheet S-10 fall outside the scope of this final rule. We
therefore refer commenters to the forthcoming Paper Reduction Act (PRA)
package for Form CMS 2552-10 approved OMB No. 0938-0050 expiring March
31, 2022. The forthcoming PRA package includes proposed changes to the
Worksheet S-10 instructions, which will provide for a public comment
period and is the appropriate forum for questions about and suggestions
for modifications to Worksheet S-10.
Comment: Many commenters expressed concerns about the accuracy and
integrity of the FY 2015 Worksheet S-10 data. A commenter noted that,
for FY 2015, some hospitals incorrectly reported charity care
transaction amounts based on write-off date, and that reporting of bad
debts often duplicated charity care charges. The commenter stated that
this duplication occurs because under the Worksheet S-10 instructions
for FY 2015, charity care
[[Page 42376]]
is reported as the total charge, while bad debt is reported as the
write-off amount. This issue, according to the commenter, is not as
prevalent in the FY 2017 data, because charity care is reported using a
separate transaction (write-off) amount as opposed to total charges.
On a separate issue, a commenter asserted that in the FY 2015
Worksheet S-10 data, charity care amounts related to coinsurance and
deductible amounts are overstated for more than 20 percent of eligible
DSH hospitals. The commenter observed that in some cases, the
overstating of such amounts can be attributed to the header in
Worksheet S-10, Line 20, Column 2, which states, ``Charity Care for
Insured Patients.'' Such description, according to the commenter, has
caused several hospitals to inadvertently report other types of charges
on this line, commonly for non-covered Medicaid services. The commenter
noted that this issue has improved in the FY 2017 data due to increased
provider education and cited analytic results in support of this
notion. However, several commenters expressed concern regarding
continued misreporting of coinsurance and deductibles in the FY 2017
Worksheet S-10. These commenters stated that it may be possible that
the reported amounts of deductibles and coinsurance are excessive for
some hospitals now that CMS has issued Transmittals 10 and 11, and the
CCR is not being applied. Commenters provided analytic results which
demonstrated an increase in the amounts of deductibles and coinsurance
reported on the Worksheet S-10 between FY 2015 and FY 2017, as well as
an increase in the number of hospitals reporting deductibles and
coinsurance that exceeded the costs of uninsured patients. The
commenter stated that the significant problems with reporting of
deductibles and coinsurance in FY 2017 provide an example of continued
misreporting of data, even after the issuance of improved cost
reporting instructions for FY 2017.
Many commenters provided suggestions to enhance the accuracy and
integrity of the Worksheet S-10 data. Several commenters urged that CMS
continue its work to accurately capture hospital uncompensated care
costs in its allocation of Medicare DSH payments. According to some
commenters, this work could include providing ample opportunity for
stakeholder feedback and education before issuing substantive revisions
to Worksheet S-10, as well as conducting additional educational
outreach to hospitals. A commenter encouraged CMS to invest resources
in developing educational forums and opportunities for ongoing dialogue
between CMS, MACs and hospitals prior to releasing significant
revisions to guidance on cost report instructions. Commenters also
suggested that CMS build infrastructure and look to the field for
technology solutions, which could produce an industry standard for how
data should be prepared and submitted to the MACs and CMS itself.
Response: We thank commenters for their continued concern and
constructive feedback regarding the accuracy of Worksheet S-10 data. We
believe that continued use of Worksheet S-10 will improve the accuracy
and consistency of the reported data. In addition, we intend to
continue with and further refine our efforts to review the Worksheet S-
10 data submitted by hospitals based on what we have learned from the
review and audit process we conducted for the FY 2020 rulemaking
period. We also intend to consider the various issues raised by the
commenters specifically related to the reporting of charity care and
bad debt costs on Worksheet S-10 as we continue to review the Worksheet
S-10 data.
We agree with commenters that continuing our ongoing educational
effort is appropriate, including provider education that may occur
during Worksheet S-10 reviews. We also appreciate the suggestions
provided by commenters regarding areas for further education. We
reiterate that we will continue the education efforts undertaken in the
past as well as our collaboration with stakeholders to address their
concerns regarding the accuracy and consistency of reporting of
uncompensated care costs.
Comment: Several commenters urged CMS to allow hospitals to submit
revisions to their cost reports in order to improve the accuracy of the
data. Related to the FY 2015 Worksheet S-10 data, a commenter requested
that CMS address and allow for corrections of what the commenter
asserted were MAC adjustment errors made during the audits so that
hospitals are allowed an opportunity to resubmit corrected Worksheet S-
10 data in an expedited fashion for use in the final rule. The
commenter stated that if CMS believes such corrected Worksheet S-10
data must be reviewed and/or approved before they can be used, then it
must provide for an expedited review process that allows for high level
agency review in order to overrule the MAC, and only permit
disallowances to stand if applied consistently and uniformly to all
providers.
Some commenters stated that CMS afforded hospitals several
opportunities to improve FY 2015 data, but these opportunities have not
been offered with respect to FY 2017 data. Commenters believe that many
hospitals that might desire to reopen their FY 2017 cost report based
on their FY 2015 audit findings have not had time to start that
process. Finally, a commenter recommended that CMS indicate in the FY
2020 final rule that it intends to use FY 2017 Worksheet S-10 data to
calculate uncompensated care payments for FY 2021 in order to provide
sufficient notice to allow providers to begin amending their unaudited
FY 2017 data before these data are used to determine payments.
Response: We acknowledge commenters' requests regarding the
opportunity to resubmit cost reports for purposes of calculating FY
2020 uncompensated care payments. However, we do not agree that we
should continue to offer hospitals multiple opportunities to amend
their cost reports outside of the normal process. We expect a hospital
to submit correct cost report data to its MAC and to use the normal
timelines and procedures in place to amend its cost report, if
appropriate. With respect to the commenter who recommended that we
indicate in the FY 2020 final rule that we intend to use FY 2017
Worksheet S-10 data to calculate uncompensated care payments for FY
2021, we note that we will address proposed policies for FY 2021 in the
FY 2021 IPPS/LTCH proposed rule.
Comment: Several commenters voiced concern that their most recent
Worksheet S-10 data were not reflected in the data used for the
proposed rule, and some were concerned that their most recent data
would not be included in the final rule data file if CMS decides to use
the March HCRIS extract, as proposed. For example, some commenters
noted that the public use file from the proposed rule did not include
audit adjustment reversals for the FY 2015 Worksheet S-10. Some
commenters noted that because CMS had not given a directive as to the
deadline for amending FY 2017 Worksheet S-10 data, many providers were
still in the process of correcting their data and did not have enough
time to submit the corrected data for use in the proposed rule, while
other commenters stated that their amended cost report for FY 2017 had
been accepted well after the cut-off for the proposed March HCRIS
extract. Thus, commenters requested that CMS use the latest HCRIS
extract possible, to allow providers and CMS to correct aberrant data
identified for potential revision, as well as account for any hospital
that
[[Page 42377]]
voluntarily submitted Worksheet S-10 revisions. Some commenters
attached copies of their updated Worksheet S-10 for CMS to consider on
the record.
Response: We appreciate the commenters' diligence in checking that
their own reports and data were properly processed. We recognize that
some hospitals' data in the March HCRIS update may not have reflected
all corrections and/or adjustments made to Worksheet S-10 data in
response to our hospital outreach and auditing efforts. Given those
circumstances and consistent with our historical practice of using the
best data available, we are using a June 30, 2019 HCRIS extract, which
is the most recent available data at the time of development of this
final rule, to calculate Factor 3 for this FY 2020 IPPS/LTCH PPS final
rule. We note that we expect to able to use the March HCRIS in future
rulemaking, which is generally a more appropriate data source for a
number of reasons, including that the data is available to the public
to review for a longer period of time prior to the publication of the
final rule, and the use of the June 30th extract presents ratesetting
challenges for CMS to incorporate the data in time for the statutory
publication of the final rule.
Following the publication of this final rule, hospitals will have
until August 31, 2019, to review and submit comments on the accuracy of
the table and supplemental data file published in conjunction with this
final rule. We believe the supplemental data file reflects the most
recent available data in HCRIS at the time of development of this final
rule. We have not considered information from any revised Worksheets S-
10 that were submitted as attachments to comments. We do not believe it
would be appropriate to allow a hospital to use the rulemaking process
to circumvent the requirement that cost report data need to be
submitted to the MAC or the requirement that requests to reopen cost
reports need to be submitted to the MAC. Otherwise we would have
multiple potentially conflicting sources of information about a
hospital's uncompensated care data or, more broadly, any cost report
data that might be submitted during the rulemaking process. In
addition, there are validity checks and other safeguards incorporated
into the cost report submission process that would not be automatically
applied to cost reports only submitted through rulemaking.
Comment: A few commenters also noted that the February 15, 2019
HCRIS extract used for the proposed rule may have misled some providers
choosing between the proposed and alternative methodologies for
calculating Factor 3 because certain changes to the FY 2015 data, such
as audit corrections, would only be reflected when CMS uses the March
HCRIS extract, as proposed for the final rule. Similarly, another
commenter asserted that CMS has used different data and calculations in
the final rules without the opportunity for hospitals to comment, that
is, hospitals do not see their final DSH payment amounts until the
final rule, in violation of the Administrative Procedural Act.
Response: Regarding the concerns related to the Administrative
Procedure Act, we note that, under the Administrative Procedure Act, a
proposed rule is required to include either the terms or substance of
the proposed rule or a description of the subjects and issues involved.
In this case, the FY 2020 IPPS/LTCH PPS proposed rule included a
detailed discussion of our proposed methodology for calculating Factor
3 and the data that would be used. We made public the best data
available at the time of the proposed rule, in order to allow hospitals
to understand the anticipated impact of the proposed methodology.
Moreover, following the publication of the proposed rule, we continued
our efforts to ensure that information hospitals had properly submitted
to their MAC in the prescribed timeframes would be available to be used
in this final rule in the event we finalized our proposed methodology.
We believe the fact that we provided data with the proposed rule, while
concurrently continuing to review that data with individual hospitals
is entirely consistent with the Administrative Procedure Act and
established CMS practice. There is no requirement under either the
Administrative Procedure Act or the Medicare statute that CMS make the
actual data that will be used in a final rule available as part of the
notice of proposed rulemaking. Rather, it is sufficient that we provide
stakeholders with notice of our proposed methodology and the data
sources that will be used, so that they may have a meaningful
opportunity to submit their views on the proposed methodology and the
adequacy of the data for the intended purpose. This requirement for
notice and comment does not, however, extend to a requirement that we
make all data that will be used to compute payments available to the
public, so that they may have an opportunity to comment on accuracy of
the data reported for individual hospitals. Similarly, there is no
requirement that we provide an opportunity for comment on the actual
payment amounts determined for each hospital.
Comment: Several commenters supported CMS' proposal to trim
hospitals' uncompensated care costs to control for anomalies. However,
many of these commenters recommended that CMS substitute aberrant data
from the FY 2015 Worksheet S-10 with data from FY 2014, since the FY
2014 data have been previously available for public scrutiny and
utilized in determining uncompensated care payments. A few commenters
also voiced concerns regarding the agency's proposed policy for
trimming uncompensated care costs. A commenter considered that it is
unnecessary to substitute 1 year of Worksheet S-10 data for another,
unless there has been some inappropriate action or improper reporting
by the provider. Other commenters stated that CMS has not clarified how
hospitals with high uncompensated care costs, which are subject to the
trimming policy, are identified. The commenter added that CMS has
failed to account for situations in which a hospital might legitimately
have high uncompensated care costs for reasons such payer mix
composition. The commenter suggested that CMS must take steps to
discern when high uncompensated care costs arise from erroneous data
rather than from a legitimate cause by ensuring that MACs work
collaboratively with hospitals to distinguish inaccurate uncompensated
care values from legitimately high values. According to the commenter,
if a hospital can justify its high values, its uncompensated care costs
should not be subject to the substitution.
Response: We appreciate the comments and suggestions regarding our
policy for trimming uncompensated care costs that are an extremely high
ratio of a hospital's total operating costs for the same year. We
believe the proposed approach balances our desire to exclude
potentially aberrant data with our concern regarding inappropriately
reducing FY 2020 uncompensated care payments to a hospital that may
have a legitimately high ratio. We note that no hospitals exceeded the
50 percent trim threshold for the FY 2015 Worksheet S-10. We will
continue to consider the commenters' recommendations for the aberrant
UCC data trim in future rulemaking.
Comment: Several commenters stated that the current Worksheet S-10
does not account for all patient care costs when converting charges to
costs. These commenters stated that the current worksheet ignores
substantial costs hospitals incur in training medical
[[Page 42378]]
residents, supporting physician and professional services, and paying
provider taxes associated with Medicaid revenue. Thus, these commenters
requested that CMS refine the Worksheet S-10 to incorporate all patient
care costs into the CCR. Commenters most often recommended that the CCR
include the cost of graduate medical education (GME) to account for the
costs associated with the training of interns and residents. The
commenters stated that GME represents a significant portion of the
overhead costs of teaching hospitals, where a large number of interns
and residents treat patients from all financial backgrounds, including
the uninsured. Therefore, the commenters believed that including GME
costs in the CCR calculation and then using this adjusted CCR for
Worksheet S-10 would more accurately represent the true uncompensated
care costs for teaching hospitals. A commenter also stated that
including GME cost in determining the CCR used on the Worksheet S-10
will better align with the Medicaid DSH program, as well as with the
approach used by the IRS in calculating the hospital community benefit
provided by non-profit hospitals.
In addition, commenters provided several suggestions for revising
the CCR on Worksheet S-10. One suggestion was for CMS to use the total
of Worksheet S, Column 3, Lines 1 through 117, reduced by the amount on
Worksheet A-8, Line 10, as the cost component, and Worksheet C, Column
8, Line 200 as the charge component. Another commenter stated that GME
costs can be included in the formula for calculating the CCR for
Worksheet S-10 by using costs from Worksheet B, Part 1, Column 24, line
118, and by removing the reasonable compensation equivalency (RCE)
limits from Worksheet S-10.
Response: As we have stated previously in response to this issue
(83 FR 41425), we believe that the purpose of uncompensated care
payments is to provide additional payment to hospitals for treating the
uninsured, not for the costs incurred in training residents. In
addition, because the CCR on Line 1 of Worksheet S-10 is pulled from
Worksheet C, Part I, and is also used in other IPPS ratesetting
contexts (such as high-cost outliers and the calculation of the MS-DRG
relative weights) from which it is appropriate to exclude GME because
GME is paid separately from the IPPS, we hesitate to adjust the CCR in
the narrower context of calculating uncompensated care costs.
Therefore, we continue to believe that it is not appropriate to modify
the calculation of the CCR on Line 1 of Worksheet S-10 to include GME
costs in the numerator. With regard to the comment that the CCRs on
Worksheet S-10 are reported with the reasonable compensation equivalent
(RCE) limits applied, we believe the commenter is mistaken. Line 1 of
Worksheet S-10 instructs hospitals to compute the CCR by dividing the
costs from Worksheet C, Part I, Line 202, Column 3, by the charges on
Worksheet C, Part I, Line 202, Column 8. The RCE limits are applied in
Column 4, not in Column 3; thus, the RCE limits do not affect the CCR
on line 1 of Worksheet S-10.
Comment: Several commenters supported the proposal to use one cost
report beginning in each fiscal year to derive the uncompensated care
costs for that year, and to annualize Medicaid days and uncompensated
care data for hospitals with less than 12 months of data. In addition,
several commenters supported the proposed policy of allowing new
hospitals that appear to be eligible for empirical DSH payments to
receive empirically justified DSH payments but not interim
uncompensated care payments.
Response: We appreciate the support for our proposal to use one
cost report beginning in each fiscal year to derive the uncompensated
care costs for that year, to annualize cost reports that do not equal
12 months of data, and to allow new hospitals that appear to be
eligible for empirical DSH payments to receive interim empirically
justified DSH payments but not interim uncompensated care payments.
Comment: Many commenters from Puerto Rico expressed their general
support for the DSH policies proposed for FY 2020, and urged that CMS
implement these policies as proposed. More specifically, several
commenters supported the proposed policy for Puerto Rico, Indian Health
Service, and Tribal hospitals, under which low-income patient days
would continue to be utilized instead of the Worksheet S-10 UCC data to
determine each hospital's share of uncompensated care payments. In
addition, these commenters supported the proposal to continue to use 14
percent of Medicaid days as a proxy for Medicare SSI days when
determining Factor 3 of the uncompensated care payment methodology for
hospitals located in Puerto Rico. These commenters stated that the
continued use of these proxies is appropriate, adding that they agree
with CMS and other stakeholders that uncompensated care data reported
by these hospitals need to be further examined before the data are used
in calculating uncompensated care payments.
Response: We appreciate the support for our proposal to use low-
income insured days as a proxy for UCC for Puerto Rico, Indian Health
Service, and Tribal hospitals, as well as for our proposal to use 14
percent of a Puerto Rico hospital's Medicaid days as a proxy for SSI
days. Because we are continuing to use insured low-income insured
patient days as a proxy for uncompensated care for these hospitals in
determining Factor 3 for FY 2020, and residents of Puerto Rico are not
eligible for SSI benefits, we believe it is important to create a proxy
for SSI days for Puerto Rico hospitals in the Factor 3 calculation.
The following comments address the proposed CCR trimming
methodology:
Comment: A few commenters stated that the current CCR trimming
methodology is not adequate to address the CCR anomalies in the
Worksheet S-10 data reported by certain hospitals. Other commenters
supported the current methodology. Some commenters also stated that
hospitals that have been identified as potential outliers should have
the opportunity to explain their data and correct errors before the
trim methodology is applied, which would facilitate data validity. In
addition, other commenters requested that the trimming methodology not
be finalized until an audit of the data has been conducted, and that
hospitals with extremely high CCRs be audited and an appropriate CCR
determined instead of applying an arbitrary trim to a statewide
average. For example, a number of commenters proposed that the four-
step methodology for trimming CCRs should be used as an outlier
identification process to alert auditors, not as a policy in and of
itself. These commenters expect that as CMS continues to work on the
Worksheet S-10 audit process, the proposed CCR trims would become an
audit tool rather than a mechanism to trim what appears to be aberrant
data.
A commenter stated that CMS should focus on understanding the
underlying reason for varying CCRs, and that if CMS intends to require
hospitals to revise their charge structures and cost apportionment
methodologies, CMS should give the hospitals sufficient time to bring
their systems into line with these requirements. Similarly, several
commenters expressed concern over the proposed trim methodology because
hospitals that are considered ``all-inclusive rate providers'' are not
required to complete Worksheet C, Part I, which is used for reporting
the CCR on Line 1 of the Worksheet S-10. As a result, these commenters
believed that the proposed trim methodology would inappropriately
modify their
[[Page 42379]]
uncompensated care costs, and that a high CCR could be accurate if the
hospital's charges are close to costs, as is usually the case for all-
inclusive rate hospitals. These commenters recommended that CMS assess
how the current CCR trim methodology affects all-inclusive rate
providers, or work with MACs to derive an appropriate CCR.
In addition, commenters encouraged CMS to engage with hospitals in
determining the best way to use Worksheet S-10 data to distribute
uncompensated care payments to all-inclusive rate providers in the
future, and some suggested that CMS continue to use the low-income
patient days proxy to distribute Medicare DSH uncompensated care
payments to these providers. A commenter stated that there was a
contradiction in the proposed rule because CMS indicated that it was no
longer necessary to propose specific Factor 3 policies for all-
inclusive providers, yet later indicated that CMS would remove all-
inclusive providers from the CCR trimming methodology because their
CCRs are not comparable to the CCRs calculated for other IPPS
hospitals. The commenter requested that CMS take a consistent approach
in the final rule, and encouraged CMS to revisit its trimming
methodology in the final rule and to also focus its audit activity for
the FY 2017 Worksheet S-10 data on whether high CCR hospitals,
particularly those that use an all-inclusive rate structure, are
generating an accurate portrayal of uncompensated care costs.
Response: We appreciate the additional information provided by the
commenters related to our proposed methodology for applying trims to
the CCRs. We intend to further explore which trims are most appropriate
to apply to the CCRs on Line 1 of Worksheet S-10, including whether it
would be appropriate to apply a unique trim for certain subsets of
hospitals, such as all-inclusive rate providers. We note that all-
inclusive rate providers have the ability to compute and enter their
appropriate information (for example, departmental cost statistics) on
Worksheet S-10, Line 1, by answering ``Yes'' to the question on
Worksheet S-2, Part I, Line 115, rather than having it computed using
information from Worksheet C, Part I. We also intend to give additional
consideration to the utilization of statewide averages in place of
outlier CCRs, and will also consider other approaches that could ensure
the validity of the trim methodology, while not penalizing hospitals
that use alternative methods of cost apportionment. We may consider
incorporating these alternative approaches through rulemaking for
future years.
However, as discussed in the FY 2020 IPPS/LTCH PPS proposed rule,
we have examined the CCRs from the FY 2015 cost reports and believe
that the risk that all-inclusive rate providers will have aberrant CCRs
and, consequently, aberrant uncompensated care data, is mitigated by
the proposal to apply trim methodologies for potentially aberrant
uncompensated care costs for all hospitals. As outlined in the proposed
rule, we remove all-inclusive rate providers from the CCR trim in Step
1 of the trimming methodology because their CCRs are not comparable to
the CCRs calculated for other IPPS hospitals. Thus, the CCRs for all-
inclusive rate providers are excluded from the CCR trimming process.
Regarding the commenters' view that CCR trims should not take place
before we give providers further opportunities to explain or amend
their data, we agree that, under ideal circumstances, CCR trims without
audits would not be needed. However, providers have had sufficient time
to amend their data and/or contact CMS to explain that the FY 2020 DSH
Supplemental Data File posted in conjunction with FY 2020 IPPS/LTCH PPS
proposed rule had incorrect data. As a result, we consider CCRs greater
than 3 standard deviations above the national geometric mean CCR for
the applicable fiscal year to be aberrant CCRs.
After consideration of the public comments we received, and for the
reasons discussed in the proposed rule and in this final rule, we are
finalizing our proposal to use 1 year of Worksheet S-10 data from FY
2015 cost reports to determine Factor 3 of the uncompensated care
methodology.
Therefore, for FY 2020, we are finalizing the following methodology
to compute Factor 3 for each hospital by--
Step 1: Selecting the provider's longest cost report from its
Federal fiscal year (FFY) 2015 cost reports. (Alternatively, in the
rare case when the provider has no FFY applicable cost report because
the cost report for the previous Federal fiscal year spanned the time
period, the previous Federal fiscal year cost report would be used in
this step.)
Step 2: Annualizing the uncompensated care costs (UCC) from
Worksheet S-10 Line 30, if the cost report is more than or less than 12
months. (If applicable, use the statewide average CCR (urban or rural)
to calculate uncompensated care costs.)
Step 3: Combining annualized uncompensated care costs for hospitals
that merged.
Step 4: Calculating Factor 3 for Indian Health Service and Tribal
hospitals and Puerto Rico hospitals using the annualized low-income
insured days proxy based on FY 2013 cost report data and the most
recent available SSI ratio (or, for Puerto Rico hospitals, 14 percent
of the hospital's FY 2013 Medicaid days). (Alternatively, in the rare
case when the provider has no FFY applicable cost report because the
cost report for the previous Federal fiscal year spanned the time
period, the previous Federal fiscal year cost report would be used in
this step.) We combine low-income insured days for hospitals that
merged. The denominator is calculated using the low-income insured days
proxy data from all DSH eligible hospitals. We note, that consistent
with the policy adopted in the FY 2019 IPPS/LTCH final rule, if a
hospital does not have both Medicaid days for FY 2013 and SSI days for
FY 2017 available for use in the calculation of Factor 3 in Step 4, we
would consider the hospital not to have data available for Step 4.
Step 5: Calculating Factor 3 for the remaining DSH-eligible
hospitals using annualized uncompensated care costs (Worksheet S-10
Line 30) based on FY 2015 cost report data (from Step 3). The hospitals
for which Factor 3 was calculated in Step 4 are excluded from this
calculation.
We also are finalizing the following proposals: (1) For providers
with multiple cost reports beginning in the same fiscal year, to use
the longest cost report and annualize Medicaid data and uncompensated
care data if a hospital's cost report does not equal 12 months of data;
(2) where a provider has multiple cost reports beginning in the same
fiscal year, but one report also spans the entirety of the following
fiscal year such that the hospital has no cost report for that fiscal
year, to use the cost report that spans both fiscal years for the
latter fiscal year; and (3) to apply statistical trim methodologies to
potentially aberrant CCRs and potentially aberrant uncompensated care
costs.
For this FY 2020 IPPS/LTCH PPS final rule, we are finalizing a
HCRIS cutoff of June 30, 2019, for purposes of calculating Factor 3. We
are also finalizing our proposal to amend the regulations at Sec.
412.106(g)(1)(iii)(C) by adding a new paragraph (6) to reflect the
methodology for computing Factor 3 for FY 2020.
[[Page 42380]]
5. Request for Public Comments on Ways to Reduce Provider Reimbursement
Review Board (PRRB) Appeals Related to a Hospital's Medicaid Fraction
Used in the Disproportionate Share Hospital (DSH) Payment Adjustment
Calculation
As discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR
19422 through 19423), as part of our ongoing efforts to reduce
regulatory burden on providers, we are examining the backlog of appeals
cases at the Provider Reimbursement Review Board (PRRB). A large number
of appeals before the PRRB relate to the calculation of a hospital's
disproportionate patient percentage (DPP) used in the calculation of
the DSH payment adjustment. (We refer readers to section IV.F.1. of the
preamble of this final rule for a discussion of the calculation of a
hospital's DPP.) Many of these appeals before the PRRB focus on the
calculation of a hospital's Medicaid fraction, which is one of the two
fractions comprising the DPP, particularly the data used to determine
an individual's Medicaid eligibility in the calculation. Specifically,
it is possible that updated data on Medicaid eligibility are available
following cost report submission. As a result, many hospitals annually
appeal their cost reports to the PRRB in an effort to try and use
updated State Medicaid eligibility data to calculate the Medicaid
fraction. We believe it is in both CMS' and the providers' interest to
seek a solution to issues related to the Medicaid fraction that appear
to have led to a large volume and backlog of PRRB appeals. Therefore,
we believe it is appropriate to explore options that may prevent the
need for such appeals. We note that the Provider Reimbursement Review
Board Rules, Version 2.0, August 29, 2018, contain revisions in Rules
46 and 47 pertaining to ``Withdrawal of an Appeal or Issue Within an
Appeal'' and ``Reinstatement'', respectively. These changes may lower
the number of tracked PRRB appeals. In exploring possible solutions, we
are concerned about balancing the competing interests of administrative
finality, ease of implementation for both CMS and providers, and the
use of the most appropriate data.
As stated in the proposed rule, we believe one such solution might
be to develop regulations governing the timing of the data for
determining Medicaid eligibility, somewhat similar to our existing
policy on entitlement to SSI benefits which is determined at a specific
time. For more information on this policy, we refer readers to the FY
2011 IPPS/LTCH PPS final rule (75 FR 50276). Under this possible
solution, a provider would submit a cost report with Medicaid days
based on the best available Medicaid eligibility data at the time of
filing and could request a ``reopening'' when the cost report is
settled without filing an appeal. CMS would issue directives to the
MACs requiring them to reopen those cost reports for this issue at a
specific time and set a realistic period during which the provider
could submit updated data. This would be an expansion of the preamble
instructions finalized in the CY 2016 OPPS/ASC final rule with comment
period issued on November 13, 2015 (80 FR 70563 and 70564) which
requires the MACs to accept one amended cost report submitted within 12
months after the due date of the cost report solely for the purpose of
revising Medicaid days. (We note that an amendment of the cost report
is initiated by the provider prior to final settlement of the cost
report, while a reopening of the cost report occurs after final
settlement and can be requested by the provider or initiated by the
MAC.) Under this possible expansion, we would require MACs to reopen
cost reports for the purpose of revising the Medicaid fraction near the
end of the 3-year reopening window and use the Medicaid data at that
time to settle the cost report. We believe the 3 years of the reopening
period could provide adequate time to update the Medicaid data used to
determine an individual's Medicaid eligibility for purposes of
calculating a hospital's Medicaid fraction. However, as indicated in
the proposed rule, we were generally interested in public comments on
using reopenings as a mechanism to use updated Medicaid eligibility
data and reduce the filing of PRRB appeals--in particular, the optimal
time for review of data to occur taking into account the hospital's
desire to receive accurate payment and CMS' and the MACs' desire to
settle cost reports in a timely manner (for example, whether it makes
sense to review data 2 years after cost report submission, near the end
of the 3 years mentioned in the reopening regulations, or at some other
time).
We stated in the proposed rule that we also are considering
allowing hospitals, for a one-time option, to resubmit a cost report
with updated Medicaid eligibility information, somewhat similar to our
existing DSH policy allowing hospitals a one-time option to have their
SSI ratios calculated based on their cost reporting period rather than
the Federal fiscal year under 42 CFR 412.106(a)(3). Under this option,
we would undertake rulemaking to determine the timeframe for exercising
the option (which may be a maximum allowable time after the close of a
cost reporting period or a specific window during which the request
could be made). We indicated in the proposed rule we were interested in
feedback and comments concerning the viability of these options, as
well as any alternative approaches, that could help reduce the number
of DSH-related appeals and inform our future rulemaking efforts.
Comment: We received several comments in response to this request
for information. Commenters were generally supportive of the options
presented.
Response: We thank commenters for responding to this request for
information. We will take these comments into consideration for future
rulemaking.
G. Hospital Readmissions Reduction Program: Updates and Changes
(Sec. Sec. 412.150 through 412.154)
1. Statutory Basis for the Hospital Readmissions Reduction Program
Section 1886(q) of the Act, as amended by section 15002 of the 21st
Century Cures Act, establishes the Hospital Readmissions Reduction
Program. Under the Hospital Readmissions Reduction Program, Medicare
payments under the acute inpatient prospective payment system for
discharges from an applicable hospital, as defined under section
1886(d) of the Act, may be reduced to account for certain excess
readmissions. Section 15002 of the 21st Century Cures Act requires the
Secretary to compare hospitals with respect to the proportion of
beneficiaries who are dually eligible for Medicare and full-benefit
Medicaid (dual eligibles) in determining the extent of excess
readmissions. We refer readers to the FY 2016 IPPS/LTCH PPS final rule
(80 FR 49530 through 49531) and the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38221 through 38240) for a detailed discussion of and additional
information on the statutory history of the Hospital Readmissions
Reduction Program.
2. Regulatory Background
We refer readers to the following final rules for detailed
discussions of the regulatory background and descriptions of the
current policies for the Hospital Readmissions Reduction Program:
FY 2012 IPPS/LTCH PPS final rule (76 FR 51660 through
51676).
FY 2013 IPPS/LTCH PPS final rule (77 FR 53374 through
53401).
[[Page 42381]]
FY 2014 IPPS/LTCH PPS final rule (78 FR 50649 through
50676).
FY 2015 IPPS/LTCH PPS final rule (79 FR 50024 through
50048).
FY 2016 IPPS/LTCH PPS final rule (80 FR 49530 through
49543).
FY 2017 IPPS/LTCH PPS final rule (81 FR 56973 through
56979).
FY 2018 IPPS/LTCH PPS final rule (82 FR 38221 through
38240).
FY 2019 IPPS/LTCH PPS final rule (83 FR 41431 through
41439).
These rules describe the general framework for the implementation
of the Hospital Readmissions Reduction Program, including: (1) The
selection of measures for the applicable conditions/procedures; (2) the
calculation of the excess readmission ratio (ERR), which is used, in
part, to calculate the payment adjustment factor; (3) beginning in FY
2019, the calculation of the proportion of ``dually eligible'' Medicare
beneficiaries which is used to stratify hospitals into peer groups and
establish the peer group median ERRs; (4) the calculation of the
payment adjustment factor, specifically addressing the base operating
DRG payment amount, aggregate payments for excess readmissions
(including calculating the peer group median ERRs), aggregate payments
for all discharges, and the neutrality modifier; (5) the opportunity
for hospitals to review and submit corrections using a process similar
to what is currently used for posting results on Hospital Compare; (6)
the adoption of an extraordinary circumstances exception policy to
address hospitals that experience a disaster or other extraordinary
circumstance; (7) the clarification that the public reporting of ERRs
will be posted on an annual basis to the Hospital Compare website as
soon as is feasible following the review and corrections period; and
(8) the specification that the definition of ``applicable hospital''
does not include hospitals and hospital units excluded from the IPPS,
such as LTCHs, cancer hospitals, children's hospitals, IRFs, IPFs,
CAHs, and hospitals in United States territories and Puerto Rico.
We also have codified certain requirements of the Hospital
Readmissions Reduction Program at 42 CFR 412.152 through 412.154. In
section IV.G.12. of the preamble of this final rule, we are finalizing
our proposals to update the regulatory text to reflect both the
proposed policies that we are finalizing in this final rule as well as
previously finalized policies.
The Hospital Readmissions Reduction Program strives to put patients
first by ensuring they are empowered to make decisions about their own
healthcare along with their clinicians, using information from data-
driven insights that are increasingly aligned with meaningful quality
measures. We believe the Hospital Readmissions Reduction Program
incentivizes hospitals to improve health care quality and value, while
giving patients the tools and information needed to make the best
decisions for them. To that end, we are committed to monitoring the
efficacy of the program to ensure that the Hospital Readmissions
Reduction Program improves the lives of patients and reduces cost.
We note that we received public comments on the effectiveness and
design of the Hospital Readmissions Reduction Program in response to
the FY 2020 IPPS/LTCH PPS proposed rule. While we appreciate the
commenters' feedback, because we did not include in the proposed rule
any proposals related to these topics, we consider the public comments
to be out of the scope of the proposed rule. Therefore, we are not
addressing most of these comments in this final rule. However, all
topics that we consider to be out of scope of the proposed rule will be
taken into consideration when developing policies and program
requirements for future years.
Comment: Several commenters urged CMS to work with a range of
stakeholders--including hospitals, patients and health services
researchers--to assess whether the Hospital Readmissions Reduction
Program has had a negative impact on hospital mortality rates and other
unintended consequences, and noted that some emerging research may
suggest that the Hospital Readmissions Reduction Program's strong
incentive to reduce readmissions could be associated with higher
mortality rates.
Response: We believe that the Hospital Readmissions Reduction
Program has successfully reduced readmissions, which are both harmful
to patients and costly for the health care system. In June 2018, the
Medicare Payment Advisory Commission also stated that ``Readmission
rates clearly declined from 2010 to 2016. Given the totality of the
evidence and the findings in the literature, it appears that at least
some of this reduction was due to the incentives in the HRRP. The exact
share that is due to the HRRP and the share due to other factors is
difficult to disentangle.'' \317\ Keeping patients healthy is one of
our highest priorities, and we welcome any research reports pertaining
to the unintended consequences of the program. We will continue to
monitor literature that discusses the Program, and take this
information into account during future policymaking. We are committed
to monitoring any unintended consequences over time, such as the
inappropriate shifting of care or increased patient morbidity and
mortality, to ensure that the Hospital Readmissions Reduction Program
improves the lives of patients and reduces cost.
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\317\ Medicare Payment Advisory Commission (MedPAC), ``Chapter
1, The Effects of the Hospital Readmissions Reduction Program,''
Report to Congress: Medicare and Health Care Delivery System, June
2018. http://www.medpac.gov/docs/default-source/reports/jun18_ch1_medpacreport_sec.pdf?sfvrsn=0.
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3. Summary of Policies for the Hospital Readmissions Reduction Program
In the FY 2020 IPPS/LTCH PPS proposed rule, we proposed the
following policies: (1) A measure removal policy that aligns with the
removal factor policies previously adopted in other quality reporting
and quality payment programs; (2) an update to the program's definition
of ``dual-eligible'', beginning with the FY 2021 program year, to allow
for a 1-month lookback period in data sourced from the State Medicare
Modernization Act (MMA) files to determine dual-eligible status for
beneficiaries who die in the month of discharge; (3) a subregulatory
process to address any potential future nonsubstantive changes to the
payment adjustment factor components; and (4) an update to the
regulations at 42 CFR 412.152 and 412.154 to reflect proposed policies
and to codify additional previously finalized policies.
In this final rule, we are finalizing our proposals as proposed. We
discuss these finalized proposals in greater detail below.
4. Current Measures and Newly Finalized Measure Policies for FY 2020
and Subsequent Years
a. Current Measures
The Hospital Readmissions Reduction Program currently includes six
applicable conditions/procedures: Acute myocardial infarction (AMI);
heart failure (HF); pneumonia; elective primary total hip arthroplasty/
total knee arthroplasty (THA/TKA); chronic obstructive pulmonary
disease (COPD); and coronary artery bypass graft (CABG) surgery. We
refer readers to the FY 2019 IPPS/LTCH PPS final rule (83 FR 41431
through 41439) for more information about how the Hospital Readmissions
Reduction Program supports CMS' goal of bringing quality measurement,
transparency, and improvement together
[[Page 42382]]
with value-based purchasing to the hospital inpatient care setting
through the Meaningful Measures Initiative. We continue to believe the
measures we have adopted adequately meet the goals of the Hospital
Readmissions Reduction Program. In the FY 2020 IPPS/LTCH PPS proposed
rule (84 FR 19424), we did not propose to remove or adopt any
additional measures at this time.
b. Measure Removal Factors Policy
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19424), while we
did not propose to remove any measures from the Hospital Readmissions
Reduction Program, we proposed to adopt a measure removal factors
policy as part of our efforts to ensure that the Hospital Readmissions
Reduction Program measure set continues to promote improved health
outcomes for beneficiaries while minimizing the overall burden and
costs associated with the program. The adoption of measure removal
factors would align the Hospital Readmissions Reduction Program with
our other quality reporting and quality payment programs and help
ensure consistency in our measure evaluation methodology across
programs.
In the FY 2019 IPPS/LTCH PPS final rule, we updated a number of CMS
programs' considerations for removing measures from the respective
programs. Specifically, we finalized eight measure removal factors for
the Hospital IQR Program (83 FR 41540 through 41544), the Hospital VBP
Program (83 FR 41441 through 41446), the PCHQR Program (83 FR 41609
through 41611), and the LTCH QRP (83 FR 41625 through 41627).
We believe these removal factors are also appropriate for the
Hospital Readmissions Reduction Program, and we believe that alignment
between CMS quality programs is important to provide stakeholders with
a clear, consistent, and transparent process. Therefore, to align with
our other quality reporting and quality payment programs, we proposed
to adopt the following removal factors for the Hospital Readmissions
Reduction Program:
Factor 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);
Factor 2. Measure does not align with current clinical
guidelines or practice;
Factor 3. Measure can be replaced by a more broadly
applicable measure (across settings or populations) or a measure that
is more proximal in time to desired patient outcomes for the particular
topic;
Factor 4. Measure performance or improvement does not
result in better patient outcomes;
Factor 5. Measure can be replaced by a measure that is
more strongly associated with desired patient outcomes for the
particular topic;
Factor 6. Measure collection or public reporting leads to
negative unintended consequences other than patient harm; \318\
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\318\ When there is reason to believe that the continued
collection of a measure as it is currently specified raises
potential patient safety concerns, CMS will take immediate action to
remove a measure from the program and not wait for the annual
rulemaking cycle. In such situations, we would promptly retire such
measures followed by subsequent confirmation of the retirement in
the next IPPS rulemaking. When we do so, we will notify hospitals
and the public through the usual hospital and QIO communication
channels used for the Hospital Readmissions Reduction Program, which
include memo and email notification and QualityNet website articles
and postings.
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