[Federal Register Volume 86, Number 154 (Friday, August 13, 2021)]
[Rules and Regulations]
[Pages 44774-45615]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16519]
[[Page 44773]]
Vol. 86
Friday,
No. 154
August 13, 2021
Part II
Book 2 of 2 Books
Pages 44773-45620
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413, 425, et al.
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 2022 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Changes to
Medicaid Provider Enrollment; and Changes to the Medicare Shared
Savings Program; Final Rule
Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules
and Regulations
[[Page 44774]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, 425, 455, and 495
[CMS-1752-F and CMS-1762-F]
RINs 0938-AU44 and 0938-AU56
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 2022 Rates; Quality
Programs and Medicare Promoting Interoperability Program Requirements
for Eligible Hospitals and Critical Access Hospitals; Changes to
Medicaid Provider Enrollment; and Changes to the Medicare Shared
Savings Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule revises 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 2022 and to implement
certain recent legislation. The final rule also updates 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 2022. It also finalizes a May 10,
2021 interim final rule with comment period regarding rural
reclassification through the Medicare Geographic Classification Review
Board (MGCRB). The final rule also implements changes and updates for
the Medicare Promoting Interoperability, Hospital Value-Based
Purchasing, Hospital Readmissions Reduction, Hospital Inpatient Quality
Reporting, Hospital-Acquired Condition Reduction, the PPS-Exempt Cancer
Hospital Reporting, and the Long-Term Care Hospital Quality Reporting
programs. It also finalizes provisions that alleviate a longstanding
problem related to claiming Medicare bad debt and provide a
participation opportunity for eligible accountable care organizations
(ACOs).
DATES: This final rule is effective October 1, 2021.
FOR FURTHER INFORMATION CONTACT:
Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-
4487, Operating Prospective Payment, MS-DRG Relative Weights, Wage
Index, Hospital Geographic Reclassifications, Capital Prospective
Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital
(DSH) Payment Adjustment, Sole Community Hospitals (SCHs), Medicare-
Dependent Small Rural Hospital (MDH) Program, Low-Volume Hospital
Payment Adjustment, and Critical Access Hospital (CAH) Issues.
Emily Lipkin, (410) 786-3633 and Jim Mildenberger, (410) 786-4551,
Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG
Relative Weights Issues.
Emily Forrest, (202) 205-1922, Market-Based Data Collection and
Market-Based MS-DRG Relative Weight Methodology Issues.
Allison Pompey, (410) 786-2348, New Technology Add On Payments and
New COVID-19 Treatments Add-on Payments Issues.
Mady Hue, (410) 786-4510, and Andrea Hazeley, (410) 786-3543, MS-
DRG Classifications Issues.
Mollie Knight, (410) 786-7948, and Bridget Dickensheets, (410) 786-
8670, Rebasing and Revising the Hospital Market Baskets Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, (410) 786-0110, Frontier Community Health Integration
Project Demonstration Issues.
Pamela Brown, [email protected], Hospital Readmissions
Reduction Program--Administration Issues.
Jim Poyer, [email protected], Hospital Readmissions Reduction
Program--Readmissions--Measures Issues.
Jennifer Tate, [email protected], Hospital-Acquired
Condition Reduction Program--Administration Issues.
Yuling Li, (410) 786-8421, Hospital-Acquired Condition Reduction
Program--Measures Issues.
Julia Venanzi, [email protected], Hospital Inpatient
Quality Reporting and Hospital Value-Based Purchasing Programs--
Administration Issues
Katrina Hoadley, [email protected], Hospital Inpatient
Quality Reporting and Hospital Value-Based Purchasing Programs--
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.
Annie Hollis, [email protected], PPS-Exempt Cancer Hospital
Quality Reporting--Administration Issues.
Katrina Hoadley, [email protected], PPS-Exempt Cancer
Hospital Quality Reporting Program-Measure Issues
Christy Hughes, (410) 786-5662, Long-Term Care Hospital Quality
Reporting Program--Data Reporting Issues.
Jessica Warren, [email protected] and Elizabeth Holland,
[email protected], Promoting Interoperability Programs.
Candace Anderson, (410) 786-1553, Medicaid Enrollment of Medicare
Providers and Suppliers for Purposes of Processing Claims for Cost-
Sharing for Services Furnished to Dually Eligible Beneficiaries.
Naseem Tarmohamed, (410) 786-0814, or
[email protected], for issues related to the Shared
Savings Program.
SUPPLEMENTARY INFORMATION:
Tables Available Through the Internet on the CMS Website
The IPPS tables for this FY 2022 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 2022 IPPS Final
rule Home Page'' or ``Acute Inpatient--Files for Download.'' The LTCH
PPS tables for this FY 2022 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-1752-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 2022 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 Proposed and Interim Final Rulemakings
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E. Advancing Health Information Exchange
F. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH
PPS Ratesetting
II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG)
Classifications and Relative Weights
A. Background
B. Adoption of the MS-DRGs and MS-DRG Reclassifications
C. FY 2022 MS-DRG Documentation and Coding Adjustment
D. Changes to Specific MS-DRG Classifications
E. Recalibration of the FY 2022 MS-DRG Relative Weights
F. Add-On Payments for New Services and Technologies for FY 2022
III. Changes to the Hospital Wage Index for Acute Care Hospitals
A. Background
B. Worksheet S-3 Wage Data for the Proposed FY 2022 Wage Index
C. Verification of Worksheet S-3 Wage Data
D. Method for Computing the Proposed FY 2022 Unadjusted Wage
Index
E. Occupational Mix Adjustment to the FY 2022 Wage Index
F. Analysis and Implementation of the Occupational Mix
Adjustment and the Proposed FY 2022 Occupational Mix Adjusted Wage
Index
G. Application of the Rural Floor, Application of the State
Frontier Floor, and Continuation of the Low Wage Index Hospital
Policy, and Budget Neutrality Adjustment
H. FY 2022 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 2022 Wage Index
IV. Rebasing and Revising of the Hospital Market Baskets for Acute
Care Hospitals
A. Background
B. Rebasing and Revising the IPPS Market Basket
C. Market Basket for Certain Hospitals Presently Excluded From
the IPPS
D. Rebasing and Revising the Capital Input Price Index (CIPI)
V. Other Decisions and Changes to the IPPS for Operating System
A. Changes in the Inpatient Hospital Updates for FY 2021 (Sec.
412.64(d))
B. Rural Referral Centers (RRCs)--Annual Updates to Case-Mix
Index and Discharge Criteria (Sec. 412.96)
C. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
D. Indirect Medical Education (IME) Payment Adjustment Factor
(Sec. 412.105)
E. Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2022 (Sec. 412.106)
F. Counting Days Associated With Section 1115 Demonstration
Projects in the Medicaid Fraction
G. Hospital Readmissions Reduction Program: Updates and Changes
(Sec. Sec. [thinsp]412.150 through 412.154)
H. Hospital Value-Based Purchasing (VBP) Program: Updates and
Changes (Sec. Sec. [thinsp]412.160 through 412.167)
I. Hospital-Acquired Conditions (HAC) Reduction Program: Updates
and Changes (Sec. 412.170)
J. Proposed 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
L. Market-Based MS-DRG Relative Weight--Policy Changes (Sec.
413.20)
M. Payment Adjustment for CAR T-cell Clinical Trial and Expanded
Use for Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
VI. Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Annual Update for FY 2022
VII. Changes for Hospitals Excluded From the IPPS
A. Rate-of-Increase in Payments to Excluded Hospitals for FY
2022
B. Critical Access Hospitals (CAHs)
VIII. Changes to the Long-Term Care Hospital Prospective Payment
System (LTCH PPS) for FY 2022
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2021
C. Changes to the LTCH PPS Payment Rates and Other Proposed
Changes to the LTCH PPS for FY 2022
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Advancing to Digital Quality Measurement and the Use of Fast
Healthcare Interoperability Resources (FHIR) in Hospital Quality
Programs--Request for Information
B. Closing the Health Equity Gap in CMS Hospital Quality
Programs--Request For Information
C. Hospital Inpatient Quality Reporting (IQR) Program
D. Changes to the PPS-Exempt Cancer Hospital Quality Reporting
(PCHQR) Program
E. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
F. Changes to the Medicare Promoting Interoperability Programs
X. Changes for Hospitals and Other Providers and Suppliers
A. Medicaid Enrollment of Medicare Providers and Suppliers for
Purposes of Processing Claims for Cost-Sharing for Services
Furnished to Dually Eligible Beneficiaries--Policy Changes (Sec.
455.410)
B. Medicare Shared Savings Program--Policy Changes (Sec.
425.600)
XI. MedPAC Recommendations
XII. Other Required Information
A. Publicly Available Files
B. Collection of Information Requirements
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, 2021 and Payment Rates for LTCHs Effective for
Discharges Occurring on or After October 1, 2021
I. Summary and Background
II. Changes to Prospective Payment Rates for Hospital Inpatient
Operating Costs for Acute Care Hospitals for FY 2022
A. Calculation of the Proposed 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 2022
A. Determination of the Federal Hospital Inpatient Capital-
Related Prospective Payment Rate Update for FY 2022
B. Calculation of the Inpatient Capital-Related Prospective
Payments for FY 2022
C. Capital Input Price Index
IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-
Increase Percentages for FY 2022
V. Changes to the Payment Rates for the LTCH PPS for FY 2022
A. LTCH PPS Standard Federal Payment Rate for FY 2022
B. Adjustment for Area Wage Levels Under the LTCH PPS for FY
2022
C. 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 2022
VI. Tables Referenced in This Rule Generally 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
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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 Promoting
Interoperability Program
O. Alternatives Considered
P. Overall Conclusion
Q. 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
Appendix B: Recommendation of Update Factors for Operating Cost Rates
of Payment for Inpatient Hospital Services
I. Background
II. Inpatient Hospital Update for FY 2022
A. FY 2022 Inpatient Hospital Update
B. Update for SCHs and MDHs for FY 2022
C. FY 2022 Puerto Rico Hospital Update
D. Update for Hospitals Excluded from the IPPS for FY 2022
E. Update for LTCHs for FY 2022
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 2022 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 FY 2022
final rule, we are continuing policies to address wage index
disparities impacting low wage index hospitals. We are finalizing our
implementation of Section 9831 of the American Rescue Plan Act of 2021,
which permanently established the imputed floor wage index policy. In
addition, we are finalizing the regulations implemented in CMS-1762-IFC
(86 CFR 24735-24739), which allowed hospitals with a rural
redesignation under the Act to reclassify through the MGCRB using the
rural reclassified area as the geographic area in which the hospital is
located. This final rule includes policies related to new technology
add-on payments. We are also finalizing our proposal to repeal the
collection of market-based rate information on the Medicare cost report
and the market-based MS-DRG relative weight methodology.
We are establishing new requirements and revising existing
requirements for eligible hospitals and CAHs participating in the
Medicare Promoting Interoperability Program.
We are providing estimated and newly established performance
standards for the Hospital Value-Based Purchasing (VBP) Program, and
updated policies for the Hospital Readmissions Reduction Program,
Hospital Inpatient Quality Reporting (IQR) Program, Hospital VBP
Program, Hospital-Acquired Condition (HAC) Reduction Program, Long-Term
Care Hospital Quality Reporting Program (LTCH QRP), and the PPS-Exempt
Cancer Hospital Reporting (PCHQR) Program. Additionally, due to the
impact of the COVID-19 PHE on measure data used in our value-based
purchasing programs, we are finalizing our proposal to suppress several
measures in the Hospital VBP, HAC Reduction, and Hospital Readmissions
Reduction Programs. As a result of these measure suppressions for the
Hospital VBP Program we are also implementing a special scoring
methodology for FY 2022 that results in a value-based incentive payment
amount that matches the 2-percent reduction to the base operating DRG
payment amount.
We note that the FY 2022 IPPS/LTCH PPS proposed rule included our
proposals related to the implementation of the provisions of the
Consolidated Appropriations Act (CAA) of 2021 related to payments to
hospitals for direct graduate medical education (GME) and indirect
medical education (IME) costs. Please refer to the proposed rule (86 FR
25502 through 25524) for additional background information on these
proposals. Due to the number and nature of the comments that we
received on the implementation of sections 126, 127 and 131 of the CAA
of 2021 relating to payments to hospitals for direct GME and IME costs,
we will address public comments associated with these issues in future
rulemaking.
In addition, we note that the FY 2022 IPPS/LTCH PPS proposed rule
included our proposals related to the organ acquisition payment policy
for transplant hospitals, donor community hospitals and organ
procurement organizations. Please refer to the proposed rule (86 FR
25656 through 25676) for additional background information on these
proposals. Due to the number and nature of the comments that we
received on the organ acquisition payment policy proposals we will
address public comments associated with these issues in future
rulemaking.
Under various statutory authorities, we either discuss continued
program implementation or are making changes to the Medicare IPPS, to
the LTCH PPS, other related payment methodologies and programs for FY
2022 and subsequent fiscal years, and other policies and provisions
included in this rule. 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 (Public Law (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 1886(a)(4) of the Act, which specifies that costs
of approved
[[Page 44777]]
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 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(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 directs 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.
Section 1886(m)(5) of the Act, which requires the
Secretary to reduce by two percentage points the annual update to the
standard Federal rate for discharges for a long-term care hospital
(LTCH) during the rate year for LTCHs that do not submit data in the
form, manner, and at a time, specified by the Secretary.
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. 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.
Section 1899 of the Act which established the Medicare
Shared Savings Program (Shared Savings Program) to facilitate
coordination and cooperation among providers and suppliers to improve
the quality of care for Medicare fee-for-service (FFS) beneficiaries
and reduce the rate of growth in expenditures under Medicare Parts A
and B.
Section 1902(kk)(3) of the Act, as amended by section
6401(b) of the Affordable Care Act, which mandates that states require
providers and suppliers to comply with the same disclosure requirements
established by the Secretary under section 1866(j)(5) of the Act.
Section 2107(e)(1) of the Act, as amended by section
6401(c) of the Affordable Care Act, which makes the requirements of
section 1902(kk) of the Act, including the disclosure requirements,
applicable to CHIP.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this final
rule. In general, these major provisions are being finalized as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
changes in this final 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 2022, we are making an adjustment of +0.5
percent to the standardized amount.
b. Extension of the New COVID-19 Treatments Add-on Payment (NCTAP)
In response to the COVID-19 PHE, we established the New COVID-19
Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases
that meet certain criteria (85 FR 71157 and 71158). We believe that as
drugs and biological products become available and are authorized for
emergency use or approved by Food and Drug Administration (FDA) for the
treatment
[[Page 44778]]
of COVID-19 in the inpatient setting, it is appropriate to increase the
current IPPS payment amounts to mitigate any potential financial
disincentives for hospitals to provide new COVID-19 treatments during
the PHE. Therefore, effective for discharges occurring on or after
November 2, 2020 and until the end of the PHE for COVID-19, CMS
established the NCTAP.
We anticipate that there might be inpatient cases of COVID-19,
beyond the end of the PHE, for which payment based on the assigned MS-
DRG may not adequately reflect the additional cost of new COVID-19
treatments. In order to continue to mitigate potential financial
disincentives for hospitals to provide these new treatments, and to
minimize any potential payment disruption immediately following the end
of the PHE, we believe that the NCTAP should remain available for cases
involving eligible treatments for the remainder of the fiscal year in
which the PHE ends (for example, until September 30, 2022). After
review of public comments received, and for the reasons discussed in
section II.F. of the preamble of this final rule, we are finalizing to
extend the NCTAP through the end of the fiscal year in which the PHE
ends for all eligible products, including those approved for new
technology add-on payments for FY 2022, with any new technology add-on
payment reducing the amount of the NCTAP.
c. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH PPS
Ratesetting
For the IPPS and LTCH PPS ratesetting, our longstanding goal is
always to use the best available data overall. In section I.F. of the
preamble of this final rule, we discuss our analysis of the best
available data for use in the development of this FY 2022 IPPS/LTCH PPS
final rule given the potential impact of the public health emergency
(PHE) for the Coronavirus Disease (COVID-19). As discussed in section
I.F. of the preamble of this final rule, we are using the FY 2019 data,
such as the FY 2019 MedPAR file, for the FY 2022 ratesetting for
circumstances where the FY 2020 data is significantly impacted by the
COVID-19 PHE, primarily in that the utilization of inpatient services
reflect generally markedly different utilization for certain types of
services in FY 2020 than would have been expected in the absence of the
PHE.
d. Continuation of the Low Wage Index Hospital Policy
To help mitigate wage index disparities between high wage and low
hospitals, in the FY 2020 IPPS/LTCH PPS rule (84 FR 42326 through
42332), we adopted a policy to increase the wage index values for
certain hospitals with low wage index values (the low wage index
hospital policy). This policy was adopted in a budget neutral manner
through an adjustment applied to the standardized amounts for all
hospitals. We also indicated that 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. Therefore, for FY 2022,
we are continuing the low-wage index hospital policy, and are also
applying this policy in a budget neutral manner by applying an
adjustment to the standardized amounts.
e. Implementation of Section 9831 of the American Rescue Plan Act of
2021 (Pub. L. 117-2) Imputed Floor Wage Index Policy for All-Urban
States
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E))
to establish a minimum area wage index for hospitals in all-urban
States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by
section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage
index policy for all-urban States effective for discharges on or after
October 1, 2021 (FY 2022) with no expiration date using the methodology
described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018.
Furthermore, section 1886(d)(3)(E)(iv)(III) of the Act provides that
the imputed floor wage index shall not be applied in a budget neutral
manner. We refer readers to section III.G.2. of this final rule for a
summary of the provisions of section 9831 of Public Law 117-2 that we
are implementing in this final rule.
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, Medicare 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 final rule, we are updating our estimates of the three
factors used to determine uncompensated care payments for FY 2022. We
are also continuing 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. Consistent
with the policy adopted in the FY 2021 IPPS/LTCH PPS final rule for FY
2022 and subsequent fiscal years, we are using a single year of data on
uncompensated care costs from Worksheet S-10 of the FY 2018 cost
reports to calculate Factor 3 in the FY 2022 methodology for all
eligible hospitals with the exception of Indian Health Service (IHS)
and Tribal hospitals and Puerto Rico hospitals. For IHS and Tribal
hospitals and Puerto Rico hospitals we are finalizing our proposal to
continue to use the low-income insured days proxy to calculate Factor 3
for these hospitals for FY 2022. We are also finalizing certain
methodological changes for calculating Factor 3 for FY 2022.
g. Modification of Limitations on Redesignation by the Medicare
Geographic Classification Review Board (MGCRB)
In May 10, 2021 Federal Register (86 FR 24735), concurrent with the
FY 2022 IPPS/LTCH PPS proposed rule, we published an interim final rule
with comment period (IFC) (CMS-1762-IFC) that amended our current
regulations to allow hospitals with a rural redesignation under the Act
to reclassify through the Medicare MGCRB using the rural reclassified
area as the geographic area in which the hospital is located. These
regulatory changes align our policy with the decision in Bates County
Memorial Hospital v. Azar, effective with reclassifications beginning
with fiscal year (FY) 2023. We respond to the public comments on CMS-
1762-IFC in this final rule, and finalize the regulatory changes made
therein.
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
[[Page 44779]]
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 2022 IPPS/LTCH PPS final rule, we are finalizing
the following policies: (1) To adopt a cross-program measure
suppression policy for the duration of the public health emergency for
COVID-19; (2) to suppress the Hospital 30-Day, All-Cause, Risk-
Standardized Readmission Rate (RSRR) following Pneumonia
Hospitalization measure (NQF #0506) for the FY 2023 program year; (3)
to modify the remaining five condition-specific readmission measures to
exclude COVID-19 diagnosed patients from the measure denominators,
beginning with the FY 2023 program year; (4) to use the MedPAR data
that aligns with the applicable period for FY 2022; (5) to
automatically adopt the use of MedPAR data corresponding to the
applicable period beginning with the FY 2023 program year and all
subsequent program years, unless otherwise specified by the Secretary;
and (6) to update the regulatory text to reflect that our Hospital
Compare website has been renamed and is now referred to as Care
Compare. We are clarifying our Extraordinary Circumstances Exceptions
(ECE) policy, and we also requested public comment on opportunities to
advance health equity through possible future stratification of results
by race and ethnicity for condition/procedure-specific readmission
measures and by expansion of standardized data collection to additional
social factors, such as language preference and disability status. We
also sought comment on mechanisms of incorporating other demographic
characteristics into analyses that address and advance health equity,
such as the potential to include administrative and self-reported data
to measure co-occurring disability status.
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 final rule, we are finalizing our proposals to: (1) Establish a
measure suppression policy for the duration of the public health
emergency for COVID-19; (2) suppress the Hospital Consumer Assessment
of Healthcare Providers and Systems (HCAHPS), Medicare Spending Per
Beneficiary (MSPB), and five Healthcare-Associated Infection (HAI)
measures, for the FY 2022 program year; and (3) suppress the Hospital
30-Day, All-Cause, Risk-Standardized Mortality Rate Following Pneumonia
(PN) Hospitalization (MORT-30-PN) measure for the FY 2023 program year.
We are also finalizing our proposal to revise the scoring and payment
methodology for the FY 2022 program year such that hospitals will not
receive Total Performance Scores. We believe that awarding a TPS to any
hospital based off the remaining measures that are not suppressed would
not result in a fair national comparison and, as a result, are not
awarding a TPS to any hospital for the FY 2022 program year. Instead,
we are finalizing our proposal to award each hospital a payment
incentive multiplier that results in a value-based incentive payment
that is equal to the amount withheld for the fiscal year (2 percent).
We are finalizing our proposal to remove the CMS Patient Safety and
Adverse Events Composite (CMS PSI 90) measure beginning with FY 2023
because the costs associated with the measure outweigh the benefit of
its use in the program. We are also finalizing our proposal to update
the baseline periods for certain measures affected by the ECE granted
in response to the COVID-19 PHE and making a technical update to our
terminology used in the Hospital VBP Program regulations.
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. In this FY 2022 IPPS/LTCH PPS final rule, we are: (1) Clarifying
our ECE policy; (2) finalizing our proposal to adopt a cross-program
measure suppression policy for the duration of the public health
emergency for COVID-19; (3) finalizing our proposal to apply that
measure suppression policy to suppress certain program data from FY
2022, FY 2023, and FY 2024 HAC Reduction Programs; and (4) finalizing
our proposal to update the regulatory text to reflect that the Hospital
Compare website has been renamed and is now referred to as Care
Compare.
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 2022 IPPS/LTCH PPS final rule, we are making several
changes. We are finalizing the adoption of five new measures: (1) A new
structural measure--Maternal Morbidity Structural Measure--beginning
with a shortened reporting period from October 1, 2021 through December
31, 2021 affecting the CY 2021 reporting period/FY 2023 payment
determination; (2) the Hybrid Hospital-Wide All-Cause Risk Standardized
Mortality (Hybrid HWM) measure in a stepwise fashion, beginning with a
voluntary reporting period from July 1, 2022 through June 30, 2023, and
followed by mandatory reporting from July 1, 2023 through June 30,
2024, affecting the FY 2026 payment determination and for subsequent
years; (3) the COVID-19 Vaccination Coverage among Health Care
Personnel (HCP) measure beginning with a shortened reporting period
from October 1, 2021 through December 31, 2021, affecting the CY 2021
reporting period/FY 2023 payment determination and with quarterly
reporting beginning with the FY 2024 payment determination and for
subsequent years; and two medication-related adverse event eCQMs
beginning with the CY 2023 reporting period/FY 2025 payment
determination; (4) Hospital Harm-Severe Hypoglycemia eCQM (NQF #3503e);
and (5) Hospital Harm-Severe Hyperglycemia eCQM (NQF #3533e).
We are also finalizing the removal of three measures: (1) Exclusive
Breast Milk Feeding (PC-05) (NQF #0480) beginning with the FY 2026
payment determination; (2) Admit Decision Time to ED Departure Time for
Admitted Patients (ED-2) (NQF #0497) beginning with the FY 2026 payment
determination; and (3) the Discharged on Statin Medication eCQM (STK-
06)
[[Page 44780]]
(NQF #0439), beginning with the FY 2026 payment determination. We are
not finalizing our proposals to remove the following two measures: (1)
Death Among Surgical Inpatients with Serious Treatable Complications
(CMS PSI-04); and (2) Anticoagulation Therapy for Atrial Fibrillation/
Flutter eCQM (STK-03) (NQF #0436).
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25070), we
requested comment from stakeholders on the potential future development
and inclusion of two measures: (1) A mortality measure for patients
admitted with COVID-19; and (2) a patient-reported outcomes measure
following elective total hip and/or total knee arthroplasty (THA/TKA).
We also requested comment from stakeholders on ways we can leverage
measures to address gaps in existing health equity generally as well as
comment on: (1) Potential future confidential stratified reporting for
the Hospital-Wide All-Cause Unplanned Readmission (HWR) measure using
both dual eligibility and race/ethnicity; and (2) potential future
reporting of a structural measure to assess the degree of hospital
leadership engagement in health equity performance data. We also
requested feedback across programs on potential actions and priority
areas that would enable the continued transformation of our quality
measurement toward greater digital capture of data and use of the FHIR
standard.
In addition, we are finalizing our proposal that beginning with the
CY 2023 reporting period/FY 2025 payment determination, hospitals will
be required to use certified technology that has been updated
consistent with the 2015 Edition Cures Update and clarifying that
certified technology must support the reporting requirements for all
available eCQMs. We also are finalizing our provision that hybrid
measures comply with the same certification requirements as eCQMs,
specifically that EHR technology must be certified to the 2015 Edition
Cures Update. We are revising 42 CFR 412.140(a)(2) and 42 CFR
412.140(e)(2)(iii) to replace the terms ``Security Administrator'' and
``System Administrator'' with the term ``security official'' in
alignment with other CMS quality programs. Due to an updated URL for
the QualityNet website from QualityNet.org to QualityNet.cms.gov, we
are also revising Hospital IQR Program regulations at 42 CFR
412.140(a)(1) and 42 CFR 412.140(c)(2)(i) to reflect updates to the
QualityNet website. Lastly, we are finalizing our proposal to extend
the effects of the educational review process for chart-abstracted
measures beginning with validations affecting the FY 2024 payment
determination.
l. PPS-Exempt Cancer Hospital Quality Reporting Program
Section 1866(k)(1) of the Act requires, for purposes of FY 2014 and
each subsequent fiscal year, that a hospital described in section
1886(d)(1)(B)(v) of the Act (a PPS-exempt cancer hospital, or a PCH)
submit data in accordance with section 1866(k)(2) of the Act with
respect to such fiscal year. There is no financial impact to PCH
Medicare payment if a PCH does not participate.
In this final rule, we are removing the Oncology: Plan of Care for
Pain--Medical Oncology and Radiation Oncology (NQF #0383) (PCH-15)
measure beginning with the FY 2024 program year, adopting the COVID-19
Vaccination Coverage among Healthcare Personnel measure beginning with
the FY 2023 program year, making a technical update to the terminology
we use in the program, and codifying existing PCHQR Program policies in
our regulations.
m. Medicare Promoting Interoperability Program
For purposes of reducing the burden on eligible hospitals and CAHs,
we are making several changes to the Medicare Promoting
Interoperability Program. Specifically, we are: (1) Continuing the EHR
reporting period of a minimum of any continuous 90-day period for new
and returning eligible hospitals and CAHs for CY 2023 and increasing
the EHR reporting period to a minimum of any continuous 180-day period
for new and returning eligible hospitals and CAHs for CY 2024; (2)
maintaining the Electronic Prescribing Objective's Query of PDMP
measure as optional while increasing its available bonus from 5 points
to 10 points for the EHR reporting period in CY 2022; (3) adding a new
Health Information Exchange (HIE) Bi-Directional Exchange measure as a
yes/no attestation to the HIE objective as an optional alternative to
the two existing measures beginning with the EHR reporting period in CY
2022; (4) requiring reporting a ``yes'' on four of the existing Public
Health and Clinical Data Exchange Objective measures (Syndromic
Surveillance Reporting, Immunization Registry Reporting, Electronic
Case Reporting, and Electronic Reportable Laboratory Result Reporting)
or requesting the applicable exclusion(s); (5) adding a new measure to
the Protect Patient Health Information objective that requires eligible
hospitals and CAHs to attest to having completed an annual assessment
of SAFER Guides beginning with the EHR reporting period in CY 2022; (6)
removing attestation statements 2 and 3 from the Promoting
Interoperability Program's prevention of information blocking
requirement; (7) increasing the minimum required score for the
objectives and measures from 50 points to 60 points (out of 100 points)
in order to be considered a meaningful EHR user; and (8) adopting two
new eCQMs to the Medicare Promoting Interoperability Program's eCQM
measure set beginning with the reporting period in CY 2023, in addition
to removing three eCQMs from the measure set beginning with the
reporting period in CY 2024, which updates are in alignment with the
eCQM updates being finalized for the Hospital IQR Program. We are
amending our regulation texts as necessary to incorporate several of
these changes. We are not finalizing our proposal to remove the
Anticoagulation Therapy for Atrial Fibrillation/Flutter eCQM (STK-03)
(NQF #0436) in alignment with the Hospital IQR Program. We are also not
finalizing our proposal to modify the Provide Patients Electronic
Access to Their Health Information measure by requiring eligible
hospitals and CAHs to ensure that patient health information remains
available to the patient (or patient-authorized representative). We
will consider the feedback we received for future rulemaking.
n. Repeal of Market-Based Data Collection and Market-Based MS-DRG
Relative Weight Methodology
As discussed in section V.L. of the preamble of this final rule, we
are finalizing our proposal, without modification, to repeal the
requirement that a hospital report on the Medicare cost report the
median payer-specific negotiated charge that the hospital has
negotiated with all of its MA organization payers, by MS-DRG, for cost
reporting periods ending on or after January 1, 2021. We are also
finalizing our proposal, without modification, to repeal the market-
based MS-DRG relative weight methodology adopted for calculating the
MS-DRG relative weights effective in FY 2024, and to continue using the
existing cost-based methodology for calculating the MS-DRG relative
weights for FY 2024 and subsequent fiscal years. Lastly, we solicited
comment on alternative approaches or data sources that could be used in
Medicare fee-for-service (FFS) ratesetting. We will continue to
consider these comments as applicable.
[[Page 44781]]
o. Medicare Shared Savings Program
We are making changes to policies for the Shared Savings Program,
which was established under section 1899 of the Act, to allow eligible
ACOs participating in the BASIC track's glide path the option to elect
to forgo automatic advancement along the glide path's increasing levels
of risk and potential reward for performance year (PY) 2022. Under the
policy we are adopting in this final rule, prior to the automatic
advancement for PY 2022, an eligible ACO may elect to remain in the
same level of the BASIC track's glide path in which it participated
during PY 2021. For PY 2023, an ACO that elects this advancement
deferral option will be automatically advanced to the level of the
BASIC track's glide path in which it would have participated during PY
2023 if it had advanced automatically to the required level for PY 2022
(unless the ACO elects to advance more quickly before the start of PY
2023).
3. Summary of Costs and Benefits
The following table provides a summary of the costs, savings,
benefits associated with the major provisions described in section
I.A.3. of the preamble of this final rule.
BILLING CODE 4120-01-P
[[Page 44782]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.000
[[Page 44783]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.001
[[Page 44784]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.002
BILLING CODE 4120-01-C
[[Page 44785]]
B. Background Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of 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. In general, 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. In addition, certain transformative new devices and certain
antimicrobial products may qualify under an alternative inpatient new
technology add-on payment pathway by demonstrating that, absent an add-
on payment, they 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. 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 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
[[Page 44786]]
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). 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, effective for LTCH's cost
reporting periods beginning in FY 2016 cost reporting period, 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.
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 Implemented in This
Final Rule
1. 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.
2. The American Rescue Plan Act of 2021 (Pub. L. 117-2)
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2) amended section 1886(d)(3)(E) of the Act (42 U.S.C. 1395ww(d)(3)(E))
to establish a minimum area wage index for hospitals in all-urban
States. Specifically, section 1886(d)(3)(E)(iv) of the Act (as added by
section 9831(a)(2) of Pub. L. 117-2) reinstates the imputed floor wage
index policy for all-urban states effective for discharges on or after
October 1, 2021 (FY 2022) with no expiration date using the methodology
described in 42 CFR 412.64(h)(4)(vi) as in effect for FY 2018.
D. Issuance of Proposed and Interim Final Rulemakings
1. FY 2022 IPPS/LTCH PPS Proposed Rule
In the FY 2022 IPPS/LTCH PPS proposed rule appearing in the May 10,
2021 Federal Register (86 FR 25070), we set forth proposed payment and
policy changes to the Medicare IPPS for FY 2022 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 2022.
The following is a general summary of the changes that we proposed
to make.
a. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of the proposed rule, we include--
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2022.
Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2022 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 2022 status of new
technologies approved for add-on payments for FY 2022, a presentation
of our evaluation and analysis of the FY 2022 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) for applications not submitted under an alternative pathway,
and a discussion of the proposed status of FY 2022 new technology
applicants under the alternative pathways for certain medical devices
and certain antimicrobial products.
A proposal to extend the New COVID-19 Treatments Add-on
Payment (NCTAP) through the end of the fiscal year in which the PHE
ends for certain products and discontinue NCTAP for products approved
for new technology add-on payments in FY 2022.
b. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of the proposed rule, we proposed
to revise to the wage index for acute care hospitals and the annual
update of the wage data. Specific issues addressed include, but were
not limited to, the following:
The proposed FY 2022 wage index update using wage data
from cost reporting periods beginning in FY 2018.
Calculation, analysis, and implementation of the proposed
occupational mix adjustment to the wage index for acute care hospitals
for
[[Page 44787]]
FY 2022 based on the 2019 Occupational Mix Survey.
Proposed application of the rural floor and the frontier
State floor, and continuation of the low wage index hospital policy.
Proposed implementation of the imputed floor wage index
policy for all-urban States under section 9831 of the American Rescue
Plan Act of 2021 (Pub. L. 117-2).
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 revisions to the regulations at Sec. 412.278
regarding the Administrator's Review of MGCRB decisions.
Proposed changes to rural reclassification cancellation
requirements at Sec. 412.103(g).
Proposed adjustment to the wage index for acute care
hospitals for FY 2022 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 2022 wage
index.
c. Proposed Rebasing and Revising of the Hospital Market Baskets
In section IV. of the preamble of the proposed rule, we proposed to
rebase and revise the hospital market baskets for acute care hospitals
and update the labor-related share.
d. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. 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 inpatient hospital update for FY 2022.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
The statutorily required IME adjustment factor for FY
2022.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Proposed requirements for payment adjustments under the
Hospital Readmissions Reduction Program for FY 2022.
The provision of estimated and newly established
performance standards for the calculation of value-based incentive
payments, as well as a proposal to suppress multiple measures and
provide net-neutral payment adjustments under the Hospital Value-Based
Purchasing Program.
Proposed requirements for payment adjustments to hospitals
under the HAC Reduction Program for FY 2022.
Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2022.
Proposed revisions to the regulations regarding the
counting of days associated with section 1115 demonstration projects in
the Medicaid fraction.
Proposals to implement provisions of the Consolidated
Appropriations Act relating to payments to hospitals for direct
graduate medical education (GME) and indirect medical education (IME)
costs.
Proposed repeal of the market-based data collection
requirement and market-based MS-DRG relative weight methodology
e. Proposed FY 2022 Policy Governing the IPPS for Capital-Related Costs
In section VI. 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 2022.
f. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of the proposed rule, we discussed
the following:
Proposed changes to payments to certain excluded hospitals
for FY 2022.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
g. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of the 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 2022.
h. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of the proposed rule, we addressed
the following:
We requested information on CMS's future plans to define
digital quality measures (dQMs) in CMS Hospital Quality Programs and on
CMS' continued efforts to close the health equity gap in CMS Hospital
Quality Programs.
Proposed requirements for the Hospital Inpatient Quality
Reporting (IQR) Program.
Proposed changes to the requirements for the quality
reporting program for PPS-exempt cancer hospitals (PCHQR Program).
Proposed changes to the requirements under the LTCH
Quality Reporting Program (QRP). We also sought information on CMS's
future plans to define digital quality measures (dQMs) for the LTCH QRP
and on CMS' continued efforts to close the health equity gap.
Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare Promoting
Interoperability Program.
i. Other Proposals Included in the Proposed Rule
Section X. of the preamble of the proposed rule included the
following proposals:
Proposed changes pertaining to Medicaid enrollment of
Medicare-enrolled providers and suppliers to 42 CFR part 455.410 and
request for comment on provider experiences where State Medicaid
agencies apply the Medicaid payment and coverage rules to a claim for a
Medicare service rather than adjudicating the claim for Medicare cost-
sharing liability.
Proposed changes pertaining to Medicare's share of organ
acquisition costs transplanted into Medicare beneficiaries and the
charges for services provided to cadaveric organ donors by donor
community hospitals and transplants hospitals.
Proposed changes pertaining to the Shared Savings Program
that would allow eligible ACOs participating in the BASIC track's glide
path to maintain their current level of participation for PY 2022.
j. Other Provisions of the Proposed Rule
Section XI. of the preamble to the proposed rule included our
discussion of the MedPAC Recommendations.
Section XII. of the preamble to the proposed rule includes the
following:
A descriptive listing of the public use files associated
with the proposed rule.
The collection of information requirements for entities
based on our proposals.
Information regarding our responses to public comments.
k. 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
[[Page 44788]]
forth proposed changes to the amounts and factors for determining the
proposed FY 2022 prospective payment rates for operating costs and
capital-related costs for acute care hospitals. We proposed to
establish the threshold amounts for outlier cases. In addition, in
section IV. of the Addendum to the proposed rule, we addressed the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2022 for certain hospitals
excluded from the IPPS.
l. 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 2022 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
2022. We are proposing to establish the adjustments for the wage index,
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.
m. 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, PCHs and other entities.
n. 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 provide our recommendations of the
appropriate percentage changes for FY 2022 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.
o. 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 2021 recommendations concerning hospital inpatient
payment policies address the update factor for hospital inpatient
operating costs and capital-related costs for hospitals under the IPPS.
We addressed these recommendations in Appendix B of the proposed rule.
For further information relating specifically to the MedPAC March 2021
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.
2. Medicare Geographic Classification Review Board (MGCRB) Interim
Final Rule With Comment Period
In the interim final rule with comment period appearing in the May
10, 2021 Federal Register (86 FR 25735) (hereinafter referred to as
CMS-1762-IFC), we implemented regulations which allowed hospitals with
a rural redesignation under the section XXXX of the Act to reclassify
through the Medicare Geographic Classification Review Board (MGCRB)
using the rural reclassified area as the geographic area in which the
hospital is located.
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 and patient access
to their health information.
To further interoperability in post-acute care settings, CMS and
the Office of the National Coordinator for Health Information
Technology (ONC) participate in the Post-Acute Care Interoperability
Workgroup (PACIO http://pacioproject.org/) to facilitate collaboration
with industry stakeholders to develop FHIR standards. These standards
could support the exchange and reuse of patient assessment data derived
from the Minimum Data Set (MDS), Inpatient Rehabilitation Facility-
Patient Assessment Instrument (IRF-PAI), LTCH Continuity Assessment
Record and Evaluation (CARE Data Set (LCDS), Outcome and Assessment
Information Set (OASIS), and other sources. The PACIO Project has
focused on FHIR implementation guides for functional status, cognitive
status and new use cases on advance directives and speech language
pathology. We encourage post-acute care (PAC) provider and health
information technology (IT) vendor participation as the efforts
advance.
The CMS Data Element Library (DEL) continues to be updated and
serves as the authoritative resource for PAC assessment data elements
and their associated mappings to health IT standards, such as Logical
Observation Identifiers Names and Codes (LOINC) and Systematized
Nomenclature of Medicine Clinical Terms (SNOMED). 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 healthcare data; supporting provider exchange of electronic
health information for care coordination, person-centered care; and
supporting real-time, data driven, clinical decision-making. Standards
in the Data Element Library (https://del.cms.gov/DELWeb/pubHome) can be
referenced on the CMS website and in the ONC Interoperability Standards
Advisory (ISA). The 2021 ISA is available at https://www.healthit.gov/isa.
The 21st Century Cures Act (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. The Cures Act
includes a trusted exchange framework and common agreement (TEFCA)
provision \1\ that will enable the nationwide exchange of electronic
health information across health information networks and provide an
important way to enable bi-directional health information exchange in
the future. For more information on current developments related to
TEFCA, we refer readers to https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement and
https://rce.sequoiaproject.org/.
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\1\ ONC, Draft 2 Trusted Exchange Framework and Common
Agreement, https://www.healthit.gov/sites/default/files/page/2019-04/FINALTEFCAQTF41719508version.pdf.
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The ONC final rule entitled ``21st Century Cures Act:
Interoperability, Information Blocking, and the ONC Health IT
Certification Program'' (85 FR 25642) published in the May 1, 2020
Federal Register, (hereinafter referred to as ``ONC Cures Act Final
Rule'')
[[Page 44789]]
implemented policies related to information blocking as authorized
under section 4004 of the 21st Century Cures Act. Information blocking
is generally defined as a practice by a health IT developer of
certified health IT, health information network, health information
exchange, or health care provider that, except as required by law or
specified by the HHS Secretary as a reasonable and necessary activity,
is likely to interfere with access, exchange, or use of electronic
health information. For a health care provider (as defined in 45 CFR
171.102), the definition of information blocking (see 45 CFR 171.103)
specifies that the provider knows that the practice is unreasonable, as
well as likely to interfere with access, exchange, or use of electronic
health information.\2\ To deter information blocking, health IT
developers of certified health IT, health information networks and
health information exchanges whom the HHS Inspector General determines,
following an investigation, have committed information blocking, are
subject to civil monetary penalties of up to $1 million per violation.
Appropriate disincentives for health care providers need to be
established by the Secretary through rulemaking. Stakeholders can learn
more about information blocking at https://www.healthit.gov/curesrule/final-rule-policy/information-blocking. ONC has posted information
resources including fact sheets (https://www.healthit.gov/curesrule/resources/fact-sheets), frequently asked questions (https://www.healthit.gov/curesrule/resources/information-blocking-faqs), and
recorded webinars (https://www.healthit.gov/curesrule/resources/webinars).
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\2\ For other types of actors (health IT developers of certified
health IT and health information network or health information
exchange, as defined in 45 CFR 171.102), the definition of
``information blocking'' (see 45 CFR 171.103) specifies that the
actor ``knows, or should know, that such practice is likely to
interfere with access, exchange, or use of electronic health
information.''
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We invite providers to learn more about these important
developments and how they are likely to affect LTCHs.
F. Use of FY 2020 or FY 2019 Data in the FY 2022 IPPS and LTCH PPS
Ratesetting
We primarily use two data sources in the IPPS and LTCH PPS
ratesetting: Claims data and cost report data. The claims data source
is the MedPAR file, which includes fully coded diagnostic and procedure
data for all Medicare inpatient hospital claims for discharges in a
fiscal year. Our goal is always to use the best available data overall
for ratesetting. Ordinarily, the best available MedPAR data would be
the most recent MedPAR file that contains claims from discharges for
the fiscal year that is 2 years prior to the fiscal year that is the
subject of the rulemaking. For FY 2022 ratesetting, under ordinary
circumstances, the best available data would be the FY 2020 MedPAR
file. The cost report data source is the Medicare hospital cost report
data files from the most recent quarterly HCRIS release. For example,
ordinarily, the best available cost report data used in relative weight
calculations would be based on the cost reports beginning 3 fiscal
years prior to the fiscal year that is the subject of the rulemaking.
For the FY 2022 ratesetting, under ordinary circumstances, that would
be the FY 2019 cost report data from HCRIS, which would contain many
cost reports ending in FY 2020 based on each hospital's cost reporting
period.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25086 through
25090), we discussed that the FY 2020 MedPAR claims file and the FY
2019 HCRIS dataset both contain data significantly impacted by the
COVID-19 PHE, primarily in that the utilization of inpatient services
was generally markedly different for certain types of services in FY
2020 than would have been expected in the absence of the PHE.
Accordingly, we questioned whether these data sources are the best
available data to use for the FY 2022 ratesetting. In the proposed
rule, we identified two factors for assessing whether these data
sources represent the best available data. The first factor is to what
extent the FY 2019 data from before the COVID-19 PHE is a better
overall approximation of FY 2022 inpatient experience (for example,
whether the share of total inpatient utilization for elective surgeries
will be more similar to FY 2019 than to FY 2020), or alternatively, to
what extent the FY 2020 data which include the COVID-19 PHE time period
is a better overall approximation of FY 2022 inpatient experience (for
example, whether the share of total inpatient utilization for
respiratory infections will be more similar to FY 2020 than to FY
2019). The second factor is to what extent the decision to use the FY
2019 or FY 2020 data differentially impacts the FY 2022 IPPS
ratesetting.
In the proposed rule, in order to help assess likely inpatient
utilization in FY 2022, we examined the trend in the number of COVID-19
vaccinations in the United States as reported to the Centers for
Disease Control (CDC) (see https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html, accessed April 16, 2021).
The U.S. COVID-19 Vaccination Program began December 14, 2020. As
of April 15, 2021, 198.3 million vaccine doses had been administered.
Overall, about 125.8 million people, or 37.9 percent of the U.S.
population, had received at least one dose of vaccine as of this date.
About 78.5 million people, or 23.6 percent of the U.S. population had
been fully vaccinated.\3\ As of April 15, the 7-day average number of
administered vaccine doses reported to CDC per day was 3.3 million, a
10.3 percent increase from the previous week. As of April 15, 80
percent of people 65 or older had received at least one dose of
vaccine; 63.7 percent were fully vaccinated. Nearly one-half (48.3
percent) of people 18 or older had received at least one dose of
vaccine; 30.3 percent were fully vaccinated. Nationally, COVID-19-
related emergency department visits as well as both hospital admissions
and current hospitalizations had risen among patients ages 18 to 64
years in recent weeks, but emergency department visits and
hospitalizations among people ages 65 years and older had decreased,
likely demonstrating the important role vaccination plays in protecting
against COVID-19.
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\3\ People who are fully vaccinated (formerly receiving 2 doses)
represents the number of people who have received the second dose in
a two-dose COVID-19 vaccine series or one dose of the single-dose
J&J/Janssen COVID-19 vaccine.
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As indicated by the CDC, COVID-19 vaccines are effective at
preventing COVID-19.\4\ For example, a CDC report on the effectiveness
of the Pfizer-BioNTech and Moderna COVID-19 vaccines when administered
in real-world conditions found that after being fully vaccinated with
either of these vaccines a person's risk of infection is reduced by up
to 90 percent. With respect to inpatient utilization in FY 2020, in the
proposed rule we stated our belief that COVID-19 and the risk of
disease were drivers of the different utilization patterns observed.
Therefore, the continuing rapid increase in vaccinations coupled with
the overall effectiveness of the vaccines led us to conclude based on
the information
[[Page 44790]]
available at the time of the proposed rule that there will be
significantly lower risk of COVID-19 in FY 2022 and fewer
hospitalizations for COVID-19 for Medicare beneficiaries in FY 2022
than there were in FY 2020. This called into question the applicability
of inpatient data from FY 2020 to the FY 2022 time period for hospitals
paid under the IPPS and LTCH PPS.
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\4\ Interim Estimates of Vaccine Effectiveness of BNT162b2 and
mRNA-1273 COVID-19 Vaccines in Preventing SARS-CoV-2 Infection Among
Health Care Personnel, First Responders, and Other Essential and
Frontline Workers--Eight U.S. Locations, December 2020-March 2021,
available at https://www.cdc.gov/mmwr/volumes/70/wr/mm7013e3.htm?s_cid=mm7013e3_e&ACSTrackingID=USCDC_921-DM53321&ACSTrackingLabel=MMWR%20Early%20Release%20-%20Vol.%2070%2C%20March%2029%2C%202021&deliveryName=USCDC_921-DM53321, accessed April 2, 2021).
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In the proposed rule, we also reviewed CDC guidance to healthcare
facilities during the COVID-19 PHE (see https://www.cdc.gov/coronavirus/2019-ncov/hcp/guidance-hcf.html). In its most recent
guidance available at the time of the proposed rule, the CDC described
how the COVID-19 pandemic has changed how health care is delivered in
the United States and has affected the operations of healthcare
facilities. Effects cited by the CDC include increases in patients
seeking care for respiratory illnesses, patients deferring and delaying
non-COVID-19 care, disruptions in supply chains, fluctuations in
facilities' occupancy, absenteeism among staff because of illness or
caregiving responsibilities, and increases in mental health concerns.
In the proposed rule, in order to investigate the effects cited by
the CDC, we examined the claims data from the FY 2020 MedPAR compared
to the FY 2019 MedPAR. Overall, in FY 2020, inpatient admissions under
the IPPS dropped by approximately 14 percent compared to FY 2019.
Elective surgeries declined significantly, and the share of admissions
for MS-DRGs associated with the treatment of COVID-19 increased. For
example, the number of inpatient admissions for MS-DRG 470 (Major Hip
and Knee Joint Replacement or Reattachment of Lower Extremity without
MCC) dropped by 40 percent in FY 2020. Its share of inpatient
admissions dropped from 4.0 percent in FY 2019 to 2.8 percent in FY
2020. The number of inpatient admissions for MS-DRG 177 (Respiratory
Infections and Inflammations with MCC) increased by +133 percent. Its
share of inpatient admissions increased from 0.8 percent in FY 2019 to
2.2 percent in FY 2020. This data analysis from the proposed rule was
consistent with the observations in the CDC's guidance that COVID-19
increased the number of patients seeking care for respiratory
illnesses, and caused patients to defer and delay non-COVID-19 care. In
the proposed rule, we noted that these observed changes in the claims
data also extend to the cost reports submitted by hospitals that
include the COVID-19 PHE time period, since those cost reports that
extend into the COVID-19 PHE are based in part on the discharges that
occurred during that time.
In the proposed rule, we concluded that the effects noted by the
CDC are specific to the pandemic and to the extent that the effects on
healthcare facilities noted by the CDC are not expected to continue
into FY 2022, it would suggest that the inpatient data from FY 2020
impacted by the COVID-19 PHE may be less suitable for use in the FY
2022 ratesetting.
In the proposed rule, we also considered the analysis of 2020 IPPS
real case-mix included in the notice titled ``CY 2021 Inpatient
Hospital Deductible and Hospital and Extended Care Services Coinsurance
Amounts'' that appeared in the Federal Register on November 12, 2020
(85 FR 71916). Section 1813(b) of the Act prescribes the method for
computing the amount of the inpatient hospital deductible. The
inpatient hospital deductible is an amount equal to the inpatient
hospital deductible for the preceding CY, adjusted by the best estimate
of the payment-weighted average of the applicable percentage increases
used for updating the payment rates to hospitals, and adjusted to
reflect changes in real case-mix.
To develop the adjustment to reflect changes in real case-mix, we
first calculated an average case-mix for each hospital that reflected
the relative costliness of that hospital's mix of cases compared to
those of other hospitals. We then computed the change in average case-
mix for hospitals paid under the IPPS in FY 2020 compared to FY 2019,
using Medicare claims from IPPS hospitals received as of July 2020.
Those claims represented a total of about 6.1 million Medicare
discharges for FY 2020 and provided the most recent case-mix data
available at the time of that analysis. Based on these claims, the
change in average case-mix in FY 2020 was 2.8 percent. Based on these
claims and past experience, we expected the overall case-mix change to
be 3.8 percent as the year progressed and more FY 2020 data became
available.
Real case-mix is that portion of case-mix that is due to changes in
the mix of cases in the hospital and not due to coding optimization. As
stated in the November 2020 notice, COVID-19 has complicated the
determination of real case-mix increase. COVID-19 cases typically group
to higher-weighted MS-DRGs, and hospitals have experienced a concurrent
reduction in cases that group to lower weighted MS-DRGs. Both of these
factors cause a real increase in case-mix. We compared the average
case-mix for February 2020 through July 2020 (COVID-19 period) with
average case-mix for October 2019 through January 2020 (pre-COVID-19
period). Since this increase applies for only a portion of CY 2020, we
allocated this increase by the estimated discharges over the 2
periods--a 2.5 percent increase for FY 2020. The 1.3-percent residual
case-mix increase is a mixture of real case-mix and coding
optimization. Over the past several years, we have observed total case-
mix increases of about 0.5 percent per year and have assumed that they
are real. Thus, based on the information available, we expect that 0.5
percent of the residual 1.3 percent change in average case-mix for FY
2020 will be real. The combination of the 2.5 percent COVID-19 effect
and the remaining residual 0.5-percent real case-mix increase results
in an estimated 3.0 percent increase in real case-mix for FY 2020.
Because this analysis was based on Medicare claims from IPPS
hospitals received as of July 2020, in the proposed rule, we calculated
case-mix values for FY 2019 and FY 2020 based on the full year FY 2019
and FY 2020 MedPAR files to help assess the change in case-mix based on
more complete data. For FY 2019 we calculated a case-mix value of 1.813
and for FY 2020 we calculated a case-mix value of 1.883, an increase in
total case-mix of 3.9 percent. These were calculated using the MS-DRG
relative weights in effect for those time periods.\5\ This was
consistent with the estimate in the Notice of the CY 2021 Inpatient
Hospital Deductible and Hospital and Extended Care Services Coinsurance
Amounts that the change in total case-mix for FY 2020 would be 3.8
percent when more complete data was available.
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\5\ Section 3710 of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act directs the Secretary of HHS to increase the
weighting factor of the assigned DRG by 20 percent for an individual
diagnosed with COVID-19 discharged during the COVID-19 PHE period.
In order to make the case-mix values more comparable, the 20 percent
increase is not included.
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The increases in patients seeking care for respiratory illnesses
and patients deferring and delaying non-COVID-19 care during FY 2020,
the increasing number of vaccinations for COVID-19, and the high
estimate of FY 2020 real case-mix growth all led us to believe that FY
2020 is not the best overall approximation of inpatient experience in
FY 2022 and that FY 2019 as the most recent complete FY prior to the
COVID-19 PHE is a better approximation of FY 2022 inpatient experience.
As we indicated in the proposed rule, whether the data is a better
overall
[[Page 44791]]
approximation of FY 2022 inpatient experience is one factor in
assessing which data source represents the best available data for the
FY 2022 rulemaking. Another factor is to what extent the decision to
use the FY 2019 or FY 2020 data differentially impacts the FY 2022
ratesetting. One way to assess this factor is to model the change in
the total case-mix, which is a driver of spending, if our assumption
regarding the FY 2022 inpatient experience used in calculating the MS-
DRG relative weights turns out to be less accurate based on actual FY
2022 experience. In the proposed rule, we estimated the difference in
the total case-mix if we calculated the MS-DRG relative weights based
on the FY 2019 claims data and the actual utilization is ultimately
more similar to the FY 2020 data, as compared to if we calculated the
MS-DRG relative weights based on the FY 2020 data and the actual
utilization is ultimately more similar to the FY 2019 data.
We first calculated a set of MS-DRG relative weights using an
assumption that the FY 2022 inpatient experience would be similar to
the FY 2019 data. Specifically, we used the proposed version 39 GROUPER
(which would be applicable to discharges occurring in FY 2022) and the
FY 2019 MedPAR data to calculate MS-DRG relative weights. We refer to
these MS-DRG relative weights as the FY 2019-based weights.
We next calculated a set of MS-DRG relative weights using an
assumption that the FY 2022 inpatient experience would be more similar
to the FY 2020 data. Specifically, we used the proposed version 39
GROUPER and the FY 2020 MedPAR data to calculate MS-DRG relative
weights. This is how we would ordinarily calculate the proposed FY 2022
MS-DRG relative weights. We refer to these MS-DRG relative weights as
the FY 2020-based weights.
We then estimated the difference in case-mix under the FY 2019-
based weights and the FY 2020-based weights if the FY 2022 inpatient
experience ended up being the reverse of the assumption made when
calculating that set of relative weights. In other words, we compared
estimated case-mix calculated under four different scenarios. For the
FY 2019-based weights, we calculated the case-mix using claims from the
FY 2019 MedPAR as an approximation of the actual FY 2022 experience
(Scenario A), and using claims from the FY 2020 MedPAR as an
approximation of the actual FY 2022 experience (Scenario B). For the FY
2020-based weights, we calculated the case-mix using claims from the FY
2020 MedPAR as an approximation of the actual FY 2022 experience
(Scenario C), and using claims from the FY 2019 MedPAR as an
approximation of the actual FY 2022 experience (Scenario D).
The results are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.003
In Scenario A and Scenario C, there is by definition no
differential impact on total case-mix due to a less accurate assumption
made when the MS-DRG relative weights were calculated: The FY 2022
inpatient experience matches the assumption used when the MS-DRG
relative weights were calculated. In Scenario B and Scenario D, it is
the reverse of the assumption used when the MS-DRG relative weights
were calculated.
In the proposed rule, we explained that in Scenario B, when the FY
2019-based weights were used, but the FY 2022 inpatient experience
turns out to be more similar to FY 2020 data, the less accurate
assumption does not differentially impact the modelled case-mix. This
can be seen by comparing the modelled case-mix under Scenario B (1.885)
with the modelled case-mix under Scenario C (also 1.885). In other
words, if the FY 2019-based weights and inpatient experience turn out
to be more similar to the FY 2020 data, then the modelled case-mix is
approximately the same as if we had used the FY 2020-based weights. The
results show that use of the FY 2019-based weights did not impact the
modelled case-mix compared to using the FY 2020-based weights.
In the proposed rule, we explained that the same conclusion is not
true of Scenario D where the FY 2020-based weights were used, but the
FY 2022 inpatient experience turns out to be more similar to FY 2019
data. Here the less accurate assumption does differentially impact the
modelled case-mix, by -0.2 percent. This can be seen by comparing the
modelled case-mix under Scenario D (1.816) with the modelled case-mix
under Scenario A (1.820). In other words, if we use the FY 2020-based
weights, and FY 2022 inpatient experience turns out to be more similar
to FY 2019 data, the modelled case-mix is -0.2 percent lower than if we
had used the FY 2019-based weights. This shows that use of the FY 2020-
based weights does impact the modelled case-mix compared to a result
from using the FY 2019-based weights.
Putting aside that we believe FY 2019 is a more likely
approximation of the FY 2022 inpatient experience for the reasons
discussed earlier, the previous analysis from the proposed rule
indicates that the differential effect of the FY 2022 MS-DRG relative
weights is more limited if the FY 2019-based weights are used than it
is if the FY 2020-based weights are used, should the FY 2022 inpatient
experience not match the assumption used to calculate the MS-DRG
relative weights.
[[Page 44792]]
Another payment factor that is impacted by the use of the FY 2019
or FY 2020 data in the FY 2022 ratesetting is the outlier fixed-loss
threshold. As discussed in section II.A.4.j. of the proposed rule,
section 1886(d)(5)(A) of the Act provides for payments in addition to
the basic prospective payments for ``outlier'' cases involving
extraordinarily high costs. To qualify for outlier payments, a case
must have costs greater than the sum of certain payments and the
``outlier threshold'' or ``fixed-loss'' amount (a dollar amount by
which the costs of a case must exceed payments in order to qualify for
an outlier payment). In accordance with section 1886(d)(5)(A)(iv) of
the Act, outlier payments for any year are projected to be not less
than 5 percent nor more than 6 percent of total operating DRG payments
plus outlier payments. We target 5.1 percent within this range. Section
1886(d)(3)(B) of the Act requires the Secretary to reduce the average
standardized amount by a factor to account for the estimated proportion
of total DRG payments made to outlier cases. In other words, outlier
payments are prospectively estimated to be budget neutral overall under
the IPPS.\6\
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\6\ More information on outlier payments may be found on the CMS
website at: http://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/AcuteInpatientPPS/outlier.html.
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In the proposed rule, under an assumption that the FY 2022
inpatient experience will be more similar to FY 2019 data, we estimated
an outlier fixed-loss amount of $30,967. Under an assumption that FY
2022 inpatient experience will be more similar to FY 2020 data, we
estimated an outlier fixed-loss amount of $36,843, a difference of
$5,876 or approximately 20 percent higher. Again, putting aside that we
believe FY 2019 is a better approximation of the FY 2022 inpatient
experience for the reasons discussed earlier, we concluded in the
proposed rule that the difference between the two estimated outlier
fixed-loss amounts means there is a consequence to making a decision as
to the best available data for estimating the FY 2022 outlier fixed-
loss amount in the form of potentially exceeding or falling short of
the targeted 5.1 percent of total operating DRG payments plus outlier
payments.
In summary, in the proposed rule, we highlighted two factors in the
decision regarding the best available data to use in the FY 2022
ratesetting. The first factor was to what extent the FY 2019 data from
before the COVID-19 PHE is a better overall approximation of FY 2022
inpatient experience, or alternatively, to what extent the FY 2020 data
including the COVID-19 PHE time period is a better overall
approximation of FY 2022 inpatient experience. After analyzing this
issue and for the reasons discussed, in the proposed rule we stated our
belief that FY 2019 is generally a better overall approximation of FY
2022. The second factor was to what extent the decision to use the FY
2019 or FY 2020 data differentially impacts the FY 2022 IPPS
ratesetting. After analyzing this issue, in the proposed rule we
determined that the decision does differentially impact the overall FY
2022 IPPS ratesetting in two primary ways. First, a decision to base
the MS-DRG relative weights on the FY 2020 data has an impact of -0.2
percent if the FY 2022 inpatient experience is more like FY 2019 data.
Second, the decision to use the FY 2019 or FY 2020 data results in an
approximately 20 percent difference in the estimate of the outlier
fixed-loss amount.
Taking these factors into account, in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25089) we proposed to use the FY 2019 data for the
FY 2022 ratesetting for circumstances where the FY 2020 data is
significantly impacted by the COVID-19 PHE, primarily in that the data
reflect generally markedly different utilization for certain types of
services in FY 2020 than would have been expected in the absence of the
PHE, as discussed previously. For example, we proposed to use the FY
2019 MedPAR claims data for purposes where we ordinarily would have
used the FY 2020 MedPAR claims data, such as in our analysis of changes
to MS-DRG classifications (as discussed in greater detail in section
II.D. of the preamble of the proposed rule). Similarly, we proposed to
use cost report data from the FY 2018 HCRIS file for purposes where we
ordinarily would have used the FY 2019 HCRIS file, such as in
determining the FY 2022 IPPS MS-DRG relative weights (as discussed in
greater detail in section II.E. of the preamble of the proposed rule).
(As noted previously, the FY 2019 HCRIS data would contain many cost
reports ending in FY 2020 based on each hospital's cost reporting
period.)
In section I.O. of Appendix A of the proposed rule, we stated that
we were considering, as an alternative to this proposal, the use of the
same FY 2020 data that we would ordinarily use for purposes of FY 2022
ratesetting, and which we may consider finalizing based on
consideration of comments received. To facilitate comment on this
alternative for FY 2022, we made data and other supplemental files
available. We refer the reader to section I.O. of Appendix A of the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25784) for more information on
these supplemental files and where they may be found.
Comment: The vast majority of commenters were fully supportive of
our proposal to use the FY 2019 data for the FY 2022 ratesetting for
circumstances where the FY 2020 data is significantly impacted by the
COVID-19 PHE. A commenter was supportive of our proposal but noted that
transplant volume was higher in 2020 than 2019. However, the commenter
stated that it recognized that due to the nature of hospital admissions
during 2020 and the number and types of procedures provided in the
hospital during the PHE, use of 2019 data is necessary.
A commenter who stated they did not disagree with our proposal,
expressed a concern that surges in COVID-19 cases could still occur in
the future, making it impossible to predict what FY 2022 will look
like. The commenter mentioned the slowing COVID-19 vaccination rate in
many areas and the emergence of new COVID-19 variants that the COVID-19
vaccines were not tested against as reasons to support this concern.
Some commenters were supportive of our proposal, but urged CMS to
make or consider certain technical adjustments when calculating the FY
2022 relative weights. We refer readers to section II.E. of the
preamble to this final rule for a complete discussion of these
comments. A few commenters objected to CMS not using FY 2020 data to
calculate the payment adjustment for CAR T-cell clinical trial and
expanded access use immunotherapy cases. We refer readers to section
V.M. of the preamble to this final rule for a complete discussion of
these comments. A commenter expressed concern about not using FY 2020
data in FY 2022 ratesetting for the LTCH PPS, in particular with
respect to how the additional costs LTCHs incurred in 2020 will be
reflected in future years' rates. We believe this commenter may have
misunderstood the role of the market basket update and refer readers to
section VIII.A.4. of the preamble to this final rule for a complete
discussion of this comment.
Response: We appreciate the commenters' support of our proposal to
use the FY 2019 data for the FY 2022 ratesetting for circumstances
where the FY 2020 data is significantly impacted by the COVID-19 PHE.
In response to the commenter who expressed concerns about the
possibility of future surges in COVID-19 making it impossible to
predict what FY 2022 will look like, we appreciate the feedback.
However, we believe the most recent vaccination and
[[Page 44793]]
hospitalization data reported by the CDC, discussed later in this
section, support our assumption that there will be significantly lower
risk of COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for
Medicare beneficiaries in FY 2022 than there were in FY 2020. To
address to the extent possible the commenter's concerns about the
efficacy of the COVID-19 vaccines against new variants, we refer the
reader to the June 25th weekly summary report from the CDC that states
``recent studies have shown that the vaccines available in the United
States are effective against variants currently circulating, including
B.1.617.2.'' \7\
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\7\ Keep Variants at Bay. Get Vaccinated Today., available at
https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/06252021.html accessed July 6, 2021).
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Since the publication of the proposed rule, we have continued to
monitor the vaccination and hospitalization data reported by the CDC
(see https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/past-reports/07022021.html, accessed July 6, 2021). As of July 1, 2021,
328.2 million vaccine doses have been administered. Overall, about
181.3 million people, or 54.6 percent of the U.S. population, have
received at least one dose of vaccine as of this date. About 155.9
million people, or 47.0 percent of the U.S. population have been fully
vaccinated. As of July 1, the 7-day average number of administered
vaccine doses reported to CDC per day was 334,816, a 45.3 percent
decrease from the previous week. As of July 1, 2021, 88.2 percent of
people 65 or older have received at least one dose of vaccine; 78.3
percent are fully vaccinated. Two-thirds (66.7 percent) of people 18 or
older have received at least one dose of vaccine; 57.7 percent are
fully vaccinated. Nationally, the COVID-19-related 7-day moving average
for new hospital admissions has been generally decreasing since
publication of the proposed rule, demonstrating the important role
vaccination is playing in protecting against COVID-19. As of July 3,
2021 (the most recent date with data available at the time of writing),
the 7-day moving average for new hospital admissions was 1,821, down
significantly from the 7-day moving average peak of 16,492 recorded on
January 9th, 2021 and the 7-day moving average of 5,075 recorded on
April 27, 2021, the date the proposed rule was issued.\8\
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\8\ New Admissions of Patients with Confirmed COVID-19.,
available at https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions accessed July 3, 2021).
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In the proposed rule, we analyzed the significant growth in real-
case mix observed in the FY 2020 MedPAR claims data. This analysis was
consistent with the observations in the CDC's guidance that COVID-19
increased the number of patients seeking care for respiratory
illnesses, and caused patients to defer and delay non-COVID-19 care.
While we acknowledge that the rate of vaccination for the U.S.
population has slowed considerably since we released the proposed rule,
the total number of vaccines administered, especially for people 65 or
older, along with the latest hospitalization trends, lead us to
continue to believe that there will be a significantly lower risk of
COVID-19 in FY 2022 and fewer hospitalizations for COVID-19 for
Medicare beneficiaries in FY 2022 than there were in FY 2020. For these
reasons, we continue to believe that FY 2020 is not the best overall
approximation of inpatient experience in FY 2022 and that FY 2019 as
the most recent complete FY prior to the COVID-19 PHE is a better
approximation of FY 2022 inpatient experience.
Therefore, after considering the comments received and evaluating
the most recent vaccination and hospitalization data from the CDC, we
are finalizing our proposal to use the FY 2019 data for the FY 2022
ratesetting for circumstances where the FY 2020 data is significantly
impacted by the COVID-19 PHE, primarily in that the data reflect
generally markedly different utilization for certain types of services
in FY 2020 than would have been expected in the absence of the PHE, as
discussed previously. For example, in this final rule we used the FY
2019 MedPAR claims data for purposes where we ordinarily would have
used the FY 2020 MedPAR claims data, such as in our analysis of changes
to MS-DRG classifications (as discussed in greater detail in section
II.D. of the preamble of this final rule). Similarly, we used cost
report data from the FY 2018 HCRIS file for purposes where we
ordinarily would have used the FY 2019 HCRIS file, such as in
determining the FY 2022 IPPS MS-DRG relative weights (as discussed in
greater detail in section II.E. of the preamble of this final rule).
(As noted previously, the FY 2019 HCRIS data would contain many cost
reports ending in FY 2020 based on each hospital's cost reporting
period.)
We note that MedPAR claims data and cost report data from the HCRIS
file are examples of the data sources for which we discuss the use of
the FY 2019 data for the FY 2022 ratesetting in this final rule. We
have clearly identified throughout this final rule where and how we are
using alternative data than what ordinarily would be used for the FY
2022 IPPS and LTCH PPS ratesetting, including certain provider specific
information.
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. Adoption of the MS-DRGs and MS-DRG Reclassifications
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).
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 2021 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, 83 FR 41158 through 41258, 84 FR
42058 through 42165, and 85 FR 58445 through 58596 respectively).
[[Page 44794]]
C. FY 2022 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 American Taxpayer Relief Act of 2012 (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 FYs 2018, 2019, 2020, and 2021 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 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), the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42057), and the FY 2021 IPPS/LTCH PPS final rule (85 FR
58444 and 58445), consistent with the requirements of section 414 of
the MACRA, we implemented 0.5 percentage point positive adjustments to
the standardized amount for FY 2019, FY 2020, and FY 2021,
respectively. We indicated the FY 2018, FY 2019, FY 2020, and FY 2021
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 2022 and 2023 in future rulemaking.
3. Adjustment for FY 2022
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 2022. We stated that this proposed
adjustment would constitute a permanent adjustment to payment rates. We
also stated that we plan to propose the final adjustment required under
section 414 of the MACRA for FY 2023 in future rulemaking.
Comment: A commenter reiterated their position from prior year
comments that CMS misinterpreted the relevant statutory authority,
which they believe explicitly assumes that the ATRA recoupment would
result in negative adjustments totaling -3.2 percentage points
completed through FY 2017, rather than the cumulative -3.9 percentage
point adjustment made by CMS. The commenter stated that CMS should have
made an additional 0.7 percent positive adjustment to the standardized
amount in FY 2018. The commenter stated that the failure to make this
adjustment resulted in an incorrect reduction in the standardized
amount for all subsequent years. We also received multiple comments
recommending that CMS commit to use its authority (a commenter
specifically citing CMS's authority under Sec. 1886(d)(5)(I) of the
Act) to restore the full amount of the cumulative -3.9 percentage point
adjustment made to achieve the $11 billion targeted by the ATRA. A
commenter requested CMS
[[Page 44795]]
specify the method for full repayment of this reduction to all
providers by FY 2023 in the final rule, instead of waiting until future
rulemaking to propose the final adjustment for FY 2023.
Response: As we discussed in response to a similar comment in the
FY 2021 IPPS/LTCH PPS final rule (85 FR 58444 through 58445) and in
prior rules, 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. 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 2022 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. CMS did not propose
the specific level of adjustment to be made in FY 2023, and therefore
we will proceed as planned to discuss the future (and final) adjustment
under section 414 of the MACRA in FY 2023 rulemaking.
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 2022.
D. Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for FY 2022 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 2022 MS-DRG Updates
Given the need for more time to carefully evaluate requests and
propose updates, as discussed in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38010), we changed the deadline to request updates to the MS-
DRGs to November 1 of each year, which provided an additional five
weeks for the data analysis and review process. In the FY 2021 IPPS/
LTCH PPS proposed rule (85 FR 32472), we stated that with the continued
increase in the number and complexity of the requested changes to the
MS-DRG classifications since the adoption of ICD-10 MS-DRGs, and in
order to consider as many requests as possible, more time is needed to
carefully evaluate the requested changes, analyze claims data, and
consider any proposed updates. We further stated we were changing the
deadline to request changes to the MS-DRGs to October 20 of each year
to allow for additional time for the review and consideration of any
proposed updates. However, in the FY 2021 IPPS/LTCH PPS final rule (85
FR 58445), due to the unique circumstances for the FY 2021 IPPS/LTCH
PPS final rule for which we waived the delayed effective date, we
maintained the deadline of November 1, 2020 for FY 2022 MS-DRG
classification change requests. We also noted that we expected to
reconsider a change in the deadline beginning with comments and
suggestions submitted for FY 2023. We stated in the proposed rule that
while we continue to believe that a change in the deadline from
November 1 to October 20 will provide hospitals sufficient time to
assess potential impacts and inform future MS-DRG recommendations, we
are maintaining the deadline of November 1 for FY 2023 MS-DRG
classification change requests.
Comment: Commenters expressed support for a future change to the
deadline for requesting updates to the MS-DRG classifications from
November 1 to October 20. The commenters also recommended that CMS
consider implementing an additional submission deadline, such as
earlier in the calendar year. According to the commenters, while the
current process to submit requests for changes to the MS-DRG
classifications may be submitted at any time prior to the fall
deadline, a second target submission date may encourage interested
parties to submit requests earlier in the year and enable additional
time for CMS to carefully evaluate requested changes, analyze claims
data and consider proposed changes.
Response: We appreciate the commenters feedback and support for our
discussion regarding a future change to the deadline for requesting
updates to the MS-DRG classifications from November 1 to October 20. We
also thank the commenters for the suggestion to add a second submission
date, and may consider any changes to the deadline and/or the frequency
for submissions of requests for MS-DRG classification changes for
future fiscal years.
Interested parties had to submit MS-DRG classification change
requests for FY 2022 by November 1, 2020, and the comments that were
submitted in a timely manner for FY 2022 are discussed in this section
of the preamble of this final rule. As we discuss 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. Interested parties
should continue to submit any comments and suggestions for FY 2023 by
November 1, 2021 via the CMS MS-DRG Classification Change Request
Mailbox located at: [email protected].
We provided a test version of the ICD-10 MS-DRG GROUPER Software,
Version 39, in connection with the FY 2022 IPPS/LTCH PPS proposed rule
so that the public could better analyze and understand the impact of
the proposals included in the proposed rule. We noted that this test
software reflected the proposed GROUPER logic for FY 2022. Therefore,
it included the new diagnosis and procedure codes that are effective
for FY 2022 as reflected in Table 6A.--New Diagnosis Codes--FY 2022 and
Table 6B.--New Procedure Codes--FY 2022 that were associated with the
proposed rule and did not include the diagnosis codes that are invalid
beginning in FY 2022 as reflected in Table 6C.--Invalid Diagnosis
Codes--
[[Page 44796]]
FY 2022 and Table 6D.--Invalid Procedure Codes--FY 2022 that was
associated with the proposed rule. Those tables were not published in
the Addendum to the proposed 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 the proposed rule. Because the diagnosis and
procedure codes no longer valid for FY 2022 are not reflected in the
test software, we made available a supplemental file in Table 6P.1a
that included the mapped Version 39 FY 2022 ICD-10-CM codes and the
deleted Version 38 FY 2021 ICD-10-CM codes that should be used for
testing purposes with users' available claims data. In addition, we
made available a supplemental file in Table 6P.1b that included the
mapped Version 39 FY 2022 ICD-10-PCS codes and the deleted Version 38
FY 2021 ICD-10-PCS codes that should be used for testing purposes with
users' available claims data. Therefore, users had access to the test
software allowing them to build case examples that reflect the
proposals that were included in the proposed rule. In addition, users
were able to view the draft version of the ICD-10 MS-DRG Definitions
Manual, Version 39.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 39,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 39,
and the supplemental mapping files in Table 6P.1a and Table 6P.1b of
the FY 2021 and FY 2022 ICD-10-CM diagnosis and ICD-10-PCS procedure
codes are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
Following are the changes that we proposed to the MS-DRGs for FY
2022. 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. As discussed in section I.F of the preamble of the proposed
rule, we proposed to use claims data from the March 2020 update of the
FY 2019 MedPAR file in our analysis of proposed MS-DRG classification
changes for FY 2022, consistent with our goal of using the best
available data overall for ratesetting. Alternatively, we also provided
the results of our analysis of proposed MS-DRG classification changes
using claims data from the September 2020 update of the FY 2020 MedPAR
file. As a result, for the FY 2022 IPPS/LTCH PPS proposed rule, our MS-
DRG analysis was based on ICD-10 claims data from the March 2020 update
of the FY 2019 MedPAR file, which contains hospital claims received
from October 1, 2018 through March 31, 2020, for discharges occurring
through September 30, 2019. In addition, we also analyzed ICD-10 claims
data from the September 2020 update of the FY 2020 MedPAR file, which
contains hospital claims received from October 1, 2019 through
September 30, 2020, for discharges occurring through September 30,
2020. In our discussion of the proposed MS-DRG reclassification
changes, we referred to these claims data as the ``March 2020 update of
the FY 2019 MedPAR file'' and ``the September 2020 update of the FY
2020 MedPAR file.''
In this FY 2022 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 2022 final rule, we generally did not
perform any further MS-DRG analysis of claims data. Therefore, the MS-
DRG analysis is based on ICD-10 claims data from both the March 2020
update of the FY 2019 MedPAR file and the September 2020 update of the
FY 2020 MedPAR file, as set forth in the proposed rule, 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 the FY 2021 IPPS/LTCH PPS final rule (85 FR 58448), we finalized
our proposal to expand our existing criteria to create a new
complication or comorbidity (CC) or major complication or comorbidity
(MCC) subgroup within a base MS-DRG. Specifically, we finalized the
expansion of the criteria to include the NonCC subgroup for a three-way
severity level split. We stated we believed that applying these
criteria to the NonCC subgroup would better reflect resource
stratification as well as promote stability in the relative weights by
avoiding low volume counts for the NonCC level MS-DRGs. We noted that
in our analysis of MS-DRG classification requests for FY 2021 that were
received by November 1, 2019, as well as any additional analyses that
were conducted in connection with those requests, we applied these
criteria to each of the MCC, CC, and NonCC subgroups. We also noted
that the application of the NonCC subgroup criteria going forward may
result in modifications to certain MS-DRGs that are currently split
into three severity levels and result in MS-DRGs that are split into
two severity levels. We stated that any proposed modifications to the
MS-DRGs would be addressed in future rulemaking consistent with our
annual process and reflected in Table 5--Proposed List of Medicare
Severity Diagnosis Related Groups (MS-DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay for the
applicable fiscal year.
In our analysis of the MS-DRG classification requests for FY 2022
that we received by November 1, 2020, as well as any additional
analyses that were conducted in connection with those requests, we
applied these criteria to each of the MCC, CC, and NonCC subgroups, as
described in the following table.
[[Page 44797]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.004
In general, once the decision has been made to propose to make
further modifications to the MS-DRGs as described previously, such as
creating a new base MS-DRG, or in our evaluation of a specific MS-DRG
classification request to split (or subdivide) an existing base MS-DRG
into severity levels, all five criteria must be met for the base MS-DRG
to be split (or subdivided) by a CC subgroup. We note that in our
analysis of requests to create a new MS-DRG, we typically evaluate the
most recent year of MedPAR claims data available. For example, in the
FY 2022 IPPS/LTCH PPS proposed rule we stated our MS-DRG analysis was
based on ICD-10 claims data from both the March 2020 update of the FY
2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file. However, in our evaluation of requests to split an existing base
MS-DRG into severity levels, as noted in prior rulemaking (80 FR
49368), we typically analyze the most recent two years of data. This
analysis includes 2 years of MedPAR claims data to compare the data
results from 1 year to the next to avoid making determinations about
whether additional severity levels are warranted based on an isolated
year's data fluctuation and also, to validate that the established
severity levels within a base MS-DRG are supported. The first step in
our process of evaluating if the creation of a new CC subgroup within a
base MS-DRG is warranted is to determine if all the criteria is
satisfied for a three way split. If the criteria fail, the next step is
to determine if the criteria are satisfied for a two way split. If the
criteria for both of the two way splits fail, then a split (or CC
subgroup) would generally not be warranted for that base MS-DRG. If the
three way split fails on any one of the five criteria and all five
criteria for both two way splits (1_23 and 12_3) are met, we would
apply the two way split with the highest R2 value. We note that if the
request to split (or subdivide) an existing base MS-DRG into severity
levels specifies the request is for either one of the two way splits
(1_23 or 12_3), in response to the specific request, we will evaluate
the criteria for both of the two way splits, however we do not also
evaluate the criteria for a three way split.
In the FY 2022 IPPS/LTCH PPS proposed rule, we stated that using
the March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, we analyzed how applying the NonCC
subgroup criteria to all MS-DRGs currently split into three severity
levels would affect the MS-DRG structure beginning in FY 2022. We noted
that findings from our analysis indicated that approximately 32 MS-DRGs
would be subject to change based on the three-way severity level split
criterion finalized in FY 2021. Specifically, we found that applying
the NonCC subgroup criteria to all MS-DRGs currently split into three
severity levels would result in the deletion of 96 MS-DRGs (32 MS-DRGs
x 3 severity levels = 96) and the creation of 58 new MS-DRGs. We
further noted that these updates would also involve a redistribution of
cases, which would impact the relative weights, and, thus, the payment
rates proposed for particular types of cases. We referred the reader to
Table 6P.1c associated with the proposed rule for the list of the 96
MS-DRGs that would be subject to deletion and the list of the 58 new
MS-DRGs that would be proposed for creation for FY 2022 under this
policy if the NonCC subgroup criteria were applied.
We stated in the proposed rule that in light of the public health
emergency (PHE), we had concerns about the impact of implementing this
volume of MS-DRG changes at this time, and our belief that it may be
appropriate to delay application of the NonCC subgroup criteria to
existing MS-DRGs in order to maintain more stability in the current MS-
DRG structure. Therefore, we proposed to delay the application of the
NonCC subgroup criteria to existing MS-DRGs with a three-way severity
level split until FY 2023, and proposed for FY 2022 to maintain the
current structure of the 32 MS-DRGs that currently have a three-way
severity level split (total of 96 MS-DRGs) that would otherwise be
subject to these criteria.
Comment: Several commenters expressed support for our proposal to
delay the application of the expanded three-way severity level split
criteria to the NonCC subgroup until fiscal year 2023 in light of the
PHE, and to maintain the current structure of the MS-DRGs. Many
commenters also recommended that a complete analysis of the MS-DRG
changes to be proposed for fiscal year 2023 in connection with the
expanded three-way severity split criteria be conducted and made
available to enable the public an opportunity to review and consider
the redistribution of cases, the impact to the relative weights (for
example, Table 5--Proposed List of Medicare Severity
[[Page 44798]]
Diagnosis Related Groups (MS-DRGs), Relative Weighting Factors, and
Geometric and Arithmetic Mean Length of Stay), payment rates and
hospital case mix to allow meaningful comment prior to implementation.
A few commenters suggested delaying the application of the expanded
three-way severity split NonCC subgroup criteria until fiscal year 2024
to allow analysis of claims data from FY 2022 that may better reflect
post pandemic utilization. Another commenter recommended delaying any
changes until FY 2025.
A commenter expressed concern that changes to the underlying MS-DRG
structure may inadvertently exacerbate payment differentials between
different types of hospitals (e.g., urban versus rural) based on the
types of services they provide, which may negatively impact Medicare
beneficiary access to some services. Another commenter stated it
reviewed its hospital specific data and had concerns that the ``with
cc'' level will be reduced on several MS-DRGs. This commenter stated
that if its case mix remains the same it would continue to treat many
patients with comorbid conditions and receive payment consistent with a
MS-DRG at the ``without CC'' level. The commenter identified the
following four MS-DRGs that appeared to be impacted the most with
respect to lost revenue, MS-DRG 617 (Amputation of Lower Limb for
Endocrine, Nutritional and Metabolic Disorder with CC); MS-DRG 847
(Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC);
MS-DRG 854 (Infectious and Parasitic Diseases with O.R. Procedure with
CC) and MS-DRG 958 (Other O.R. Procedures for Multiple Significant
Trauma with CC). Lastly, the commenter recommended that CMS also
further assess other proposed groupings, such as the maternity MS-DRGs,
due to historically low volumes in these MS-DRGs and to determine if it
would be appropriate to combine any of them.
Another commenter requested that CMS provide data transparency to
illustrate volumes by MS-DRG that support the proposal for changes to
the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS proposed rule and
to also consider patient mix for the obstetric MS-DRGs. This commenter
also suggested that CMS examine the impact for surgical versus medical
MS-DRGs with respect to redistribution and associated impacts to the
relative weights. According to the commenter, the impact appears to be
greater for surgical MS-DRGs.
Finally, a commenter who expressed support for CMS' proposal to
delay implementation of the expanded three-way severity split criteria
to the NonCC subgroup recommended that any proposed changes to the
structure of the MS-DRGs should consist of the impact of the proposed
CC/MCC redesign and not the current CC/MCC structure that is scheduled
to be changed.
Response: We appreciate the commenters' support. In response to the
recommendation that a complete analysis of the MS-DRG changes to be
proposed for FY 2023 in connection with the application of the expanded
three-way severity split criteria to the NonCC subgroup be conducted
and made publicly available, we plan to perform and make publicly
available a more detailed analysis in connection with any future
proposed changes, consistent with our annual claims analysis for MS-DRG
classification change proposals. With respect to the commenters who
suggested delaying the application of the expanded three-way severity
split NonCC subgroup criteria until fiscal year 2024 or later,
including to allow the use of FY 2022 claims data, we appreciate the
feedback and will take these suggestions under consideration.
In response to the commenters who expressed concern that changes to
the underlying MS-DRG structure may inadvertently exacerbate payment
differentials between different types of hospitals based on the types
of services they provide, or would have the greatest impacts with
respect to particular MS-DRGs, we note that generally, changes to the
MS-DRG classifications and related policies under the IPPS that are
implemented on an annual basis may affect payment for different types
of hospitals depending on the services they provide, and, note that we
intend to conduct and make publicly available analysis of the
application of the NonCC subgroup criteria in connection with any
future proposed changes, consistent with our annual MS-DRG analysis,
including with respect to particular MS-DRGs.
We appreciate the commenters' feedback suggesting further review of
the maternity (obstetric) MS-DRGs and agree that these groupings
warrant special consideration. As discussed in prior rulemaking (83 FR
41210), we cannot adopt the same approach to refine the maternity and
newborn MS-DRGs because of the extremely low volume of Medicare
patients there are in these DRGs.
In response to the commenter who requested that CMS provide data
transparency to illustrate volumes by MS-DRG that support the proposal
for changes to the 96 MS-DRGs discussed in the FY 2022 IPPS/LTCH PPS
proposed rule, we refer the reader to Table 6P.1l associated with this
final rule and available via the internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. This table
displays the volume (case counts) by each MS-DRG based on claims data
from the March 2020 update of the FY 2019 MedPAR file and the September
2020 update of the FY 2020 MedPAR file.
We also thank the commenter for its suggestion to examine the
impact for surgical versus medical MS-DRGs and agree that type of
information can be useful for stakeholders.
With respect to the commenter who recommended that any proposed
changes to the structure of the MS-DRGs should consist of the impact of
the proposed CC/MCC redesign and not the current CC/MCC structure that
is scheduled to be changed, it is not clear to us from the limited
comment if the commenter is referring to the potential changes in
connection with the comprehensive CC/MCC analysis that is currently in
progress. We note that any proposed modifications to the MS-DRGs would
be addressed in future rulemaking, including any proposed changes to
the severity level designation of diagnosis codes, and would be
considered and taken into account with application of the NonCC
subgroup criteria.
After consideration of the public comments we received, we are
finalizing our proposal to delay the application of the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split
until FY 2023 or later, and are finalizing for FY 2022 to maintain the
current structure of the 32 MS-DRGs that currently have a three-way
severity level split.
We are making the FY 2022 ICD-10 MS-DRG GROUPER and Medicare Code
Editor (MCE) Software Version 39, the ICD-10 MS-DRG Definitions Manual
files Version 39 and the Definitions of Medicare Code Edits Manual
Version 39 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.
2. Pre-MDC: MS-DRG 018 Chimeric Antigen Receptor (CAR) T-Cell Therapy
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58451 through
58453), we finalized our proposal to create Pre-MDC MS-DRG 018
(Chimeric Antigen Receptor (CAR) T-cell Immunotherapy) and to reassign
cases reporting ICD-10-PCS procedure codes XW033C3 (Introduction of
engineered autologous chimeric antigen receptor t-cell
[[Page 44799]]
immunotherapy into peripheral vein, percutaneous approach, new
technology group 3) or XW043C3 (Introduction of engineered autologous
chimeric antigen receptor t-cell immunotherapy into central vein,
percutaneous approach, new technology group 3) from Pre-MDC MS-DRG 016
(Autologous Bone Marrow Transplant with CC/MCC or T-cell
Immunotherapy), to new Pre-MDC MS-DRG 018 effective with discharges on
and after October 1, 2020. We also finalized our proposal to revise the
title for MS-DRG 016 from ``Autologous Bone Marrow Transplant with CC/
MCC or T-cell Immunotherapy'' to ``Autologous Bone Marrow Transplant
with CC/MCC'' to reflect these changes.
Additionally, in the FY 2021 IPPS/LTCH PPS final rule in response
to public comments expressing concern that Pre-MDC MS-DRG 018 is
specific to one mechanistic approach to cellular therapy, and in
response to commenters who sought clarification on how future CAR T-
cell and non-CAR T-cell therapy products would be assigned, we stated
that if additional cellular therapies should become available, we would
use our established process to determine the MS-DRG assignment. The
commenters requested that CMS provide flexibility for future cellular
therapies, as they are made available and not restrict Pre-MDC MS-DRG
018 to CAR T-cell therapies alone. In this section of this rule, we
discuss the assignment of these therapies in more detail.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25094), during the September 8-9, 2020 ICD-10 Coordination and
Maintenance Committee meeting, several topics involving requests for
new procedure codes related to CAR T-cell therapies, non-CAR T-cell
therapies and other immunotherapies were discussed. We referred the
reader to the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information
regarding these requests for new procedure codes.
As noted in prior rulemaking (85 FR 32543), 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. As discussed in section II.D.13 of
the preamble of the proposed rule and this final rule, Table 6B.--New
Procedure Codes, lists the new procedure codes that have been approved
to date that will be effective with discharges on and after October 1,
2021. Included in Table 6B are the following new procedure codes that
describe the administration of CAR T-cell and non-CAR T-cell therapies
and other immunotherapies. As stated in the proposed rule, consistent
with our established process, we examined the MS-DRG assignment for the
predecessor codes to determine the most appropriate MS-DRG assignment
and, consistent with the assignment of those predecessor codes, we
proposed to classify the following new procedure codes as non-O.R.
procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.--New
Procedure Codes associated with the proposed rule and available via the
internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/.
BILLING CODE 4120-01-P
[[Page 44800]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.005
BILLING CODE 4120-01-C
In connection with our proposed assignment of the listed procedure
codes to Pre-MDC MS-DRG 018, we also proposed to revise the title for
Pre-MDC MS-DRG 018 ``Chimeric Antigen Receptor (CAR) T-cell
Immunotherapy'' to ``Chimeric Antigen Receptor (CAR) T-cell and Other
Immunotherapies'' to better reflect the cases reporting the
administration of non-CAR T-cell therapies and other immunotherapies
that would also be assigned to this MS-DRG (for example, Introduction
of lifileucel immunotherapy into peripheral vein, percutaneous
approach, new technology group 7), in addition to CAR T-cell therapies.
Comment: Several commenters agreed with the proposal to assign the
listed ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018 and to revise
the title to include ``Other Immunotherapies.'' A commenter who
expressed support for the change to Pre-MDC MS-DRG 018 stated its view
that the domain of cellular therapeutics will become increasingly
important in the care of Medicare beneficiaries with cancer in the
future and that creating sufficient plasticity in the diagnostic coding
system to permit the continued integration of new and innovative
therapeutics into the evidence-based care of Medicare beneficiaries is
essential. Another commenter stated they appreciated the recognition of
the differentiated nature of cancer care, as well as the importance of
innovation in
[[Page 44801]]
the domain of immune-oncology, which it stated was a necessary part of
effective, equitable cancer care delivery to CMS beneficiaries who
receive their care at both PPS and PPS-Exempt centers to ensure
equitable access. A commenter stated the proposed change to Pre-MDC MS-
DRG 018 furthers the goal of securing expedited access for Medicare
beneficiaries to innovative therapies. Another commenter stated the
proposal responds to stakeholder concerns that currently, Pre-MDC MS-
DRG 018 is specific to one mechanistic approach to cellular therapy.
This same commenter and other commenters stated the proposal is also
responsive to stakeholder requests that CMS provide flexibility for
future cellular therapies as they are made available, and not restrict
Pre-MDC MS-DRG 018 to CAR T-cell therapies alone.
However, some commenters who expressed appreciation of CMS'
recognition of non-CAR T-cell immunotherapy and a need to revise the
description for Pre-MDC MS-DRG 018 requested further clarification from
CMS on what the ``Other Immunotherapies'' terminology is intended to
include. The commenters stated the term ``Other Immunotherapies'' is
very general and may lead to confusion since ``immunotherapy'' is a
broad term that is applied across several therapeutic areas (for
example Diabetes, Rheumatoid Arthritis, Cancer, etc.) to describe
treatments that stimulate an immune response within patients. A
commenter stated that the National Cancer Institute differentiates
immunotherapy for cancer patients into several types (for example,
Immune checkpoint inhibitors, T-cell transfer therapy, Monoclonal
antibodies, etc.). This commenter stated their belief that CMS is not
intending to refer to a broad array of immunotherapy and suggested that
more precise language in the descriptor of Pre-MDC MS-DRG 018 may be
beneficial. Some commenters recommended that CMS consider using
terminology such as ``Immune Effector Cells'' in place of ``Other
Immunotherapies'' with respect to the description of the MS-DRG. Other
commenters suggested that CMS consider revising the title for Pre-MDC
MS-DRG 018 to ``Autologous T-cell Immunotherapies''. Another commenter
stated they recognized the intent of the proposed change and commended
the effort by CMS to ensure that future cellular and CAR T-cell
therapies are rapidly assigned to a MS-DRG to allow for proper payment,
however, similar to other commenters, this commenter requested
clarification as to whether the proposed revision to the title of Pre-
MDC MS-DRG 18 is intended to incorporate solely cellular and CAR T-cell
therapies, or whether the goal is to include all cancer
immunotherapeutic agents since the term ``immunotherapy'' is broad and
future novel cancer immunotherapeutic agents may have different
resource utilization.
A commenter acknowledged that CMS is faced with a challenging
landscape in incorporating the administration of new gene and cell
therapies into the IPPS and recognized that CMS' proposed assignment of
procedure codes describing the administration of tumor-infiltrating
lymphocyte (TIL) therapies to MS-DRG 018 is to the most similar MS-DRG
that covers similar clinical characteristics and comorbidities.
However, whether for TIL therapies or other products in the pipeline,
the commenter recommended that CMS consider the following factors when
determining a permanent payment mechanism:
Patient diagnosis and product indication (solid vs. blood
cancers)
Cell collection methodologies (tissue biopsy, pheresis, etc.)
Product administration methodologies
Patient clinical care regimes and durations
Product safety and toxicity profiles that impact inpatient
care and follow-up
According to the commenter, society experts state there are
distinct and important differences in these factors between TIL
therapies and CAR T-cell therapies that may support reconsideration of
the MS-DRG assignment after a product is approved by the FDA and is
used to treat Medicare beneficiaries. The commenter recommended further
consideration of the appropriateness and patient access implications,
based on these factors, before grouping the two types of therapies
together on a long-term basis. This commenter also suggested that if
CMS finalized a change to the title of MS-DRG 018 to include TIL
therapies upon their initial approval, as proposed, that the title of
the MS-DRG more clearly reflect the specialized products assigned to
it.
A few commenters urged CMS to finalize the proposal while
continuing to work with stakeholders on ways to improve the
predictability and stability of hospital payment for these complex,
novel cell therapies that provide options for patients who so
desperately need them. Other commenters stated that if the proposed
revision to the title for Pre-MDC MS-DRG 018 is finalized, that CMS
should continue to monitor and assess the appropriateness of therapies
assigned to MS-DRG 018, if they continue to be aligned on resource use,
and whether additional refinements or MS-DRGs may be warranted in the
future. The commenters also suggested that CMS consider and detail a
process for creating new Pre-MDC MS-DRGs that reflect utilization and
clinical similarity consistent with the current overall IPPS
infrastructure while maintaining important resource and clinical
differences to maintain relative weight stability.
Other commenters opposed or expressed strong concerns with the
proposal to assign the procedure codes describing non-CAR T-cell and
other immunotherapies to Pre-MDC MS-DRG 018 and to revise the title of
the MS-DRG. These commenters stated that assigning therapies that are
clinically distinct from CAR T-cell therapies and may vary in resource
use has the potential to distort future rate setting and will disrupt
the Agency's measured multi-year approach in establishing a MS-DRG
dedicated to CAR T-cell therapy. According to the commenters, expanding
the MS-DRG to other immunotherapies one year after it has been
implemented holds the risk of creating additional payment uncertainty
around CAR T-cell therapies. The commenters urged CMS to maintain Pre-
MDC MS-DRG 018 specifically for autologous CAR T-cell therapies only,
as a long-term solution for reliable and predictable payments that will
enable hospitals to provide access to CAR T-cell therapies for Medicare
beneficiaries.
Some commenters recommended that CMS publicly propose MS-DRG
mappings in advance of making a final assignment decision and provide
an opportunity for stakeholders to submit comments with respect to
proposed mappings. Other commenters stated the new technology add-on
payment process should be independent of the process for obtaining a
MS-DRG assignment for a new code.
A few commenters provided specific information relating to the
process that is involved for patients undergoing treatment with CAR T-
cell therapy. The commenters outlined the stage of leukapheresis where
T-cells are separated and removed from the blood and the remaining
blood is returned to the body, followed by the T-cells being sent to a
manufacturing facility where they are genetically engineered and grown
in a laboratory until millions of T-cells are produced. These
commenters did not agree with the assignment of procedure codes
describing non-CAR T-cell therapies and other
[[Page 44802]]
immunotherapies to Pre-MDC MS-DRG 018 stating the treatment processes
are distinctly different and that some products have yet to be approved
by the FDA.
A commenter who specifically opposed the modification of Pre-MDC
MS-DRG 018 for FY 2022 stated that there are not any non-CAR T-cell
therapy FDA approved products that are anticipated in the near term.
This commenter further stated that CMS' proposal to include ``other
immunotherapies'' in the description for Pre-MDC MS-DRG 018 is overly
broad and risks inclusion of therapeutics which are not well aligned
with CAR T-cell cases being mapped to this MS-DRG. According to the
commenter, CMS has not provided sufficient detail about the rationale
and supporting evidence for assignment of non-CAR T-cell products to
MS-DRG 018. The commenter also stated that the term ``immunotherapy''
could describe products that treat a range of conditions, and those
products may have different experience with potential complications and
expected length of stay than CAR T-cell products as well as different
costs for the product itself. This same commenter recommended that CMS
provide evidence of clinical consistency and resource use alignment in
future rulemaking when proposing therapies that may map to Pre-MDC MS-
DRG-018 and allow for public comments. Another commenter expressed
concern that the proposed change to encompass ``other immunotherapies''
in Pre-MDC MS-DRG 018 could set a precedent for creating ``generic''
MS-DRGs for gene therapies, which, according to the commenter, could
hamper timely beneficiary access to needed treatment. This commenter
urged CMS to limit Pre-MDC MS-DRG 018 to all types of CAR T-cell
therapies and to consider creating new MS-DRGs for therapies, such as
gene therapies, outside the CAR T-cell space.
Response: We thank the commenters for their support of our proposal
to assign the listed procedure codes describing CAR T-cell, non-CAR T-
cell and other immunotherapies to Pre-MDC MS-DRG 018 and to modify the
title for Pre-MDC MS-DRG 018 to reflect this assignment. As previously
noted, we used our established process to examine the MS-DRG assignment
for the predecessor codes to determine the most appropriate MS-DRG
assignment. Specifically, we reviewed the predecessor code and MS-DRG
assignment most closely associated with the new procedure code, and in
the absence of claims data, we considered other factors that may be
relevant to the MS-DRG assignment, including the severity of illness,
treatment difficulty, complexity of service and the resources utilized
in the diagnosis and/or treatment of the condition. We have noted in
prior rulemaking that this process does not automatically result in the
new procedure code being assigned to the same MS-DRG or to have the
same designation (O.R. versus Non-O.R.) as the predecessor code. As
stated in the preamble of the proposed rule and discussed in this final
rule, we proposed to classify the new procedure codes as Non-O.R.
procedures affecting Pre-MDC MS-DRG 018, as shown in Table 6B.--New
Procedure Codes that was associated with the proposed rule and
available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/,
providing the opportunity for public comment on the MDC, MS-DRG
assignment and designation.
The predecessor code and associated MS-DRG assignment (if
applicable) for the listed codes are as follows:
BILLING CODE 4120-01-P
[[Page 44803]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.006
[[Page 44804]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.007
BILLING CODE 4120-01-C
As shown in the table, all the procedure codes have a predecessor
code that was previously assigned to Pre-MDC MS-DRG 018 with the
[[Page 44805]]
exception of four procedure codes (XW033G7, XW033L7, XW043G7, and
XW043L7) that have a predecessor code that was designated Non-O.R. and
did not impact any MS-DRG assignment. Two of the four codes describe
the introduction (administration) of an allogeneic CAR T-cell therapy
and are intended to capture any allogeneic CAR T-cell products that may
become available and do not yet have a unique procedure code. The other
two codes specifically describe the product lifileucel. We believe that
at this time, as the field of cellular and gene immunotherapies is
continuing to evolve very rapidly, that it is appropriate to initially
classify the procedure codes describing allogeneic CAR T-cell therapy
and lifileucel to Pre-MDC MS-DRG 018 because there are clinical
similarities with respect to the administration of these products, the
complexity of the conditions in which they are treating, and resource
utilization that are consistent with other CAR T-cell products
currently assigned to the MS-DRG. As a commenter specifically noted in
its support to assign the procedure codes describing the introduction
of lifileucel (XW033L7 and XW043L7) to Pre-MDC MS-DRG 018, both
lifileucel (a tumor-infiltrating lymphocyte or TIL therapy) and CAR T-
cell therapies require collection of a patient's lymphocyte cells which
are a key component of a complicated manufacturing process to produce a
patient-specific therapeutic dose, both are primarily administered in
the inpatient setting due to risk of significant but treatable adverse
events and the resources are anticipated to be comparable with respect
to the intensity of patient care that includes the treatment phase,
monitoring, management of any adverse events, and length of stay. While
for TIL therapy the source of the lymphocyte is the patient's tumor and
is obtained through surgical resection, and for CAR T-cell therapy the
source of the lymphocyte is the patient's blood, obtained through
apheresis, both therapies require a patient's lymphocytes. We also
appreciate another commenter's recognition of the challenges involved
with incorporating the administration of new gene and cellular
therapies into the IPPS and the view that assignment of procedure codes
describing the administration of tumor-infiltrating lymphocyte (TIL)
therapies to Pre-MDC MS-DRG 018 is to the most similar MS-DRG that
reflects similar clinical characteristics and comorbidities. With
respect to allogeneic CAR T-cell therapies, it is understood that these
therapies are not derived from a patient's own cells and therefore are
not ``autologous'', however, the resources and complexity in the care
and clinical management of these patients may be considered comparable
when taking into account diagnosis, prognosis, and treatment difficulty
(for example, frequent adjustments in dosing regimens in efforts to
prevent rejection of the new cells and susceptibility to infection). We
note that the definition of a MS-DRG will not be so specific that every
patient is identical, rather, the level of variation is known and
predictable. Thus, while the precise resource intensity of a patient
cannot be predicted, the average pattern of resource intensity of a
group of patients in a MS-DRG can be accurately predicted.
We also appreciate the commenter's feedback on factors to consider
for products that are in the pipeline with respect to MS-DRG assignment
as a permanent payment mechanism. We agree that there may be
distinctions to account for as we continue to gain more experience in
the utilization of these therapies and have additional claims data to
analyze.
We acknowledge the commenters' concerns that the term ``Other
Immunotherapies'' that was proposed for the title of Pre-MDC MS-DRG 018
may be considered broad. While, as several commenters stated in their
comments, cellular therapies and gene therapies are an evolving field,
the term ``Other Immunotherapies'' is intended to encompass the group
of therapies that are currently available and being utilized today (for
which codes have been created for reporting in response to industry
requests or are being considered for implementation), and to enable
appropriate MS-DRG assignment for any future therapies that may also
fit into this category and are not specifically identified as a CAR T-
cell product, that may become available (for example receive marketing
authorization or a newly established procedure code in the ICD-10-PCS
classification) during FY 2022. We appreciate the suggestions to
consider alternative terminology for the title (description) of Pre-MDC
MS-DRG 018 and look forward to continuing to work with stakeholders on
this issue in the future. At this time, for FY 2022, we believe it is
premature to finalize any of the suggested title revisions by
commenters to Pre-MDC MS-DRG 018 that may not fully reflect the various
types of therapies and products described by the different procedure
codes that are currently assigned or may be considered for assignment
there in FY 2022. We also note that any proposed changes to modify the
logic for case assignment and/or the title to Pre-MDC MS-DRG 018 would
be considered in future rulemaking. We further note that the process of
code creation and proposed assignment to the most appropriate MS-DRG
exists independently, regardless of whether there is an associated
application for a new technology add-on payment for a product or
technology submitted for consideration in a given fiscal year.
Specifically, requests for a new code(s) or updates to existing codes
are addressed through the ICD-10 Coordination and Maintenance Committee
meetings where code proposals are presented and the public is provided
the opportunity to comment. All codes finalized after the September
meeting must be reviewed and are subsequently proposed for assignment
under the ICD-10 MS-DRGs through notice and comment rulemaking. Codes
that are finalized after the March meeting are also reviewed and
subject to our established process of initially reviewing the
predecessor codes MS-DRG assignment and designation, while considering
other relevant factors as previously described. The codes that are
finalized after the March meeting are specifically identified with a
footnote in Tables 6A.--New Diagnosis Codes and Table 6B.--New
Procedure Codes that are made publicly available in association with
the final rule via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The public may provide feedback on these finalized
assignments which are then taken into consideration for the following
fiscal year. We refer the reader to section II.D.16 of the preamble of
this final rule for additional information regarding the ICD-10
Coordination and Maintenance Committee meeting process. Lastly, we note
that while some of the commenters opposed the revision to the title and
assignment of the new ICD-10-PCS procedure codes to Pre-MDC MS-DRG 018,
these commenters did not provide any alternative MS-DRGs for CMS to
consider.
In response to concerns involving payment uncertainty, we disagree
that modifying Pre-MDC MS-DRG 018 to include other immunotherapies one
year after it has been implemented carries a risk of creating
additional payment uncertainty around CAR T-cell therapies and
volatility in the relative weight for Pre-MDC MS-DRG 018. As stated in
section II.E.2.b. of the preamble of the proposed rule and this
[[Page 44806]]
final rule, we proposed and are finalizing to maintain the methodology
for the relative weight calculation for Pre-MDC MS-DRG 018. We refer
the reader to section II.E.2.b. of the preamble of this final rule for
the detailed discussion. Since the new procedure codes describing CAR
T-cell, non-CAR T-cell or other immunotherapies are effective with
discharges on and after October 1, 2021 and based on our understanding
that the administration of these therapies continues to be in clinical
trials, any claims reporting these new procedure codes containing
diagnosis code Z00.6 or having standardized drug charges of less than
$373,000 would be excluded from the calculation of the relative weight
for Pre-MDC MS-DRG 018. During this timeframe, as additional claims
data is made available, we will be better positioned to further
evaluate if changes to the current methodology or other modifications
to the procedure code assignments and MS-DRG are warranted.
We appreciate the unique process that is involved with the
development and production of CAR T-cell therapies, however, under the
IPPS, when evaluating appropriate MS-DRG assignment for technologies
(for example devices) that are utilized in the performance of a
procedure we do not take into consideration how a specific device is
manufactured compared to how other similar devices are manufactured.
Rather, we analyze and consider the procedure(s) for which the
technology is utilized for or in, and the resources involved in the
performance of the procedure. As discussed, based on the information to
date, we believe that the initial assignment of the listed procedure
codes is appropriate. Based on the nature of some comments, it appears
commenters were suggesting that CMS apply the criteria that is utilized
for the new technology add-on application process when suggesting what
factors CMS should consider for MS-DRG assignment of CAR T-cell, non-
CAR T-cell, and other immunotherapies. We note that the new technology
add-on application criteria is separate and distinct from the code
request process and subsequent MS-DRG assignment process.
In response to the commenter who stated there are not any non-CAR
T-cell therapy FDA approved products that are anticipated in the near
term, we wish to clarify that the proposed and final assignment of a
procedure code to a MS-DRG is not dependent upon a products FDA
approval. Similarly, the creation of a code to describe a technology
that is utilized in the performance of a procedure or service does not
require FDA approval of the technology.
With respect to the commenters' recommendation for CMS to continue
to assess the appropriateness of the therapies being proposed or
finalized to group to Pre-MDC MS-DRG 018, we note that, as discussed in
the preamble of the proposed rule and this final rule we use our
established process to examine the MS-DRG assignment for the
predecessor codes to determine the most appropriate MS-DRG assignment
and, consistent with the assignment of those predecessor codes, we
propose to classify new procedure codes as shown Table 6B.--New
Procedure Codes in association with the proposed rule each year. The
procedure codes describing CAR T-cell, non-CAR T-cell or other
immunotherapies are effective with discharges on and after October 1,
2021 as shown in Table 6B.--New Procedure Codes associated with this
final rule and available via the internet on the CMS website at:
https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps. In connection with the creation of new procedure
codes (and diagnosis codes), the MS-DRGs are reviewed and recalibrated
on an annual basis to specifically identify changes in utilization and
resources, and to allow the opportunity for public comment on proposed
changes under the IPPS.
In response to the comment that the term ``immunotherapy'' could
describe products that treat a range of conditions, we note that for FY
2022 we are addressing an immediate need to account for any upcoming
therapies that may be made available that are not specifically
classified as a CAR T-cell therapy to enable appropriate payment and
predictability. We note that the ICD-10-CM diagnosis codes identify
specific conditions and are available for tracking indications and
other purposes. We also note that because MS-DRG 018 is a Pre-MDC, the
logic for case assignment is dependent on the procedure codes that are
specifically assigned to the logic of the MS-DRG. Therefore, if a
particular type of immunotherapy is not specifically described by one
of the procedure codes that are listed in the definition (logic) for
Pre-MDC MS-DRG 018, then the logic for case assignment to this MS-DRG
would not be satisfied and another MS-DRG would be appropriately
assigned based on the GROUPER logic (the definition of the MS-DRG).
After consideration of the public comments received, for FY 2022,
we are finalizing our proposal to assign the listed procedure codes
describing CAR T-cell, non-CAR T-cell and other immunotherapies to Pre-
MDC MS-DRG 018 and to modify the title to ``Chimeric Antigen Receptor
(CAR) T-cell and Other Immunotherapies'' to better reflect the cases
reporting the administration of non-CAR T-cell therapies and other
immunotherapies.
When additional claims data becomes available for the CAR T-cell,
non-CAR T-cell therapies and other immunotherapies for which new
procedure codes have been created and are effective October 1, 2021 or
that may be created and become effective during FY 2022, we can
evaluate that data to determine if further modifications to Pre-MDC MS-
DRG 018 are warranted. We plan to continue engaging with stakeholders
on additional options for consideration in this field of cellular and
gene therapies, such as the creation of new and distinct MS-DRGs and to
determine if the creation of a new MDC (Major Diagnostic Category) may
be warranted to which unique MS-DRGs could be established and the
appropriate corresponding procedure codes could be proposed for
assignment.
3. MDC 03 (Diseases and Disorders of Ear, Nose, Mouth and Throat)
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58462 through
58471), we finalized our proposal to create two new base MS-DRGs, 140
and 143, with a three-way severity level split for new MS-DRGs 140,
141, and 142 (Major Head and Neck Procedures with MCC, with CC, and
without CC/MCC, respectively) and new MS-DRGs 143, 144, and 145 (Other
Ear, Nose, Mouth and Throat O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively). We provided the list of procedure codes
that were finalized to define the logic for the new MS-DRGs in Tables
6P.2a, 6P.2b, and 6P.2c associated with the final rule and available
via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/. As discussed
in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25095 through 25098),
we received two separate but related requests to review and reconsider
the MS-DRG assignments for a subset of the procedure codes listed in
Table 6P.2a (procedure codes assigned to MS-DRGs 140, 141, and 142) and
Table 6P.2b (procedure codes assigned to MS-DRGs 143, 144, and 145). In
this section of this rule, we discuss each of these separate, but
related requests.
[[Page 44807]]
a. Major Head and Neck Procedures
The requestor provided the following procedure codes from Table
6P.2a associated with the FY 2021 IPPS/LTCH PPS final rule for CMS to
examine.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.008
BILLING CODE 4120-01-C
The requestor stated that the listed procedure codes do not appear
appropriately assigned to MS-DRGs 140, 141, and 142. According to the
requestor, if any one of the five procedure codes describing a
procedure performed on the cranial cavity (0W9100Z, 0W910ZZ, 0WC10ZZ,
0WC13ZZ, or 0WX14ZZ) is assigned in conjunction with a principal
diagnosis from MDC 03 (Diseases and Disorders of Ear, Nose, Mouth, and
Throat), it appears more appropriate that cases reporting the diagnosis
and procedure combination would group to MS-DRGs 25, 26, and 27
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC,
and without CC/MCC, respectively) (for example, ``craniotomy'' MS-DRGs)
in MDC 01 (Diseases and Disorders of the Central Nervous System) or to
MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively). The requestor stated that drainage and extirpation from
the cranial cavity always involves drilling or cutting through the
skull regardless of the approach, therefore the five procedure codes
identified warrant assignment to the ``craniotomy'' MS-DRGs. For the
three procedure codes describing excision of subcutaneous tissue of
chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ), the requestor
stated those codes should group to MS-DRGs 987, 988, and 989 (Non-
extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) because they are not
pertinent to the ear, nose, mouth, or throat.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25096 through
25097), we stated that we reviewed this request and noted that the five
procedure codes describing procedures performed on the cranial cavity
are already assigned to MDC 01 and group to the ``craniotomy'' MS-DRGs
(25, 26, and 27) when reported with a principal diagnosis from MDC 01,
and are also currently classified as Extensive O.R. procedures,
resulting in assignment to MS-DRGs 981, 982, and 983 when any one of
the five procedure codes is reported on the claim and is unrelated to
the MDC to which the case was assigned based on the principal
diagnosis. We also noted that in addition to MS-DRGs 25, 26, and 27,
MS-DRG 23 (Craniotomy with Major Device Implant or Acute Complex CNS
Principal Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis without MCC) include procedures
performed on structures located within the cranial cavity, are included
in the range of MS-DRGs known as the ``craniotomy'' MS-DRGs in MDC 01,
and the five procedure codes submitted by the requestor describing
procedures performed on the cranial cavity are also assigned to these
MS-DRGs. We referred the requestor to Appendix E of the ICD-10 MS-DRG
Definitions Manual for further discussion of how each procedure code
may be assigned to multiple MDCs and MS-DRGs under the IPPS. The ICD-10
MS-DRG Definitions Manual is located on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software. We also noted
that these five procedure codes were previously assigned to MS-DRGs 131
and 132 (Cranial and Facial Procedures with and without CC/MCC,
respectively) in MDC 03 under version 37 of the ICD-10 MS-DRGs prior to
the restructuring that was finalized effective FY 2021 for MS-DRG 129
(Major Head and Neck Procedures with CC/MCC or Major Device) and MS-DRG
130 (Major Head and Neck Procedures without CC/MCC), MS-DRGs 131 and
132, and MS-DRGs 133 and 134 (Other Ear, Nose, Mouth and Throat O.R.
Procedures with and without CC/MCC, respectively).
With regard to the three procedure codes describing excision of
subcutaneous tissue of chest, back, or abdomen (0JB60ZZ, 0JB70ZZ, and
0JB80ZZ), the requestor suggested that the codes should group to MS-
DRGs 987, 988, and 989 (Non-extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) specifically because they are not pertinent to the ear,
nose, mouth, or throat, however, we noted it is unclear if the
requestor was concerned more broadly that the three procedure codes
should not group to any MS-DRGs in MDC 03 (Diseases and Disorders of
Ear, Nose, Mouth and Throat), given the stated rationale for the
request.
We stated in the proposed rule that, upon our review, we believed
that the three procedure codes describing excision of subcutaneous
tissue of chest, back, and abdomen (0JB60ZZ, 0JB70ZZ, and 0JB80ZZ),
which do not describe major head and neck procedures, were
inadvertently included in Table 6P.2a for assignment to MS-DRGs 140,
141, and 142. However, we also stated we believe that the codes are
appropriate for assignment in MDC 03 and noted that the three procedure
codes were previously assigned to MS-DRGs 133 and 134 (Other Ear, Nose,
Mouth and
[[Page 44808]]
Throat O.R. Procedures with and without CC/MCC, respectively) in MDC 03
prior to the restructuring that was finalized effective FY 2021 for MS-
DRGs 129, 130, 131, 132, 133, and 134. We also provided the following
clarification in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58470), as
stated in the ICD-10 MS-DRG Definitions Manual, ``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. For example, the ``other'' medical class for the
Respiratory System MDC would contain the diagnoses ``other somatoform
disorders'' and ``congenital malformation of the respiratory system,''
while the ``other'' surgical class for the female reproductive MDC
would contain the surgical procedures ``excision of liver'' (liver
biopsy in ICD-9-CM) and ``inspection of peritoneal cavity''
(exploratory laparotomy in ICD-9-CM). 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.''
In the proposed rule, we noted that during our review of procedure
codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ (describing excision of
subcutaneous tissue of chest, back, and abdomen, respectively) we also
confirmed that these procedures are currently designated as Extensive
O.R. procedures. Consistent with other procedure codes on the Non-
extensive procedure code list, we stated we do not believe the
procedures described by these procedure codes necessarily utilize the
resources or have the level of technical complexity as the procedures
on the Extensive O.R. procedures list. Therefore, we agreed that the
procedure codes describing these procedures would be more appropriately
designated as Non-extensive procedures and group to MS-DRGs 987, 988,
and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively) when any one of
the three procedure codes is reported on a claim and is unrelated to
the MDC to which the case was assigned based on the principal
diagnosis. We referred the reader to section II.D.10. of the preamble
of the proposed rule for further discussion regarding our proposal to
reassign these procedure codes from MS-DRGs 981, 982, and 983
(Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989
(Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) for FY 2022.
Therefore, we proposed to reassign the three procedure codes
describing excision of subcutaneous tissue of chest, back, or abdomen
(0JB60ZZ, 0JB70ZZ, and 0JB80ZZ) from MS-DRGs 140, 141, and 142 (Major
Head and Neck Procedures with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 143, 144, and 145 (Other Ear, Nose, Mouth and
Throat O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 03 for FY 2022. We refer the reader to section
II.D.10. of the preamble of this final rule for further discussion
regarding the designation of these codes as Extensive O.R. procedures
versus Non-extensive O.R. procedures and our finalized reassignment of
these codes from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and 989
for FY 2022.
Comment: Commenters supported the proposed reassignment of the
three procedure codes describing excision of subcutaneous tissue of
chest, back, or abdomen from MS-DRGs 140, 141, and 142 to MS-DRGs 143,
144, and 145.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ,
and 0JB80ZZ describing excision of subcutaneous tissue of chest, back,
or abdomen from MS-DRGs 140, 141, and 142 to MS-DRGs 143, 144, and 145
for FY 2022.
b. Other Ear, Nose, Mouth and Throat O.R. Procedures
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25097 through 25098) and noted earlier, we received two separate but
related requests to review and reconsider the MS-DRG assignments for a
subset of the procedure codes listed in Table 6P.2a and Table 6P.2b
associated with the FY 2021 IPPS/LTCH PPS final rule. In this section
of this rule, we discuss the second request related to procedure codes
listed in Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final
rule and currently assigned to MS-DRGs 143, 144 and 145.
The requestor provided a list of 82 procedure codes from Table
6P.2b associated with the FY 2021 IPPS/LTCH PPS final rule for CMS to
examine. We refer the reader to Table 6P.1d associated with the FY 2022
IPPS/LTCH PPS proposed rule and this final rule and available via the
internet at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/ for the list of procedure codes that
were provided by the requestor. According to the requestor, if any one
of the 82 procedure codes is assigned in conjunction with a principal
diagnosis code from MDC 03, it appears more appropriate that cases
reporting the diagnosis and procedure code combination would group to
MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) or to MS-DRGs 987, 988, and 989 (Non-extensive O.R.
Procedures Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) versus MS-DRGs 143, 144, and 145 (Other
Ear, Nose, Mouth And Throat O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively). However, the requestor also stated that
of the 82 procedure codes, the following three procedure codes
describing control of bleeding in the cranial cavity warrant grouping
to MS-DRGs 25, 26, and 27 (for example, ``craniotomy'' MS-DRGs) in MDC
01, for the same reasons previously described in the prior section
pertaining to the five other procedures performed on the cranial
cavity.
BILLING CODE 4120-01-P
[[Page 44809]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.009
BILLING CODE 4120-01-C
We reviewed this request and similar to the discussion in the prior
section for the separate but related request, we noted that 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. We stated we continue to believe that
the 82 procedure codes provided by the requestor are appropriately
assigned to MS-DRGs 143, 144, and 145 in MDC 03. With regard to the
requestor's assertion that cases reporting any one of the 82 procedure
codes would more appropriately group to the MS-DRGs for Extensive O.R.
procedures or Non-extensive O.R. procedures when reported in
conjunction with a principal diagnosis from MDC 03, we noted that, as
shown in Table 6P.2b associated with the FY 2021 IPPS/LTCH PPS final
rule, the procedure codes that were finalized for assignment to MS-DRGs
143, 144, and 145 were previously assigned to MS-DRGs 129 and 130, 131
and 132, or 133 and 134 in MDC 03. We also noted that, as discussed in
prior rulemaking, 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. For
these reasons, we proposed to maintain the current structure for MS-
DRGs 143, 144, and 145 for FY 2022.
Comment: A few commenters recommended that CMS reconsider the list
of 82 procedure codes assigned to MS-DRGs 143, 144, and 145 (Other Ear,
Nose, Mouth and Throat O.R. Procedures with MCC, with CC and without
CC/MCC, respectively) that were displayed in Table 6P.1d associated
with the proposed rule when reported with a principal diagnosis from
MDC 03.
The commenters acknowledged that 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, however, the commenters stated it is unclear what clinical
scenarios would result in certain procedure codes listed being assigned
with a diagnosis in MDC 03. The commenters provided the following list
of 38 procedure codes as examples of procedures that would not be
expected to be performed with a diagnosis from MDC 03.
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Another commenter requested transparency for the logic and data for
the exclusion of the 82 procedure codes and suggested that CMS may not
have any data for these procedures within MS-DRGs 143, 144, and 145
that were created in FY 2021.
Response: We appreciate the commenters' feedback and acknowledge
that the listed procedure codes would not appear to be clinically
indicated specifically for diagnoses in MDC 03. The commenter is
correct that it is too soon to have data available for the listed
procedure codes under MS-DRGs 143, 144, and 145 that were created
effective FY 2021. However, in our analysis of the FY 2018 MedPAR data
that was studied in our initial review of MDC 03 in consideration of
potential restructuring, for MS-DRG 133 (currently MS-DRG 144), we
identified one case reporting procedure code 0DJ04ZZ (Inspection of
upper intestinal tract, percutaneous endoscopic approach) with an
average length of stay of 14 days and average costs of $5,728 and one
case reporting procedure code 0FB00ZX (Excision of liver, open
approach, diagnostic) with an average length of stay of 17 days and
average costs of $32,642. We continued to believe that these
procedures, in addition and/or including the 38 procedure codes listed
that are now the subject of commenters' concerns, appropriate to
maintain in the logic for case assignment to the ``other'' surgical MS-
DRGs in MDC 03. However, as a result of the ongoing concerns expressed
by commenters specifically regarding the assignment of the 38 listed
procedure codes and the suggestion that CMS should reconsider the
current MS-DRG assignment, we determined it may be helpful to provide
the comparable translations under ICD-9-CM for commenters to better
understand how these 38 procedures were initially grouped to the ICD-10
MS-DRGs as a result of replication during the conversion from ICD-9 to
ICD-10 based MS-DRGs. We refer the reader to Table
[[Page 44811]]
6P.1m for findings from our analysis of the 38 listed procedure codes,
which indicates how these procedures were classified under ICD-10-PCS
based on the comparable translations under ICD-9-CM resulting in the
current MS-DRG assignment. We note that we were unable to fully
evaluate the 82 procedure codes and believe it may be advantageous to
evaluate further when claims data becomes available under the
restructured MS-DRGs (143, 144, and 145) that were effective with
discharges beginning FY 2021.
In response to the commenter who requested transparency for the
logic, we note that the GROUPER logic for all the MS-DRGs is made
publicly available in the ICD-10 MS-DRG Definitions Manual via the
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
After consideration of the public comments we received, we are
finalizing to maintain the assignment of the listed 82 procedure codes
to MS-DRGs 143, 144, and 145 for FY 2022. We will continue to review
the appropriateness of procedure code assignment to these MS-DRGs in
connection with our broader comprehensive procedure code analysis.
As noted in the proposed rule, with regard to the three procedure
codes describing control of bleeding in the cranial cavity (0W310ZZ,
0W313ZZ, and 0W314ZZ), and the requestor's suggestion that the codes
should group to MS-DRGs 25, 26, and 27 in MDC 01, we consulted with our
clinical advisors who stated these procedures are consistent with the
existing procedure codes included in the logic for case assignment to
MS-DRGs 25, 26, and 27. We refer the reader to section II.D.10. of the
preamble of the proposed rule and this final rule for further
discussion of this request, as well as the finalized assignment of
these codes to MS-DRGs 23, 24, 25, 26, and 27 for FY 2022.
4. MDC 04 (Diseases and Disorders of the Respiratory System)
a. Bronchiectasis
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25098), we
discussed a request we received to reassign cases reporting diagnosis
codes describing bronchiectasis from MS-DRGs 190, 191, and 192 (Chronic
Obstructive Pulmonary Disease with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 177, 178, and 179 (Respiratory Infections and
Inflammation with MCC, with CC, and without CC/MCC, respectively).
Bronchiectasis is described by the following diagnosis codes:
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According to the requestor, the underlying pathophysiology of
bronchiectasis is more similar to cystic fibrosis than it is to chronic
obstructive pulmonary disease (COPD). The requestor stated that in
bronchiectasis, there is an inciting event that creates scarring in the
lung which prevents the lung from clearing out mucous like it normally
would. The accumulation of abnormal mucous results in an environment
conducive to bacterial growth and commonly found bacteria in this
setting is very similar to those of cystic fibrosis with staphylococcus
aureus, pseudomonas aeruginosa, and non-tuberculous mycobacterium. The
requestor reported that when patients develop an exacerbation of
bronchiectasis, this is because of a buildup of mucous compounded by
overwhelming growth of the previously discussed bacteria. The requestor
also stated that patients admitted to the hospital for bronchiectasis
exacerbation are treated aggressively with intravenous (IV) antibiotics
to suppress the bacterial infection in combination with airway
clearance therapies. The requestor further stated that, unlike in an
acute COPD exacerbation, these patients do not always require steroids
as there is not necessarily airway reactivity.
The requestor maintained that the underlying reason for admission
to the hospital for these patients is the bacterial infection component
of the exacerbation, with the standard course of treatment for these
pulmonary bacterial infections averaging a minimum of 10-14 days due to
the slow growing nature of the bacteria commonly encountered in these
patients.
We stated in the FY 2022 IPPS/LTCH PPS proposed rule that we
reviewed this request and believed that bronchiectasis is appropriately
assigned to MS-DRGs 190, 191, and 192 (Chronic Obstructive Pulmonary
Disease with MCC, with CC, and without CC/MCC, respectively) because
bronchiectasis, like COPD, is a chronic condition. We noted that with
respect to the requestor's comments, cystic fibrosis, a genetic disease
that affects mucous producing cells resulting in recurring lung
infections, can lead to bronchiectasis. However, our clinical advisors
indicated that the cause of bronchiectasis can be multifactorial or
even remain undefined. Regardless of the cause, when present,
bronchiectasis is an irreversible chronic pulmonary condition due to
abnormal change to or destruction of normal pulmonary anatomy (the
major bronchi and bronchiole walls), resulting in impaired air movement
in and out of the lungs. COPD, regardless of the cause (smoking,
pollution, other exposures), is a chronic pulmonary condition due to
change/destruction of normal pulmonary anatomy, resulting in impaired
air movement in and out of the lungs. Both bronchiectasis and COPD
patients have abnormal pulmonary function tests and abnormal anatomic
findings on chest x-ray and/or chest CT. Therefore, for these reasons,
we proposed to maintain the structure of MS-DRGs 190, 191, and 192 for
FY 2022.
Comment: Commenters agreed with our proposal to maintain the
structure of MS-DRGs 190, 191, and 192.
Response: We thank the commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the structure of MS-DRGs 190, 191,
and 192 for FY 2022.
[[Page 44812]]
b. Major Chest Procedures
In the FY 2020 IPPS/LTCH PPS proposed (84 FR 19234) and final rules
(84 FR 42148), we stated that in review of the procedures that are
currently assigned to MS-DRGs 163, 164, and 165 (Major Chest Procedures
with MCC, with CC and without CC/MCC, respectively) and 166, 167, and
168 (Other Respiratory System O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively), that further refinement of these MS-DRGs
may be warranted. In this section of this rule, we discuss our review
of the procedures and restructuring these MS-DRGs for FY 2022.
We began our review of MS-DRGs 163, 164, 165, 166, 167, and 168 by
first examining all the procedures currently assigned to these MS-DRGs.
We referred the reader to the ICD-10 MS-DRG Definitions Manual Version
38.1, which is available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS for complete documentation of the GROUPER logic for
MS-DRGs 163, 164, 165, 166, 167, and 168.
We stated in the proposed rule that in our review of the procedures
currently assigned to MS-DRGs 163, 164, 165, 166, 167, and 168, we
found 17 procedure codes in MS-DRGs 163, 164, and 165 describing laser
interstitial thermal therapy (LITT) of body parts that do not describe
areas within the respiratory system, which would not be clinically
appropriate to maintain in the logic. These procedure codes are listed
in the following table.
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During our review of these 17 procedure codes, we identified
additional MDCs and MS-DRG assignments that are also not clinically
appropriate to maintain in the logic because the body parts described
by the codes are not consistent with the organ system, etiology or
clinical specialty of the MDC to which the procedure code is currently
assigned. For example, 16 of the 17 procedure codes (all except
procedure code DVY0KZZ) are included in the logic for case assignment
to MDC 12 (Diseases and Disorders of the Male Reproductive System) in
MS-DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for
Malignancy with and without CC/MCC, respectively) and MS-DRGs 717 and
718 (Other Male Reproductive System O.R. Procedures Except Malignancy
with and without CC/MCC, respectively) which is not clinically
appropriate. Therefore, we proposed to reassign these 17 procedure
codes from their current MS-DRG assignments in MDC 04, and from the
additional MDCs and MS-DRGs identified during our review that were
found to be clinically inappropriate, to their clinically appropriate
MDC and MS-DRGs as shown in Table 6P.2b 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).
Comment: Commenters agreed with the proposed reassignment of the
listed procedure codes as shown in Table 6P.2b associated with the
proposed rule describing LITT of various body parts to the proposed
more clinically appropriate MDCs and MS-DRGs. However, a commenter
suggested that CMS consider reassignment of code D0Y6KZZ to MS-DRGs 28,
29, and 30 (Spinal Procedures with MCC, with CC or Spinal
Neurostimulators and without CC/CC, respectively) rather than MS-DRGs
40, 41, and 42 (Peripheral, Cranial Nerve and Other Nervous System
Procedures with MCC, with CC and without CC/MCC, respectively) as being
more clinically and anatomically homogenous.
Response: We thank the commenters for their support. In response to
the commenter who suggested that CMS consider reassignment of code
D0Y6KZZ to MS-DRGs 28, 29, and 30 rather than MS-DRGs 40, 41, and 42 we
note that our clinical advisors continue to believe this is an
appropriate
[[Page 44813]]
assignment to MS-DRGs 40, 41, and 42 because the resources involved in
the performance of a LITT procedure of the spinal cord (code D0Y6KZZ)
clinically align more appropriately with the resources involved in the
performance of stereotactic radiosurgery of spinal cord procedures
currently assigned to MS-DRGs 40, 41, and 42 (procedure codes D026DZZ,
D026HZZ, and D026JZZ).
We also note that, as discussed in section II.D.10. of the preamble
of the proposed rule and this final rule, we identified additional
procedure codes describing LITT of various body parts, in addition to
the 17 procedure codes listed earlier in this section. The 14
additional procedure codes are:
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As these codes also describe laser interstitial thermal therapy
(LITT) of various body parts, we conducted further review of the MDC
and MS-DRG assignments of these 14 procedure codes consistent with our
initial review of the 17 procedure codes, and determined that
clinically inappropriate assignments also exist or that the current MS-
DRG assignment is not in alignment with the resources that are utilized
in the performance of the LITT procedure. For example, we examined
procedure codes D0Y0KZZ and D0Y1KZZ describing LITT of brain and brain
stem, respectively, that are currently assigned to the ``craniotomy''
MS-DRGs 23, 24, 25 26, and 27 in MDC 01 (Diseases and Disorders of the
Central Nervous System). The technique to perform the LITT procedure on
these structures is considered minimally invasive and does not involve
a craniotomy, therefore, continued assignment to the craniotomy MS-DRGs
is not clinically appropriate. While we agree that these procedures are
appropriately assigned to MDC 01, similar to our review for procedure
code D0Y6KZZ describing LITT of spinal cord, we believe it is more
appropriate for the procedures described by codes D0Y0KZZ and D0Y1KZZ
to be reassigned to MS-DRGs 40, 41, and 42. We then examined procedure
codes DBY0KZZ, DBY1KZZ, DBY2KZZ, DBY5KZZ, DBY6KZZ, DBY7KZZ, and DBY8KZZ
describing LITT of respiratory structures including the trachea,
bronchus, lung, pleura, mediastinum, chest wall, and diaphragm,
respectively, that are currently assigned to the ``major chest
procedures'' MS-DRGs 163, 164, and 165. While we agree that these
procedures are appropriately assigned to MDC 04, we do not believe LITT
of these respiratory structures utilize the same resources or require
the same level of complexity as the other procedures currently defined
in the GROUPER logic as ``major chest procedures'' since, as noted
previously, LITT is considered a minimally invasive procedure and there
are no large incisions with extensive muscle dissection. For these
reasons, we believe it is more appropriate for the procedure codes
describing LITT of respiratory structures to be reassigned to MS-DRGs
166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC,
with CC, and without CC/MCC, respectively).
After consideration of the public comments we received and based on
the analysis described previously, we are finalizing our proposal, with
modification, to reassign the 31 listed procedure codes as shown in
Table 6P.2b associated with this final rule describing LITT of various
body parts to the more clinically appropriate MDCs and MS-DRGs for FY
2022.
During our review of the procedure codes describing LITT of various
body parts we also confirmed that these procedures are currently
designated as Extensive O.R. procedures. We do not believe the
procedures described by these procedure codes necessarily utilize the
resources or have the level of technical complexity as the other
procedures on the Extensive O.R. procedures list. We stated in the
proposed rule that we believe that the procedure codes describing these
procedures would be more appropriately designated as Non-extensive
procedures and group to MS-DRGs 987, 988, and 989 (Non-extensive O.R.
Procedures Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) when any one of the procedure codes is
reported on a claim and is unrelated to the MDC to which the case was
assigned based on the principal diagnosis. We refer the reader to
section II.D.10. of the preamble of the proposed rule and this final
rule for further discussion regarding reassignment of these procedure
codes from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures
Unrelated to Principal Diagnosis with
[[Page 44814]]
MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988,
and 989 (Non-extensive O.R. Procedures Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively) for FY 2022.
We also identified five procedure codes describing repair of the
esophagus procedures currently assigned to MS-DRGs 163, 164, and 165
that would not be clinically appropriate to maintain in the logic. The
procedure codes are 0DQ50ZZ (Repair esophagus, open approach), 0DQ53ZZ
(Repair esophagus, percutaneous approach), 0DQ54ZZ (Repair esophagus,
percutaneous endoscopic approach), 0DQ57ZZ (Repair esophagus, via
natural or artificial opening), and 0DQ58ZZ (Repair esophagus, via
natural or artificial opening endoscopic), and are currently assigned
to the following MDCs and MS-DRGs.
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We stated that the five procedure codes describing repair of
esophagus procedures are not clinically coherent with the other
procedures in MS-DRGs 163, 164, and 165 that describe procedures
performed on major chest structures. Therefore, we proposed to remove
procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ from
the logic in MDC 04 for FY 2022.
Comment: Commenters agreed with the proposal to remove procedure
codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ from the logic in
MDC 04.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to remove procedure codes 0DQ50ZZ, 0DQ53ZZ,
0DQ54ZZ, 0DQ57ZZ, and 0DQ58ZZ describing repair of the esophagus from
the logic in MDC 04 for FY 2022.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25102), during our review of procedure codes 0DQ50ZZ, 0DQ53ZZ, 0DQ54ZZ,
0DQ57ZZ, and 0DQ58ZZ (describing repair of esophagus procedures) we
also confirmed that these procedures are currently designated as
Extensive O.R. procedures. We stated we do not believe the procedures
described by procedure codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ necessarily
utilize the resources or have the level of technical complexity as the
other procedures on the Extensive O.R. procedures list. We further
stated we believe that the procedure codes describing these procedures
would be more appropriately designated as Non-extensive procedures and
group to MS-DRGs 987, 988, and 989 (Non-extensive O.R. Procedures
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) when any one of the three procedure codes is reported on
a claim and is unrelated to the MDC to which the case was assigned
based on the principal diagnosis. We refer the reader to section
II.D.10. of the preamble of the proposed rule and this final rule for
further discussion regarding reassignment of these procedure codes from
MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R.
Procedures Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) for FY 2022.
Next, we examined claims data from the March 2020 update of the FY
2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file for all cases in MS-DRGs 163, 164, 165, 166, 167, and 168. Our
findings are shown in the following tables.
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As shown in the tables, there were a higher number of cases
reported in MS-DRGs 163, 164, 165, 166, 167, and 168 from the March
2020 update of the FY 2019 MedPAR file in comparison to the September
2020 update of the FY 2020 MedPAR file and overall, the cases reported
have comparable average lengths of stay and comparable average costs
for both fiscal years.
We then examined claims data from both the March 2020 update of the
FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file for MS-DRGs 163, 164, 165, 166, 167, and 168 to compare costs,
complexity of service and clinical coherence for each procedure code
currently assigned to these MS-DRGs to assess any potential
reassignment of the procedures. We refer the reader to Table 6P.1e and
Table 6P.1f 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) for the detailed claims data analysis. Table 6P.1e
contains the data analysis findings of procedure codes currently
assigned to MS-DRGs 163, 164, 165, 166, 167, and 168 from the March
2020 update of the FY 2019 MedPAR file and Table 6P.1f contains the
data analysis findings of procedure codes currently assigned to MS-DRGs
163, 164, 165, 166, 167, and 168 from the September 2020 update of the
FY 2020 MedPAR file. We note that if a procedure code that is currently
assigned to MS-DRGs 163, 164, 165, 166, 167, or 168 is not displayed,
it is because there were no cases found reporting that code in the
assigned MS-DRG.
As shown in Table 6P.1e and Table 6P.1f associated with the
proposed rule and this final rule, in our examination of the claims
data from both the March 2020 update of the FY 2019 MedPAR file and
September 2020 update of the FY 2020 MedPAR file, we found there is
wide variation in the volume, length of stay, and average costs for the
procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167, and
168. There were several instances in which only one occurrence of a
procedure was reported with a procedure code from MS-DRGs 163, 164,
165, 166, 167, or 168, and the average length of stay for these
specific cases ranged from 1 day to 97 days. For example, in the
analysis of claims data from the March 2020 update of the FY 2019
MedPAR file, during our review of MS-DRG 163, we found 153 procedures
for which only one occurrence of the procedure was reported with the
average length of stay ranging from 2 days to 65 days and the average
costs ranging from $3,760 to $195,447 for these cases. For MS-DRG 164,
we found 145 procedures for which only one occurrence of the procedure
was reported with the average length of stay ranging from 1 day to 28
days and the average costs ranging from $1,886 to $137,810 for these
cases. For MS-DRG 165, we found 111 procedures for which only one
occurrence of the procedure was reported with the average length of
stay ranging from 1 day to 23 days and the average costs ranging from
$2,656 to $73,092 for these cases. For MS-DRG 166, we found 150
procedures for which only one occurrence of the procedure was reported
with the average length of stay ranging from 1 day to 61 days and the
average costs ranging from $3,230 to $246,679 for these cases. For MS-
DRG 167, we found 110 procedures for which only one occurrence of the
procedure was reported with the average length of stay ranging from 1
day to 23 days and the average costs ranging from $2,058 to $149,220
for these cases. For MS-DRG 168, we found 68 procedures for which only
one occurrence of the procedure was reported with the average length of
stay ranging from 1 day to 18 days and the average costs ranging from
$2,033 to $35,576 for these cases.
Our analysis of the claims data from the September 2020 update of
the FY 2020 MedPAR file resulted in similar findings to those from the
March 2020 update of the FY 2019 MedPAR file; there were several
instances in which only one occurrence of a procedure was reported with
a procedure code from MS-DRGs 163, 164, 165, 166, 167, or 168. During
our review of MS-DRG 163, we found 139 procedures for which only one
occurrence of the procedure
[[Page 44817]]
was reported with the average length of stay ranging from 2 days to 97
days and the average costs ranging from $5,697 to $205,696 for these
cases. For MS-DRG 164, we found 122 procedures for which only one
occurrence of the procedure was reported with the average length of
stay ranging from 1 day to 35 days and the average costs ranging from
$3,204 to $120,128 for these cases. For MS-DRG 165, we found 92
procedures for which only one occurrence of the procedure was reported
with the average length of stay ranging from 1 day to 16 days and the
average costs ranging from $2,682 to $164,014 for these cases. For MS-
DRG 166, we found 141 procedures for which only one occurrence of the
procedure was reported with the average length of stay ranging from 1
day to 45 days and the average costs ranging from $3,230 to $246,679
for these cases. For MS-DRG 167, we found 105 procedures for which only
one occurrence of the procedure was reported with the average length of
stay ranging from 1 day to 22 days and the average costs ranging from
$2,150 to $112,465 for these cases. For MS-DRG 168, we found 72
procedures for which only one occurrence of the procedure was reported
with the average length of stay ranging from 1 day to 9 days and the
average costs ranging from $1,563 to $76,061 for these cases.
Our clinical advisors reviewed the procedures currently assigned to
MS-DRGs 163, 164, 165, 166, 167, and 168 to identify the patient
attributes that currently define each of these procedures and to group
them with respect to complexity of service and resource intensity. This
process included separating the procedures according to the surgical
approach (open, percutaneous, percutaneous endoscopic, via natural or
artificial opening, via natural or artificial opening endoscopic, and
external).
We also considered the claims data from the March 2020 update of
the FY 2019 MedPAR file and the September 2020 update of the FY 2020
MedPAR file for MS-DRGs 163, 164, 165, 166, 167, and 168 to further
analyze the average length of stay and average costs for the cases
reporting procedures assigned to any one of these MS-DRGs as well as
clinical coherence for these cases. For example, procedures that we
believe represent greater treatment difficulty and reflect a class of
patients who are similar clinically with regard to consumption of
hospital resources were grouped separately from procedures that we
believe to be less complex but still reflect patients who are similar
clinically with regard to consumption of hospital resources. This
approach differentiated the more complex procedures, such as procedures
performed on the sternum and ribs (for example, major chest) from the
less complex procedures such as bypass procedures performed on
peripheral vessels or diagnostic biopsies.
We stated in the FY 2022 IPPS/LTCH PPS proposed rule that as an
initial step in our proposed restructuring of these MS-DRGs, we
identified the following 26 procedure codes that are currently assigned
to MS-DRGs 166, 167, and 168 that we believe represent procedures
performed on structures that align more appropriately with the
procedures assigned to MS-DRGs 163, 164, and 165 that describe major
chest procedures.
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We analyzed claims data from the March 2020 update of the FY 2019
MedPAR file for the listed procedure codes in MS-DRGs 166, 167, and
168. We noted that if a listed procedure code is not displayed, it is
because there were no cases found reporting that code among MS-DRGs
166, 167, and 168. Our findings are shown in the following table.
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[[Page 44818]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.019
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We then analyzed claims data from the September 2020 update of the
FY 2020 MedPAR file for the listed procedure codes in MS-DRGs 166, 167,
and 168. We noted that if a listed procedure code is not displayed, it
is because there were no cases found reporting that code among MS-DRGs
166, 167, and 168. Our findings are shown in the following table.
BILLING CODE 4120-01-P
[[Page 44819]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.020
BILLING CODE 4120-01-C
We referred the reader to Tables 6P.1e and 6P.1f for detailed
claims data for the previously listed procedures in MS-DRGs 163, 164,
165, 166, 167, and 168 from the March 2020 update of the FY 2019 MedPAR
file and the September 2020 update of the FY 2020 MedPAR file,
respectively, and noted in the proposed rule that while some of the 26
listed procedure codes identified in MS-DRGs 166, 167, and 168 may not
have been reported in either year's MedPAR claims data or only had one
occurrence in which the procedure was reported, we believe these
procedures described by the listed 26 procedure codes are clinically
coherent with the other procedures that are currently assigned to MS-
DRGs 163, 164, and 165. For example, in our analysis of the March 2020
update of the FY 2019 MedPAR file, as shown in the table, we found
procedure code 02QW0ZZ reported with one occurrence with an average
length of stay of 15 days and average costs of $46,829. Despite finding
only one case, we stated that we believe procedures described by this
procedure code, as well as related procedure codes describing
procedures performed on the great vessels, are more clinically coherent
with the procedures assigned to MS-DRGs 163, 164, and 165 and align
more appropriately with the average length of stay and average costs of
those MS-DRGs. Similarly, in our analysis of the September 2020 update
of the FY 2020 MedPAR file, as shown in the table, we found procedure
code 0PS204Z reported with 344 occurrences with an average length of
stay of 9.6 days and average costs of $48,340. We stated that we
believe procedures described by this procedure code, as well as related
procedure codes describing procedures performed to repair or resect the
ribs, are more clinically coherent with the procedures
[[Page 44820]]
assigned to MS-DRGs 163, 164, and 165 and also align more appropriately
with the average length of stay and average costs of those MS-DRGs.
As a result of our preliminary review of MS-DRGs 163, 164, 165,
166, 167, and 168, for FY 2022, we proposed the reassignment of the
listed 26 procedure codes (9 procedure codes describing repair of
pulmonary or thoracic structures, and 17 procedure codes describing
procedures performed on the sternum or ribs) from MS-DRGs 166, 167, and
168 to MS-DRGs 163, 164, and 165 in MDC 04. We stated that our data
analysis shows that for the cases reporting any one of the 26 procedure
codes, generally, they have an average length of stay and average costs
that appear more consistent with the average length of stay and average
costs of cases in MS-DRGs 163, 164, and 165. Our clinical advisors also
agreed that these procedures clinically align with the other procedures
that are currently assigned to MS-DRGs 163, 164, and 165. We referred
the reader to Table 6P.2c associated with the proposed rule for the
list of procedure codes we proposed for reassignment from MS-DRGs 166,
167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04.
Comment: Commenters supported the proposed reassignment of the
listed 26 procedure codes from MS-DRGs 166, 167, and 168 to MS-DRGs
163, 164, and 165 in MDC 04.
Response: We appreciate the commenters' support.
After consideration of the public comments received, we are
finalizing our proposal to reassign the listed 26 procedure codes (9
procedure codes describing repair of pulmonary or thoracic structures,
and 17 procedure codes describing procedures performed on the sternum
or ribs), as listed in Table 6P.2c associated with this final rule,
from MS-DRGs 166, 167, and 168 to MS-DRGs 163, 164, and 165 in MDC 04
for FY 2022.
As discussed in the proposed rule, after this initial review of all
the procedures currently assigned to MS-DRGs 163, 164, 165, 166, 167,
and 168, in combination with the results of the data analysis as
reflected in Tables 6P.1e and 6P.1f, our clinical advisors support a
phased restructuring of these MS-DRGs. We believe further analysis of
the procedures assigned to these MS-DRGs is warranted based on the
creation of new procedure codes that have been assigned to these MS-
DRGs in recent years for which claims data are not yet available and
the need for additional time to examine the procedures currently
assigned to those MS-DRGs by clinical intensity, complexity of service
and resource utilization. We will continue to evaluate the procedures
assigned to these MS-DRGs as additional claims data become available.
5. MDC 05 (Diseases and Disorders of the Circulatory System)
a. Short-Term External Heart Assist Device
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25106 through 25115), Impella[supreg] Ventricular Support Systems are
temporary heart assist devices intended to support blood pressure and
provide increased blood flow to critical organs in patients with
cardiogenic shock, by drawing blood out of the heart and pumping it
into the aorta, partially or fully bypassing the left ventricle to
provide adequate circulation of blood (replace or supplement left
ventricle pumping) while also allowing damaged heart muscle the
opportunity to rest and recover in patients who need short-term support
for up to 6 days. The ICD-10-PCS codes that describe the insertion of
Impella[supreg] heart assist devices are currently assigned to MS-DRG
215 (Other Heart Assist System Implant). We referred the reader to the
ICD-10 MS-DRG Definitions Manual Version 38.1, 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 for complete documentation of the GROUPER
logic for MS-DRG 215.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41159 through
41170), we discussed public comments that recommended that CMS continue
to monitor the data in MS-DRG 215 for future consideration of
distinctions (for example, different approaches and evolving
technologies) that may impact the clinical and resource use of
procedures utilizing heart assist devices. Our data analysis showed a
wide range in the average length of stay and the average costs for
cases reporting procedures that involve a biventricular short-term
external heart assist system versus a short-term external heart assist
system. We noted we were aware that the AHA published Coding Clinic
advice that clarified coding and reporting for certain external heart
assist devices due to the technology being approved for new indications
but the claims data current at that time did not yet reflect that
updated guidance. We also noted that there had been recent updates to
the descriptions of the codes for heart assist devices. The qualifier
``intraoperative'' was added effective October 1, 2017 (FY 2018) to the
procedure codes describing the insertion of short-term external heart
assist system procedures to distinguish between procedures where the
device was only used intraoperatively and was removed at the conclusion
of the procedure versus procedures where the device was not removed at
the conclusion of the procedure and for which that qualifier would not
be reported. We agreed with the commenters that continued monitoring of
the data and further analysis was necessary prior to proposing any
modifications to MS-DRG 215 and finalized our proposal to maintain the
current structure of MS-DRG 215 for FY 2019.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42167) we discussed
public comments on our proposals related to recalibration of the FY
2020 relative weights and the changes in relative weights from FY 2019.
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, 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 percent
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. After reviewing the comments
received and the data used in our ratesetting calculations, we
acknowledged an outlier circumstance where the weight for a MS-DRG was
seeing a significant reduction for each of the 3 years since CMS began
using the ICD-10 data in calculating the relative weights. Therefore,
for the reasons discussed in the FY 2020 final rule, we adopted a
temporary one-time measure for FY 2020 where the FY 2020 relative
weight was set equal to the FY 2019 relative weight, which in turn had
been set equal to the FY 2018 relative weight.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58598) we again
acknowledged an outlier circumstance where the weight for MS-DRG 215
was seeing a significant reduction for each of the 4 years since CMS
began using the ICD-10 data in calculating the relative weights. We
stated while we would ordinarily consider this weight change to be
appropriately driven by the underlying data, given the comments
received, and in an abundance of caution because this may be the MS-DRG
assigned when a hospital provides temporary right ventricular support
for
[[Page 44821]]
up to 14 days in critical care patients for the treatment of acute
right heart failure or decompensation caused by complications related
to COVID-19, including pulmonary embolism, we adopted a temporary one-
time measure for FY 2021 for MS-DRG 215. Specifically, we set the 2021
relative weight for MS-DRG 215 equal to the average of the FY 2020
relative weight and the otherwise applicable FY 2021 weight.
For the FY 2022 IPPS/LTCH PPS proposed rule, we received a request
to reassign certain cases reporting procedure codes describing the
insertion of a percutaneous short-term external heart assist device
from MS-DRG 215 to MS-DRGs 216, 217, and 218 (Cardiac Valve and Other
Major Cardiothoracic Procedures with Cardiac Catheterization with MCC,
with CC, and without CC/MCC, respectively). According to the requestor,
there are two distinct clinical populations within MS-DRG 215: High-
risk Percutaneous Coronary Intervention (PCI) patients receiving short
term ``intraoperative'' external heart assist systems where the device
is only used intraoperatively and is removed at the conclusion of the
procedure, and those patients in or at risk of cardiogenic shock
requiring longer heart pump support and ICU stays. The requestor stated
that cases in which short-term external heart assist systems are placed
intraoperatively require fewer resources. The requestor suggested that
moving the less resource intensive cases that report a procedure code
that describes the intraoperative insertion of short-term external
heart assist systems from MS-DRG 215 into MS-DRG 216, 217, and 218,
will clinically align the two distinctly different patient populations,
and consequently will address the potential decrease in the relative
weight of MS-DRG 215.
The requestor stated it performed its own analysis of claims in MS-
DRG 215 that involve the intraoperative insertion of a short-term
external heart assist device (as identified by the presence of ICD-10-
PCS codes 02HA3RJ (Insertion of short-term external heart assist system
into heart, intraoperative, percutaneous approach) and 5A0221D
(Assistance with cardiac output using impeller pump, continuous). The
requestor stated that its analysis found that if procedures involving
intraoperative placement of a short-term external heart assist device
were moved into MS-DRGs 216, 217 and 218, it would result in an
increase in the average costs and average lengths of stay for the cases
that would remain to be assigned to MS-DRG 215.
As discussed in the proposed rule, during our review of this issue,
we noted that when a patient is admitted and has an Impella[supreg]
external heart assist device inserted two ICD-10-PCS codes are
assigned: A code that describes the insertion of the device and code
5A0221D that describes assistance with an impeller pump. Therefore, our
analysis included procedure code 02HA3RJ as identified by the requestor
as well as similar procedure codes 02HA0RJ (Insertion of short-term
external heart assist system into heart, intraoperative, open approach)
and 02HA4RJ (Insertion of short-term external heart assist system into
heart, intraoperative, percutaneous endoscopic approach) that also
describe the intraoperative insertion of a short-term heart assist
device, differing only in approach. Because the assistance with an
Impella[supreg] is coded with ICD-10-PCS code 5A0221D whether the
device is used only intraoperatively or in instances where the device
is left in place at the conclusion of the procedure, we did not include
this code in our analysis. We also noted that the requestor suggested
that the cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device be moved to MS-
DRGs 216, 217 and 218 but these MS-DRGs are defined by the performance
of cardiac catheterization. Therefore, we expanded our analysis to also
include MS-DRGs 219, 220 and 221 (Cardiac Valve and Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC,
with CC, and without CC/MCC, respectively).
We stated in the FY 2022 IPPS/LTCH PPS proposed rule that first, we
examined claims data from the March 2020 update of the FY 2019 MedPAR
file for MS-DRG 215 to identify cases reporting ICD-10-PCS codes
02HA0RJ, 02HA3RJ or 02HA4RJ and a procedure code describing the
performance of a cardiac catheterization. Our findings are shown in the
following table:
[GRAPHIC] [TIFF OMITTED] TR13AU21.021
As shown in the table, we identified a total of 7,741 cases within
MS-DRG 215 with an average length of stay of 7.8 days and average costs
of $68,234. Of these 7,741 cases, there are 2,943 cases that include
both a procedure code describing the intraoperative insertion of a
short-term external heart assist device and a procedure code describing
the performance of a cardiac catheterization with an average length of
stay of 7.1 days and average costs of $60,449. Of these 2,943 cases,
there are 23 cases reporting a procedure code describing the open
intraoperative
[[Page 44822]]
insertion of a short-term external heart assist device with a procedure
code describing the performance of a cardiac catheterization with an
average length of stay of 8.9 days and average costs of $85,806. There
are 2,904 cases reporting a procedure code describing a percutaneous
intraoperative insertion of a short-term external heart assist device
with a procedure code describing the performance of a cardiac
catheterization with an average length of stay of 7.1 days and average
costs of $60,227. There are 16 cases reporting a procedure code
describing a percutaneous endoscopic intraoperative insertion of a
short-term external heart assist device with a procedure code
describing the performance of a cardiac catheterization approach with
an average length of stay of 6.4 days and average costs of $64,217. The
data analysis shows that for the cases in MS-DRG 215 reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing
the performance of a cardiac catheterization, generally, the average
length of stay is shorter and the average costs are lower than the
average length of stay and average costs (with the exception of the
average costs and length of stay for the 23 cases reporting a procedure
code describing the open intraoperative insertion of a short-term
external heart assist device with a procedure code describing the
performance of a cardiac catheterization which are higher) compared to
all cases in that MS-DRG.
In the proposed rule, we indicated that we also examined claims
data from the March 2020 update of the FY 2019 MedPAR file for MS-DRGs
216, 217 and 218. Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.022
Because MS-DRG 215 is a base DRG and there is a three-way split
within MS-DRGs 216, 217, and 218, we indicated that we also analyzed
the cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device with a procedure
code describing the performance of a cardiac catheterization for the
presence or absence of a secondary diagnosis designated as a
complication or comorbidity (CC) or a major complication or comorbidity
(MCC).
[GRAPHIC] [TIFF OMITTED] TR13AU21.023
This data analysis shows the cases in MS-DRG 215 reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing
the performance of a cardiac catheterization when distributed based on
the presence or absence of a secondary diagnosis designated as a
complication or comorbidity (CC) or a major complication or comorbidity
(MCC) have average costs generally more similar to the average costs in
the FY 2019 MedPAR file for MS-DRGs 216, 217 and 218 respectively,
while the average lengths of stay are shorter. While the cases from MS-
DRG 215 reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device with a procedure
code describing the performance of a cardiac catheterization ``with
CC'' and ``without CC/MCC'' have higher average costs than the average
costs of MS-DRGs 217 and 218, these costs are closer to the average
costs of those MS-DRGs than they are to the average costs of MS-DRG
215. The average costs of the cases from MS-DRG 215 reporting a
procedure code describing the intraoperative insertion of a short-term
external heart assist device with a procedure code describing the
performance of a cardiac catheterization ``with MCC'' are lower than
the average costs of both MS-DRGs 215 and 216.
Next, we examined claims data from the March 2020 update of the FY
2019 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-PCS
codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing
the performance of a cardiac catheterization. Our findings are shown in
the following table:
[[Page 44823]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.024
As shown in the table, of the 7,741 cases within MS-DRG 215, there
are 432 cases that include a procedure code describing the
intraoperative insertion of a short-term external heart assist device
without a procedure code describing the performance of a cardiac
catheterization with an average length of stay of 4.8 days and average
costs of $53,607. Of these 432 cases, there are eight cases reporting a
procedure code describing the open intraoperative insertion of a short-
term external heart assist device without a procedure code describing
the performance of a cardiac catheterization with an average length of
stay of 8.8 days and average costs of $141,242. There are 423 cases
reporting a procedure code describing a percutaneous intraoperative
insertion of a short-term external heart assist device without a
procedure code describing the performance of a cardiac catheterization
with an average length of stay of 4.7 days and average costs of
$51,964. There is one case reporting a procedure code describing a
percutaneous endoscopic intraoperative insertion of a short-term
external heart assist device without a procedure code describing the
performance of a cardiac catheterization approach with a length of stay
of 2 days and costs of $47,289. We noted that the data analysis shows
that for the cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ,
02HA3RJ or 02HA4RJ without a procedure code describing the performance
of a cardiac catheterization, generally, the average length of stay is
shorter and the average costs are lower than the average length of stay
and average costs (with the exception of the average costs and length
of stay for the eight cases describing the open intraoperative
insertion of a short-term external heart assist device without a
procedure code describing the performance of a cardiac catheterization
which are higher) compared to all cases in that MS-DRG.
We also examined claims data from the March 2020 update of the FY
2019 MedPAR file for MS-DRGs 219, 220 and 221. Our findings are shown
in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.025
Similarly, because MS-DRG 215 is a base DRG and there is a three-
way split within MS-DRGs 219, 220 and 221, we stated that we also
analyzed the cases reporting a procedure code describing the
intraoperative insertion of a short-term external heart assist device
without a procedure code describing the performance of a cardiac
catheterization for the presence or absence of a secondary diagnosis
designated as a complication or comorbidity (CC) or a major
complication or comorbidity (MCC).
[[Page 44824]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.026
We indicated in the proposed rule that this data analysis shows the
cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or
02HA4RJ without a procedure code describing the performance of a
cardiac catheterization when distributed based on the presence or
absence of a secondary diagnosis designated as a complication or
comorbidity (CC) or a major complication or comorbidity (MCC) have
average costs generally more similar to the average costs in the FY
2019 MedPAR file for MS-DRGs 219, 220 and 221 respectively, while the
average lengths of stay are shorter. While the cases from MS-DRG 215
reporting a procedure code describing the intraoperative insertion of a
short-term external heart assist device, without a procedure code
describing the performance of a cardiac catheterization ``with MCC'',
``with CC'' and ``without CC/MCC'' have higher average costs than the
average costs MS-DRGs 219, 220 and 221, respectively, these costs are
closer to the average costs of those MS-DRGs than they are to the
average costs of MS-DRG 215.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing
the performance of a cardiac catheterization. Our findings are shown in
the following table:
[GRAPHIC] [TIFF OMITTED] TR13AU21.027
As shown in the table, we identified a total of 6,275 cases within
MS-DRG 215 with an average length of stay of 7.9 days and average costs
of $72,144. Of these 6,275 cases, there are 2,395 cases that include
both a procedure code describing the intraoperative insertion of a
short-term external heart assist device and a procedure code describing
the performance of a cardiac catheterization with an average length of
stay of 6.8 days and average costs of $62,260. Of these 2,395 cases,
there were 25 cases reporting a procedure code describing the open
intraoperative insertion of a short-term external heart assist device
with a procedure code describing the performance of a cardiac
catheterization with an average length of stay of 8.2 days and average
costs of $85,954. There are 2,360 cases reporting a procedure code
describing a percutaneous intraoperative insertion of a short-term
external heart assist device with a procedure code describing the
performance of a cardiac catheterization with an average length of stay
of 6.8 days and average costs of $61,965. There are 10 cases reporting
a procedure code describing a percutaneous endoscopic intraoperative
insertion of a short-term external heart assist device with a procedure
code describing the performance of a cardiac catheterization approach
with an average length of stay of 6.9 days and average costs of
$72,564. The data analysis shows that for the cases in MS-DRG 215
reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or
[[Page 44825]]
02HA4RJ with a procedure code describing the performance of a cardiac
catheterization, when examined collectively, the average length of stay
is shorter (6.8 days versus 7.9 days) and the average costs are lower
($62,260 versus $72,144) than the average length of stay and average
costs (of all cases in that MS-DRG). We noted there were some
differences noted in cases reporting a procedure code describing the
intraoperative insertion of a short-term external heart assist device
with a procedure code describing the performance of a cardiac
catheterization when examined by operative approach. For the 25 cases
reporting a procedure code describing the open intraoperative insertion
of a short-term external heart assist device with a procedure code
describing the performance of a cardiac catheterization, the average
costs were higher ($85,954 versus $72,144) and average length of stay
was slightly longer (8.2 days versus 7.9 days) when compared to all
cases in that MS-DRG. For the 10 cases reporting a procedure code
describing the percutaneous endoscopic intraoperative insertion of a
short-term external heart assist device with a procedure code
describing the performance of a cardiac catheterization, the average
costs were nearly equal ($72,564 versus $72,144) and average length of
stay was shorter (6.9 days versus 7.9 days) when compared to all cases
in that MS-DRG.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for MS-DRGs 216, 217 and 218. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.028
Because MS-DRG 215 is a base DRG and there is a three-way split
within MS-DRGs 216, 217, and 218, we also analyzed the cases reporting
a procedure code describing the intraoperative insertion of a short-
term external heart assist device with a procedure code describing the
performance of a cardiac catheterization for the presence or absence of
a secondary diagnosis designated as a complication or comorbidity (CC)
or a major complication or comorbidity (MCC).
[GRAPHIC] [TIFF OMITTED] TR13AU21.029
This data analysis shows the cases in MS-DRG 215 reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ with a procedure code describing
the performance of a cardiac catheterization when distributed based on
the presence or absence of a secondary diagnosis designated as a
complication or comorbidity (CC) or a major complication or comorbidity
(MCC) have average costs generally more similar to the average costs in
the FY 2020 MedPAR file for MS-DRGs 216, 217 and 218 respectively,
while the average lengths of stay are shorter. While the cases from MS-
DRG 215 reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device with a procedure
code describing the performance of a cardiac catheterization ``with
CC'' and ``without CC/MCC'' have higher average costs than the average
costs of MS-DRGs 217 and 218, these costs are closer to the average
costs of those MS-DRGs than they are to the average costs of MS-DRG
215. The average costs of the cases from MS-DRG 215 reporting a
procedure code describing the intraoperative insertion of a short-term
external heart assist device with a procedure code describing the
performance of a cardiac catheterization ``with MCC'' are lower than
the average costs of both MS-DRGs 215 and 216.
Next, we examined claims data from the September 2020 update of the
FY 2020 MedPAR file for MS-DRG 215 to identify cases reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code
describing the performance of a cardiac catheterization. Our findings
are shown in the following table:
[[Page 44826]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.030
As shown in the table, of the 6,275 cases within MS-DRG 215, there
are 331 cases that include a procedure code describing the
intraoperative insertion of a short-term external heart assist device
without a procedure code describing the performance of a cardiac
catheterization with an average length of stay of 4.5 days and average
costs of $52,181. Of these 331 cases, there are eight cases reporting a
procedure code describing the open intraoperative insertion of a short-
term external heart assist device without a procedure code describing
the performance of a cardiac catheterization with an average length of
stay of 8.9 days and average costs of $80,314. There are 332 cases
reporting a procedure code describing a percutaneous intraoperative
insertion of a short-term external heart assist device without a
procedure code describing the performance of a cardiac catheterization
with an average length of stay of 4.4 days and average costs of
$51,569. There is one case reporting a procedure code describing a
percutaneous endoscopic intraoperative insertion of a short-term
external heart assist device without a procedure code describing the
performance of a cardiac catheterization approach with a length of stay
of 2 days and costs of $24,379. The data analysis shows that for the
cases in MS-DRG 215 reporting ICD-10-PCS codes 02HA0RJ, 02HA3RJ or
02HA4RJ without a procedure code describing the performance of a
cardiac catheterization, generally, the average length of stay is
shorter and the average costs are lower than the average length of stay
and average costs (with the exception of the average costs and length
of stay for the eight cases reporting a procedure code describing the
open intraoperative insertion of a short-term external heart assist
device without a procedure code describing the performance of a cardiac
catheterization which are higher) compared to all cases in that MS-DRG.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for MS-DRGs 219, 220 and 221. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.031
Similarly, because MS-DRG 215 is a base DRG and there is a three-
way split within MS-DRGs 219, 220 and 221, we also analyzed the 331
cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device without a
procedure code describing the performance of a cardiac catheterization
for the presence or absence of a secondary diagnosis designated as a
complication or comorbidity (CC) or a major complication or comorbidity
(MCC).
[[Page 44827]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.032
This data analysis shows the cases in MS-DRG 215 reporting ICD-10-
PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code
describing the performance of a cardiac catheterization when
distributed based on the presence or absence of a secondary diagnosis
designated as a complication or comorbidity (CC) or a major
complication or comorbidity (MCC) have average costs generally more
similar to the average costs in the FY 2020 MedPAR file for MS-DRGs
219, 220 and 221 respectively, while the average lengths of stay are
shorter. While the cases from MS-DRG 215 reporting a procedure code
describing the intraoperative insertion of a short-term external heart
assist device without a procedure code describing the performance of a
cardiac catheterization ``with CC'' and ``without CC/MCC'' have higher
average costs than the average costs of MS-DRGs 220 and 221, these
costs are closer to the average costs of those MS-DRGs than they are to
the average costs of MS-DRG 215. The average costs of the cases from
MS-DRG 215 reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device without a
procedure code describing the performance of a cardiac catheterization
``with MCC'' are lower than the average costs of both MS-DRGs 215 and
219.
We indicated in the proposed rule that our clinical advisors
reviewed the clinical issues and the claims data and agreed that cases
reporting a procedure code that describes the intraoperative insertion
of a short-term external heart assist device are generally less
resource intensive and are clinically distinct from other cases
reporting procedure codes describing the insertion of other types of
heart assist devices currently assigned to MS-DRG 215. Our clinical
advisors stated that critically ill patients who are experiencing or at
risk for cardiogenic shock from an emergent event such as heart attack
or virus that impacts the functioning of the heart and requires longer
heart pump support are different from those patients who require
intraoperative support only. Patients receiving a short-term external
heart assist device intraoperatively during coronary interventions
often have an underlying disease pathology such as heart failure
related to occluded coronary vessels that is broadly similar in kind to
other patients also receiving these interventions without the need for
an insertion of a short-term external heart assist device. In the post-
operative period, these patients can recover and can be sufficiently
rehabilitated prior to discharge. For these reasons, we indicated our
clinical advisors supported reassigning ICD-10-PCS codes 02HA0RJ,
02HA3RJ, and 02HA4RJ that describe the intraoperative insertion of a
short-term external heart assist device to MS-DRGs 216, 217, 218, 219,
220 and 221 in MDC 05. They stated this reassignment would improve
clinical coherence in these MS-DRGs.
To compare and analyze the impact of our suggested modifications,
we ran a simulation using the Version 38.1 ICD-10 MS-DRG GROUPER and
the claims data from the March 2020 update of the FY 2019 MedPAR file.
The following table reflects our simulation for ICD-10-PCS procedure
codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative
insertion of a short-term external heart assist device if they were
moved to MS-DRGS 216, 217, 218, 219, 220 and 221.
[[Page 44828]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.033
We stated in the proposed rule that we believe the resulting
proposed MS-DRG assignments would be more clinically homogeneous,
coherent and better reflect hospital resource use while at the same
time addressing concerns related to the relative weight of MS-DRG 215.
A review of this simulation shows that this distribution of ICD-10-PCS
codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the intraoperative
insertion of a short-term external heart assist device if moved to MS-
DRGs 216, 217, 218, 219, 220 and 221, increases the average costs of
the cases remaining in MS-DRG 215 by over $4,500, while generally
having a more limited effect on the average costs of MS-DRGs 216, 217,
218, 219, 220 and 221.
We also ran a simulation using the Version 38.1 ICD-10 MS-DRG
GROUPER and the claims data from the September 2020 update of the FY
2020 MedPAR file. The following table reflects our simulation for ICD-
10-PCS procedure codes 02HA0RJ, 02HA3RJ or 02HA4RJ that describe the
intraoperative insertion of a short-term external heart assist device
if they were moved to MS-DRGS 216, 217, 218, 219, 220 and 221.
[[Page 44829]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.034
As with our simulation based on the March 2020 update of the FY
2019 MedPAR file, we indicated we believe that this simulation supports
that the resulting proposed MS-DRG assignments would be more clinically
homogeneous, coherent and better reflect hospital resource use while at
the same time addressing concerns related to the relative weight of MS-
DRG 215. We noted that a review of this simulation shows that this
distribution of ICD-10-PCS codes 02HA0RJ, 02HA3RJ or 02HA4RJ that
describe the intraoperative insertion of a short-term external heart
assist device if moved to MS-DRGs 216, 217, 218, 219, 220 and 221,
increases the average costs of the cases remaining in MS-DRG 215 by
over $6,000, while generally having a more limited effect on the
average costs of MS-DRGS 216, 217, 218, 219, 220 and 221.
Therefore, for FY 2022, we proposed to reassign ICD-10-PCS codes
02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215 to MS-DRGs 216,
217, 218, 219, 220 and 221 in MDC 05.
Comment: Commenters supported the proposal to reassign ICD-10-PCS
codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in MS-DRG 215. These
commenters stated they appreciated CMS' attention, careful review and
efforts to create more long-term stability for heart assist devices, a
life-saving technology. Some commenters stated CMS' actions will create
a more clinically balanced structure for hospital payments for patients
needing short-term external heart assist device support. Commenters
stated that this reassignment will better reflect hospital resource
utilization creating a more clinically homogenous coherent structure
for acute patients that require intraoperative support of a short-term
external heart assist device. A commenter stated this reassignment
would also result in a relative weight for MS-DRG 215 that more
accurately reflects the resource utilization of the procedures within
that MS-DRG, as well as stabilizing the relative weight for MS-DRG 215,
which has fluctuated over the last few years. Another commenter
acknowledged intraoperative cases require fewer hospital resources
during their admission than all other cases in MS-DRG 215 and stated
removing ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ describing
intraoperative use from MS-DRG 215 maintains appropriate payment for
longer term circulatory support, such as cardiogenic shock patients,
who require more intensive resource use.
Response: We thank the commenters for their support.
Comment: Other commenters opposed CMS' proposal to reassign the
short-term heart assist device ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and
02HA4RJ from MDC 05 in MS-DRG 215 to MS-DRGs 216, 217, 218, 219, 220
and 221 in MDC 05. Some commenters urged CMS to reconsider the proposal
regarding short-term external heart assist devices and leave procedure
codes 02HA0RJ, 02HA3RJ, and 02HA4RJ in MS-DRG 215 where they are
currently assigned. These commenters noted patients requiring
intraoperative short-term external heart assist devices tend to be more
severely ill and stated the proposal does not fully consider the
complexity of care required for these patients and the associated
resource utilization, in terms of the need for additional length of
stay and monitoring. A commenter stated short-term external heart
assist systems, require high resources consumption evidenced by
critical care management, expensive drugs and tests; and specialized
clinical staff such as: Physicians, nursing, perfusionists, etc.
Another commenter stated they believe there may be hospital-specific
differences with some facilities performing the diagnostic cardiac
catheterizations as outpatient services prior to the inpatient
admission for the other cardiothoracic procedures. A commenter
expressed concern about the impact this change would have related to
the increased use of the external heart assist devices and resources
required to insert the device, including the cost of the device. This
commenter stated an estimated 50% of the cases at their facility
involving a short-term heart assist device would fall into a CC or
NonCC category under the proposed MS-DRG change in spite of the fact
the patients who require this device are at higher risk, which would
mean that approximately 50% of their Medicare payment would be
allocated to the cost
[[Page 44830]]
of the device itself. This commenter stated that an even greater
negative financial impact may be recognized as there has been an
increase in the use of Impella[supreg] devices due to higher incidence
of advanced ischemic cardiomyopathy because of the COVID-19 pandemic
and delays in treatment.
Another commenter requested that CMS consider re-evaluation once
the MedPAR data are normalized from the pandemic to consider structure
revisions for these MS-DRGs. This commenter noted that there is a
proposed relative weight reduction from 11.1579 to 10.5614 for MS- DRG
215 even though CMS proposed to move the intraoperative short-term
heart assist devices from this MS-DRG. This commenter stated this
reduction does not seem appropriate especially if the proposed MS-DRG
changes are finalized.
Response: We thank the commenters for their feedback. Our clinical
advisors have reviewed these concerns regarding the proposed
reassignment and continue to state the resulting MS-DRG assignments, as
proposed, would be more clinically homogeneous, coherent and better
reflect hospital resource use because cases reporting a procedure code
that describes the intraoperative insertion of a short-term external
heart assist device are generally less resource intensive and are
clinically distinct from other cases reporting procedure codes
describing the insertion of other types of heart assist devices
currently assigned to MS-DRG 215. Our clinical advisors acknowledge
that while the need to have a short term heart assist device inserted
can reflect on the severity of illness of the patient being treated,
critically ill patients who are experiencing or at risk for cardiogenic
shock from an emergent event such as heart attack or virus that impacts
the functioning of the heart and require longer heart pump support and
ICU stays are different from those patients who require intraoperative
support only where the device is removed at the conclusion of the
procedure. As additional claims data become available, we will continue
to analyze the clinical nature of each of the procedures describing the
insertion of short-term heart assist devices and their MS-DRG
assignments to further improve the overall accuracy of the IPPS
payments in future rulemaking.
Comment: While indicating their support of CMS' proposal, some
commenters urged CMS to refrain from moving cases reporting a procedure
code describing the intraoperative insertion of a short-term external
heart assist device into MS-DRG 219, 220, and 221. These commenters
stated the cases should be assigned to MS-DRGs 216, 217 and 218 only,
based on the presence or absence of a secondary diagnosis designated as
a complication or comorbidity (CC) or a major complication or
comorbidity (MCC). A few commenters stated that CMS should refrain from
moving cases into MS-DRG 219, 220, or 221 because the claim volume of
cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device without a
procedure code describing a cardiac catherization is under five hundred
and intracardiac heart assist devices, such as Impella[supreg] devices
require the use of diagnostic catheters, fluoroscopy, and hemodynamic
monitoring during use, all resulting in higher costs. Considering the
types of procedures that utilize short term circulatory support and the
techniques used by these circulatory support devices, these commenters
stated cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device are comparable
to those mapping to MS-DRG 216, 217 and 218, even when a cardiac
catherization procedure is not performed. Other commenters asserted
there are known coding and documentation issues seen with this complex
therapy, without providing examples of these issues, and stated that
reassigning ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ to MS-DRGs
219, 220, and 221, described as ``without cardiac catheterization'' may
lead to coding errors since the vast majority of these procedures
necessitate a cardiac catheterization.
Response: We note that the requestor originally suggested that the
cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device be moved to MS-
DRGs 216, 217 and 218 but because these MS-DRGs are defined by the
performance of cardiac catheterization, we specifically expanded our
analysis to also include MS-DRGs 219, 220 and 221 (Cardiac Valve and
Other Major Cardiothoracic Procedures without Cardiac Catheterization
with MCC, with CC, and without CC/MCC, respectively). We do not believe
it would be appropriate to assign all cases to the ``with cardiac
catheterization'' MS-DRGs because the claims data would not reflect the
additional resources associated with the performance of a cardiac
catheterization in cases reporting a procedure code describing the
intraoperative insertion of a short-term external heart assist device.
As presented in the proposed rule and in this final rule, the data
analysis performed show in both in the FY 2019 MedPAR file and the FY
2020 MedPAR file, the average length of stay is shorter and the average
costs are lower in cases reporting a procedure code describing the
intraoperative insertion of a short-term external heart assist device
without the performance of a cardiac catheterization when compared to
cases reporting a procedure code describing the intraoperative
insertion of a short-term external heart assist device with the
performance of a cardiac catheterization when analyzed for the presence
or absence of a secondary diagnosis designated as a complication or
comorbidity (CC) or a major complication or comorbidity (MCC).
Our clinical advisors believe that continued monitoring of the data
and further analysis is needed prior to proposing any additional
modifications to the MS-DRG assignment of cases reporting ICD-10-PCS
codes 02HA0RJ, 02HA3RJ or 02HA4RJ without a procedure code describing
the performance of a cardiac catheterization. Our clinical advisors
believe maintaining the distinction between the performance of or lack
of a cardiac catherization procedure is important in these subsets of
cases as we continue to examine the volume and length of stay as well
as considering a variety of factors pertaining to resource consumption
and clinical characteristics that might account for differences in
resource use before determining if additional modifications to the
assignment of these procedure codes are warranted.
In response to the suggestion that we refrain from moving cases
into MS-DRG 219, 220, or 221 because claim volume of cases reporting a
procedure code describing the intraoperative insertion of a short-term
external heart assist device without a procedure code describing a
cardiac catherization is low, we do not believe moving this subset of
cases into an incoherent grouping simply because the case volume is low
is in keeping with our goal to maintain clinically coherent groups that
also more accurately stratify Medicare patients with varying levels of
severity.
Similarly, in response to the comments asserting that there are
known coding and documentation issues seen with this complex therapy
and that reassigning ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ to
MS-DRGs 219, 220, and 221, described as ``without cardiac
catheterization'' may lead to coding errors since the vast majority of
these procedures necessitate
[[Page 44831]]
a cardiac catheterization, we again do not believe moving cases into an
MS-DRG because of the need for improved provider documentation or any
additional coder instruction is in keeping with our goal to maintain
clinically coherent groups that also more accurately stratify Medicare
patients with varying levels of severity. We acknowledge that accurate
coding of external heart assist devices has been the subject of
confusion in the past, and we will continue to monitor the claims data
for these procedures. As one of the four Cooperating Parties, we also
will continue to collaborate with the American Hospital Association to
provide guidance for coding external heart assist devices through the
Coding Clinic for ICD-10-CM/PCS publication and to review the ICD-10-
PCS guidelines to determine where further clarifications may be made.
Therefore, after consideration of the public comments we received,
and for reasons stated previously, we are finalizing our proposal to
reassign ICD-10-PCS codes 02HA0RJ, 02HA3RJ, and 02HA4RJ from MDC 05 in
MS-DRG 215 to MS-DRGs 216, 217, 218, 219, 220 and 221 in MDC 05,
without modification, effective October 1, 2021.
b. Type II Myocardial Infarction
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25115 through
25116), we discussed a request we received to review the MS-DRG
assignment of ICD-10-CM diagnosis code I21.A1 (Myocardial infarction
type 2). The requestor stated that when a type 2 myocardial infarction
is documented, per coding guidelines, it is to be coded as a secondary
diagnosis since it is due to an underlying cause. This requestor also
noted that when a type 2 myocardial infarction is coded with a
principal diagnosis in MDC 05 (Diseases and Disorders of the
Circulatory System), the GROUPER logic assigns MS-DRGs 280 through 282
(Acute Myocardial Infarction, Discharged Alive with MCC, with CC, and
without CC/MCC, respectively). The requestor questioned if this GROUPER
logic was correct or if the logic should be changed so that a type 2
myocardial infarction, coded as a secondary diagnosis, does not result
in the assignment of a MS-DRG that describes an acute myocardial
infarction.
As discussed in the proposed rule, to begin our analysis, we
reviewed the GROUPER logic. We noted that the requestor is correct that
when diagnosis code I21.A1 is reported as a secondary diagnosis in
combination with a principal diagnosis in MDC 05, the case currently
groups to medical MS-DRGs 280 through 282 in the absence of a surgical
procedure, when the patient is discharged alive. We also noted that if
the patient expires, GROUPER logic instead will assign MS-DRGs 283
through 285 (Acute Myocardial Infarction, Expired with MCC, with CC,
and without CC/MCC, respectively) when diagnosis code I21.A1 is
reported as a secondary diagnosis in combination with a principal
diagnosis in MDC 05.
According to the Universal Definition of Myocardial Infarction
(MI), developed by a global task force that included the European
Society of Cardiology, the American College of Cardiology, the American
Heart Association and the World Heart Federation (WHF), the diagnosis
of MI requires the rise and/or fall of cardiac biomarkers with clinical
evidence of ischemia in which there is evidence of myocardial injury or
necrosis, defined by symptoms, electrocardiographic (ECG) changes, or
new regional wall motion abnormalities. Since 2007, this definition
further classifies myocardial infarctions into five distinct subtypes.
While a type 1 MI is defined as a MI due to an acute coronary syndrome,
type 2 MI is defined as a mismatch in myocardial oxygen supply and
demand due to other causes such as coronary dissection, vasospasm,
emboli, or hypotension that is not attributed to unstable coronary
artery disease (CAD).
We indicated in the proposed rule that our clinical advisors
reviewed this issue and did not recommend changing the current MS-DRG
assignment of ICD-10-CM diagnosis code I21.A1. As noted by the
requestor, the ICD-10-CM Official Guidelines for Coding and Reporting
state ``Type 2 myocardial infarction, (myocardial infarction due to
demand ischemia or secondary to ischemic imbalance) is assigned to code
I21.A1, Myocardial infarction type 2 with a code for the underlying
cause coded first.'' We indicated our clinical advisors believed that
cases reporting diagnosis code I21.A1 as a secondary diagnosis are
associated with a severity of illness on par with cases reporting a
principal diagnosis of another type myocardial infarction. They stated
the diagnosis of myocardial infarction describes myocardial cell death
due to inadequate oxygen supply to the myocardium for a prolonged
period, regardless of the subtype. Our clinical advisors further
stated, for clinical consistency, it is more appropriate to maintain
the current assignment of ICD-10-CM diagnosis code I21.A1 with the
other codes that describe myocardial infarction. Therefore, we did not
propose to reassign diagnosis code I21.A1 from MS-DRGs 280 through 285.
As discussed in the proposed rule, during our review of this issue
we also noted that code I21.A1 (Myocardial infarction type 2) is
currently one of the listed principal diagnoses in the GROUPER logic
for MS-DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI, HF or Shock with and without MCC,
respectively). However, code I21.A1 is not currently recognized in
these same MS-DRGs when coded as a secondary diagnosis. As a result,
when coded as a secondary diagnosis in combination with a principal
diagnosis in MDC 05, MS-DRGs 224 and 225 (Cardiac Defibrillator Implant
with Cardiac Catheterization without AMI, HF, or Shock with and without
MCC, respectively) are instead assigned when reported with a listed
procedure code. We referred the reader to the ICD-10 MS-DRG Definitions
Manual Version 38.1, 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 for
complete documentation of the GROUPER logic for MS-DRGs 222, 223, 224,
and 225.
Acknowledging that coding guidelines instruct to code I21.A1 after
the diagnosis code that describes the underlying cause, we indicated
our clinical advisors recommended adding special logic in MS-DRGs 222
and 223 to have code I21.A1 also qualify when coded as a secondary
diagnosis in combination with a principal diagnosis in MDC 05 since
these diagnosis code combinations also describe acute myocardial
infarctions.
As a result, we proposed modifications to the GROUPER logic to
allow cases reporting diagnosis code I21.A1 (Myocardial infarction type
2) as a secondary diagnosis to group to MS-DRGs 222 and 223 when
reported with a listed procedure code for clinical consistency with the
other MS-DRGs describing acute myocardial infarction.
A diagnosis code may define the logic for a specific MS-DRG
assignment in three different ways. The diagnosis code may be listed as
principal or as any one of the secondary diagnoses, as a secondary
diagnosis, or only as a secondary diagnosis as noted in more detail in
the proposed rule and this final rule.
Principal or secondary diagnoses. Indicates that a
specific set of diagnoses are used in the definition of the MS-DRG. The
diagnoses may be listed as principal or as any one of the secondary
diagnoses. A special case of this condition is MS-DRG 008 in which two
[[Page 44832]]
diagnoses (for example, renal and diabetic) must both be present
somewhere in the list of diagnoses in order to be assigned to MS-DRG
008.
Secondary diagnoses. Indicates that a specific set of
secondary diagnoses are used in the definition of the MS-DRG. For
example, a secondary diagnosis of acute leukemia with chemotherapy is
used to define MS-DRG 839.
Only secondary diagnoses. Indicates that in order to be
assigned to the specified MS-DRG no secondary diagnoses other than
those in the specified list may appear on the patient's record. For
example, in order to be assigned to MS-DRG 795, only secondary
diagnoses from the specified list may appear on the patient's record.
We noted in the proposed rule that whenever there is a secondary
diagnosis component to the MS-DRG logic, the diagnosis code can either
be used in the logic for assignment to the MS-DRG or to act as a CC/
MCC. For this specific scenario, we proposed that code I21.A1, as a
secondary diagnosis, be used in the definition of the logic for
assignment to MS-DRGs 222 and 223, similar to the example described
previously, where a secondary diagnosis of acute leukemia with
chemotherapy is used to define MS-DRG 839, and therefore will not act
as an MCC in these MS-DRGs.
In summary, for FY 2022, we proposed to maintain the current
structure of MS-DRGs 280 through 285. We proposed to modify the GROUPER
logic to allow cases reporting diagnosis code I21.A1 (Myocardial
infarction type 2) as a secondary diagnosis to group to MS-DRGs 222 and
223 when reported with qualifying procedures.
Comment: A commenter agreed with CMS' proposed modifications to the
GROUPER logic to allow cases reporting diagnosis code I21.A1
(Myocardial infarction type 2) as a secondary diagnosis to group to MS-
DRGs 222 and 223 (Cardiac Defibrillator Implant with Cardiac
Catheterization with AMI, HF or Shock with and without MCC,
respectively) when reported with qualifying procedures. This commenter
stated they agreed that coding rules stipulate that diagnosis code
I21.A1 must be reported as a secondary diagnosis.
Response: We appreciate the commenters' support.
Comment: Other commenters expressed concern with CMS' proposal. A
commenter stated that they believed it is inappropriate to include
cases with diagnosis code I21.A1 in the MS-DRGs that describe an acute
myocardial infarction (MS-DRGs 280 through 285). The commenter
expressed concern that if cases reporting diagnosis code I21.A1 are
assigned to the MS-DRGs that describe an acute myocardial infarction,
this would disrupt the resource accuracy of these MS-DRGs. They stated
from a clinical perspective, the pattern of care for patients with type
2 MI may vary considerably compared to the treatment of patients with
other types of myocardial infarctions, namely Type 1 STEMI and Type 1
NSTEMI. This commenter however, agreed with the proposal to modify the
GROUPER logic to allow cases reporting diagnosis code I21.A1 as a
secondary diagnosis to group to MS-DRGs 222 and 223 when reported with
qualifying procedures and stated this portion of the proposal aligns
with the intended use of type 2 MI and creates clinical consistency in
MS-DRGs. The commenter also stated while it is inappropriate for
diagnosis code I21.A1 to be classified as the diagnosis driving MS-DRG
assignment, type 2 MI should be classified as a major complication or
comorbidity (MCC) because patients with type 2 MI face an increased
mortality risk. Another commenter stated the proposed rule did not
provide rationale as to why code I21.A1 would not act as an MCC under
the proposal to revise the GROUPER logic to allow cases reporting
diagnosis code I21.A1 as a secondary diagnosis to group to MS-DRGs 222
and 223 when reported with qualifying procedures. This commenter
requested that data analysis be provided on the instances when this
code would not act as an MCC.
Response: We appreciate the commenters' feedback. We note to that
the GROUPER logic assignment for each diagnosis code as a principal
diagnosis is for grouping purposes only. As discussed in the FY 2019
IPPS/LTCH PPS final rule (83 FR 41217) and the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58519), because the diagnoses are codes listed under
the heading of ``Principal Diagnosis'' in the ICD-10 MS-DRG Definitions
Manual, it may appear to indicate that these codes are to be reported
as a principal diagnosis for assignment to these MS-DRGs. However, the
Definitions Manual display of the GROUPER logic assignment for each
diagnosis code does not correspond to coding guidelines for reporting
the principal diagnosis. The MS-DRG logic must specifically require a
condition to group based on whether it is reported as a principal
diagnosis or a secondary diagnosis, and consider any procedures that
are reported, in addition to consideration of the patient's age, sex
and discharge status in order to affect the MS-DRG assignment. In other
words, cases will group according to the GROUPER logic, regardless of
any coding guidelines or coverage policies. It is the Medicare Code
Editor (MCE) and other payer-specific edits that identify
inconsistencies in the coding guidelines or coverage policies. These
data integrity edits address issues such as data validity, coding
rules, and coverage policies. Since the inception of the IPPS, the data
editing function has been a separate and independent step in the
process of determining a DRG assignment. The separation of the MS-DRG
grouping and data editing functions allows the MS-DRG GROUPER to remain
stable even though coding rules and coverage policies may change during
the fiscal year.
In response to the commenter that stated that if type 2 MI cases
are assigned to the MS-DRGs that describe an acute myocardial
infarction, this would disrupt the resource accuracy of these MS-DRGs,
while at the same time agreeing with the proposal to allow cases
reporting diagnosis code I21.A1 (Myocardial infarction type 2) as a
secondary diagnosis to group to MS-DRGs 222 and 223 when reported with
qualifying procedures, we are unclear of the commenters' rationale for
these conflicting statements. Specifically, because MS-DRGs 222 and 223
also describe an acute myocardial infarction, it is unclear why the
commenter indicates a type 2 MI should only be considered an MI in this
instance.
In response to the commenter that stated that CMS did not provide
rationale as to why code I21.A1 would not act as an MCC under the
proposal to revise the GROUPER logic in MS-DRGs 222 and 223 and in
response to their request that data analysis be provided on the
instances when this code would not act as an MCC, as we indicated in
the proposed rule, whenever there is a secondary diagnosis component to
the MS-DRG logic, the diagnosis code can either be used in the logic
for assignment to the MS-DRG or to act as a CC/MCC. It is not a
question of data analysis. Although I21.A1 is designated as an MCC when
reported as a secondary diagnosis, if code I21.A1, as a secondary
diagnosis, is being used in the definition of the logic for assignment
to MS-DRGs 222 and 223, it cannot act as an MCC in these MS-DRGs.
Therefore, outside of MS-DRGs 222, 223, 280, 281, 282, 283, 284 and
285, diagnosis code I21.A1 will continue to act as an MCC when reported
as a secondary diagnosis in Version 39.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the current structure of MS-DRGs
280 through 285, without modification, for
[[Page 44833]]
FY 2022. We are also finalizing our proposal, without modification, to
modify the GROUPER logic to allow cases reporting diagnosis code I21.A1
(Myocardial infarction type 2) as a secondary diagnosis to group to MS-
DRGs 222 and 223 when reported with qualifying procedures, effective
October 1, 2021.
c. Viral Cardiomyopathy
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25116 through
25117), we discussed three separate but related requests that we
received to add ICD-10-CM diagnosis code B33.24 (Viral cardiomyopathy)
to the list of principal diagnoses for MS-DRGs 314, 315, and 316 (Other
Circulatory System Diagnoses with MCC, with CC, and without CC/MCC,
respectively) in MDC 05. The requestors noted that a discontinuity
exists in the current MDC assignment of diagnosis codes in ICD-10-CM
subcategory B33.2. The list of the five ICD-10-CM diagnosis codes in
subcategory B33.2, as well as their current MDC assignments, is found
in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.035
A requestor noted ICD-10-CM codes B33.20, B33.21, B33.22, and
B33.23 are assigned to MDC 05 (Diseases and Disorders of the
Circulatory System), while code B33.24 is assigned to MDC 18
(Infectious and Parasitic Diseases, Systemic or Unspecified Sites). The
requestor stated that the placement of ICD-10-CM diagnosis code B33.24
within subcategory B33.2 is clinically appropriate, as all the
diagnoses within this subcategory share a common etiology, involve the
heart and supporting structures, and require the same intensity of
hospital care. However, the assignment of code B33.24 to a different
MDC is clinically incongruous with the placement of the other codes in
the subcategory. According to the requestor, all of the conditions
share similar etiology, anatomic location, and needs for care,
therefore the five codes should all be assigned to MDC 05. This
requestor also stated that reassigning code B33.24 to MDC 05 would
ensure both clinical continuity and coding consistency within the B33.2
subcategory. Another requestor stated MDC 05 surgical MS-DRGs should be
assigned when procedures such as cardiac catheterization or coronary
angioplasty are performed for a principal diagnosis of viral
cardiomyopathy.
In the proposed rule, we indicated that to begin our analysis, we
reviewed the GROUPER logic. We noted that currently, cases reporting
ICD-10-CM diagnosis code B33.24 as a principal diagnosis group to
medical MS-DRGs 865 and 866 (Viral Illness with and without MCC,
respectively) in MDC 18 in the absence of a surgical procedure. We
indicated our clinical advisors reviewed this issue and noted viral
cardiac infections may present as endocarditis (inflammation of the
heart's inner lining), myocarditis (inflammation of the middle layer of
the heart), pericarditis (inflammation of the pericardium), or
cardiomyopathy (disease of the heart muscle). The infection usually
begins somewhere other than the heart, often in the nose, lungs, or
stomach. As the infection progresses, and the microbe multiplies and
gets into the bloodstream, it can infiltrate the heart muscle. The
growth and replication of viruses inside the heart can endanger the
heart by destroying heart cells. The management of viral cardiomyopathy
is similar to the management of other viral cardiac infections and can
include bed rest, control of pain with non-steroidal anti-inflammatory
agents and anti-microbial therapy to avoid permanent myocardial damage,
cardiomegaly, and/or congestive cardiac failure.
We indicated our clinical advisors agreed that the diagnosis of
viral cardiomyopathy is clinically related to the other diagnoses in
ICD-10-CM subcategory B33.2. We stated that they believed it is
clinically appropriate for all five diagnoses in subcategory B33.2 to
group to MDC 05 (Diseases and Disorders of the Circulatory System) as
these conditions describe circulatory system conditions and
complications and that this modification will improve clinical
coherence. Therefore, we proposed to reassign ICD-10-CM diagnosis code
B33.24 from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and
without MCC, respectively) to MDC 05 in MS DRGs 314, 315, and 316
(Other Circulatory System Diagnoses with MCC, with CC, and without CC/
MCC, respectively). We stated in the proposed rule that, under this
proposal, cases reporting procedure codes from MDC 05 in conjunction
with principal diagnosis B33.24, would group to MS-DRGs in MDC 05.
Comment: Commenters agreed with CMS' proposal to reassign ICD-10-CM
diagnosis code B33.24 (Viral cardiomyopathy) from MDC 18 in MS DRGs 865
and 866 (Viral Illness with and without MCC, respectively) to MDC 05 in
MS-DRGs 314, 315, and 316 (Other Circulatory System Diagnoses with MCC,
with CC, and without CC/MCC, respectively). Commenters stated this
change will improve clinical coherence since viral cardiomyopathy is
closely related to the other viral heart diseases in subcategory B33.2
that are already assigned to MDC 05.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to reassign ICD-10-CM diagnosis code B33.24
from MDC 18 in MS DRGs 865 and 866 (Viral Illness with and without MCC,
respectively) to MDC 05 in MS DRGs 314, 315, and 316 (Other Circulatory
System Diagnoses with MCC, with CC, and without CC/MCC, respectively),
without modification, effective October 1, 2021.
d. Left Atrial Appendage Closure (LAAC)
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58471 through
58477), we identified nine ICD-10-PCS procedure codes that describe
Left Atrial Appendage Closure (LAAC) procedures and noted their
corresponding MS-DRG assignments in the ICD-10 MS-DRGs Version 37 as
listed in the following table.
[[Page 44834]]
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As discussed in the FY 2021 IPPS/LTCH PPS final rule, we examined
claims data from the September 2019 update of the FY 2019 MedPAR file
for cases reporting LAAC procedures with an open approach in MS-DRGs
250 and 251 (Percutaneous Cardiovascular Procedures without Coronary
Artery Stent with and without MCC, respectively). Our analysis showed
that the cases reporting a LAAC procedure with an open approach in MS-
DRGs 250 and 251 had higher average costs and longer average length of
stay compared to all cases in MS-DRGs 250 and 251. We also stated our
clinical advisors believed that ICD-10-PCS codes 02L70CK, 02L70DK, and
02L70ZK that describe a LAAC procedure with an open approach were more
suitably grouped to MS-DRGs 273 and 274 (Percutaneous Intracardiac
Procedures with and without MCC, respectfully). Therefore, we finalized
our proposal to reassign ICD-10-PCS procedure codes 02L70CK, 02L70DK,
and 02L70ZK from MS-DRGs 250 and 251 to MS-DRGs 273 and 274. We also
finalized a revision to the titles for MS-DRG 273 and 274 to
Percutaneous and Other Intracardiac Procedures with and without MCC,
respectively to reflect this reassignment for FY 2021.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25117 through
25118), we discussed a request we received to again review the MS-DRG
assignment of cases involving LAAC procedures with an open approach in
response to this final policy. The requestor disagreed with CMS' FY
2021 IPPS/LTCH PPS final rule decision to move the three procedure
codes describing the open occlusion of left atrial appendage to MS-DRGs
273 and 274 (Percutaneous and Other Intracardiac Procedures with and
without MCC, respectively). The requestor stated they believe that MS-
DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC,
respectively), would more appropriately correspond with the open
procedural resources and longer length of stay expected with open heart
procedures.
We indicated in the proposed rule that our clinical advisors
reviewed this request and continued to support the reassignment of ICD-
10-PCS procedure codes 02L70CK, 02L70DK, and 02L70ZK from MS-DRGs 250
and 251 to MS-DRGs 273 and 274 because it allows all LAAC procedures to
be grouped together under the same MS-DRGs and improves clinical
coherence. Our clinical advisors stated open LAAC procedures are
primarily performed in the absence of another O.R. procedure and
generally are not performed with a more intensive open chest procedure.
When performed as standalone procedures, open LAAC procedures share
similar factors such as complexity and resource utilization with all
other LAAC procedures. We noted that our clinical advisors continued to
state our FY 2021 final policy results in MS-DRG assignments that are
more clinically homogeneous and better reflect hospital resource use.
Therefore, we proposed to maintain the assignment of codes 02L70CK,
02L70DK, and 02L70ZK that describe the open occlusion of the left
atrial appendage in MS-DRGs 273 and 274.
Comment: A commenter expressed concern and requested that CMS
reconsider its proposal to continue the assignment of the open LAAC
procedure codes to MS-DRGs 273 and 274 (Percutaneous and Other
Intracardiac Procedures with and without MCC, respectively) and instead
assign these procedures to MS-DRGs 228 and 229 (Other Cardiothoracic
Procedures with and without MCC, respectively). This commenter
acknowledged in response to the FY 2021 proposed rule, they supported
CMS' proposal to reassign the open approach left atrial appendage
procedure codes from MS-DRGs 250 and 251 to MS-DRGS 273 and 274 at that
time. However, the commenter stated that because CMS did not provide a
detailed analysis of the claims data for the average length of stay and
average costs related to the cases reporting procedure codes describing
the open occlusion of left atrial appendage in the FY 2022 proposed
rule, it reviewed the data analysis as presented in the FY 2021 IPPS/
LTCH PPS rule and compared it to the data analysis in Section II.D.5.d
of the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25118 through 25121)
which was presented as part of the discussion of a two-part request to
review the MS-DRG assignments for cases involving surgical ablation
procedures for atrial fibrillation. The commenter stated based on their
own analysis, it appeared the average length of stay and average costs
of open occlusion of left atrial appendage procedures would be more
clinically aligned with MS-DRGs 228 and 229.
Response: We appreciate the commenter's feedback. We note that the
analysis discussed in FY 2021 rulemaking was based on the examination
of claims data from the September 2019 update of the FY 2019 MedPAR
file, while discussions in Section II. D. of the FY 2022 proposed rule
are based on the examination of claims data from the March 2020 update
of the FY 2019 MedPAR file, as well as the September 2020 update of the
FY 2020 MedPAR file.
We display in the following tables claims analysis using claims
data from the March 2020 update of the FY 2019 MedPAR file, as well as
the September 2020 update of the FY 2020 MedPAR file. We examined
claims data from the March 2020 update of the FY 2019 MedPAR file for
all cases in MS-DRGs 273 and 274 and compared the results to cases with
a procedure code describing an open LAAC procedure.
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[[Page 44835]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.037
In MS-DRG 273, we found a total of 7,557 cases with an average
length of stay of 6.1 days and average costs of $28,356. Of those 7,557
cases, there were 29 cases reporting a LAAC procedure with an open
approach, with an average length of stay of 7.6 days and average costs
of $52,365. In MS-DRG 274, we found a total of 26,595 cases with an
average length of stay of 2 days and average costs of $24,295. Of those
26,595 cases, there were 89 cases reporting a LAAC procedure with an
open approach, with an average length of stay of 3.5 days and average
costs of $25,185. The analysis shows that the cases reporting a LAAC
procedure with an open approach in MS-DRGs 273 and 274 have higher
average costs compared to all cases in MS-DRGs 273 and 274 ($52,365
versus $28,356 and $25,185 versus $24,295, respectively).
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for all cases in MS-DRGs 273 and 274 and compared
the results to cases with a procedure code describing an open LAAC
procedure.
[GRAPHIC] [TIFF OMITTED] TR13AU21.038
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In MS-DRG 273, we found a total of 6,542 cases with an average
length of stay of 6.1 days and average costs of $30,671. Of those 6,542
cases, there were 19 cases reporting a LAAC procedure with an open
approach, with an average length of stay of 8.3 days and average costs
of $47,421. In MS-DRG 274, we found a total of 23,125 cases with an
average length of stay of 1.9 days and average costs of $25,880. Of
those 23,125 cases, there were 55 cases reporting a LAAC procedure with
an open approach, with an average length of stay of 3.1 days and
average costs of $20,995. The analysis shows that the cases reporting a
LAAC procedure with an open approach in MS-DRG 273 have higher average
costs compared to all cases in MS-DRG 273 ($47,421 versus $30,671)
while the cases reporting a LAAC procedure with an open approach in MS-
DRG 274 have lower average costs compared to all cases in MS-DRG 274
($20,995 versus $25,880).
While we recognize the average costs of the small number of cases
reporting LAAC procedures with an open approach generally have average
costs greater than the average costs of the cases in MS-DRGs 273 and
274 overall, our clinical advisors continue to support the reassignment
of the open occlusion of left atrial appendage procedures, which was
finalized in FY 2021 rulemaking. The MS-DRG system is a system of
averages, and it is expected that across the diagnostic related groups
that within certain groups, some cases may demonstrate higher than
average costs, while other cases may demonstrate lower than average
costs.
Our clinical advisors reviewed this issue and stated they do not
believe that assigning procedure codes describing an open LAAC
procedure to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with
and without MCC, respectively) will improve clinical coherence, as this
surgical class is not as precisely defined from a clinical perspective.
MS-DRGs 228 and 229 are an example of the surgical MS-DRGs that are
found within each MDC that include `other' procedures 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.
Our clinical advisors note that, as stated in the ICD-10 MS-DRG
Definitions Manual, ``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
[[Page 44836]]
defined from a clinical perspective. The other classes would include
diagnoses or procedures which were infrequently encountered or not well
defined clinically''. The ICD-10 MS-DRG Definitions Manual also states
``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.''
Our clinical advisors continue to state that when performed as
standalone procedures, open LAAC procedures share similar factors such
as complexity and resource utilization with all other LAAC procedures.
Moreover, our clinical advisors continue to support the FY 2021
reassignment of the open occlusion of left atrial appendage procedures
because it allows all LAAC procedures to be grouped together under the
same MS-DRGs and improves clinical coherence. After consideration of
the public comments we received, and for the reasons stated previously,
we are finalizing our proposal to maintain the assignment of codes
02L70CK, 02L70DK, and 02L70ZK that describe the open occlusion of the
left atrial appendage in MS-DRGs 273 and 274, without modification, for
FY 2022.
e. Surgical Ablation
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25118 through
25121), we discussed a two-part request we received to review the MS-
DRG assignments for cases involving the surgical ablation procedure for
atrial fibrillation. Atrial fibrillation (AF) is an irregular and often
rapid heart rate that occurs when the two upper chambers of the heart
experience chaotic electrical signals. AF presents as either paroxysmal
(lasting <7 days), persistent (lasting >7 day, but less than 1 year),
or long standing persistent (chronic) (lasting >1 year) based on time
duration and can increase the risk for stroke, heart failure, and
mortality. Management of AF has two primary goals: Optimizing cardiac
output through rhythm or rate control, and decreasing the risk of
cerebral and systemic thromboembolism. Patients that worsen in
symptomology or fail to respond to pharmacological treatment or other
interventions may be referred for surgical ablation to treat their AF.
Surgical ablation is a procedure that works by burning or freezing
tissue on the inside of the heart to disrupt faulty electrical signals
causing the arrhythmia, which can help the heart maintain a normal
heart rhythm.
As discussed in the proposed rule, the first part of this request
was to create a new classification of surgical ablation MS-DRGs to
better accommodate the costs of open concomitant surgical ablations.
According to the requestor, patients undergoing surgical ablation are
treated under two potential scenarios: (1) Open concomitant
(combination) surgical ablation, meaning open surgical ablation
performed during another open-heart surgical procedure such as mitral
valve repair or replacement (MVR), aortic valve repair or replacement
(AVR), or coronary artery bypass grafting (CABG) and (2) minimally
invasive, percutaneous endoscopic, standalone surgical ablation as the
sole therapeutic procedure performed. According to the requestor, open
concomitant surgical ablation is an efficient procedure, as it allows
treatment of AF and another clinical pathology in one procedure thereby
decreasing the risk of future readmits, need for future repeat catheter
ablation procedures, and patient mortality.
The requestor identified the following potential procedure
combinations that would comprise an ``open concomitant surgical
ablation'' procedure.
Open CABG + open surgical ablation
Open MVR + open surgical ablation
Open AVR + open surgical ablation
Open MVR + open AVR + open surgical ablation
Open MVR + open CABG + open surgical ablation
Open MVR + open AVR + open CABG + open surgical ablation
Open AVR + open CABG + open surgical ablation
The requestor performed their own analysis of these procedure code
combinations and stated that it found the average costs for open
concomitant surgical ablation procedures were consistently higher
compared to the average costs within their respective MS-DRGs, which
could limit beneficiary access to these procedures.
The requestor suggested that the following four MS-DRGs be created
to address the differences in average costs and average lengths of stay
it found in its data analysis:
Suggested New MS-DRG XXX--Open Surgical Ablation with or
without Other Cardiothoracic Procedure with Cardiac Catheterization
with MCC;
Suggested New MS-DRG XXX--Open Surgical Ablation with or
without Other Cardiothoracic Procedure with Cardiac Catheterization
without MCC;
Suggested New MS-DRG XXX--Open Surgical Ablation with or
without Other Cardiothoracic Procedure without Cardiac Catheterization
with MCC; and
Suggested New MS-DRG XXX--Open Surgical Ablation with or
without Other Cardiothoracic Procedure without Cardiac Catheterization
without MCC.
In response to this request, we identified nine ICD-10-PCS codes
that describe open surgical ablation. These codes and their
corresponding MDC and MS-DRG assignments are listed in the following
table.
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[[Page 44837]]
We stated in the proposed rule that the ICD-10 MS-DRGs Definitions
Manual Version 38.1, for open concomitant surgical ablation procedures,
the GROUPER logic assigns MS-DRGs 228 and 229 (Other Cardiothoracic
Procedures with and without MCC, respectively) in most instances
because MS-DRGs 228 and 229 are high in the surgical hierarchy GROUPER
logic of MDC 05 (Diseases and Disorders of the Circulatory System). We
would like to correct the statement in the proposed rule that, in ICD-
10 MS-DRGs Definitions Manual Version 38.1, for open concomitant
surgical ablation procedures, the GROUPER logic assigns MS-DRGs 228 and
229 (Other Cardiothoracic Procedures with and without MCC,
respectively) in most instances. We list in the following table the
open concomitant surgical ablation procedure code combinations and
their corresponding MS-DRG assignments in the ICD-10 MS-DRGs
Definitions Manual Version 38.1.
[GRAPHIC] [TIFF OMITTED] TR13AU21.040
BILLING CODE 4120-01-C
Since patients can have multiple procedures reported with a
principal diagnosis during a particular hospital stay, and a patient
can be assigned to only one MS-DRG, the surgical hierarchy GROUPER
logic provides a hierarchical order of surgical classes from the most
resource-intensive to the least resource-intensive. Patients with
multiple procedures are generally assigned to the MS-DRG that
correlates to the most resource-intensive surgical class.
As noted in the proposed rule, our clinical advisors reviewed this
grouping issue and noted in open concomitant surgical ablation
procedures, the CABG, MVR, and/or AVR components of the procedure are
more technically complex than the open surgical ablation procedure. We
noted that our clinical advisors stated that in open concomitant
surgical ablation procedures, the MS-DRG assigned should be based on
the most resource-intensive procedure performed. Therefore, we
indicated we believed this request would be better addressed by
proposing to revise the surgical hierarchy in MDC 05 rather than
creating four new MS-DRGs. For FY 2022, we proposed to revise the
surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-
236 (Coronary Bypass) above MS-DRGs 228 and 229 to enable more
appropriate MS-DRG assignment for these types of cases. We indicated in
the proposed rule, that, under this proposal, if a procedure code
describing a CABG and a procedure code describing an open surgical
ablation are present, the GROUPER logic would assign the CABG surgical
class because a CABG would be sequenced higher in the hierarchy than an
open surgical ablation.
Comment: Many commenters agreed with our proposal to revise the
surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs 231-
236 (Coronary Bypass) above MS-DRGs 228 and 229. Some commenters stated
the re-sequencing of the CABG MS-DRGs is long overdue. A commenter
specifically stated they agreed with CMS' reasoning to revise the
surgical hierarchy rather than to create new DRGs and stated from a
clinical and payment standpoint, moving CABG MS-DRGs 231-236 above
Other Cardiothoracic Procedure MS-DRGs 228-229 aligns the procedures
better with their technical complexity and their costs.
Response: We thank the commenters for their support.
Comment: While supporting our proposal, other commenters stated
that this proposal does not address the issue of the increased
resources required to treat patients with AF that are also a candidate
for an open surgical ablation procedure at the same time of their CABG
procedure. Some commenters stated that CMS' proposal to revise the
surgical hierarchy for CABG procedures does not advance patient access
nor allow patients the opportunity to receive these procedures during
the
[[Page 44838]]
CABG surgical procedure. Another commenter stated that the proposed
revision to the surgical hierarchy fails to address the increased costs
of cases associated with open concomitant surgical ablation for AF
performed during open mitral valve procedures, which are assigned to
MS-DRGs 216 through 221. Another commenter stated while they agree that
surgical ablation procedures are not as resource intensive as CABG
procedures, CMS' proposal does not give consideration to the increased
costs the surgical ablation procedure adds to the CABG procedure.
A commenter stated that CMS did not describe its methodology in
detail regarding its analysis of the costs associated with performance
of open surgical ablation for AF performed concomitantly during open-
heart procedures, preventing meaningful public comments. This commenter
stated that concomitant surgical ablation does not represent an
``incidental cost'' to a hospital that can be remedied just through
changes in the existing surgical hierarchy.
Commenters expressed concern that given the added costs of
performing as many as three procedures at the same time, hospitals may
more likely schedule the patient for separate procedures even though
guidelines of the Society for Thoracic Surgeons and the Heart Rhythm
Society recommend performing surgical ablation for AF at the time of
open-heart procedures. A commenter stated that facilities receive only
one MS-DRG payment when procedures are performed concomitantly and are
therefore burdened with absorbing the additional expenses of other
services provided, further stating that data have shown that mortality
is significantly reduced in the first year following concomitant
treatment.
Many commenters urged CMS to either (1) create new MS-DRGs for
these open concomitant procedures as originally requested, or (2)
assign these procedures to MS-DRGs that consider the added procedure
and device costs required. Another commenter requested that CMS create
a supplemental payment mechanism that could be modeled based on the
respective costs of the individual procedures determined by claims data
and then adjusted for efficiencies of a single operative session to
facilitate incremental payment when two major procedures are performed
during the same hospital admission.
Response: We appreciate the commenters' feedback.
As discussed in section II.D.15. of the preamble of the proposed
rule and this final rule, in our proposal to revise the surgical
hierarchy for the MS-DRGs in MDC 05, MS-DRGs 216-221 (Cardiac Valve and
Other Major Cardiothoracic Procedures) will continue to be sequenced
above MS-DRGs 231-236 (Coronary Bypass) and MS-DRGs 228 and 229. Of
note, in the absence of other procedure codes on the claim, we agree
with the commenter that the only procedure code combination describing
open concomitant surgical ablations affected by our proposal to revise
the surgical hierarchy for the MS-DRGs in MDC 05 is ``Open CABG + Open
Ablation''. Under this proposal, the six other combinations describing
open concomitant surgical ablations will continue to be assigned to MS-
DRGs 216 through 221.
In response to the comment that CMS did not describe its
methodology in detail regarding its analysis of the costs associated
with performance of open surgical ablation, as we discussed insection
II.D.15. of the preamble of the proposed rule, we reviewed the surgical
hierarchy within MDC 05 consistent with our annual process;
specifically, we 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.
With regard to the comments stating that the proposed revision to
the surgical hierarchy fails to address the increased costs of cases
associated with open concomitant surgical ablation, we examined the
data analysis of cases reporting procedure code combinations describing
open concomitant surgical ablations in the March 2020 update of the FY
2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file for cases reporting procedure code combinations describing open
concomitant surgical ablations. First, we refer the reader to Table
6P.1n 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) for the list of ICD-10-PCS
procedure codes reflecting mitral valve repair or replacement (MVR),
aortic valve repair or replacement (AVR), and coronary artery bypass
grafting (CABG) procedures that we examined in our analysis of this
issue. We also refer the reader to Table 6P.1o 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) for data analysis findings of cases reporting
procedure code combinations describing open concomitant surgical
ablations currently assigned to MS-DRGs 216, 217, 218, 219, 220 and 221
from the March 2020 update of the FY 2019 MedPAR file and from the
September 2020 update of the FY 2020 MedPAR file. We note that if a
procedure code combination that is currently assigned to MS-DRGs 216,
217, 218, 219, 220 and 221 is not displayed, it is because there were
no cases found reporting that combination in the assigned MS-DRG.
As shown in Table 6P.1o associated with this final rule, in our
examination of the claims data from both the March 2020 update of the
FY 2019 MedPAR file and September 2020 update of the FY 2020 MedPAR
file, while the average lengths of stay and average costs of cases
reporting procedure code combinations describing open concomitant
surgical ablations are higher than all cases in their respective MS-
DRG, we found there is variation in the volume, length of stay, and
average costs of the cases. In the analysis of claims data from the
March 2020 update of the FY 2019 MedPAR file, during our review of MS-
DRG 216, we found 1,145 cases reporting procedure code combinations
describing open concomitant surgical ablations with the average length
of stay ranging from 17.6 days to 24.3 days and average costs ranging
from $77,868 to $125,120 for these cases. For MS-DRG 217, we found 295
cases reporting procedure code combinations describing open concomitant
surgical ablations with the average length of stay ranging from 10 days
to 13 days and average costs ranging from $45,526 to $52,859 for these
cases. For MS-DRG 218, we found 7 cases reporting procedure code
combinations describing open concomitant surgical ablations with the
average length of stay ranging from 7 days to 11 days and average costs
ranging from $28,614 to $68,725 for these cases. For MS-DRG 219, we
found 2,673 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay ranging
from 11.6 days to 13.3 days and average costs ranging from $65,846 to
$83,281 for these cases. For MS-DRG 220, we found 1,890 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 7.3 days to 10.2
days and average costs ranging from $44,568 to $64,726 for these cases.
For MS-DRG 221, we found 110 cases reporting procedure code
combinations describing open concomitant surgical ablations with the
average length of stay ranging from 5.6 days to 6.8 days and average
costs
[[Page 44839]]
ranging from $44,826 to $73,629 for these cases.
Our analysis of the claims data from the September 2020 update of
the FY 2020 MedPAR file resulted in similar findings to those from the
March 2020 update of the FY 2019 MedPAR file; while the average lengths
of stay and average costs of cases reporting procedure code
combinations describing open concomitant surgical ablations are higher
than all the cases in their respective MS-DRG, we found there is
variation in the volume, length of stay, and average costs of the
cases. In the analysis of claims data from the September 2020 update of
the FY 2020 MedPAR file, during our review of MS-DRG 216, we found 931
cases reporting procedure code combinations describing open concomitant
surgical ablations with the average length of stay ranging from 16.1
days to 20.5 days and average costs ranging from $79,732 to $108,552
for these cases. For MS-DRG 217, we found 207 cases reporting procedure
code combinations describing open concomitant surgical ablations with
the average length of stay ranging from 9.2 days to 12 days and average
costs ranging from $46,588 to $70,840 for these cases. For MS-DRG 218,
we found 1 case reporting procedure code combinations describing open
concomitant surgical ablations with a length of stay of 8 days and
costs of $17,611. For MS-DRG 219, we found 1,998 cases reporting
procedure code combinations describing open concomitant surgical
ablations with the average length of stay ranging from 11.6 days to
14.6 days and average costs ranging from $68,175 to $104,560 for these
cases. For MS-DRG 220, we found 1,318 cases reporting procedure code
combinations describing open concomitant surgical ablations with the
average length of stay ranging from 7.5 days to 8.0 days and average
costs ranging from $48,200 to $61,444 for these cases. For MS-DRG 221,
we found 60 cases reporting procedure code combinations describing open
concomitant surgical ablations with the average length of stay ranging
from 5.1 days to 8.6 days and average costs ranging from $49,910 to
$65,501 for these cases.
In response to comments that urged CMS to create new MS-DRGs for
these open concomitant procedures as originally requested, based on
these data, our clinical advisors believe additional time is needed
given the complexity of these code combinations and corresponding data
before exploring a proposal to create new MS-DRGs for this subset of
patients. For example, cases reporting a CABG and a procedure code
describing an open surgical ablation without procedure codes describing
an AVR or an MVR were found in MS-DRGs 216 through 221 meaning another
cardiac valve or other major cardiothoracic procedure was reported,
which could be contributing to the increased costs of these cases.
Secondly, MS-DRGs 216, 217 and 218 are defined by the performance of
cardiac catheterization, meaning a cardiac catherization procedure was
reported, which could be also contributing to the increased costs of
these cases. Lastly, the cases reporting an open concomitant surgical
ablation code combination are predominately found in the higher (CC or
MCC) severity level MS-DRGs of their current base MS-DRG assignment.
Therefore, our clinical advisors believe that additional time is needed
to allow for further analysis of the claims data to determine to what
extent the patient's co-morbid conditions are also contributing to
higher costs and to identify other contributing factors that might
exist with respect to the increased length of stay and costs of these
cases in these MS-DRGs. Our clinical advisors also believe that future
data findings may demonstrate additional variance in resource
utilization for this patient population.
We also note, as discussed in Section D.1.b of the proposed rule
and this final rule, using the March 2020 update of the FY 2019 MedPAR
file and the September 2020 update of the FY 2020 MedPAR file, we
analyzed how applying the NonCC subgroup criteria to all MS-DRGs
currently split into three severity levels would affect the MS-DRG
structure beginning in FY 2022. Findings from our analysis indicated
that MS-DRGs 216, 217, 218 as well as approximately 31 other MS-DRGs
would be subject to change based on the three-way severity level split
criterion finalized in FY 2021. We refer the reader to Table 6P.1c
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) for the
list of the 96 MS-DRGs that would be subject to deletion and the list
of the 58 new MS-DRGs that would have been proposed for creation under
this policy if the NonCC subgroup criteria were applied.
As discussed previously, we are finalizing the delay of the
application of the NonCC subgroup criteria to existing MS-DRGs with a
three-way severity level split until FY 2023 or later, and are
finalizing our proposal to maintain the current structure of the 32 MS-
DRGs that currently have a three-way severity level split (total of 96
MS-DRGs) that would otherwise be subject to these criteria for FY 2022.
Noting that currently the total number of cases in MS-DRG 218 is below
500, and that we may consider consolidating these MS-DRGs into two
severity levels based on the application of the NonCC subgroup criteria
in future rule-making, as well as for the reasons stated previously, we
believe additional time is needed to review the clinical nature of
cases reporting an open concomitant surgical ablation code combination
before creating new MS-DRGs for the subset of cases with procedure
codes that describe open concomitant surgical ablation procedures that
are currently assigned to MS-DRGs 216 through 221 at this time.
In response to comment that the proposed hierarchy change will not
address the increased resources required to treat patients with AF that
are a candidate for an open surgical ablation procedure at the same
time of their CABG procedure, we analyzed the March 2020 update of the
FY 2019 MedPAR file for cases reporting the procedure code combination
``Open CABG + Open Ablation'' of the seven potential procedure
combinations that would comprise an ``open concomitant surgical
ablation'' procedure, as this is the only concomitant procedure code
combination potentially affected by the proposed hierarchy change (in
the absence of other procedure codes that could affect MS-DRG
assignment on the claim).
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[[Page 44840]]
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As shown in the table, the data analysis performed indicates that
the 1,010 cases in MS-DRG 228 reporting a procedure code that describes
a CABG procedure as well as a procedure code describing an open
ablation have an average length of stay that is longer than the average
length of stay for all the cases in MS-DRG 228 (12.8 days versus 10.7
days) and higher average costs when compared to all the cases in MS-DRG
228 ($56,331 versus $45,772). The 1,041 cases in MS-DRG 229 reporting a
procedure code that describes a CABG procedure as well as a procedure
code describing an open ablation also have an average length of stay
that is longer than the average length of stay for all the cases in MS-
DRG 229 (8.2 days versus 5.3 days) and higher average costs when
compared to all the cases in MS-DRG 229 ($38,643 versus $29,454). As
expected, there were zero cases found with procedure codes describing
one of the other six ``open concomitant surgical ablation'' procedure
code combinations as described by the requestor since GROUPER logic
would assign MS-DRGs 216 through 221 for the other combinations.
We then examined the redistribution of cases that is anticipated to
occur as a result of the proposal to move MS-DRGs 231 through 236
(Coronary Bypass) above MS-DRGs 228 and 229 in the surgical hierarchy
of MDC 05 for Version 39 of the ICD-10 MS-DRGs, by processing the
claims data from the March 2020 update of the FY 2019 MedPAR file
through the ICD-10 MS-DRG GROUPER Version 38 and then processing the
same claims data through the ICD-10 MS-DRG GROUPER Version 39 for
comparison. The number of cases from this comparison that result in
different MS-DRG assignments is the number of the cases that are
anticipated to potentially shift or be redistributed. Our findings are
shown in the following table.
[[Page 44841]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.042
We found a number of cases that are anticipated to potentially
shift or be redistributed into MS-DRGs 231 through 236. The largest
number of cases moving out of MS-DRG 228 are moving into MS-DRG 235,
which means these cases reported a procedure code for CABG and a
cardiothoracic procedure, such as a surgical ablation, without
procedure codes reporting a PTCA or cardiac catherization. The largest
number of cases moving out of MS-DRG 229 are moving into MS-DRG 236,
which again means these cases reported a procedure code for CABG and a
cardiothoracic procedure, such as a surgical ablation, without
procedure codes reporting a PTCA or cardiac catherization.
We then examined the claims data from the March 2020 update of the
FY 2019 MedPAR file to identify the average length of stay and average
costs for all cases in MS-DRGs 231, 232, 233, 234, 235 and 236. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.043
In reviewing the data analysis performed, the 1,010 cases in MS-DRG
228 reporting a procedure code that describes a CABG procedure as well
as a procedure code describing an open ablation have an average length
of stay that is longer than the average length of stay for all the
cases in MS-DRG 235 (12.8 days versus 9.8 days) and higher average
costs when compared to all the cases in MS-DRG 235 ($56,331 versus
$42,133). The 1,041 cases in MS-DRG 229 reporting a procedure code that
describes a CABG procedure as well as a procedure code describing an
open ablation also have an average length of stay that is longer than
the average length of stay for all the cases in MS-DRG 236 (8.2 days
versus 6.4 days) and higher average costs when compared to all the
cases in MS-DRG 236 ($38,643 versus $29,565). The average length of
stay and average costs of cases reporting a procedure code that
describes a CABG procedure as well as a procedure code describing an
open ablation in MS-DRG 228 as well as a secondary diagnosis of MCC are
closer aligned to costs of cases in MS-DRGs 233 (Coronary Bypass with
Cardiac Catheterization with MCC) (12.8 days versus 12.7 days and
$56,331 versus $54,170 respectively). The average length of stay and
average costs of cases reporting a procedure code that describes a CABG
procedure as well as a procedure code describing an open ablation in
MS-DRG 229 without secondary diagnosis of MCC are closer aligned to
costs of cases in MS-DRGs
[[Page 44842]]
234 (Coronary Bypass with Cardiac Catheterization without MCC) (8.2
days versus 8.7 days and $38,643 versus $38,058 respectively).
Next, we analyzed the September 2020 update of the FY 2020 MedPAR
file for cases reporting a procedure code describing a CABG procedure
with a procedure code describing an open ablation.
[GRAPHIC] [TIFF OMITTED] TR13AU21.044
As shown in the table, the data analysis performed indicates that
the 836 cases in MS-DRG 228 reporting a procedure code that describes a
CABG procedure as well as a procedure code describing an open ablation
have an average length of stay that is longer than the average length
of stay for all the cases in MS-DRG 228 (12.8 days versus 10.2 days)
and higher average costs when compared to all the cases in MS-DRG 228
($60,327 versus $46,508). The 824 cases in MS-DRG 229 reporting a
procedure code that describes a CABG procedure as well as a procedure
code describing an open ablation also have an average length of stay
that is longer than the average length of stay for all the cases in MS-
DRG 229 (7.9 days versus 4.9 days) and higher average costs when
compared to all the cases in MS-DRG 229 ($39,392 versus $29,885). As
expected, there were zero cases found with procedure codes describing
one of the other six ``open concomitant ablation'' procedure code
combinations as described by the requestor since GROUPER logic would
assign MS-DRGs 216 through 221 for the other combinations.
As we did with the March 2020 update of the FY 2019 MedPAR file, we
then examined the redistribution of cases that is anticipated to occur
by processing the claims data, this time from the September 2020 update
of the FY 2020 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38
and then processed the same claims data through the ICD-10 MS-DRG
GROUPER Version 39 for comparison. Our findings are shown in the table.
[[Page 44843]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.045
Similarly, we found a number of cases that are anticipated to
potentially shift or be redistributed into MS-DRGs 231 through 236. The
largest number of cases moving out of MS-DRG 228 are moving into MS-DRG
235, which means these cases reported a procedure code for CABG and a
cardiothoracic procedure, such as a surgical ablation, without
procedure codes reporting a PTCA or cardiac catherization. The largest
number of cases moving out of MS-DRG 229 are moving into MS-DRG 236,
which again means these cases reported a procedure code for CABG and a
cardiothoracic procedure, such as a surgical ablation, without
procedure codes reporting a PTCA or cardiac catherization.
We also examined the claims data from the September 2020 update of
the FY 2020 MedPAR file to identify the average length of stay and
average costs for all cases in MS-DRGs 231, 232, 233, 234, 235 and 236.
Our findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.046
In reviewing the data analysis performed, the 836 cases in MS-DRG
228 reporting a procedure code that describes a CABG procedure as well
as a procedure code describing an open ablation have an average length
of stay that is longer than the average length of stay for all the
cases in MS-DRG 235 (12.8 days versus 9.7 days) and higher average
costs when compared to all the cases in MS-DRG 235 ($60,327 versus
$44,106). The 824 cases in MS-DRG 229 reporting a procedure code that
describes a CABG procedure as well as a procedure code describing an
open ablation also have an average length of stay that is longer than
the average length of stay for all the cases in MS-DRG 236 (7.9 days
versus 6.4 days) and higher average costs when compared to all the
cases in MS-DRG 236 ($39,392
[[Page 44844]]
versus $31,170). The average length of stay and average costs of cases
reporting a procedure code that describes a CABG procedure as well as a
procedure code describing an open ablation in MS-DRG 228 as well as a
secondary diagnosis of MCC are closer aligned to costs of cases in MS-
DRGs 233 (Coronary Bypass with Cardiac Catheterization with MCC) (12.8
days versus 12.5 days and $60,327 versus $56,388 respectively). The
average length of stay and average costs of cases reporting a procedure
code that describes a CABG procedure as well as a procedure code
describing an open ablation in MS-DRG 229 without secondary diagnosis
of MCC are closer aligned to costs of cases in MS-DRGs 234 (Coronary
Bypass with Cardiac Catheterization without MCC) (7.9 days versus 8.5
days and $39,392 versus $39,406 respectively).
In response to comments that urged CMS to assign these procedures
to MS-DRGs that consider the added procedure and device costs required,
our clinical advisors reviewed these data and continue to state that in
open concomitant surgical ablation procedures, the CABG, MVR, and/or
AVR components of the procedure are more technically complex than the
open surgical ablation procedure. They also state that the proposed
revision to the surgical hierarchy leads to a grouping that is more
coherent and better accounts for the resources expended to address the
more complex procedures from other cases redistributed during the
hierarchy change. However, in cases where an open ablation is performed
in combination with a coronary bypass procedure but without a PTCA or
cardiac catherization procedure also being performed, to better address
the concerns expressed in the public comments, our clinical advisors
support the assignment of these cases to MS-DRGs 233 and 234 as an
enhancement to better reflect the clinical severity and resource use
involved in these cases. Our clinical advisors also support changing
the titles of MS-DRGs 233 and 234 to ``Coronary Bypass with Cardiac
Catheterization or Open Ablation with and without MCC, respectively''
to better reflect the assigned procedures.
Therefore, after consideration of the public comments we received,
and for the reasons discussed, we are finalizing our proposal to revise
the surgical hierarchy for the MS-DRGs in MDC 05 to sequence MS-DRGs
231-236 (Coronary Bypass) above MS-DRGs 228 and 229, effective October
1, 2021. We refer the reader to section II.D.15. of the preamble of
this final rule for the discussion of the surgical hierarchy and the
complete list of our proposed modifications to the surgical hierarchy
in MDC 05 as well as our finalization of that proposal. In addition,
after consideration of the public comments we received and for the
reasons discussed, we are also finalizing the assignment of cases with
a procedure code describing coronary bypass and a procedure code
describing open ablation to MS-DRGs 233 and 234 and changing the titles
of these MS-DRGs to ``Coronary Bypass with Cardiac Catheterization or
Open Ablation with and without MCC, respectively''.
As discussed earlier in the proposed rule and in this section, this
request involved two parts. The second part of the request was to
reassign cases describing standalone percutaneous endoscopic surgical
ablation. According to the requestor, standalone, percutaneous
endoscopic surgical ablation is a rapidly growing therapy, indicated
for highly symptomatic patients that have already failed medical
management and/or percutaneous catheter ablation procedures. The
requestor identified nine ICD-10-PCS codes that they stated describe
percutaneous endoscopic surgical ablation. These codes and their
corresponding MDC and MS-DRG assignments are listed in the following
table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.047
The requestor performed their own analysis and stated that they
found the most common MS-DRG assignment for cases describing standalone
percutaneous endoscopic surgical ablation was MS-DRGs 228 and 229
(Other Cardiothoracic Procedures with and without MCC, respectively)
and that in those MS-DRGs, the standalone surgical ablation procedures
cost more than all the procedures in their currently assigned MS-DRGs
228 and
[[Page 44845]]
229. Therefore, the requestor recommended CMS reassign these procedures
to higher weighted MS-DRGs 219 and 220 (Cardiac Valve and Other Major
Cardiothoracic Procedures without Cardiac Catheterization with MCC and
with CC, respectively).
In response to this request, we examined claims data from the March
2020 update of the FY 2019 MedPAR file for all cases in MS-DRGs 228 and
229 and compared the results to cases with a procedure code describing
a standalone percutaneous endoscopic surgical ablation procedure. Our
findings are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.048
As shown in the table, the data analysis performed indicates that
the 99 cases in MS-DRG 228 reporting a procedure code that describes
percutaneous endoscopic surgical ablation have an average length of
stay that is shorter than the average length of stay for all the cases
in MS-DRG 228 (7.1 days versus 10.7 days) and higher average costs when
compared to all the cases in MS-DRG 228 ($48,281 versus $45,772). The
497 cases in MS-DRG 229 reporting a procedure code that describes
percutaneous endoscopic surgical ablation have an average length of
stay that is shorter than the average length of stay for all the cases
in MS-DRG 229 (3.7 days versus 5.3 days) and higher average costs when
compared to all the cases in MS-DRG 229 ($35,516 versus $29,454).
We then examined the claims data from the March 2020 update of the
FY 2019 MedPAR file to identify the average length of stay and average
costs for all cases in MS-DRGs 219 and 220. Our findings are shown in
the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.049
As shown in the table, for MS-DRG 219, there were a total of 15,597
cases with an average length of stay of 10.9 days and average costs of
$57,845. For MS-DRG 220, there were a total of 15,074 cases with an
average length of stay of 6.5 days and average costs of $39,565.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for all cases in MS-DRGs 228 and 229 and compared
the results to cases with a procedure code describing a standalone
percutaneous endoscopic surgical ablation procedure. Our findings are
shown in the following table.
[[Page 44846]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.050
As shown in the table, the data analysis performed indicates that
the 84 cases in MS-DRG 228 reporting a procedure code that describes
percutaneous endoscopic surgical ablation have an average length of
stay that is shorter than the average length of stay for all the cases
in MS-DRG 228 (6.9 days versus 10.2 days) and lower average costs when
compared to all the cases in MS-DRG 228 ($44,710 versus $46,508). The
393 cases in MS-DRG 229 reporting a procedure code that describes
percutaneous endoscopic surgical ablation have an average length of
stay that is shorter than the average length of stay for all the cases
in MS-DRG 229 (3.4 days versus 4.9 days) and higher average costs when
compared to all the cases in MS-DRG 229 ($34,237 versus $29,885).
We then examined the claims data from the September 2020 update of
the FY 2020 MedPAR file to identify the average length of stay and
average costs for all cases in MS-DRGs 219 and 220. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.051
As shown in the table, for MS-DRG 219, there were a total of 11,863
cases with an average length of stay of 10.9 days and average costs of
$61,934. For MS-DRG 220, there were a total of 10,072 cases with an
average length of stay of 6.5 days and average costs of $41,800.
As noted in the proposed rule, our analysis indicates that MS-DRGs
219 and 220 generally have much higher average costs and longer average
lengths of stay than the cases with a procedure code describing a
standalone percutaneous endoscopic surgical ablation procedure
currently assigned to MS-DRGs 228 and 229. Instead, the average costs
and average length of stay for cases reporting a standalone
percutaneous endoscopic surgical ablation appear to be generally more
aligned with the average costs and average length of stay for all cases
in MS-DRGs 228 and 229, where they are currently assigned. We indicated
that our clinical advisors reviewed this issue and did not recommend
changing the assignment of procedure codes describing percutaneous
endoscopic surgical ablation. Therefore, for the reasons indicated, we
proposed to maintain the current structure of MS-DRGs 219 and 220.
Comment: Commenters disagreed with our proposal to maintain the
current structure of MS-DRGs 219 and 220 and noted that payment for MS-
DRGs 228 and 229 has been trending downward over the last 5 years. Some
commenters stated that CMS did not provide transparency to the details
of its analysis to support why standalone hybrid surgical ablation
procedures should not be moved from MS-DRGs 228 and 229. Another
commenter stated CMS' proposed decline in payment rates makes it
impossible for their facility to continue to provide these needed
procedures to patients suffering from atrial fibrillation. Another
commenter stated the proposed relative weight does not accurately
reflect the costs of these device intensive procedures and that there
has been no transparency into the cause for these significant declines.
Other commenters asserted that hospitals will be forced to postpone or
``trim back'' on providing patients access to more complex, resource
intensive procedures such as these, to better align their costs with
what they asserted were Medicare's inadequate payment levels. Other
commenters requested that CMS use its statutory authority to not reduce
the relative weight and payment for MS-DRGs 228 and 229, which contain
stand-alone surgical ablation procedures for AF.
Response: We appreciate the commenters' feedback. We note that we
did not propose a change to the GROUPER logic of MS-DRGs 228 and 229.
Our clinical advisors did not recommend changing the assignment of
procedure codes describing percutaneous endoscopic surgical ablation,
currently assigned to MS-DRGs 228 and 229, to MS-DRGs 219 and 220.
Therefore, we proposed to maintain the current structure of MS-DRGs 219
and 220. This proposal by extension also maintains the current
structure of MS-DRGs 228 and 229. With regard to the comments about the
implications for payment in MS-DRGs 228 and 229, we note that the goals
of assigning or re-assigning procedure codes to MS-DRGs are to better
clinically represent the resources involved in caring for these
patients and enhance the overall accuracy of the system. In response to
the comment that CMS did not provide transparency to
[[Page 44847]]
the details of its analysis in the proposed rule, we provided our
claims analysis for the cases with a procedure code describing a
standalone percutaneous endoscopic surgical ablation procedure as well
as a discussion of that analysis and the basis for our proposal. It is
unclear from the comments what additional details the commenters are
referencing.
In response to the comment that hospitals will be forced to
postpone or ``trim back'' on providing patients access to these
procedures in order to better align their costs with Medicare payment
levels, as we have stated in prior rulemaking, it is not appropriate
for facilities to deny treatment to beneficiaries needing a specific
type of therapy or treatment that potentially involves increased costs.
As we have indicated in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38103), the FY 2019 IPPS/LTCH PPS final rule (83 FR 41273), the FY 2020
IPPS/LTCH PPS final rule (84 FR 42167) and the FY 2021 IPPS/LTCH final
rule (85 FR 58598), we do not believe it is normally appropriate to
address relative weight fluctuations that appear to be driven by
changes in the underlying data even if we have addressed relative
weight fluctuations in specific circumstances such as when a relative
weight would have declined by more than 20 percent in one year, or in
instances where we did not have sufficient MedPAR data to set accurate
and stable cost relative weights for low volume MS-DRGs. We do however
acknowledge the trending reduction in relative weights for MS-DRGs 228
and 229 in our ratesetting as reflected in the following chart.
[GRAPHIC] [TIFF OMITTED] TR13AU21.052
BILLING CODE 4120-01-C
We believe this weight change over time to be appropriately driven
by the underlying data in the 5 years since CMS began using the ICD-10
data in calculating the relative weights. We note that there are 809
ICD-10-PCS codes assigned to the GROUPER logic of MS-DRGs 228 and 229
in the ICD-10 MS-DRGs Definitions Manual Version 38.1, of which the
procedure codes describing standalone ablation represent a small
percentage.
As stated in the ICD-10 MS-DRG Definitions Manual, ``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 ICD-10 MS-DRG Definitions Manual also states ``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.'' MS-DRGs 228 and 229 are an example of
the surgical MS-DRGs that are found within each MDC that include
``other'' procedures 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.
As displayed in the proposed rule, when we examined claims data
from the March 2020 update of the FY 2019 MedPAR file for all cases in
MS-DRGs 228 and 229 and compared the results to cases with a procedure
code describing a standalone percutaneous endoscopic surgical ablation
procedure, the 99 cases in MS-DRG 228 reporting a procedure code that
describes percutaneous endoscopic surgical ablation represent only 2%
of the 4,436 total cases in MS-DRG 228. The 497 cases in MS-DRG 229
reporting a procedure code that describes percutaneous endoscopic
surgical ablation represent only 9% of the 5,250 total cases in MS-DRG
229.
Similarly, when we examined claims data from the September 2020
update of the FY 2020 MedPAR file for all cases in MS-DRGs 228 and 229
and compared the results to cases with a procedure code describing a
standalone percutaneous endoscopic surgical ablation procedure, the 84
cases in MS-DRG 228 reporting a procedure code that describes
percutaneous endoscopic surgical ablation represent only 2% of the
4,419 total cases in MS-DRG 228. The 393 cases in MS-DRG 229 reporting
a procedure code that describes percutaneous endoscopic surgical
ablation represent only 8% of the 4,732 total cases in MS-DRG 229.
We also note that 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. It is to be expected that when MS-
DRGs are restructured, such as when procedure codes are reassigned or
the hierarchy within an MDC is revised, resulting in
[[Page 44848]]
a different case-mix within the MS-DRGs, the relative weights of the
MS-DRGs will change as a result. Over the past five years, there have
been changes to the structure of MS-DRGS 228 and 229. Specifically, in
the FY 2017 IPPS/LTCH PPS final rule (81 FR 56809 through 56813), we
finalized our proposal to collapse MS-DRGs 228, 229, and 230 from three
severity levels to two severity levels by deleting MS-DRG 230 and
revised the structure of MS- DRG 229. We also finalized our proposal to
reassign ICD-9-CM procedure code 35.97 and the cases reporting 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 the titles of MS-DRG 228 and 229. In the FY 2020 IPPS/
LTCH PPS final rule (84 FR 42080 through 56813) we finalized our
proposal to modify the structure of MS-DRGs 266 and 267 by reassigning
ICD-10-PCS procedure code 02UG3JZ describing a transcatheter mitral
valve repair with implant procedure from MS-DRGs 228 and 229 to MS-DRGs
266 and 267 and revised the titles of MS- DRG 266 and 267. Finally, as
discussed in the FY 2022 IPPS/LTCHPPS proposed rule, and earlier in
this section, we proposed to revise the surgical hierarchy for the MS-
DRGs in MDC 05 to sequence MS-DRGs 231-236 (Coronary Bypass) above MS-
DRGs 228 and 229 for FY 2022. Therefore, the data appear to reflect
that the difference in the relative weights reflected in Table 5 -List
of Medicare Severity Diagnosis Related Groups (MS-DRGs), Relative
Weighting Factors, and Geometric and Arithmetic Mean Length of Stay
associated with final rule for the applicable fiscal year can be
attributed to the fact that the finalization of these proposals
resulted in a different case-mix within the MS-DRGs which is then being
reflected in the relative weights. We refer the reader to section II.E.
of the preamble of this FY 2022 IPPS/LTCH PPS final rule for a complete
discussion of the relative weight calculations.
Comment: A few commenters noted that hybrid standalone percutaneous
endoscopic surgical ablation includes both a minimally invasive
surgical ablation performed by a surgeon and catheter ablation
performed by an electrophysiologist in the same hospital visit, and
stated that the downward payment trend for the MS-DRGs 228 and 229 has
resulted in hospitals being undercompensated for the costs of
furnishing standalone hybrid percutaneous endoscopic surgical ablation
procedures for AF. These commenters proposed two possible remedies to
this underpayment, that CMS either (1) maintain the relative weights of
MS-DRGs 228 and 229 for a year and then reassess the data, or (2)
assign cases reporting procedure codes describing standalone
percutaneous endoscopic surgical ablation from MS-DRGs 228 and 229 to
the higher (MCC) severity level MS-DRG of its current base MS-DRG
assignment, which is MS-DRG 228 (Other Cardiothoracic Procedures with
MCC), to prevent underpayment for these procedures.
Response: We appreciate the commenter's suggestions. In response to
the request that CMS maintain the relative weights of MS-DRGs 228 and
229 for a year, as stated in response to similar comments expressed by
other commenters, we believe the weight change in these MS-DRGs over
time to be appropriately driven by the underlying data. In response to
the request that CMS assign cases reporting procedure codes describing
standalone percutaneous endoscopic surgical ablation from MS-DRGs 228
and 229 to the higher (MCC) severity level MS-DRG of its current base
MS-DRG assignment, we examined the claims analysis as presented in the
proposed rule and earlier in this section. Using the March 2020 update
of the FY 2019 MedPAR file, the 497 cases in MS-DRG 229 reporting a
procedure code that describes percutaneous endoscopic surgical ablation
without a secondary diagnosis designated as an MCC have an average
length of stay that is shorter than the average length of stay for all
the cases in MS-DRG 228 (3.7 days versus 10.7 days) and lower average
costs when compared to all the cases in MS-DRG 228 ($35,516 versus
$45,772). Similarly, using the September 2020 update of the FY 2020
MedPAR file, the 393 cases in MS-DRG 229 reporting a procedure code
that describes percutaneous endoscopic surgical ablation without a
secondary diagnosis designated as an MCC have an average length of stay
that is shorter than the average length of stay for all the cases in
MS-DRG 228 (3.4 days versus 10.2 days) and lower average costs when
compared to all the cases in MS-DRG 228 ($34,237 versus $46,508). Our
clinical advisors reviewed this analysis and do not support
reassignment of cases reporting a procedure code that describes
percutaneous endoscopic surgical ablation without a secondary diagnosis
designated as an MCC from MS-DRG 229 to MS-DRG 228 based on this claims
data analysis. Our advisors stated it would not be appropriate to
reassign these cases into the higher severity level MS-DRG in the
absence of an MCC and noted that the cases would not be clinically
coherent with regard to resource utilization as reflected in the
differences in average costs and average lengths of stay. As additional
claims data becomes available, we will continue to analyze the clinical
nature of procedure codes that describe percutaneous endoscopic
surgical ablation and their MS-DRG assignments to further improve the
overall accuracy of the IPPS payments in future rulemaking.
Therefore, after consideration of the public comments we received,
and for the reasons stated earlier, we are finalizing our proposal to
maintain the current structure of MS-DRGs 219 and 220 for FY 2022.
f. Drug-Eluting Stents
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25121 through
25122), we discussed a request we received to review the MS-DRG
assignments of claims involving the insertion of coronary stents in
percutaneous coronary interventions. The requestor suggested that CMS
eliminate the distinction between drug-eluting and bare-metal coronary
stents in the MS-DRG classification. According to the requestor, coated
stents have a clinical performance comparable to drug-eluting stents
however they are grouped with bare-metal stents because they do not
contain a drug. The requestor asserted that this comingling muddies the
clinical coherence of the MS-DRG structure, as one cannot infer
distinctions in clinical performance or benefits among the groups and
potentially creates a barrier (based on hospital decision-making) to
patient access to modern coated stents.
The requestor listed the following MS-DRGs in its request.
MS-DRG 246 (Percutaneous Cardiovascular Procedures with
Drug-Eluting Stent with MCC or 4+ Arteries or 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 or Stents); and
MS-DRG 249 (Percutaneous Cardiovascular Procedures with
Non-Drug-Eluting Stent without MCC).
According to the requestor, the non-drug-eluting stent MS-DRGs have
outlived their usefulness in the stent market. The requestor performed
its own analysis of MedPAR data from FY 2015 through FY 2019 and stated
that it found the volume of cases describing non-drug-eluting coronary
stents has
[[Page 44849]]
declined since 2015, culminating in FY 2019, with drug-eluting stents
accounting for 96.1% of all stent cases within the Medicare program,
while non-drug-eluting stents accounted for only 3.9% that year. The
requestor asserted that the assignment of coated stents to the non-
drug-eluting stent category creates a market distortion as this newer
technology is being comingled with very old technology at a payment
disadvantage large enough to influence hospitals' willingness to
prescribe, while at the same time acknowledging that the separation in
average charges and costs between the non-drug-eluting stent category
and the drug-eluting stent category is minimal in their analysis of the
claims data.
In the proposed rule, based on a review of the procedure codes that
are currently assigned to MS-DRGs 246, 247, 248 and 249, we indicated
that our clinical advisors agreed that further refinement of these MS-
DRGs may be warranted. However, we noted that in ICD-10-PCS, a stent is
considered an intraluminal device. The distinction between drug-eluting
and non-drug eluting intraluminal devices is found elsewhere in the
ICD-10-PCS procedure code classification and evaluating this request
requires a more extensive analysis to assess potential impacts across
the MS-DRGs. For these reasons, at this time, we indicated that our
clinical advisors recommended that rather than evaluating the procedure
codes assigned to MS-DRGs 246, 247, 248 and 249 in isolation,
additional analysis should be performed for this subset of procedure
codes across the MS-DRGs, as part of the comprehensive procedure code
review described in section II.D.11. of the preamble of the proposed
rule and this final rule. Therefore, we indicated we believed it would
be more appropriate to consider this request further during our
comprehensive procedure code review in future rulemaking.
Comment: We received a comment expressing concern that the
existence of a payment differential between drug-eluting and bare-metal
stents continues to prevent access for patients who are not able to
obtain the clinical benefits of modern coated stents due to hospital
margin concerns. The commenter stated that multiple clinical studies
have consistently proven that the clinical safety and effectiveness of
their cardiovascular coated stent is more similar to drug-eluting
coronary stents when compared to bare-metal-stents. This commenter
urged CMS to take timely action in refining the MS-DRGs to remedy the
patient access issue, respectfully requested that CMS complete its
analysis in time for the FY 2023 IPPS proposed rule, and also requested
that CMS confirm the timing in this FY 2022 IPPS final rule.
Response: We appreciate the commenter's comments. We note that the
distinction between drug eluting and non-drug-eluting stents has long
existed in the classification. In the FY 2003 IPPS/LTCH PPS final rule
(67 FR 50003 through 50005), we created two new temporary CMS DRGs to
reflect cases involving the insertion of a drug-eluting coronary artery
stent as signified by the presence of code ICD-9-CM procedure code
36.07 (Insertion of drug-eluting coronary artery stent): CMS DRG 526
(Percutaneous Cardiovascular Procedure With Drug- Eluting Stent With
AMI); and CMS DRG 527 (Percutaneous Cardiovascular Procedure With Drug-
Eluting Stent Without AMI) to parallel existing CMS DRGs 516
(Percutaneous Cardiovascular Procedure with Acute Myocardial Infarction
(AMI)) and 517(Percutaneous Cardiovascular Procedure with Coronary
Artery Stent without AMI). Although the FDA had not yet approved the
technology for use, at the time public presentation of the results from
clinical trials found virtually no in-stent restenosis in patients
treated with the drug-eluting stent. Therefore, we stated temporary CMS
DRGs 526 and 527 CMS DRGs were created effective for discharges
occurring on or after April 1, 2003 in recognition of the potentially
significant impact this technology may conceivably have on the
treatment of coronary artery blockages, the predictions of its rapid,
widespread use, and that the higher costs of this technology could
create undue financial hardships for hospitals due to the high volume
of stent cases. The FDA ultimately approved drug-eluting stents for use
in April 2003.
In the FY 2006 IPPS/LTCH PPS (70 FR 47292 through 47295), we
deleted CMS DRGs 516, 517, 526, and 527 and created four new CMS DRGs
in their places. We stated that rather than divide the CMS DRG pairs
based on whether the patient had an acute myocardial (AMI), we split
each pair of CMS DRGs based on the presence or absence of a major
cardiovascular condition to identify subgroups of significantly more
severe patients who use greater hospital resources more accurately than
was possible under the previous CMS DRGs. The new CMS DRG titles were:
CMS DRG 555 (Percutaneous Cardiovascular Procedure with Major
Cardiovascular Diagnosis); CMS DRG 556 (Percutaneous Cardiovascular
Procedure with Non- Drug-Eluting Stent without Major Cardiovascular
Diagnosis); CMS DRG 557 (Percutaneous Cardiovascular Procedure with
Drug-Eluting Stent with Major Cardiovascular Diagnosis) (formerly CMS
DRG 526); and CMS DRG 558 (Percutaneous Cardiovascular Procedure with
Drug- Eluting Stent without Major Cardiovascular Diagnosis). In the FY
2008 IPPS/LTCH PPS final rule we adopted the MS-DRGs and in that rule
(72 FR 47259 through 47260) we stated we found that PTCAs with four or
more vessels or four or more stents were more comparable in average
charges to the higher weighted DRG in the group and made changes to the
GROUPER logic. Claims containing ICD-9-CM procedure code 00.66 for
PTCA, and code 36.07 (Insertion of drug-eluting coronary artery
stent(s)), and code 00.43 (Procedure on four or more vessels) or code
00.48 (Insertion of four or more vascular stents) were assigned to MS-
DRG 246 (formerly 557). In addition, claims containing ICD-9-CM
procedure code 00.66 for PTCA, and code 36.06 (Insertion of non-drug
eluting coronary artery stent(s)), and code 00.43 or code 00.48 were
assigned to MS-DRG 248 (formerly 555). We also made conforming changes
to the MS-DRG titles as follows: MS-DRG 246 was titled ``Percutaneous
Cardiovascular Procedures with Drug-Eluting Stent(s) with MCC or 4 or
more Vessels/Stents''. MS-DRG 248 was titled ``Percutaneous
Cardiovascular Procedures with Non-Drug-Eluting Stent(s) with MCC or 4
or more Vessels/Stents''. The title for MS-DRGs 247 (formerly 558) and
249 (formerly 556) remained unchanged. In FY 2018 IPPS/LTCH PPS Final
rule (82 FR 38024) we finalized our proposal to revise the title of MS-
DRG 246 to ``Percutaneous Cardiovascular Procedures with Drug- Eluting
Stent with MCC or 4+ Arteries or Stents'' and the title of MS-DRG 248
to ``Percutaneous Cardiovascular Procedures with Non-Drug-Eluting Stent
with MCC or 4+ Arteries or Stents'' to better reflect the ICD-10-PCS
terminology of ``arteries'' versus ``vessels'' as used in the procedure
code titles within the classification.
We also again note the distinction between drug-eluting and non-
drug eluting intraluminal devices is found elsewhere in the ICD-10-PCS
procedure code classification. This distinction is not limited to
procedures describing coronary interventions. A more extensive analysis
is needed to assess the potential impacts across the MS-DRGs to avoid
unintended consequences or missed opportunities in most appropriately
capturing the resource utilization and clinical coherence for this
subset of procedures.
[[Page 44850]]
In response to the commenter's concern that the existence of a
payment differential between drug-eluting and bare-metal stents
continues to prevent access for patients, as we have stated in prior
rulemaking, it is not appropriate for facilities to deny treatment to
beneficiaries needing a specific type of therapy or treatment that
potentially involves increased costs. In response to the commenter's
request that CMS complete its analysis of the classification in time
for the FY 2023 IPPS proposed rule, we note that the comprehensive
procedure code review will be a multi-year project. As indicated in
section II.D.11. of the preamble of the proposed rule and this final
rule, we will provide more detail on this analysis and the methodology
for conducting this review in future rulemaking.
After consideration of the public comments we received, and for the
reasons discussed, we are not making changes in this final rule to the
MS-DRG assignments of claims involving the insertion of coronary stents
in percutaneous coronary interventions, and we will further consider
this issue in future rulemaking.
6. MDC 08 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Knee Joint Procedures
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25122), we
discussed a request we received to examine the procedure code
combinations for procedures describing a right knee joint removal and
replacement and procedures describing a left knee joint removal and
replacement in MS-DRGs 466, 467, and 468 (Revision of Hip or Knee
Replacement with MCC, with CC, and without CC/MCC, respectively).
According to the requestor, when using the MS-DRG GROUPER software
version 37, the left knee joint procedure combinations group correctly
to MS-DRG 468, while the exact same right knee procedure code
combinations group incorrectly to MS-DRG 465 (Wound Debridement and
Skin Graft Except Hand for Musculoskeletal and Connective Tissue
Disorders without CC/MCC).
The requestor provided the following procedure codes that describe
the procedure code combinations for the left knee joint removal and
replacement procedures currently assigned to MS-DRGs 466, 467, and 468.
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BILLING CODE 4120-01-C
The requestor also provided the following procedure codes that
describe the procedure code combinations for right knee joint removal
and replacement procedures for CMS' review and consideration.
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[GRAPHIC] [TIFF OMITTED] TR13AU21.054
BILLING CODE 4120-01-C
In the proposed rule, we noted that we reviewed the procedure code
combinations listed and agree with the requestor that the procedure
codes that describe the procedure code combinations for right knee
joint removal and replacement procedures were inadvertently excluded
from the logic for MS-DRGs 466, 467, and 468.
We also noted that during our review of the previously listed
procedure code combinations describing removal and replacement of the
right and left knee joints, we identified additional MS-DRGs in which
the listed procedure code combinations for the left knee joint are in
the logic, however, the listed procedure code combinations for the
right knee joint were inadvertently excluded from the logic.
Specifically, the listed procedure code combinations describing removal
and replacement of the left knee joint are also included in the logic
for case assignment to MS-DRGs 461 and 462 (Bilateral or Multiple Major
Joint Procedures of Lower Extremity with and without MCC, respectively)
in MDC 08 and in the logic for case assignment to MS-DRGs 628, 629, and
630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with
MCC, with CC, and without CC/MCC, respectively) in MDC 10 (Endocrine,
Nutritional and Metabolic Diseases and Disorders). Our clinical
advisors stated that the procedure code combinations describing removal
and replacement of the right knee joint should be added to MS-DRGs 461,
462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC
10 for consistency with the procedure code combinations describing
removal and replacement of the left knee joint that are currently
assigned to those MS-DRGs. We stated that adding these procedure codes
will improve clinical coherence and ensure more appropriate MS-DRG
assignment for these cases.
Therefore, for FY 2022, we proposed to add the three procedure code
combinations listed previously describing removal and replacement of
the right knee joint that were inadvertently omitted from the logic to
MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and
630 in MDC 10.
Comment: Several commenters supported the proposal to add the three
procedure code combinations listed previously describing removal and
replacement of the right knee joint that were inadvertently omitted
from the logic to MS-DRGs 461, 462, 466, 467, and 468 in MDC 08 and to
MS-DRGs 628, 629, and 630 in MDC 10. A few commenters also recommended
that CMS conduct further review to determine whether additional
combinations may be currently excluded from the logic for these MS-
DRGs.
Another commenter who supported our proposal stated they found the
following 11 additional combinations that appeared to be missing from
the logic for MS-DRGs 628, 629, and 630 in MDC 10.
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BILLING CODE 4120-01-C
This commenter also noted the difficulty in analyzing the logic
list as some code combinations display the Removal code first and other
[[Page 44853]]
combinations display the Replacement code first.
Response: We appreciate the commenters' support. We thank the
commenters for their feedback and agree with the commenter's findings
of the 11 additional code combinations inadvertently missing from the
logic for MS-DRGs 628, 629, and 630 in MDC 10. We performed further
analysis to determine if other combinations may be inadvertently
missing and did not find any.
In response to the commenter's feedback regarding the format in
which the Removal and Replacement codes are displayed in the logic, we
note that we are working with our contractor, 3M HIS, to evaluate
modifications to the logic list in these MS-DRGs that are defined by
such combinations and reflected in the ICD-10 MS-DRG Definitions Manual
to refine how the logic list may be better displayed.
After consideration of the public comments received, we are
finalizing our proposal to add the three procedure code combinations
listed previously describing removal and replacement of the right knee
joint that were inadvertently omitted from the logic to MS-DRGs 461,
462, 466, 467, and 468 in MDC 08 and MS-DRGs 628, 629, and 630 in MDC
10 and are adding the 11 additional code combinations listed that were
provided by the commenter to the logic for MS-DRGs 628, 629, and 630 in
MDC 10 for FY 2022.
b. Pelvic Trauma With Internal Fixation
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25123), we
discussed a request we received to reassign cases reporting a diagnosis
code describing a pelvic fracture in combination with a procedure code
describing repair of a pelvic fracture with internal fixation, from the
lower (NonCC) severity level MS-DRG of its current base MS-DRG
assignment to the higher (MCC) severity level MS-DRG of its current
base MS-DRG assignment. According to the requestor, there has been
steady growth in the volume of internal fixation procedures performed
for pelvic fractures since 2008. The requestor stated that due to this
growth rate and the anticipated increase in utilization of these
internal fixation devices in these procedures in the future that CMS
should reconsider the payment structure for these cases it referred to
as ``internal fixation for pelvic trauma''.
The requestor provided data for the Healthcare Common Procedural
Coding System (HCPCS) code G0413 (Percutaneous skeletal fixation of
posterior pelvic bone fracture and/or dislocation, for fracture
patterns which disrupt the pelvic ring, unilateral or bilateral,
(includes ileum, sacroiliac joint and/or sacrum) and Current Procedural
Terminology (CPT) code 22848 (Pelvic fixation (attachment of caudal end
of instrumentation to pelvic bony structures) other than sacrum) from
2008 through 2018 that it cross walked to ICD-10-PCS procedure codes.
The requestor stated that this CPT coded data indicated that physicians
have used pelvic fracture fixation, and pelvic instrumentation, for an
increasing number of trauma/fracture repair cases, demonstrating
expanded use of these devices in the pelvic area overall.
The requestor reported that sacral fractures are often
underdiagnosed and once the diagnosis is made, bedrest is common,
although prolonged bedrest is not recommended for the elderly. In
addition, the requestor stated that pelvic fractures may be isolated or
they may be associated with surrounding structures. For example, the
requester reported that the sacroiliac joint is involved in
approximately 30 to 35% of pelvic fracture cases. According to the
requestor, the standard of care has also transitioned, from bedrest-
only to surgery, and current medical practice has evolved to lower the
threshold for fracture repair surgery. For instance, the requestor
stated that smaller 5mm fractures that were once left untreated now
have standard treatment protocols involving the use of pelvic
instrumentation. As a result, the requestor asserted that there will be
greater utilization of internal fixation devices to treat these smaller
pelvic fractures.
The requestor provided the following procedure codes that it stated
describe procedures involving the use of internal fixation devices for
pelvic fracture repair.
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BILLING CODE 4120-01-C
The requestor also provided the following diagnosis code
subcategories that it stated identify diagnoses describing pelvic
fracture.
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[[Page 44854]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.057
BILLING CODE 4120-01-C
The requestor performed its own analysis of claims data and
reported findings for cases reporting a combination of the diagnosis
codes found in the listed diagnosis code subcategories and the listed
procedure codes (internal fixation for pelvic trauma) for MS-DRGs 515,
516, and 517 (Other Musculoskeletal System and Connective Tissue O.R.
Procedures with MCC, with CC, and without CC/MCC, respectively); MS-
DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC,
with CC, and without CC/MCC, respectively); and MS-DRGs 957, 958, and
959 (Other O.R. Procedures for Multiple Significant Trauma with MCC,
with CC, and without CC/MCC, respectively). According to the requestor,
its findings support reassignment of these internal fixation for pelvic
trauma cases from the lower severity level MS-DRG 517 to the higher
severity level MS-DRG 515, from the lower severity level MS-DRG 909 to
the higher severity level 907, and from the lower severity level MS-DRG
959 to the higher severity level 957. The requestor suggested that
approximately 2,000 cases would be impacted by its recommendation to
reassign internal fixation for pelvic trauma cases. The requestor also
stated that these internal fixation for pelvic trauma cases currently
result in a high rate of CMS outlier payments to institutions that
perform a high volume of these procedures. Finally, the requestor
stated that there is precedent for reassignment of cases from the lower
severity level MS-DRGs to the higher severity level MS-DRG for cases
involving the use of a device in orthopedic surgery. The requestor
provided the examples of total ankle replacement procedures, spinal
disc replacement procedures and neurostimulator implantation procedures
to demonstrate how CMS has previously reassigned cases from the lower
severity level MS-DRG to the higher severity level MS-DRG.
We noted in the proposed rule that we first examined the claims
data from the March 2020 update of the FY 2019 MedPAR file and the
September 2020 update of the FY 2020 MedPAR file for all cases in MS-
DRGs 515, 516, and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957,
958, and 959. Our findings are shown in the following tables.
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[[Page 44855]]
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BILLING CODE 4120-01-C
We then examined claims data from the March 2020 update of the FY
2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file for cases reporting any combination of the diagnosis and procedure
codes that the requestor provided to identify internal fixation for
pelvic trauma cases in MS-DRGs 515, 516, and 517; MS-DRGs 907, 908, and
909; and MS-DRGs 957, 958, and 959.
We noted in the proposed rule that our analysis identified two
types of cases in which the combination of a diagnosis code and a
procedure code (that the requestor provided to identify internal
fixation for pelvic trauma cases) was reported. The first type of case
consisted of a diagnosis code describing a pelvic fracture reported in
combination with a single procedure code describing repair of a pelvic
fracture with internal fixation on a claim, and the second type of case
consisted of a diagnosis code describing a pelvic fracture reported in
combination with two procedure codes describing repair of a pelvic
fracture with internal fixation (for example, one for the right side
and one for the left side) on a claim. These cases are described as
single and bilateral internal fixation procedures for pelvic trauma,
respectively. We refer the reader to Tables 6P.1h and 6P.1i associated
with the proposed rule and this final rule (which are available via the
internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of diagnosis
and procedure code combinations reflecting single internal fixation for
pelvic trauma procedures reported by case ID in each MS-DRG, by fiscal
year, along with the detailed claims analysis. We refer the reader to
Tables 6P.1j and 6P.1k associated with the proposed rule and this final
rule (which are available via the internet on the CMS website at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS) for the list of diagnosis and procedure code
combinations reflecting bilateral internal fixation for pelvic trauma
procedures reported by case ID in each MS-DRG, by fiscal year, along
with the detailed claims analysis. For example, Table 6P.1h shows the
claims data analysis findings from the March 2020 update of the FY 2019
MedPAR file. Line 2 identifies the section for single cases reported in
MS-DRG 515, line 13 identifies the section for single cases reported in
MS-DRG 516, and line 42 identifies the single cases reported in MS-DRG
517. The following table summarizes the information found in each
column of the tables.
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[[Page 44856]]
BILLING CODE 4120-01-C
As shown in Table 6P.1h, line 4, column A, displays the Case ID
``Single-A'' for the first case; column B displays MS-DRG 515; column C
displays the diagnosis code S32.111A; column D displays the description
of the diagnosis code (Minimally displaced Zone 1 fracture of sacrum,
initial encounter for closed fracture); column E displays the procedure
code 0QS234Z; column F displays the description of the procedure code
(Reposition right pelvic bone with internal fixation device,
percutaneous approach); column G displays the case count 1; column H
displays an average length of stay of 3.0 days ; column I displays
average costs of $8,433 for the case; column J displays the frequency
of the procedure reported was one (1) occurrence; column K displays a
3.0 day length of stay for the case; and column L displays $8,433 for
the cost of the case.
We also noted that in our analysis of the claims data from the
March 2020 update of the FY 2019 MedPAR file, we found that there were
no cases reporting any combination of the diagnosis codes and procedure
codes previously listed in MS-DRGs 907, 908, and 909 or MS-DRGs 957,
958, and 959. Our findings are shown in the following table for any
cases found to report a diagnosis code describing a pelvic trauma in
combination with a procedure code describing single internal fixation
in MS-DRGs 515, 516, and 517.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.061
BILLING CODE 4120-01-C
As shown in the table, there were only three cases found in MS-DRG
517 reporting single internal fixation for pelvic trauma procedures,
with an average length of stay of 5.33 days and average costs of
$12,147. The average length of stay is longer and the average costs of
these three cases higher compared to the average length of stay and the
average costs for all cases in MS-DRG 517 (5.33 days versus 2.6 days
and $12,147 versus $10,316, respectively); however, overall, we believe
the data findings are comparable. We stated that our clinical advisors
did not support reassignment of the three cases from MS-DRG 517 to MS-
DRG 515 based on the claims data analysis and also stated it would not
be appropriate to reassign these cases into the higher severity level
MS-DRG in the absence of a MCC and noted that the cases would not be
clinically coherent with regard to resource utilization.
In the proposed rule we noted that in our analysis of the claims
data from the March 2020 update of the FY 2019 MedPAR file for cases in
which a bilateral internal fixation for pelvic trauma procedure was
performed, we identified one case in MS-DRG 517. As shown in Table
6P.1j, the average length of stay for this case was 4.0 days and the
average costs were $24,258, which is longer than the average length of
stay and greater than the average costs for all cases in MS-DRG 517
(2.6 days and $10,316, respectively). We also identified cases
reporting various code combinations for MS-DRGs 515 and 516, and
provide the details in Table 6P.1j 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).
We also noted that in our analysis of the claims data from the
September 2020 update of the FY 2020 MedPAR file we found that there
were no cases reporting any combination of the diagnosis codes and
procedure codes previously listed in MS-DRG 909 or in MS-DRGs 957, 958,
and 959. Our findings are shown in the following table for any cases
found to report a diagnosis code describing a pelvic trauma in
combination with a procedure code describing single internal fixation
in MS-DRGs 515, 516, 517, 907, and 908.
BILLING CODE 4120-01-P
[[Page 44857]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.062
BILLING CODE 4120-01-C
As shown in the table, there were only four cases found in MS-DRG
517 reporting single internal fixation for pelvic trauma procedures,
with an average length of stay of 2.5 days and average costs of
$10,136. For the same reasons described previously based on the FY 2019
analysis, our clinical advisors did not support reassignment of the
cases in the lower severity level MS-DRG 517 to the higher severity
level MS-DRG 515. In addition, the average length of stay and average
costs for these four cases reporting single internal fixation for
pelvic trauma procedures are less than the average length of stay and
average costs for all the cases in MS-DRG 517 (2.5 days versus 2.6 days
and $10,136 versus $11,301, respectively); however, overall, we believe
the data findings are comparable.
As indicated in the proposed rule, in our analysis of the claims
data from the September 2020 update of the FY 2020 MedPAR file for
cases in which a bilateral internal fixation for pelvic trauma
procedure was performed, we identified one case in MS-DRG 517. As shown
in Table 6P.1k, the average length of stay for this case was 2.0 days
and the average costs were $10,103, which is shorter than the average
length of stay and less than the average costs for all cases in MS-DRG
517 (2.6 days and $11,301, respectively). We also identified cases
reporting various combinations for MS-DRGs 515, 516 and MS-DRG 907, and
provide the details in Table 6P.1k 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).
We stated we believe further analyses of these internal fixation
for pelvic trauma cases in the claims data is warranted. We noted that
our analysis for both the single and bilateral cases was centered on
the reporting of a principal diagnosis code describing a pelvic trauma
(fracture) in combination with a procedure code describing internal
fixation based on the codes provided by the requestor. However, we also
identified cases in the claims data in which a pelvic trauma diagnosis
code was reported as a secondary diagnosis code in combination with a
procedure code describing internal fixation and believe these cases
require further evaluation. In addition, during our review of the
diagnosis and procedure codes that the requestor provided, we
identified diagnosis codes that we believe do not warrant consideration
for purposes of this request and additional procedure codes that
describe internal fixation for pelvic trauma procedures, which we
believe do warrant further analysis. For example, as previously noted,
the requestor provided the subcategories for the diagnosis codes that
it requested we consider for analysis. We do not agree that diagnosis
codes describing a pelvic fracture that include the term ``sequela''
should be considered in the analysis to examine this request because,
in the ICD-10-CM classification, the term sequela is defined as the
residual effect (condition produced) after the acute phase of an
illness or injury has terminated.
As noted in the proposed rule, we referred the reader to Table
6P.1g for the list of diagnosis codes that are included in the
diagnosis subcategories provided by the requestor and the list of
procedure codes provided by the requestor, which also contains the
procedure codes we identified. We stated that additional time is needed
for data analysis given the volume of these code combinations and
corresponding data. We also stated we believe that additional time is
needed to allow for further analysis of the claims data to determine
the causes of the fractures and other possible contributing factors
with respect to the length of stay and costs of these cases, as well as
the rate of outlier payments as identified by the requestor. We noted
that our clinical advisors also believe that future data findings may
demonstrate additional variance in resource utilization for this
patient population. We further noted that, as discussed in the FY 2021
IPPS/LTCH PPS final rule, we finalized the addition of 161 procedure
codes to MS-DRGs 957, 958, and 959 in MDC 24 (Multiple Significant
Trauma) that include the insertion of internal fixation devices. We
stated we believe it would be beneficial to examine future claims data
to determine if there is a change in the volume of cases in those
specific MS-DRGs as a result of that update. For these reasons, we
proposed to maintain the structure of MS-DRGs 515, 516, and 517; MS-
DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959 for FY 2022.
Comment: Some commenters agreed with CMS that additional analysis
would be beneficial for the reasons discussed in the proposed rule. A
commenter also suggested that as part of the additional analysis, CMS
should also analyze cases involving trauma activations. According to
the commenter, the most common reason for treatment of Medicare
patients by a trauma center is falls with a high rate of associated
fractures, especially hip fractures. This commenter stated that in
[[Page 44858]]
addition to trauma programs' readiness, activation and coordinated
care, designated and verified programs are required to engage in injury
prevention. The commenter further stated their belief that since falls
are the single largest traumatic event for Medicare beneficiaries and
trauma centers, CMS should engage in policies designed to prevent falls
and mitigate the incidence of hip and extremity fractures which are a
major source of disability for seniors. The commenter provided examples
such as making beneficiary data available on ED visits and hospital
admissions for falls sorted by geographic location and the treating
hospital and including the source of admission for these beneficiaries.
The commenter stated that with appropriate incentives, hospitals could
direct injury prevention efforts in collaboration with community
organizations, nursing facilities and senior centers to assist with
proven fall prevention interventions such as installing safety
equipment (for example, grab bars and railings), introducing exercise
programs and promoting safe routines for activities of daily living.
The commenter also stated that other approaches could involve providing
payment for prevention activities targeted at patients who present with
a first or recurrent fall in an attempt to avoid a future, more severe
injury that could result in a debilitating hip and/or extremity
fracture. This commenter expressed interest in collaborating further
with CMS and other stakeholders on these initiatives.
Response: We appreciate the commenters' support. We also thank the
commenter for their recommendation to examine trauma activation in
connection with the additional analysis planned for pelvic fracture
repair cases and for the various options presented for injury
prevention strategies. We look forward to further engagement with
stakeholders on this topic.
Comment: Other commenters suggested that CMS reconsider the request
to reassign cases reporting a diagnosis code describing a pelvic
fracture in combination with a procedure code describing repair of a
pelvic fracture with internal fixation, from the lower (NonCC) severity
level MS-DRG of its current base MS-DRG assignment to the higher (MCC)
severity level MS-DRG for FY 2022. According to a commenter, as new
technologies are made available intended to surgically treat many
pelvic fracture patients who previously may have been treated medically
in the inpatient setting, hospitals may bear a disproportionate share
of these costs until the MS-DRGs are calibrated. This commenter stated
that providing a reassignment now would help mitigate the financial
strain for hospitals supporting these procedure types, and would
benefit the Medicare program in its potential to reduce outlier
payments. The commenter maintained that CMS could initially limit the
reassignment to specific DRGs, or to specific combinations of procedure
and diagnosis codes at this time, and review the data in a future
rulemaking period.
Another commenter conducted its own analysis and indicated its
findings support reassignment for FY 2022. Alternatively, this
commenter also stated they looked forward to updating CMS with
additional data to support future reassignment options.
Response: We appreciate the commenters' feedback and the additional
analysis conducted. It is not clear from the commenter's analysis which
specific code combinations generated the results provided. As we noted
in the proposed rule, among other factors, there are specific codes and
code combinations requiring further review as we identified additional
codes that the requestor did not include in their initial submission.
We will continue to work with stakeholders as we evaluate the data for
these cases and consider future modifications to the structure of the
MS-DRGs.
After consideration of the public comments received, we are
finalizing our proposal to maintain the structure of MS-DRGs 515, 516,
and 517; MS-DRGs 907, 908, and 909; and MS-DRGs 957, 958, and 959 for
FY 2022.
7. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract):
Chronic Renal Replacement Therapy (CRRT)
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25128 through
25138), we discussed a request we received to create new MS-DRGs for
cases where the patient receives continuous renal replacement therapy
(CRRT) during the inpatient stay. According to the requestor, hospitals
incur higher costs related to CRRT and current MS-DRG definitions do
not adequately account for the clinical and resource requirements of
CRRT. The requestor stated Medicare payment is insufficient to cover
the costs of administering CRRT, creating a disincentive in offering
this dialysis modality and is a barrier to further adoption of CRRT.
The requestor suggested that the following two new MS-DRGs be created:
Suggested New MS-DRG XXX--Continuous Renal Replacement Therapy
with CC/MCC; and
Suggested New MS-DRG XXX--Continuous Renal Replacement Therapy
without CC/MCC.
Renal replacement therapy (RRT) replaces kidney function by
exchanging solute and removing fluid from the blood as a means to
prevent or treat renal failure in patients with acute kidney injury
(AKI). Modalities of renal support include CRRT, conventional
intermittent hemodialysis (IHD), and prolonged intermittent renal
replacement therapies (PIRRTs), which are a hybrid of CRRT and IHD. IHD
provides solute clearance and filtration during relatively brief
treatment sessions, generally lasting from three to five hours. CRRT
provides gradual fluid removal and solute clearance over prolonged
treatment times, typically over a 24-hour period, mimicking the natural
function of the kidney to allow for the continuous removal or
replacement of fluid. The most common CRRT modalities are continuous
venovenous hemofiltration, continuous venovenous hemodialysis, and
continuous venovenous hemodiafiltration.
According to the requestor, CRRT is used primarily to treat
critically ill, hospitalized patients who experience AKI requiring more
intensive and continuous treatment than other dialysis modalities. The
requestor stated that CRRT offers fluid balance and convective
clearance that may be precisely adjusted for each patient, and has been
associated with a higher likelihood of kidney recovery as compared to
other modalities of RRT. The requestor asserted that IHD may worsen the
neurological status of patients with acute brain injury or other causes
of increased intracranial pressure by compromising their cerebral
perfusion by raising intracranial pressure. The ongoing modulation of
fluid balance and targeted fluid management capabilities of CRRT
enables its use in situations other than renal failure. According to
the requestor, CRRT, a slow continuous therapy, is preferred for
patients who are hemodynamically unstable because it helps prevent the
hemodynamic fluctuations common with the more rapid IHD. In light of
the COVID-19 pandemic, the requestor noted the National Institutes of
Health's Coronavirus Disease 2019 (COVID-19) Treatment Guidelines and
The American Society of Nephrology recommend CRRT as the preferred
renal replacement therapy for critically ill, COVID-19 patients
experiencing AKI, who develop indications for renal replacement
therapy, due to the
[[Page 44859]]
hemodynamic instability often experienced in this condition.
The requestor acknowledged that under the current MS-DRG
definitions, Medicare cases with beneficiaries receiving CRRT are
assigned to more than 300 MS-DRGs. Although these beneficiaries are
clinically similar in that they are critically ill patients who
experience AKI requiring more intensive and continuous treatment than
other dialysis modalities, the principal diagnoses for their inpatient
stays vary. The requestor stated their analysis of the variability in
principal diagnosis of the cases examined with beneficiaries receiving
CRRT indicated that, in general, IHD tends to be used more for patients
with chronic illnesses, and CRRT tends to be used for more acute
injuries and end of life scenarios. Therefore, the requestor suggested
that CMS create new MS-DRGs specific to CRRT, without regard to
principal diagnosis, in order to group the resource intensive,
clinically coherent, CRRT cases together in contrast to the existing
GROUPER definitions.
According to the requestor, continuing to assign CRRT to existing
MS-DRGs would be clinically inappropriate and remain financially
devastating to providers even when treating the most routine,
uncomplicated CRRT patients. The requestor performed its own data
analysis and stated hospitals lose over $22,000 per CRRT case on
average, even when outliers are considered, which they state is a
shortfall of more than 30 percent. The requestor asserted these losses
create a disincentive for providers to offer CRRT despite its clinical
benefits. The requestor also asserted the magnitude of financial losses
associated with the provision of CRRT at the current level of MS-DRG
payment could force many hospitals to examine the capacity and scope of
their CRRT programs if facilities continue to determine that the
financial burden of treating Medicare beneficiaries with CRRT is more
than the facility can sustain. As COVID-19 continues to strain hospital
resources, the requestor asserts the availability of CRRT should not be
impeded by inadequate MS-DRG payments related to CRRT.
In the proposed rule, we noted that the following ICD-10-PCS
procedure code identifies the performance of CRRT.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.063
BILLING CODE 4120-01-C
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
code 5A1D90Z is currently recognized as a non-O.R. procedure that
affects the MS-DRG to which it is assigned. We indicated that our
clinical advisors agreed that the principal diagnosis assigned for
inpatient admissions where continuous renal replacement of therapy is
utilized can vary. To examine the impact of the use of CRRT in response
to this request, we examined claims data from the March 2020 update of
the FY 2019 MedPAR file for the top ten MS-DRGs reporting the use of
CRRT. Our findings are reflected in the following table:
BILLING CODE 4120-01-P
[[Page 44860]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.064
BILLING CODE 4120-01-C
As shown in this table, our data findings demonstrate the average
lengths of stay were longer and the average costs were higher for the
cases
[[Page 44861]]
reporting the use of CRRT when compared to all cases in their
respective MS-DRG. We note that the claims data demonstrate that the
MS-DRG with the largest number of cases reporting CRRT is MS-DRG 871
with 2,912 cases. Of the top 10 MS-DRGs reporting CRRT, the MS-DRG with
the smallest number of cases is MS-DRG 682 with 401 cases. The average
length of stay of this subset of cases ranges from a high of 35.5 days
in MS-DRG 004 to a low of 7.9 days in MS-DRG 871 for cases reporting
the use of CRRT. The average costs of this subset of cases ranges from
a high of $174,085 in MS-DRG 003 to a low of $27,681 in MS-DRG 871 for
cases reporting the use of CRRT.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for the top ten MS-DRGs reporting the use of CRRT.
Our similar findings are reflected in the following table:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.065
[[Page 44862]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.066
BILLING CODE 4120-01-C
As shown in this table, our data findings show that the average
lengths of stay were longer and the average costs were higher for the
cases reporting the use of CRRT when compared to all cases in their
respective MS-DRG. We noted that the claims data demonstrate that the
MS-DRG with the largest number of cases reporting CRRT is MS-DRG 871
with 3,023 cases. Of the top 10 MS-DRGs reporting CRRT, the MS-DRG with
the smallest number of cases is MS-DRG 219 with 374 cases. The average
length of stay of this subset of cases ranges from a high of 34.9 days
in MS-DRG 004 to a low of 7.9 days in MS-DRG 871 for cases reporting
the use of CRRT. The average costs of this subset of cases ranges from
a high of $182,952 in MS-DRG 003 to a low of $29,248 in MS-DRG 871 for
cases reporting the use of CRRT.
We indicated in the proposed rule that, while the results of the
claims analysis indicate that the average costs and average lengths of
stay for cases reporting the use of CRRT are higher compared to the
average costs for all cases in their assigned MS-DRG, we were unable to
ascertain from the claims data the resource use specifically
attributable to CRRT during a hospital stay. We noted that there is
large variability in the differences in average costs from MS-DRG to
MS-DRG, indicating there may have been other factors contributing to
the higher costs. When reviewing consumption of hospital resources for
this subset of cases, the claims data clearly demonstrate the patients
typically have a major complication or co-morbid (MCC) condition
reported based on the MS-DRGs assigned. The claims data also reflect,
based on the top ten MS-DRGS, that the procedure frequently occurs in
cases with other procedures with higher than average resource use such
as mechanical ventilation, tracheostomy, extracorporeal membrane
oxygenation (ECMO) and other major cardiovascular procedures that also
may
[[Page 44863]]
be contributing to the higher average costs for these cases.
To further examine the variability in cases reporting the use of
CRRT, we also reviewed the claims data to identify the number
(frequency) and types of principal diagnoses that were reported to
determine what factors may also be contributing to the higher average
costs for these cases.
Our findings for the top 10 principal diagnoses that were reported
within the claims data from the March 2020 update of the FY 2019 MedPAR
file for this subset of cases is shown in the following table:
[GRAPHIC] [TIFF OMITTED] TR13AU21.067
The claims data in this table reflects a wide variance with regard
to the frequency and types of principal diagnoses that were reported
along with the procedure code describing the use of CRRT. We noted that
the claims data demonstrate that the diagnosis with the largest number
of cases reporting CRRT is A41.9 (Sepsis, unspecified organism) with
4,226 cases. Of the top 10 principal diagnoses reporting CRRT, the
diagnosis with the smallest number of cases is A41.01 (Sepsis due to
Methicillin susceptible Staphylococcus aureus) with 271 cases. The
average length of stay of this subset of cases ranges from a high of 20
days with a diagnosis of I13.0 (Hypertensive heart and chronic kidney
disease with heart failure and stage 1 through stage 4 chronic kidney
disease, or unspecified chronic kidney disease) to a low of 12.6 days
with a diagnosis of A41.9 (Sepsis, unspecified organism) for cases
reporting the use of CRRT. The average costs of this subset of cases
ranges from a high of $85,557 with a diagnosis of I21.4 (Non-ST
elevation (NSTEMI) myocardial infarction) to a low of $40,908 with a
diagnosis of N17.9 (Acute kidney failure, unspecified) for cases
reporting the use of CRRT.
Our findings for the top 10 principal diagnoses that were reported
within the claims data from the September 2020 update of the FY 2020
MedPAR file for this subset of cases are shown in the following table:
[[Page 44864]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.068
The claims data in this table also reflect a wide variance with
regard to the frequency and types of principal diagnoses that were
reported along with the procedure code describing the use of CRRT. As
shown, the claims data demonstrate that the diagnosis with the largest
number of cases reporting CRRT is A41.9 (Sepsis, unspecified organism)
with 4,128 cases. Of the top 10 principal diagnoses reporting CRRT, the
diagnosis with the smallest number of cases is N17.0 (Acute kidney
failure with tubular necrosis) with 270 cases. The average length of
stay of this subset of cases ranges from a high of 21.4 days with a
diagnosis of U07.1 (COVID-19) to a low of 11.8 days with a diagnosis of
J96.01 (Acute respiratory failure with hypoxia) for cases reporting the
use of CRRT. The average costs of this subset of cases ranges from a
high of $86,717 with a diagnosis of I21.4 (Non-ST elevation (NSTEMI)
myocardial infarction) to a low of $48,882 with a diagnosis of J96.01
(Acute respiratory failure with hypoxia) for cases reporting the use of
CRRT.
As indicated in the proposed rule, to evaluate the frequency with
which the use of CRRT is reported for different clinical scenarios, we
examined claims from the March 2020 update of the FY 2019 MedPAR file
across each of the 25 MDCs to determine the number of cases reporting
the use of CRRT. Our findings are shown in this table.
BILLING CODE 4120-01-P
[[Page 44865]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.069
[[Page 44866]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.070
BILLING CODE 4120-01-C
As shown in the table, the top five MDCs with the largest number of
cases reporting CRRT are MDC 18, with 6,761 cases; MDC 05, with 6,027
cases; MDC 04, with 1,370 cases; MDC 11, with 1,134 cases; and MDC 06,
with 987 cases. The top five MDCs with the highest average costs for
cases reporting the use of CRRT were MDC 13, with average costs of
$131,252; MDC 22, with average costs of $104,749; MDC 17, with average
costs of $95,309; MDC 07, with average costs of $87,272; and MDC 05,
with average costs of $86,024. The claims data indicate that the
average length of stay ranges from a high of 47.3 days in MDC 13 to a
low of 8 days in MDC 14 for cases reporting the use of CRRT across each
of the 25 MDCs.
We also examined claims from the September 2020 update of the FY
2020 MedPAR file across each of the 25 MDCs to determine the number of
cases
[[Page 44867]]
reporting the use of CRRT. Our findings are shown in this table.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.071
[[Page 44868]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.072
BILLING CODE 4120-01-C
As shown in the table, the top five MDCs with the largest number of
cases reporting CRRT are MDC 18, with 7,678 cases; MDC 05, with 5,516
cases; MDC
[[Page 44869]]
04, with 2,191 cases; MDC 11, with 1,066 cases; and MDC 06, with 838
cases. The top five MDCs with the highest average costs for cases
reporting the use of CRRT were MDC 22, with average costs of $139,244;
MDC 17, with average costs of $88,182; MDC 05, with average costs of
$87,875; MDC 07, with average costs of $86,894; and MDC 08, with
average costs of $ 77,515. The claims data indicate that the average
length of stay ranges from a high of 26.7 days in MDC 22 to a low of 11
days in MDC 20 for cases reporting the use of CRRT across each of the
25 MDCs.
We indicated in the proposed rule that our clinical advisors
reviewed the clinical issues and the claims data, and did not support
creating new MS-DRGs for CRRT without regard to principal diagnosis.
Our clinical advisors noted that more than one modality for RRT can be
utilized for managing patients with AKI given the needs of the patient.
For example, a patient may initially start on CRRT when they are
hemodynamically unstable, but transition to IHD as their condition is
managed during the admission. While patients requiring CRRT can be more
resource intensive, we stated it would not be practical to create new
MS-DRGs specifically for this subset of patients given the various
clinical presentations for which CRRT may be utilized, and the
variation of costs in their assigned MS-DRGs. We further indicated that
we believed that additional analysis and efforts toward a broader
approach to refining the MS-DRGs for cases of patients requiring renal
replacement therapy would be needed to address the concerns expressed
by the requestor. These data do show cases reporting the use of CRRT
can present greater treatment difficulty. However, when reviewing
consumption of hospital resources for this subset of cases, the claims
data also suggest that the increased costs may be attributable to the
severity of illness of the patient and other circumstances of the
admission.
In summary, we indicated in the proposed rule that the claims data
reflect a wide variance with regard to the frequency and average costs
for cases reporting the use of CRRT. Depending on the number of cases
in each MS-DRG, it is difficult to detect patterns of complexity and
resource intensity. We indicated we believed the creation of new MS-
DRGs for cases with procedure codes reporting the use of CRRT has the
potential for creating instability in the relative weights and
disrupting the integrity of the MS-DRG system. Therefore, we did not
propose to create new MS-DRGs for cases reporting the use of continuous
renal replacement therapy.
Comment: A commenter supported CMS' proposal and stated they agreed
that new MS-DRGs should not be created for continuous renal replacement
therapy without regard to principal diagnosis. Another commenter stated
that CMS should group cases reporting the use of continuous renal
replacement therapy along with ICD-10-CM diagnosis codes N17.8 (Other
acute kidney failure) or N17.9 (Acute kidney failure, unspecified) to
the highest (MCC) severity level MS-DRG of its current base MS-DRG
assignment. The commenter noted that both N17.8 and N17.9 (Acute kidney
failure, unspecified) are designated as a ``CC'' when reported as a
secondary diagnosis. This commenter also stated that while CRRT is not
a new technology, given its increased costs, CRRT should be considered
for a permanent ``add-on'' payment that compensates hospitals for the
higher costs of caring for these patients.
Response: We appreciate the commenters' support. With regard to the
commenter's statement that cases reporting the use of continuous renal
replacement therapy along with ICD-10-CM diagnosis codes N17.8 (Other
acute kidney failure) or N17.9 (Acute kidney failure, unspecified)
should be grouped to the highest (MCC) severity level MS-DRG of its
current base MS-DRG assignment, we consider this comment to be outside
the scope of the proposal discussed. We may consider additional claims
data analysis for these procedures in future rulemaking. After
consideration of the public comments we received, we are finalizing our
proposal to not create new MS-DRGs for cases reporting the use of
continuous renal replacement therapy for FY 2022.
8. MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs and
Immunologic Disorders)
a. ANDEXXA[supreg] (Coagulation Factor Xa (Recombinant), Inactivated-
zhzo)
ANDEXXA[supreg] (Coagulation Factor Xa (Recombinant), Inactivated-
zhzo) is a recombinant decoy protein that rapidly reverses the
anticoagulant effects of two direct oral anticoagulants, apixaban and
rivaroxaban, when reversal of anticoagulation is needed due to life-
threatening or uncontrolled bleeding in indications such as
intracranial hemorrhages (ICHs) and gastrointestinal bleeds (GIBs).
ANDEXXA[supreg] received FDA approval on May 3, 2018. When administered
as a bolus followed by continuous infusion, ANDEXXA[supreg] blocks the
anticoagulants ability to inhibit FXa. ANDEXXA[supreg] was approved for
new technology add on payments in FY 2019 (83 FR 41362). We refer
readers to section II.H.5.j. of the preamble of the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41355 through 41362), and section II.H.4.k. of
the preamble of the FY 2020 IPPS/LTCH PPS final rule (84 FR 42193
through 42194) for a complete discussion of the new technology add on
payment application and payment amount for ANDEXXA[supreg] for FY 2019
and FY 2020.
In section II.H.4.i. of the preamble of the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58614 through 58615), we noted the 3-year anniversary
date of the entry of ANDEXXA[supreg] onto the U.S. market (May 3, 2021)
will occur in the second half of FY 2021. We stated 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. After
consideration of the public comments received, we finalized our
proposal to continue new technology add-on payments for this technology
for FY 2021.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25138 through
25146), we discussed a request we received from the manufacturer to
review potential access issues in the inpatient setting for this drug
in the future. The requestor acknowledged that CMS approved the new
technology add-on payment for ANDEXXA[supreg] beginning in FY 2019 and
noted that FY 2021 will be the last year before the add-on payments
expire. According to the requestor, ANDEXXA[supreg] is the only
indicated factor Xa inhibitor reversal agent, and the requestor stated
a concern for the future of access to ANDEXXA[supreg] for patients
experiencing uncontrolled bleeds caused by factor Xa inhibitors. The
requestor stated their claims modeling showed a significant drop in
hospital payment for cases involving use of ANDEXXA[supreg] following
the expiration of new technology add-on payments. Specifically, after
new technology add-on payments expire, the requestor stated their model
projects that approximately 59% of cases are likely to be paid less
than the wholesale acquisition costs for ANDEXXA[supreg].
We noted in the proposed rule that the following ICD-10-PCS
procedure codes identify the intravenous administration of
ANDEXXA[supreg].
[[Page 44870]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.073
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes XW03372 and XW04372 are designated as non-O.R. procedures for
purposes of MS-DRG assignment. We indicated that our clinical advisors
agreed that the principal diagnosis assigned for inpatient admissions
where the intravenous administration of ANDEXXA[supreg] is indicated
can vary.
To evaluate the frequency with which the intravenous administration
of ANDEXXA[supreg] is reported for different clinical scenarios in
response to this request, we examined claims data from the March 2020
update of the FY 2019 MedPAR file across the Pre-MDC category, each of
the 25 MDCs and the surgical class referred to as ``unrelated operating
room procedures'' to determine the number of cases reporting the use of
ANDEXXA[supreg]. Our findings are shown in the following table.
BILLING CODE 4120-01-P
[[Page 44871]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.074
[[Page 44872]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.075
BILLING CODE 4120-01-C
As shown in the table, there were 461 cases reporting the
intravenous administration of ANDEXXA[supreg] with procedure codes
XW03372 or XW04372. The top five MDCs with the largest number of cases
reporting ANDEXXA[supreg] are MDC 01, with 250 cases; MDC 06 with 53
cases; MDC 05, with 33 cases; MDC 18, with 25 cases; and the Pre-MDC
category, with 16 cases. The claims data indicate that the average
costs range from a high of $107,741 in the Pre-MDC category to a low of
$22,242 in MDC 09 for cases reporting the use of ANDEXXA[supreg] across
the claims data. The claims data also indicates that the average length
of stay ranges from a high of 19.9 days in the Pre-MDC category to a
low of 4 days in MDC 09 for cases reporting the use of ANDEXXA[supreg].
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file across the Pre-MDC category, each of the 25 MDCs
and the surgical class referred to as ``unrelated operating room
procedures'' to determine the number of cases reporting the use of
ANDEXXA[supreg]. Our findings are shown in the following table.
BILLING CODE 4120-01-P
[[Page 44873]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.076
[[Page 44874]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.077
BILLING CODE 4120-01-C
As shown in the table, there were 719 cases reporting the
intravenous administration of ANDEXXA[supreg] with procedure codes
XW03372 or XW04372. The top five MDCs with the largest number of cases
reporting ANDEXXA[supreg] are MDC 01, with 364 cases; MDC 06 with 98
cases; MDC 18, with 52 cases; MDC 05, with 50 cases; and MDC 24, with
30 cases. The claims data indicate that the average costs range from a
high of $123,750 in the Pre-MDC category to a low of $27,922 in MDC 09
for cases reporting the use of ANDEXXA[supreg] across the claims data.
The claims data also indicates that the average length of stay ranges
from a high of 25 days in the Pre-MDC category to a low of 4.2 days in
MDC 21 for cases reporting the use of ANDEXXA[supreg] across the claims
data.
As discussed in the proposed rule, to further examine the impact of
the intravenous administration of ANDEXXA[supreg], we examined claims
data from the March 2020 update of the FY 2019 MedPAR file for the top
ten MS-DRGs reporting procedure codes XW03372 or XW04372. Our findings
are reflected in the following table:
BILLING CODE 4120-01-P
[[Page 44875]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.078
[[Page 44876]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.079
BILLING CODE 4120-01-C
As shown in this table, the claims data demonstrate that the MS-DRG
with the largest number of cases reporting ANDEXXA[supreg] is MS-DRG
064 with 78 cases. Of the top 10 MS-DRGs reporting ANDEXXA[supreg], the
MS-DRG with the smallest number of cases is MS-DRG 003 with 13 cases.
The average length of stay of this subset of cases ranges from a high
of 21.5 days in MS-DRG 003 to a low of 4.2 days in MS-DRG 086 for cases
reporting the use of ANDEXXA[supreg]. The average costs of this subset
of cases ranges from a high of $117,265 in MS-DRG 003 to a low of
$26,992 in MS-DRG 083 for cases reporting the use of ANDEXXA[supreg].
We noted while our data findings demonstrate the average costs were
higher for the cases reporting the intravenous administration of
ANDEXXA[supreg] when compared to all cases in their respective MS-DRG,
these cases represent a very small percentage of the total number of
cases reported in these MS-DRGs. We also noted that the top 10 MS-DRGs
identified only account for 239 of the 461 cases in total that were
identified in the March 2020 update of the FY 2019 MedPAR file
reporting ICD-10-PCS codes XW03372 or XW04372. The remainder of the
cases are distributed in small numbers across the MS-DRGs.
We also examined claims data from the September 2020 update of the
FY 2020 MedPAR file for the top ten MS-DRGs reporting procedure codes
XW03372 or XW04372. Our findings are reflected in the following table:
BILLING CODE 4120-01-P
[[Page 44877]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.080
BILLING CODE 4120-01-C
As shown in this table, the claims data demonstrate that the MS-DRG
with the largest number of cases reporting ANDEXXA[supreg] is MS-DRG
064 with 111 cases. Of the top 10 MS-DRGs reporting ANDEXXA[supreg],
the MS-DRG with the smallest number of cases is MS-DRG 083 with 23
cases. The average length of stay of this subset of cases ranges from a
high of 10 days in MS-DRG 023 to a low of 3.5 days in MS-DRG 378 for
cases reporting the use of ANDEXXA[supreg].
[[Page 44878]]
The average costs of this subset of cases ranges from a high of $59,478
in MS-DRG 025 to a low of $24,348 in MS-DRG 378 for cases reporting the
use of ANDEXXA[supreg]. As with our analysis of the FY 2019 claims
data, while these data findings demonstrate the average costs were
higher for the cases reporting the intravenous administration of
ANDEXXA[supreg] when compared to all cases in their respective MS-DRG,
these cases represent a very small percentage of the total number of
cases reported in these MS-DRGs. We also noted that the top 10 MS-DRGs
identified only account for 385 of the 719 cases in total that were
identified in the September 2020 update of the FY 2020 MedPAR file
reporting ICD-10-PCS codes XW03372 or XW04372. The remainder of the
cases are distributed in small numbers across the MS-DRGs.
After reviewing the claims data, we indicated in the proposed rule
that we believe it is premature to consider a proposal for cases
involving ANDEXXA[supreg] therapy for FY 2022. We noted that while the
March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file do contain claims reporting the
procedure codes identifying the intravenous administration of
ANDEXXA[supreg], the number of cases is small across the MDCs and MS-
DRGs. We also noted the claims data also reflects a wide variance with
regard to the frequency and average costs for these cases reporting the
use of ANDEXXA[supreg]. Moreover, we indicated we were unable to
identify another MS-DRG that would be a more appropriate MS-DRG
assignment for these cases based on the indication for this therapeutic
drug. As noted previously, ANDEXXA[supreg] reverses the anticoagulant
effects of apixaban and rivaroxaban, when reversal of anticoagulation
is needed due to life-threatening or uncontrolled bleeding. The
underlying cause of the life-threatening or uncontrolled bleeding can
vary which means the principal diagnosis assigned for inpatient
admissions where ANDEXXA[supreg] is administered can vary. The MS-DRGs
are a classification system intended to group together diagnoses and
procedures with similar clinical characteristics and utilization of
resources. As discussed in the proposed rule, we generally seek to
identify sufficiently large sets of claims data with a resource/cost
similarity and clinical similarity in developing diagnostic-related
groups rather than smaller subsets based on the drugs administered. In
reviewing this issue, we indicated our clinical advisors expressed
concern regarding making potential MS-DRG changes based on a specific,
single therapeutic agent, identified by unique procedure codes rather
than based on a group of related procedure codes that can be reported
to describe that same type or class of treatment or technology, which
is more consistent with the intent of the MS-DRGs.
We indicated that we recognized that the average costs of the small
numbers of cases involving the intravenous administration of
ANDEXXA[supreg] are greater when compared to the average costs of all
cases in their respective MS-DRG. We noted that the MS-DRG system is a
system of averages and it is expected that within the diagnostic
related groups, some cases may demonstrate higher than average costs,
while other cases may demonstrate lower than average costs. We further
noted 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.
In the proposed rule, we acknowledged the importance of ensuring
that patients diagnosed with an indication for a factor Xa inhibitor
reversal agent have adequate access to care and receive the necessary
treatment. While we are sensitive to the requestors' concerns about
continued access to treatment for beneficiaries who require the
reversal of anticoagulation due to life-threatening or uncontrolled
bleeding, we indicated additional time is needed to explore options and
other mechanisms through which to address low volume high-cost drugs
outside of the MS-DRGs.
Furthermore, we noted that we were proposing to continue new
technology add-on payments for ANDEXXA[supreg] for FY 2022. We refer
the reader to section II.F.4.b of the preamble of the proposed rule and
this final rule for further discussion regarding our proposal to allow
a one-time extension of new technology add-on payments for FY 2022 for
15 technologies for which the new technology add-on payment would
otherwise be discontinued, in connection with our proposal to use the
FY 2019 data to develop the proposed FY 2022 relative weights, as well
as our finalization of that proposal.
Therefore, for the reasons stated previously, for FY 2022 we did
not propose any MS-DRG changes for cases involving the intravenous
administration of ANDEXXA[supreg].
Comment: Commenters expressed appreciation for the consideration
CMS provided. These commenters acknowledged that ANDEXXA[supreg]
presents a unique challenge because MS-DRGs are a classification system
for grouping diagnoses and procedures with similar clinical
characteristics and utilization of resources. Another commenter agreed
that the underlying cause of life-threatening or uncontrolled bleeding
can vary and stated that cases involving the use of ANDEXXA[supreg]
(coagulation factor Xa (recombinant), inactivated-zhzo) do not fit
neatly within another MS-DRG. These commenters also agreed that options
and mechanisms through which to address low volume high-cost drugs
should be explored outside of the MS-DRG classification.
Response: We appreciate the commenters' support, and intend to
continue to consider these issues. For the reasons summarized earlier,
and after consideration of the public comments we received, we are not
making any MS-DRG changes for cases involving the intravenous
administration of ANDEXXA[supreg] for FY 2022.
b. Cytokine Release Syndrome (CRS) Logic
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58557 through
58561), we finalized modifications to the proposed severity level
designations for a subset of the diagnosis codes describing Cytokine
Release Syndrome (CRS) based upon further review of the conditions and
in response to public comments. We provided the following table to
display the finalized severity level designations and stated that we
will continue to monitor the CRS codes and their impact on resource use
once the claims data become available to determine if further
modifications to the severity level are warranted.
[[Page 44879]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.081
In connection with the finalized severity level designations for
the listed CRS codes, we also finalized modifications to the ICD-10 MS-
DRG GROUPER logic V38 for MS-DRGs 814, 815, and 816
(Reticuloendothelial and Immunity Disorders with MCC, with CC, and
without CC/MCC, respectively) to conform to the updates the CDC
finalized in the ICD-10-CM Tabular List instructions for assigning and
reporting the CRS codes effective with discharges on and after October
1, 2020. The following modifications to the GROUPER logic were
finalized effective with discharges on and after October 1, 2020, for
case assignment involving CRS following CAR T-cell therapy to MS-DRGs
814, 815, and 816. We noted that the GROUPER logic for MS-DRGs 814,
815, and 816 will include a principal diagnosis of T80.89XA with a
secondary diagnosis of any CRS code as shown.
Principal Diagnosis
T80.89XA Other complications following infusion, transfusion and
therapeutic injection, initial encounter
with
Secondary Diagnosis
D89.831 Cytokine release syndrome, grade 1
D89.832 Cytokine release syndrome, grade 2
D89.833 Cytokine release syndrome, grade 3
D89.834 Cytokine release syndrome, grade 4
D89.835 Cytokine release syndrome, grade 5
D89.839 Cytokine release syndrome, grade unspecified
As discussed in section II.D.13 of the preamble of the proposed
rule and this final rule, Table 6A.--New Diagnosis Codes, lists the new
diagnosis codes that have been approved to date and will be effective
with discharges on and after October 1, 2021. Included in Table 6A are
the following codes that describe complication of immune effector
cellular therapy identifying the timeframe of the encounter.
[GRAPHIC] [TIFF OMITTED] TR13AU21.082
Also included in Table 6A are the following diagnosis codes that
describe immune effector cell-associated neurotoxicity syndrome
(ICANS), with varying degrees of severity.
[GRAPHIC] [TIFF OMITTED] TR13AU21.083
Consistent with the Tabular List instruction for these two sets of
diagnosis codes as presented and discussed by the CDC at the September
8-9, 2020 ICD-10 Coordination and Maintenance Committee meeting, the
diagnosis codes describing a complication of the immune effector
cellular therapy (T80.82XA, T80.82XD, and T80.82XS) are to be sequenced
first, followed by the applicable diagnosis code to identify the
specified condition resulting from the complication. For example, the
types of complications that may result from immune effector
[[Page 44880]]
cellular therapy treatment (for example, CAR T-cell therapy) include
ICANS or CRS, as described by the listed diagnosis codes. Accordingly,
the CDC included the following instructional note in the Tabular List
modifications for code T80.82--
``Use additional code to identify the specific complication, such as:
cytokine release syndrome (D89.83-)
immune effector cell-associated neurotoxicity syndrome (G92.0-)''
Materials relating to the discussions involving the diagnosis codes
from the September 8-9, 2020 ICD-10 Coordination and Maintenance
Committee meeting can be obtained from the CDC website at: https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm.
As noted previously, the current logic for case assignment
involving CRS following CAR T-cell therapy to MS-DRGs 814, 815, and 816
includes a principal diagnosis of T80.89XA with a secondary diagnosis
of any CRS code. However, with the finalization of new diagnosis code
T80.82-, diagnosis code T80.89XA would no longer be reported and these
cases would instead report new diagnosis code T80.82XA, effective with
discharges on and after October 1, 2021. As shown in Table 6A
associated with the proposed rule, we proposed to assign diagnosis code
T80.82XA to MDC 16 (Diseases and Disorders of Blood, Blood Forming
Organs, and Immunologic Disorders) in MS-DRGs 814, 815, and 816. We
stated that if the MDC and MS-DRG assignment for new diagnosis code
T80.82XA is finalized, the current logic for MS-DRGs 814, 815, and 816
that includes a principal diagnosis code of T80.89XA with a secondary
diagnosis code of any CRS code would no longer be appropriate or
necessary.
Therefore, we proposed to revise the structure of MS-DRGs 814, 815,
and 816 by removing the logic that includes a principal diagnosis of
T80.89XA with a secondary diagnosis of any CRS code from MS-DRGs 814,
815, and 816 effective FY 2022.
Comment: Commenters supported the proposed revision to the
structure of MS-DRGs 814, 815, and 816 to remove the logic that
includes a principal diagnosis of T80.89XA with a secondary diagnosis
of any CRS code from MS-DRGs 814, 815, and 816. Commenters also
supported the proposed assignment of new diagnosis code T80.82XA to MS-
DRGs 814, 815, and 816 in MDC 16.
Response: We appreciate the commenters' support.
Comment: A commenter requested that CMS explain its rationale for
MS-DRG assignment of the listed diagnosis codes describing complication
of immune effector cellular therapy (T80.82XA, T80.82XD, and T80.82XS)
and the codes describing immune effector cell-associated neurotoxicity
syndrome (ICANS), with varying degrees of severity (G92.00, G92.01,
G92.02, G92.03, G92.04, and G92.05). Specifically, the commenter
questioned why CMS limited assignment to these MS-DRGs and if
consideration could be given for the codes to be identified as CCs or
MCCs for any MS-DRG.
Response: As discussed in prior rulemaking and in the proposed rule
(86 FR 25186), we use our established process which involves examining
the MS-DRG assignment and the attributes (severity level and O.R.
status) of the predecessor diagnosis or procedure code, as applicable,
to inform our proposed assignments and designations. Specifically, we
review the predecessor code and MS-DRG assignment most closely
associated with the new diagnosis or procedure code, and in the absence
of claims data, we consider other factors that may be relevant to the
MS-DRG assignment, including the severity of illness, treatment
difficulty, complexity of service and the resources utilized in the
diagnosis and/or treatment of the condition. We note that this process
does not automatically result in the new diagnosis or procedure code
being proposed for assignment to the same MS-DRG or to have the same
designation as the predecessor code. We encourage the commenter to also
review the FY 2022 Conversion Table that was made publicly available
via the internet on the CDC website at: https://www.cdc.gov/nchs/icd/icd10cm.htm, the V38.1 ICD-10 MS-DRG Definitions Manual that 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, and Table 6A.--New Diagnosis Codes
associated with the proposed and final rules (available via the
internet on the CMS website at: https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-proposed-rule-home-page#Tables) for
information regarding MDC, MS-DRG and severity level assignment for
these diagnosis codes. As shown in the Conversion Table, the
predecessor code for new diagnosis code T80.82XA is diagnosis code
T80.89XA; as shown in Appendix B--Diagnosis Code/MDC/MS-DRG Index of
the V38.1 ICD-10 MS-DRG Definitions Manual, diagnosis code T80.89XA is
assigned to MDC 16 in MS-DRGs 814-816; and as shown in Table 6A.- New
Diagnosis Codes, the finalized severity level assignments for the
diagnosis codes inquired about are as follows:
[GRAPHIC] [TIFF OMITTED] TR13AU21.084
[[Page 44881]]
Effective October 1, 2021, when diagnosis code G92.03, G92.04 or
G92.05 are reported as a secondary diagnosis, the GROUPER logic would
recognize any one of these codes as a CC and the appropriate ``with
CC'' MS-DRG would be assigned.
After consideration of the public comments we received, we are
finalizing our proposal to assign diagnosis code T80.82XA to MDC 16
(Diseases and Disorders of Blood, Blood Forming Organs, and Immunologic
Disorders) in MS-DRGs 814, 815, and 816. We are also finalizing our
proposal to revise the structure of MS-DRGs 814, 815, and 816 by
removing the logic that includes a principal diagnosis of T80.89XA with
a secondary diagnosis of any CRS code from MS-DRGs 814, 815, and 816
effective FY 2022.
9. MDC 17 (Myeloproliferative Diseases and Disorders, and Poorly
Differentiated Neoplasms): Inferior Vena Cava Filter Procedures
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58517 through
58520), we discussed the ICD-10-PCS codes that describe the insertion
of an intraluminal device into the inferior vena cava that are listed
in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.085
We finalized a change in the designation of ICD-10-PCS procedure
code 06H03DZ from O.R. procedure to non-O.R. procedure and maintained
the O.R. designation of procedure codes 06H00DZ and 06H04DZ. In that
discussion, we noted our clinical advisors supported changing the O.R.
designation of procedures describing insertion of an intraluminal
device into the inferior vena cava performed via a percutaneous
approach since the procedure does not require the resources of an
operating room, while concurring that procedures describing the
insertion of an intraluminal device into the inferior vena cava
performed via an open or a percutaneous endoscopic approach could
require greater resources than a procedure describing insertion of an
intraluminal device into the inferior vena cava performed via a
percutaneous approach. We also noted that the goals of changing the
designation of procedures from non-O.R. to O.R., or vice versa, are to
better clinically represent the resources involved in caring for these
patients and to enhance the overall accuracy of the system and not
whether the change in designation would impact payment in a particular
direction.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25147 through
25149), we discussed a request we received to revise MS-DRGs 829 and
830 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms
with Other Procedures with and without CC/MCC, respectively) by
removing the current two-way severity level split and creating a three-
way severity level split in response to this final policy. The
requestor respectfully disagreed with the FY 2021 IPPS/LTCH PPS final
rule decision to change the designation of the procedure code
describing the insertion of an inferior vena cava intraluminal device
via percutaneous approach to a non-O.R. procedure, and stated vena cava
filters are most often placed in interventional radiology suites and
require a high level of skill to prevent rupture of the vena cava; and
although they are long-term devices, they must be placed skillfully to
allow for removal later if needed.
According to the requestor, it is a conundrum that patients with
principal and secondary diagnoses that qualify for medical MS-DRGs 837
(Chemotherapy with Acute Leukemia as Secondary Diagnosis or with High
Dose Chemotherapy Agent with MCC), MS-DRG 838 (Chemotherapy with Acute
Leukemia as Secondary Diagnosis with CC or High Dose Chemotherapy
Agent), and MS-DRG 839 (Chemotherapy with Acute Leukemia as Secondary
Diagnosis without CC/MCC) group to lower weighted surgical MS-DRGs 829
and 830 (Myeloproliferative Disorders or Poorly Differentiated
Neoplasms with Other Procedures with and without CC/MCC, respectively)
when a non-major O.R. procedure is performed. The requestor stated the
difference in relative weights might be occurring because of the two-
way split within MS-DRGs 829 and 830 and the three-way split within MS-
DRGs 837, 838 and 839. The requestor theorized that removing the
current two-way severity level split of MS-DRGs 829 and 830 and
creating a three-way severity level split could help resolve the
relative weight discrepancy when any non-major O.R. procedures are
performed during hospitalizations for chemotherapy for acute leukemia.
This requestor also suggested that if CMS' analysis did not support
creating a three-way split for MS-DRGs 829 and 830, exclusion of PCS
code 06H03DZ from the list of qualifying procedures and reinstatement
of O.R. procedure status to appropriately compensate providers for the
cost of devices and
[[Page 44882]]
resources to place inferior vena cava filters across the patient
population should be proposed.
As indicated in the proposed rule, to evaluate the request to
create a three-way severity split MS-DRG for cases reporting
myeloproliferative disorders or poorly differentiated neoplasms with
other procedures, consistent with our established process, we conducted
an analysis of base MS-DRG 829. This analysis includes 2 years of
MedPAR claims data to compare the data results from 1 year to the next
to avoid making determinations about whether additional severity levels
are warranted based on an isolated year's data fluctuation and also, to
validate that the established severity levels within a base MS-DRG are
supported.
Therefore, we reviewed the claims data for base MS-DRG 829 using
the September 2018 update of the FY 2018 MedPAR file and the March 2020
update of the FY 2019 MedPAR file, which were used in our analysis of
claims data for MS-DRG reclassification requests for FY 2020 and FY
2022, respectively. Our findings are shown in the table:
[GRAPHIC] [TIFF OMITTED] TR13AU21.086
We applied the criteria to create subgroups for the three-way
severity level split. We found that the criterion that there be at
least 500 cases for each subgroup was not met based on the data in both
the FY 2018 and FY 2019 MedPAR files, as shown in the table for both
years. Specifically, for the ``with MCC'', ``with CC'', and ``without
CC/MCC'' split, there were only 333 cases in the ``without CC/MCC''
subgroup based on the data in the FY 2019 MedPAR file and only 333
cases in the ``without CC/MCC'' subgroup based on the data in the FY
2018 MedPAR file. Accordingly, the claims data do not support a three-
way severity level split for base MS-DRG 829.
We also reviewed the claims data for base MS-DRG 829 using the
September 2019 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, which were used in our analysis of
claims data for MS-DRG reclassification requests for FY 2021 and FY
2022, respectively. Our findings are shown in the table:
[GRAPHIC] [TIFF OMITTED] TR13AU21.087
We applied the criteria to create subgroups for the three-way
severity level split. We found that the criterion that there be at
least 500 cases for each subgroup was not met based on the data in both
the FY 2019 and FY 2020 MedPAR files, as shown in the table for both
years. Specifically, for the ``with MCC'', ``with CC'', and ``without
CC/MCC'' split, there were only 303 cases in the ``without CC/MCC''
subgroup based on the data in the FY 2020 MedPAR file and, as
previously noted, only 333 cases in the ``without CC/MCC'' subgroup
based on the data in the FY 2019 MedPAR file. As shown in both sets of
data and stated previously, the claims data do not support a three-way
severity level split for base MS-DRG 829.
As discussed in the proposed rule, in response to the request to
exclude ICD-10-PCS code 06H03DZ from a list of qualifying procedures if
CMS' analysis did not support creating a three-way split for MS-DRGs
829 and 830, we noted that by definition, procedure codes designated as
non-O.R. procedures, not further classified as ``affecting the MS-DRG
assignment'', do not influence the MS-DRG assignment. As stated
previously, in the FY 2021 IPPS/LTCH PPS final rule we finalized our
proposal to change the designation of ICD-10-PCS procedure code 06H03DZ
from O.R. procedure to non-O.R. procedure, therefore as a non-O.R.
procedure, there is no need to exclude ICD-10-PCS code 06H03DZ from a
list of qualifying procedure codes for MS-DRGs 829 and 830.
In response to the request to reinstate the O.R. procedure
designation of ICD-10-PCS code 06H03DZ if CMS' analysis did not support
creating a three-way split for MS-DRGs 829 and 830, we indicated the
change in designation from O.R. procedure to non-O.R. procedure was
recent, only becoming effective October 1, 2020. We indicated our
clinical advisors continued to indicate that code 06H03DZ, describing
the percutaneous insertion of an intraluminal device into the inferior
vena cava, does not require the resources of an operating room, that
the procedure to insert an IVC filter percutaneously is not surgical in
nature and that the resources involved in furnishing this procedure are
comparable to the related ICD-10-PCS procedure codes that describe the
insertion of infusion devices into the inferior vena cava that are
currently designated as non-O.R. procedures. We noted our clinical
advisors stated that our FY 2021 final policy resulted in an O.R.
designation of 06H03DZ that better reflects the associated technical
complexity and hospital resource use of this procedure. We also noted
that we continue to explore alternatives on how 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, as discussed in
the FY 2021 IPPS/LTCH PPS final rule and in section II.D.11. of the
preamble of the proposed rule and this final rule. We indicated we
continue to develop our process and methodology, and that we will
provide more detail in future rulemaking.
[[Page 44883]]
In summary, based on the results of our analysis, for FY 2022, we
proposed to maintain the current structure of MS-DRGs 829 and 830.
Comment: Commenters expressed support for CMS' proposal to maintain
the current structure of MS-DRGs 829 and 830 (Myeloproliferative
Disorders or Poorly Differentiated Neoplasms with Other Procedures with
and without CC/MCC, respectively) and not create a three-way severity
level split.
Response: We thank the commenters for their support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the current structure of MS-DRGs
829 and 830, without modification, for FY 2022.
10. Review of Procedure Codes in MS-DRGs 981 Through 983 and 987
Through 989
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 (Non-Extensive 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.
In addition to this internal review, we also consider requests that
we receive 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.
Based on the results of our review of the claims data from the
March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, as well as our review of the
requests that we received to examine cases found to group to MS-DRGs
981 through 983 or MS-DRGs 987 through 989, we proposed to move the
cases reporting the procedures and/or principal diagnosis codes
described in this section of this rule 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.
As discussed in section II.D.3.b. of the preamble of the proposed
rule and this final rule, we received a request to reassign cases with
procedures describing control of bleeding in the cranial cavity when
reported with a central nervous system diagnosis 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 MDC 01 (Diseases and
Disorders of the Central Nervous System) in MS-DRGs 25, 26, and 27
(Craniotomy and Endovascular Intracranial Procedures with MCC, with CC,
and without CC/MCC, respectively (for example, ``craniotomy'' MS-DRGs).
We noted that in addition to MS-DRGs 25, 26, and 27, MS-DRG 23
(Craniotomy with Major Device Implant or Acute Complex CNS Principal
Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis without MCC) also include
procedures performed on structures located within the cranial cavity
and are included in the range of MS-DRGs known as the ``craniotomy''
MS-DRGs in MDC 01.
The management and treatment for bleeding (or hemorrhage) within
the cranial cavity varies depending on the location, cause and the
severity (or extent) of the bleed. Common causes include head trauma or
cerebral aneurysm. Control of bleeding in the cranial cavity procedures
are identified by ICD-10-PCS procedure codes 0W310ZZ (Control bleeding
in cranial cavity, open approach), 0W313ZZ (Control bleeding in cranial
cavity, percutaneous approach) and 0W314ZZ (Control bleeding in cranial
cavity, percutaneous endoscopic approach) and are currently assigned to
the following MDCs and MS-DRGs.
BILLING CODE 4120-01-P
[[Page 44884]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.088
[[Page 44885]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.089
BILLING CODE 4120-01-C
According to the requestor, procedures performed within the cranial
cavity always involve drilling or cutting through the skull regardless
of the approach, therefore the three procedure codes identified
(0W310ZZ, 0W313ZZ, and 0W314ZZ) warrant assignment to the
``craniotomy'' MS-DRGs.
We stated in the proposed rule that our analysis of this grouping
issue confirmed that when a procedure describing control of bleeding in
the cranial cavity is reported with a principal diagnosis from MDC 01,
these cases group to MS-DRGs 981, 982, and 983. 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 a MS-DRG assignment to a surgical class referred to as
``unrelated operating room procedures''.
As noted in the proposed rule, we examined claims data from the
March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file for cases reporting any one of the
three procedure codes (0W310ZZ, 0W313ZZ or 0W314ZZ) in MS-DRGs 981
through 983 with a principal diagnosis from MDC 01. Our findings are
shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TR13AU21.090
[[Page 44886]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.091
As noted previously, the requestor asked that we consider
reassignment of these cases to the craniotomy MS-DRGs (identified as
MS-DRGs 23, 24, 25, 26, and 27). We therefore examined the data for all
cases in MS-DRGs 23, 24, 25, 26, and 27. Our findings are shown in the
following tables.
[GRAPHIC] [TIFF OMITTED] TR13AU21.092
[GRAPHIC] [TIFF OMITTED] TR13AU21.093
As shown, in our analyses of the claims data for MS-DRGs 981
through 983, we found a total of ten cases reporting procedures
describing control of bleeding in cranial cavity with a principal
diagnosis from MDC 01 in the March 2020 update of the FY 2019 MedPAR
file, and a total of two cases reporting procedures describing control
of bleeding in cranial cavity with a principal diagnosis from MDC 01 in
the September 2020 update of the FY 2020 MedPAR file.
As noted in the proposed rule, our clinical advisors stated these
procedures
[[Page 44887]]
describing control of bleeding in the cranial cavity are consistent
with the existing procedure codes included in the logic for case
assignment to MS-DRGs 25, 26, and 27, in addition to MS-DRG 23
(Craniotomy with Major Device Implant or Acute Complex CNS Principal
Diagnosis with MCC or Chemotherapy Implant or Epilepsy with
Neurostimulator) and MS-DRG 24 (Craniotomy with Major Device Implant or
Acute Complex CNS Principal Diagnosis without MCC) that also describe
procedures performed on structures located within the cranial cavity
and are included in the range of MS-DRGs known as the ``craniotomy''
MS-DRGs. While the claims analysis based on the March 2020 update of
the FY 2019 MedPAR file identified only ten cases and the September
2020 update of the FY 2020 MedPAR file identified only two cases for
which these procedures were reported as a stand-alone procedure
resulting in assignment to MS-DRGs 981 through 983, and the average
length of stay and average costs for these cases vary in comparison to
the average length of stay and average costs of all cases in MS-DRGs
23, 24, 25, 26, and 27, given the nature of head trauma cases, the
resource use would be expected to vary based on the extent of the
patient's injuries. We stated in the proposed rule that we believed it
is clinically appropriate to add these procedure codes describing
control of bleeding in the cranial cavity to MS-DRGs 23, 24, 25, 26,
and 27 in MDC 01.
Therefore, we proposed to add procedure codes 0W310ZZ, 0W313ZZ, and
0W314ZZ to MDC 01 in MS-DRGs 23, 24, 25, 26, and 27 (``craniotomy'' MS-
DRGs) for FY 2022.
Comment: Commenters agreed with our proposal to add procedure codes
0W310ZZ, 0W313ZZ, and 0W314ZZ to MDC 01 in MS-DRGs 23, 24, 25, 26, and
27.
Response: We thank the commenters for their support.
After consideration of the public comments received, we are
finalizing our proposal to add procedure codes 0W310ZZ, 0W313ZZ, and
0W314ZZ describing bleeding in the cranial cavity to MDC 01 in MS-DRGs
23, 24, 25, 26, and 27 for FY 2022.
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.
In addition to this internal review, we also consider requests that
we receive 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 for
the cases to be reassigned from one of the MS-DRG groups to the other.
Based on the results of our review of the claims data from the
March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, as well as our review of the
requests that we received to examine cases found to group to MS-DRGs
981 through 983 or MS-DRGs 987 through 989, we proposed to move the
cases reporting the procedures codes described in this section of this
rule from MS-DRGs 981 through 983 to MS-DRGs 987 through 989.
As discussed in section II.D.3.a. of the preamble of the proposed
rule and this final rule, we received a request that we understood to
be for our consideration of the reassignment of the following three
procedure codes from Extensive O.R. procedures to Non-extensive O.R.
procedures.
[GRAPHIC] [TIFF OMITTED] TR13AU21.094
As stated in the proposed rule, in conducting our review of this
request, our clinical advisors noted that ICD-10-PCS codes 0JB60ZZ,
0JB70ZZ, and 0JB80ZZ currently group to MS-DRGs 981 through 983 when
reported with a principal diagnosis that is not assigned to one of the
MDCs to which these procedure codes are assigned. While our claims
analysis of both the March 2020 update of the FY 2019 MedPAR file and
the September 2020 update of the FY 2020 MedPAR file did not identify
any cases reporting any one of the three listed procedure codes in MS-
DRGs 981, 982, or 983, we stated that our clinical advisors believe
that these procedures would be more appropriately designated as Non-
extensive procedures because they are more consistent with other
procedures on the Non-extensive procedure code list. They stated that
these procedures do not consume the resources or require a similar
level of technical complexity as the procedures on the Extensive O.R.
procedures list.
Therefore, we proposed to reassign the three procedure codes listed
from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to
Principal Diagnosis with MCC, with CC, without CC/MCC, respectively) to
MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to
Principal Diagnosis with MCC, with CC, without CC/MCC, respectively)
for FY 2022.
Comment: Commenters supported our proposal to reassign procedure
codes 0JB60ZZ, 0JB70ZZ, and 0JB80ZZ from MS-DRGs 981, 982, and 983 to
MS-DRGs 987, 988, and 989.
Response: We appreciate the commenters' support.
After consideration of the public comments received, we are
finalizing our proposal to reassign procedure codes 0JB60ZZ, 0JB70ZZ,
and 0JB80ZZ describing excision of subcutaneous tissue from the chest,
back, and abdomen, respectively, from MS-DRGs 981, 982, and 983 to MS-
DRGs 987, 988, and 989 for FY 2022.
As discussed in section II.D.4.b. of the preamble of the proposed
rule and this final rule, we identified 17 procedure codes describing
laser interstitial thermal therapy (LITT) that are currently designated
as extensive O.R. procedures. In addition to those 17 procedure codes,
we identified additional procedure codes describing LITT of various
body parts that are also designated as extensive O.R. procedures. The
ICD-10-PCS codes describing LITT of various body parts are as follows.
BILLING CODE 4120-01-P
[[Page 44888]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.095
BILLING CODE 4210-01-C
Whenever one of these listed procedure codes is reported on a claim
that is unrelated to the MDC to which the case was assigned based on
the principal diagnosis, it currently results in assignment to MS-DRGs
981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal
Diagnosis with MCC, with CC, without CC/MCC, respectively). Our
clinical advisors stated that all of the listed procedure codes warrant
redesignation from the extensive procedure list and MS-DRGs 981, 982,
and 983 to the non-extensive procedure list and to MS-DRGs 987, 988,
and 989 (Non-Extensive Procedure Unrelated to Principal Diagnosis with
MCC, with CC, without CC/MCC, respectively). Specifically, our clinical
advisors stated the procedures described by these codes are minimally
invasive and are consistent with other ablation (root operation
Destruction) type procedures that are designated as non-extensive
procedures in the ICD-10-PCS classification.
As noted in the proposed rule, in our analysis of claims from the
March 2020 update of the FY 2019 MedPAR file, we identified a total of
six cases reporting procedure codes describing LITT of various body
sites in MS-DRGs 981, 982, and 983 with an average length of stay of
2.5 days and average costs of $7,734. Specifically, we found one case
reporting procedure code DVY0KZZ (Laser interstitial thermal therapy of
prostate) in MS-DRG 981 with an average length of stay of 4.0 days and
average costs of $7,348. For MS-DRG 982, we found five cases in which
procedure codes describing LITT of various body sites were reported.
The first case reported procedure code D0Y0KZZ (Laser interstitial
thermal therapy of brain) with an average length of stay of 1.0 day and
average costs of $4,142, the second case reported procedure code
D0Y6KZZ (Laser interstitial thermal therapy of spinal cord) with an
average length of stay of 3.0 days and average costs of $20,007, the
third case reported procedure code DDY1KZZ (Laser interstitial thermal
therapy of stomach) with an average length of stay of 2.0 days and
average
[[Page 44889]]
costs of $3,424, the fourth case reported procedure code DDY7KZZ (Laser
interstitial thermal therapy of rectum) with an average length of stay
of 3.0 days and average costs of $3,735, and the fifth case reported
procedure code DVY0KZZ (Laser interstitial thermal therapy of prostate)
with an average length of stay of 2.0 days and average costs of $7,750.
There were no cases found to report procedures describing LITT in MS-
DRG 983. Our findings are summarized in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.096
In the proposed rule, we stated that for our analysis of claims
from the September 2020 update of the FY 2020 MedPAR file, we
identified one case reporting procedure code D0Y6KZZ (Laser
interstitial thermal therapy of spinal cord) with an average length of
stay of 6 days and average costs of $5,130, and two cases reporting
procedure code DVY0KZZ (Laser interstitial thermal therapy of prostate)
with an average length of stay of 8.5 days and average costs of $20,329
in MS-DRGs 981, 982, or 983. Although our claims analysis identified a
limited number of cases reporting procedures describing LITT, we stated
that our clinical advisors believe that these procedures would be more
appropriately designated as Non-extensive procedures because they are
more consistent with other procedures on the Non-extensive procedure
code list.
Therefore, we proposed to reassign the listed procedure codes
describing LITT of various body parts from MS-DRGs 981, 982, and 983
(Extensive O.R. Procedures Unrelated to Principal Diagnosis with MCC,
with CC, and without CC/MCC, respectively) to MS-DRGs 987, 988, and 989
(Non-extensive O.R. Procedures Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) for FY 2022.
Comment: Commenters agreed with our proposal to reassign the listed
procedure codes describing LITT of various body parts from MS-DRGs 981,
982, and 983 to MS-DRGs 987, 988, and 989.
Response: We thank the commenters for their support.
After consideration of the public comments received, we are
finalizing our proposal to reassign the listed procedure codes
describing LITT of various body parts from MS-DRGs 981, 982, and 983 to
MS-DRGs 987, 988, and 989, without modification, for FY 2022.
As also discussed in section II.D.4.b. of the preamble of the
proposed rule and this final rule, we identified five procedure codes
describing repair of the esophagus that are currently designated as
extensive O.R. procedures. The procedure codes are 0DQ50ZZ (Repair
esophagus, open approach), 0DQ53ZZ (Repair esophagus, percutaneous
approach), 0DQ54ZZ (Repair esophagus, percutaneous endoscopic
approach), 0DQ57ZZ (Repair esophagus, via natural or artificial
opening), and 0DQ58ZZ (Repair esophagus, via natural or artificial
opening endoscopic). Whenever one of these five procedure codes is
reported on a claim that is unrelated to the MDC to which the case was
assigned based on the principal diagnosis, it currently results in
assignment to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC,
respectively). Our clinical advisors stated that three of these five
procedures warrant redesignation from the extensive procedure list and
MS-DRGs 981, 982, and 983 to the non-extensive procedure list and to
MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to
Principal Diagnosis with MCC, with CC, without CC/MCC, respectively).
Specifically, our clinical advisors stated the procedures identified by
procedure codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ do not involve the same
utilization of resources with respect to the performance of the
procedure in comparison to the procedures identified by procedure codes
0DQ50ZZ and 0DQ540ZZ. In our analysis of claims from the March 2020
update of the FY 2019 MedPAR file, we identified three cases reporting
procedure code 0DQ58ZZ in MS-DRGs 981, 982, and 983 with an average
length of stay of 14 days and average costs of $34,894. In our analysis
of claims from the September 2020 update of the FY 2020 MedPAR file, we
identified two cases reporting procedure code 0DQ58ZZ in MS-DRGs 981,
982, or 983 with an average length of stay of 8 days and average costs
of $12,037. We stated that our clinical advisors believe that these
procedures would be more appropriately designated as Non-extensive
procedures because they are more consistent with other procedures on
the Non-extensive procedure code list. Therefore, we proposed to
reassign these three procedure codes (0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ)
from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R.
Procedures Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) for FY 2022.
[[Page 44890]]
Comment: Commenters supported our proposal to reassign procedure
codes 0DQ53ZZ, 0DQ57ZZ, and 0DQ58ZZ from MS-DRGs 981, 982, and 983 to
MS-DRGs 987, 988, and 989.
Response: We appreciate the commenters' support.
After consideration of the public comments received, we are
finalizing our proposal to reassign the procedure codes describing
repair of the esophagus via percutaneous approach, natural or
artificial opening approach, and natural or artificial opening
endoscopic approach, from MS-DRGs 981, 982, and 983 to MS-DRGs 987,
988, and 989, without modification, for FY 2022.
As discussed in section II.D.11.c.24. of the preamble of the
proposed rule, we identified procedure code 0T9D0ZZ (Drainage of
urethra, open approach) during our review of procedure code 0U9L0ZZ
(Drainage of vestibular gland, open approach), which is currently
designated as a non-O.R. procedure. We noted that the procedure
described by procedure code 0T9D0ZZ represents the male equivalent of
the female procedure described by procedure code 0U9L0ZZ. Procedure
code 0T9D0ZZ is currently designated as an extensive O.R. procedure and
is reported to describe procedures performed on the Cowper's
(bulbourethral) gland in males. Whenever this procedure code is
reported on a claim that is unrelated to the MDC to which the case was
assigned based on the principal diagnosis, it currently results in
assignment to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, without CC/MCC,
respectively).
In the proposed rule we noted that our clinical advisors stated
that this procedure warrants redesignation from the extensive procedure
list and MS-DRGs 981, 982, and 983 to the non-extensive procedure list
and to MS-DRGs 987, 988, and 989 (Non-Extensive Procedure Unrelated to
Principal Diagnosis with MCC, with CC, without CC/MCC, respectively).
Specifically, our clinical advisors stated that the procedure described
by procedure code 0T9D0ZZ continues to warrant an O.R. designation
because it is performed on deeper structures and requires a higher
level of technical skill and it is a more complex procedure when
compared to the non-O.R. procedure described by procedure code 0U9L0ZZ,
however, abscess formation in the Cowper's (bulbourethral) glands is
uncommon and can often be treated with ultrasound guided percutaneous
aspiration. The need for open surgical management is rare and includes
chronic infection unresponsive to non-operative management and
complicated acute infection such as perineal fistula formation. Open
surgical management would require use of the operating room for both
appropriate anesthesia and for the resources required to perform the
more invasive perineal surgical dissection. Therefore, we stated that
our clinical advisors believe a non-extensive O.R. designation is
suitable for this procedure.
We noted in the proposed rule that we analyzed claims data from the
March 2020 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file for cases reporting procedure code
0T9D0ZZ in MS-DRGs 981, 982, and 983. We found one case in MS-DRG 981
with an average length of stay of 8.0 days and average costs of $23,566
in the March 2020 update of the FY 2019 MedPAR file, and no cases in
the September 2020 update of the FY 2020 MedPAR file. Although our
claims analysis identified only one case reporting procedure code
0T9D0ZZ, we stated in the proposed rule that our clinical advisors
believe that these procedures would be more appropriately designated as
Non-extensive procedures because they are more consistent with other
procedures on the Non-extensive procedure code list.
Therefore, we proposed to reassign procedure code 0T9D0ZZ from MS-
DRGs 981, 982, and 983 (Extensive O.R. Procedures Unrelated to
Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) to MS-DRGs 987, 988, and 989 (Non-extensive O.R.
Procedures Unrelated to Principal Diagnosis with MCC, with CC, and
without CC/MCC, respectively) for FY 2022.
Comment: Commenters supported our proposal to reassign procedure
code 0T9D0ZZ from MS-DRGs 981, 982, and 983 to MS-DRGs 987, 988, and
989.
Response: We thank the commenters for their support.
After consideration of the public comments received, we are
finalizing our proposal to reassign procedure code 0T9D0ZZ from MS-DRGs
981, 982, and 983 to MS-DRGs 987, 988, and 989, without modification,
for FY 2022.
11. 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 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.D.13 of the preamble of this final rule, we are
[[Page 44891]]
making Table 6B.--New Procedure Codes--FY 2022 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 38.1 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.
We discussed in the FY 2020 IPPS/LTCH PPS 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58540 through
58541), we provided a summary of the comments we had received in
response to our request for feedback 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.
We stated in the proposed rule that in consideration of the PHE, we
believe it may be appropriate to allow additional time for the claims
data to stabilize prior to selecting the timeframe to analyze for this
review. Additional time is also necessary as we continue to develop our
process and methodology. Therefore, stated that we will provide more
detail on this analysis and the methodology for conducting this review
in future rulemaking.
Comment: Several commenters agreed it is appropriate to allow
additional time for the claims data to stabilize prior to selecting the
timeframe to analyze for the comprehensive procedure code review.
Response: In the FY 2022 IPPS/LTCH PPS proposed rule and this final
rule, we are addressing 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. In this section of the rule we discuss the process
that was utilized for evaluating the requests that were received for FY
2022 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 note 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 in this
section of this rule. Instead, we only discuss MS-DRGs that require
explicitly adding the relevant procedure 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
address that aspect in summarizing their request or our response to the
request in this section of this rule.
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. In this section of this rule,
as we did in the proposed 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 as previously
discussed.
With respect to some of the comments received in response to our
discussion of several requests to change the designation of specific
ICD-10-PCS procedure codes from non-O.R.
[[Page 44892]]
procedures to O.R. procedures, we wish to clarify that when we state
that a current non-O.R. procedure is frequently or generally performed
in the outpatient setting, we are indicating that the resources
involved in the performance of the procedure are such that, it does not
specifically require an inpatient admission and is typically not the
underlying reason for the admission, nor a major factor in the
consumption of resources for an inpatient admission. While an inpatient
provider may elect to perform a specific procedure in the operating
room or a procedure room, that does not constitute automatic
designation of the procedure as an O.R. procedure under the IPPS.
Alternatively, a procedure that is performed at the bedside does not
constitute automatic designation of the procedure as a non-O.R.
procedure under the IPPS. In addition, when we state that a current
non-O.R. procedure is typically performed in conjunction with another
O.R. procedure, we are indicating that there is generally another O.R.
procedure reported on the claim that is primarily responsible for
impacting the utilization of resources for that admission.
b. O.R. Procedures to Non-O.R. Procedures
(1) Open Drainage of Subcutaneous Tissue and Fascia
One requestor identified the following ICD-10-PCS procedure code
that describes the open drainage of right lower leg subcutaneous tissue
and fascia, shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.097
In the ICD-10 MS-DRG Version 38.1 Definitions Manual, this ICD-10-
PCS procedure code is currently recognized as an O.R. procedure for
purposes of MS-DRG assignment. The requestor noted that this procedure
consumes resources comparable to related ICD-10-PCS procedure code
0J9N00Z (Drainage of right lower leg subcutaneous tissue and fascia
with drainage device, open approach) that describes the open drainage
of right lower leg subcutaneous tissue and fascia with a drainage
device, which is currently designated as a non-O.R. procedure. The
requestor stated that these comparable procedures should be recognized
similarly for purposes of MS-DRG assignment.
In the proposed rule, we noted that during our review of this
issue, we identified 21 ICD-10-PCS procedure codes that describe the
open drainage of subcutaneous tissue and fascia, shown in the following
table that are clinically similar to ICD-10-PCS code 0J9N0ZZ, and are
also designated as O.R. procedures in the ICD-10 MS-DRG Version 38.1
Definitions Manual.
BILLING CODE 4120-01-P
[[Page 44893]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.098
We stated we reviewed these procedures and that our clinical
advisors agreed that procedures that describe the open drainage of
subcutaneous tissue and fascia consume resources comparable to the
related ICD-10-PCS procedure codes that describe the open drainage of
subcutaneous tissue and fascia with a drainage device that are
currently designated as non-O.R. procedures. We stated that these
procedures do not typically require the resources of an operating room,
and are not surgical in nature. Therefore, we proposed to remove the 22
codes listed in the following table from the FY 2022 ICD-10 MS-DRGs
Version 39 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.
[[Page 44894]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.099
BILLING CODE 4210-01-C
Comment: Commenters supported CMS' proposal to change the
designation of the 22 procedure codes describing open drainage of
subcutaneous tissue and fascia from O.R. procedures to non-O.R.
procedures.
Response: We appreciate the commenters for their support.
Comment: Other commenters opposed CMS' proposal. Commenters stated
that these procedures are indeed performed in the operating room under
general anesthesia, are surgical in nature, and significantly increase
costs. A commenter also stated that ICD-10-PCS codes describing open
drainage ``with drainage device'' are rarely (if ever) assigned because
when drains are placed at the conclusion of open drainage procedures,
drains are considered integral to the performance of a procedure. Some
commenters acknowledged there may be certain circumstances in which
these procedures do not require an operating room but note they are not
consistently conducive to being performed at bedside, especially when
the patient is not able to tolerate the procedure, or when performed in
for community hospitals that do not have hybrid O.R.s or special
procedure rooms. A commenter stated that a review of the cases at their
facility shows that approximately 80% of the procedures describing open
drainage of subcutaneous tissue and fascia are performed in an O.R.
setting requiring anesthesia, with a much lesser percentage performed
at the bedside.
Another commenter noted in the FY 2018 IPPS proposed rule, these
same 22 ICD-10-PCS codes were identified and a commenter opposed the
proposal to redesignate these codes at that time. In response to the
issues raised by this commenter, CMS agreed in the FY 2018 IPPS final
rule to maintain the designation of the 22 procedure codes. This
commenter stated the rationale to maintain these 22 codes as O.R.
procedures has not changed and that there is no safe way to effectively
drain an infection involving the subfascial plane without the resources
of an O.R.
Response: Our clinical advisors reviewed the commenters' concerns
and state that treatment practices have continued to shift since FY
2018 rulemaking. Procedures describing the open drainage of
subcutaneous tissue and fascia can now be safely performed in the
outpatient setting and when performed during a hospitalization, it is
typically in conjunction with another O.R. procedure. In cases where
procedures describing open drainage of subcutaneous tissue and fascia
are the only procedures performed in an admission, the admission is
quite likely due to need for IV antibiotics as opposed to the need for
operating room resources in an inpatient setting. Our clinical advisors
continue to state that these procedures consume resources comparable to
the related ICD-10-PCS procedure codes that describe the open drainage
of subcutaneous tissue and fascia with a drainage device that are
currently designated as non-O.R. procedures. In response to the comment
that ICD-10-PCS codes describing open drainage ``with drainage device''
are rarely (if ever) assigned, while we agree there are limited
scenarios in which the qualifier ``with drainage device'' is
applicable, we note coding is dependent on the documentation in the
medical record.
In response to the comments that differentiate when these
procedures are performed at bedside versus in hybrid O.R.s versus in
special procedure rooms, we note that the designation of procedure as a
non-O.R. procedure is
[[Page 44895]]
not determined solely by the location in the facility in which the
procedure was performed. While the site in which the procedure is
performed and the procedural approach are important considerations in
the designation of a procedure, other clinical factors such as
procedure complexity, resource utilization, and need for anesthesia
administration are also relevant to whether a procedure would typically
require the resources of an operating room. In that regard, our
clinical advisors state procedure codes that describe the open drainage
of subcutaneous tissue and fascia do not reflect the technical
complexity or resource intensity in comparison to other procedures that
are designated as O.R. procedures. As noted by the commenters, while
there are circumstances where performing open drainage in the operating
room under sedation or general anesthesia may be necessary, open
drainage procedures can be performed at the bedside or settings other
than an operating room under general anesthesia.
We also note we have identified that the designation of the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia as O.R. procedures is a result of a replication error in
transitioning to ICD-10. This replication error led to ICD-10-PCS
procedure codes that describe the open drainage of subcutaneous tissue
and fascia being listed as comparable translations for ICD-9-CM code
83.09 (Other incision of soft tissue), which was designated as a non-
extensive O.R. procedure under the ICD-9-CM MS-DRGs Version 32.
Conversely, this replication error led ICD-10-PCS procedure codes that
describe the open drainage of subcutaneous tissue and fascia with a
drainage device being listed as comparable translations for ICD-9-CM
code 86.04 (Other incision with drainage of skin and subcutaneous
tissue) which was designated as a non-O.R. procedure under the ICD-9-CM
MS-DRGs Version 32. Designating the 22 procedure codes that describe
the open drainage of subcutaneous tissue and fascia as non-O.R.
procedures will result in a more accurate replication of the comparable
procedure, under the ICD-9-CM MS-DRGs Version 32 which was 86.04, not
83.09 and is more aligned with current shifts in treatment practices.
After consideration of the public comments we received, for the
reasons stated, we are finalizing our proposal, without modification,
to change the designation of the 22 procedure codes listed in the
preceding table from O.R. procedures to non-O.R. procedures, effective
October 1, 2021.
c. Non-O.R. Procedures to O.R. Procedures
(1) Percutaneous Introduction of Substance Into Cranial Cavity and
Brain
One requestor identified ICD-10-PCS procedure code XW0Q316
(Introduction of eladocagene exuparvovec into cranial cavity and brain,
percutaneous approach, new technology group 6) that the requestor
stated is currently not recognized as an O.R. procedure for purposes of
MS-DRG assignment. The requestor recommended that this procedure be
designated as an O.R. procedure because the procedure requires
traversing the skull in order to place a substance within the cranial
cavity or brain. The requestor noted that CMS disagreed with
designating this procedure as an O.R. procedure last year in the
absence of claims data; however, the requestor stated that because the
skull must be opened by drilling or cutting a burr hole through the
skull, this procedure warrants O.R. status similar to other
transcranial procedures performed with an open or percutaneous approach
that are classified as O.R. procedures.
We noted in the proposed rule that in the ICD-10 MS-DRGs
Definitions Manual Version 38.1, procedure code XW0Q316 is currently
designated as a non-O.R. procedure for purposes of MS-DRG assignment.
We agreed with the requestor that procedure code XW0Q316 describes a
procedure that involves the creation of a burr hole in the skull. In
the FY 2021 IPPS/LTCH PPS final rule (85 FR 58579 through 58580), we
stated 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. The predecessor code for procedure code XW0Q316 is
procedure code 3E0Q3GC (Introduction of other therapeutic substance
into cranial cavity and brain, percutaneous approach) which is
designated as a non-O.R. procedure. In the absence of claims data, our
clinical advisors also considered the indication for the specific
procedure being described by the new procedure code, the treatment
difficulty, and the resources utilized.
We stated in the proposed rule that upon further review and
consideration, our clinical advisors agreed that procedure code XW0Q316
describing a procedure that is performed by creating a burr hole in the
skull warrants designation as an O.R. procedure consistent with other
percutaneous procedures performed on the cranial cavity and brain body
parts. Therefore, we proposed to add this procedure code to the FY 2022
ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E--Operating
Room Procedures and Procedure Code/MS-DRG Index as an O.R. procedure,
assigned to MS-DRGs 628, 629, and 630 (Other Endocrine, Nutritional and
Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 10 (Endocrine, Nutritional and Metabolic Diseases
and Disorders) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without MCC/CC, respectively).
Comment: Commenters agreed with our proposal to designate procedure
code XW0Q316 as an O.R. procedure.
Response: After consideration of the public comments we received,
we are finalizing our proposal to change the designation of procedure
code XW0Q316 from a non-O.R. procedure to an O.R. procedure, effective
October 1, 2021.
(2) Open Drainage of Maxilla and Mandible
One requestor identified three ICD-10-PCS procedure codes that
describe the open drainage of maxilla or mandible that the requestor
stated are currently not recognized as O.R. procedures for purposes of
MS-DRG assignment. The three procedure codes are listed in the
following table.
[[Page 44896]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.100
The requestor stated that procedures that describe the open
drainage of the maxilla or mandible should be designated as O.R.
procedures because these procedures, indicated for diagnoses such as
subperiosteal abscesses, are performed in the operating room under
general anesthesia and involve making open incisions through muscle and
stripping away the periosteum. The requestor identified procedure codes
0W950ZZ (Drainage of lower jaw, open approach) and 0W940ZZ (Drainage of
upper jaw, open approach) that are currently designated as O.R.
procedures. The requestor noted that ICD-10-PCS guidelines instruct
that the procedure codes in Anatomical Regions, General, can be used
when the procedure is performed on an anatomical region rather than a
specific body part, or on the rare occasion when no information is
available to support assignment of a code to a specific body part. The
requestor stated that because bone is a specific body part in ICD-10-
PCS, procedure codes should be assigned for subperiosteal drainage of
mandible and maxilla bones from table 0N9, Drainage of Head and Facial
Bones, instead of codes from table 0W9, Drainage of Anatomical Regions,
General, when these procedures are performed. Therefore, the requestor
stated that procedure codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ should also
be recognized as O.R. procedures for purposes of MS-DRG assignment.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0N9R0ZZ, 0N9T0ZZ, and 0N9V0ZZ are currently designated as non-
O.R. procedures for purposes of MS-DRG assignment. In the proposed
rule, we stated that our clinical advisors reviewed this issue and
disagreed that the procedures describing the open drainage of the
maxilla or mandible are typically performed in the operating room under
general anesthesia. Our clinical advisors stated that these procedures
can be done in an oral surgeon's office or an outpatient setting and
are rarely performed in the inpatient setting. Our clinical advisors
also stated a correlation cannot be made between procedures performed
in general anatomic regions and procedures performed in specific body
parts because these procedures coded with the general anatomic regions
body part represent a broader range of procedures that cannot be coded
to a specific body part. Therefore, we proposed to maintain the current
non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ,
and 0N9V0ZZ.
Comment: A commenter supported CMS' proposal to maintain the
current non-O.R. designation for procedure codes describing open
drainage of maxilla or mandible.
Response: We appreciate the commenters' support.
Comment: Another commenter opposed CMS' proposal to maintain the
current non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ,
0N9T0ZZ, and 0N9V0ZZ and stated that the treatment of jaw infections
requires open drainage of jaw bones performed in the operating room
under anesthesia in conjunction with intravenous antibiotics to prevent
sepsis. This commenter stated that procedures that are typically
performed in the outpatient surgical setting should be designated as
O.R. procedures and that the frequency in which procedures are
performed in the inpatient setting should not determine the
designation. The commenter asserted that when these procedures are
necessitated during inpatient stays, providers should be compensated
for operating room resources because the payment of infrequent
surgeries as non-O.R. procedures results in significant uncompensated
surgical resources for facilities.
Response: Our clinical advisors reviewed the commenters' concerns
and continue to support maintaining the current non-O.R. designation
for procedure codes describing open drainage of maxilla or mandible and
disagree that the procedures describing the open drainage of the
maxilla or mandible typically require the resources of an operating
room. Our clinical advisors state that if admission is required for the
treatment of a jaw infection as the commenter suggested, the admission
is quite likely due to need for IV antibiotics as opposed to the need
for operating room resources in an inpatient setting.
With regard to the comments about the implications for
reimbursement, we note that the goals of changing the designation of
procedures from non-O.R. to O.R., or vice versa, are to better
clinically represent the resources involved in caring for these
patients and to enhance the overall accuracy of the system. Therefore,
decisions to change an O.R. designation are based on whether such a
change would accomplish those goals and not whether the change in
designation would impact the payment in a particular direction.
After consideration of the public comments we received, for the
reasons stated, we are finalizing our proposal to maintain the current
non-O.R. designation of ICD-10-PCS procedure codes 0N9R0ZZ, 0N9T0ZZ,
and 0N9V0ZZ, without modification, for FY 2022.
(3) Thoracoscopic Extirpation of Pleural Cavities
One requestor identified ICD-10-PCS procedure codes 0WC94ZZ
(Extirpation of matter from right pleural cavity, percutaneous
endoscopic approach) and 0WCB4ZZ (Extirpation of matter from left
pleural cavity, percutaneous endoscopic approach) that the requestor
stated are currently not recognized as O.R. procedures for purposes of
MS-DRG assignment. The requestor stated that these procedures should be
designated as O.R. procedures because they are thoracoscopic procedures
that are always performed in the operating room under general
anesthesia. The requestor stated procedure codes 0W994ZZ (Drainage of
right pleural cavity, percutaneous endoscopic approach) and 0W9B4ZZ
(Drainage of left pleural cavity, percutaneous endoscopic approach) are
currently designated as O.R. procedures, therefore procedure codes
0WC94ZZ and 0WCB4ZZ should also be recognized as O.R. procedures for
purposes of MS-DRG assignment because they utilize the same resources.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0WC94ZZ and 0WCB4ZZ are currently designated as non-O.R.
procedures for purposes of MS-DRG assignment. We stated in the proposed
rule that our clinical advisors reviewed this issue and
[[Page 44897]]
disagreed that procedure codes describing the thoracoscopic drainage of
the pleural cavities should necessarily have the same designation as
procedure codes describing the thoracoscopic extirpation of matter from
the pleural cavities. We noted that our review of the designation of
ICD-10-PCS codes as an O.R. procedure or a non-O.R. procedure considers
the resources used as well as whether that procedure should affect the
MS-DRG assignment, and if so, in what way. Our clinical advisors stated
that thoracoscopic drainage of the pleural cavities is performed for
distinct indications in clinically different scenarios. Our clinical
advisors further stated that drainage is the process of taking out, or
letting out, fluids and/or gases from a body part and is typically
performed in the pleural cavity for indications such as congestive
heart failure, infection, hemothorax and empyema. In contrast, the
procedures describing the thoracoscopic extirpation of the pleural
cavities are performed for a wider range of indications because the
solid matter removed may be an abnormal byproduct of a biological
function or a foreign body. Our clinical advisors noted that the
thoracoscopic extirpation of the pleural cavities is generally
performed with other procedures such as heart transplant, lung
transplant mechanical ventilation, and other major chest procedures and
would not be the main reason for inpatient hospitalization or be
considered the principal driver of resource expenditure.
Therefore, we proposed to maintain the current non-O.R. designation
of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ.
Comment: A commenter supported CMS' proposal to maintain the
current non-O.R. designation for procedure codes describing the
thoracoscopic extirpation of matter from the pleural cavities.
Response: We appreciate the commenters' support.
Comment: Another commenter opposed CMS' proposal to maintain the
non-O.R. designation of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ.
The commenter stated that procedure codes describing the thoracoscopic
extirpation of matter from the pleural cavities can indeed be primary
surgical procedures in procedures such as when the thoracoscopic
evacuation of a traumatic hemothorax is performed during
hospitalization, and stated that all thoracoscopic lung procedures
should be designated as O.R. procedures because they are performed in
the operating room and require general anesthesia with one lung
ventilation. This commenter also stated that ICD-10-PCS codes for
thoracoscopic drainage of pleural cavities have been appropriately
designated as O.R. procedures, and the only difference between root
operations ``Drainage'' and ``Extirpation'' is strictly the consistency
of the substance removed.
Response: Our clinical advisors reviewed the commenters' concerns
and continue to support maintaining the current non-O.R. designation
for procedure codes of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ
because the resources involved in furnishing these procedures does not
warrant designation as O.R. procedures. Our clinical advisors continue
to state the thoracoscopic extirpation of the pleural cavities is
generally performed with other procedures such as heart transplant,
lung transplant mechanical ventilation, and other major chest
procedures and would not be the main reason for inpatient
hospitalization or be considered the principal driver of resource
expenditure. Our clinical advisors also do not agree that unilaterally
all thoracoscopic lung procedures should be designated as O.R.
procedures.
Our clinical advisors reiterate that thoracoscopic drainage of the
pleural cavities and thoracoscopic extirpation of the pleural cavities
are performed for distinct indications in clinically different
scenarios and disagree with the suggestion that the only difference
between the PCS root operations ``Drainage'' and ``Extirpation'' is the
consistency of the substance removed. Rather, drainage procedures take
out, or let out, fluids and/or gases from a body part and are typically
performed in the pleural cavity for indications such as congestive
heart failure, infection, hemothorax and empyema. Extirpation
procedures are not limited to removing blood clots. In contrast, the
procedures describing the thoracoscopic extirpation of the pleural
cavities are performed for a wider range of indications because the
solid matter removed may be an abnormal byproduct of a biological
function or a foreign body.
In response to the commenter that stated highlighted the
thoracoscopic evacuation of a traumatic hemothorax as an example of how
these procedures can indeed be primary surgical procedures, we note
hemothorax is defined as a collection of blood in the pleural cavity.
The thoracoscopic evacuation of a hemothorax would meet the ICD-10-PCS
definition of a ``Drainage'' procedure. The procedure codes describing
the drainage of the pleural cavity were not the subject of this
request.
After consideration of the public comments we received, for the
reasons stated, we are finalizing our proposal to maintain the current
non-O.R. designation of ICD-10-PCS procedure codes 0WC94ZZ and 0WCB4ZZ,
without modification, for FY 2022.
(4) Open Pleural Biopsy
One requestor identified ICD-10-PCS procedure codes 0BBN0ZX
(Excision of right pleura, open approach, diagnostic) and 0BBP0ZX
(Excision of left pleura, open approach, diagnostic), that describe an
open pleural biopsy that the requestor stated are performed in the
operating room with general anesthesia. The requestor also stated that
procedure codes 0BBN0ZZ (Excision of right pleura, open approach) and
0BBP0ZZ (Excision of left pleura, open approach) describing open
pleural biopsy for non-diagnostic purposes are justifiably designated
as O.R. procedures. According to the requestor, these procedure codes
describing an open pleural biopsy should be designated as O.R.
procedures regardless of whether they are performed for diagnostic or
therapeutic purposes.
In the proposed rule we noted that under the ICD-10-PCS procedure
classification, biopsy procedures are identified by the 7th digit
qualifier value ``diagnostic'' in the code description. In response to
the requestor's suggestion that procedures performed for a pleural
biopsy by an open approach, regardless of whether it is a diagnostic or
therapeutic procedure, should be designated as an O.R. procedure, we
examined procedure codes 0BBN0ZX, 0BBN0ZZ, 0BBP0ZX, and 0BBP0ZZ.
We also noted that in the ICD-10 MS-DRGs Definitions Manual Version
38.1, procedure codes 0BBN0ZZ and 0BBP0ZZ are currently designated as
O.R. procedures, however, procedure codes 0BBN0ZX and 0BBP0ZX are not
recognized as O.R. procedures for purposes of MS-DRG assignment. We
agreed with the requestor that procedure codes 0BBN0ZX and 0BBP0ZX
would typically require the resources of an operating room. We stated
that our clinical advisors also agreed that procedure codes 0BBN0ZX and
0BBP0ZX would typically require the resources of an operating room.
Therefore, we proposed to add these 2 procedure codes to the FY 2022
ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E--Operating
Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures,
assigned to MS-DRGs 166, 167, and 168
[[Page 44898]]
(Other Respiratory System O.R. Procedures with MCC, with CC, and
without CC/MCC, respectively) in MDC 04 (Diseases and Disorders of the
Respiratory System).
Comment: Commenters supported our proposal to designate procedure
codes 0BBN0ZX and 0BBP0ZX as O.R. procedures.
Response: After consideration of the public comments we received,
we are finalizing our proposal to change the designation of procedure
codes 0BBN0ZX and 0BBP0ZX from non-O.R. procedures to O.R. procedures,
without modification, effective October 1, 2021.
(5) Percutaneous Revision of Intraluminal Devices
One requestor identified five ICD-10-PCS procedure codes that
describe the percutaneous revision of intraluminal vascular devices
that the requestor stated are currently not recognized as O.R.
procedures for purposes of MS-DRG assignment. The five procedure codes
are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.101
The requestor stated that the procedure codes that describe the
percutaneous revision of intraluminal vascular devices within arteries,
veins, and great vessels should be designated as O.R. procedures to
compensate for the resources needed to perform these procedures. The
requestor also stated procedures to reattach, realign, or otherwise
revise intraluminal devices percutaneously require anesthesia,
specialized equipment for intravascular visualization, significant
skill, and time, therefore, it is important for these codes to be
designated with O.R. procedure status.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 02WY3DZ, 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ are currently
designated as non-O.R. procedures for purposes of MS-DRG assignment. We
stated in the proposed rule that we agreed with the requestor that
these five ICD-10-PCS procedure codes typically require the resources
of an operating room. Therefore, to the FY 2022 ICD-10 MS-DRG Version
39 Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index, we proposed to add code 02WY3DZ as an O.R.
procedure assigned to MS-DRGs 270, 271, and 272 (Other Major
Cardiovascular Procedures, with MCC, with CC, and without CC/MCC,
respectively) in MDC 05 (Diseases and Disorders of the Circulatory
System). We also proposed to add codes 03WY3DZ, 04WY3DZ, 05WY3DZ, and
06WY3DZ as O.R. procedures assigned to MS-DRGs 252, 253, and 254 (Other
Vascular Procedures with MCC, with CC, and without CC/MCC,
respectively) in MDC 05 (Diseases and Disorders of the Circulatory
System).
Comment: Commenters supported our proposal to designate ICD-10-PCS
procedure codes 02WY3DZ, 03WY3DZ, 04WY3DZ, 05WY3DZ, and 06WY3DZ as O.R.
procedures. A commenter noted that they agreed that these procedures do
typically require the resources of an operating room.
Response: After consideration of the public comments we received,
we are finalizing our proposal to change the designation of procedure
code 02WY3DZ from a non-O.R. procedure to an O.R. procedure, effective
October 1, 2021, without modification. We are also finalizing our
proposal to change the designation of procedure codes 03WY3DZ, 04WY3DZ,
05WY3DZ, and 06WY3DZ from non-O.R. procedures to O.R. procedure,
without modification, effective October 1, 2021.
(6) Occlusion of Left Atrial Appendage
One requestor identified nine ICD-10-PCS procedure codes that
describe left atrial appendage closure (LAAC) procedures that the
requestor stated are currently not recognized as O.R. procedures for
purposes of MS-DRG assignment in all instances. The nine procedure
codes are listed in the following table.
[[Page 44899]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.102
The requestor stated that these procedures are currently designated
as non-O.R. procedures that route to surgical MS-DRGs only when
assigned in combination with a principal diagnosis within MDC 05
(Diseases and Disorders of the Circulatory System). The requestor
stated these procedures should also be designated as O.R. procedures
when assigned in combination with diagnoses outside of the circulatory
system, such as sepsis or trauma, to compensate for the associated
resource use, skill requirements, and device costs.
In the ICD-10 MS-DRG Version 38.1 Definitions Manual, the nine ICD-
10-PCS procedure codes that describe left atrial appendage closure are
currently recognized as non-O.R. procedures that affect the MS-DRG to
which they are assigned. We refer readers to section II.D.5.d of the
preamble of this final rule, where we address ICD-10-PCS procedure
codes 02L70CK, 02L70DK, and 02L70ZK that describe a LAAC procedure
performed with an open approach. These codes were discussed in response
to a request to reassign these codes to MS-DRGs 228 and 229 (Other
Cardiothoracic Procedures with and without MCC, respectively). In
section II.D.5.d of this final rule we also summarize and respond to
the comments regarding our proposal to maintain the assignment of these
codes in MS-DRGs 273 and 274 (Percutaneous and Other Intracardiac
Procedures with and without MCC, respectively) in MDC 05 for the
reasons discussed, and discuss our finalization of that proposal.
We stated in the proposed rule that our clinical advisors reviewed
this related issue and believed the current designation of LAAC
procedures as non-O.R. procedures that affect the assignment for MS-
DRGs 273 and 274 is clinically appropriate to account for the subset of
patients undergoing left atrial appendage closure specifically. LAAC is
indicated and approved as a treatment option for patients diagnosed
with atrial fibrillation, a heart rhythm disorder that can lead to
cardiovascular blood clot formation, who are also at increased risk for
stroke. LAAC procedures block off the left atrial appendage to prevent
emboli that may form in the left atrial appendage from exiting and
traveling to other sites in the vascular system, thereby preventing the
occurrence of ischemic stroke and systemic thromboembolism. We noted
the ICD-10-CM diagnosis codes used to report atrial fibrillation are
currently assigned to MDC 05 (Diseases and Disorders of the Circulatory
System). We stated our clinical advisors believed that circumstances in
which a patient is admitted for a principal diagnosis outside of MDC 05
and a left atrial appendage closure is performed as the only surgical
procedure in the same admission are infrequent, and if they do occur,
the LAAC procedure would not be a significant contributing factor in
the increased intensity of resources needed for facilities to manage
these complex cases. Our clinical advisors further stated LAAC
procedures generally do not require the resources of an operating room.
LAAC procedures are most often performed percutaneously in settings
such as cardiac catheterization laboratories and take approximately one
hour. We stated when performed with an open approach or percutaneous
endoscopic approach, these procedures share similar factors such as
complexity, and resource utilization with all other LAAC procedures.
Therefore, we proposed to maintain the current designation of ICD-10-
PCS procedure codes 02L70CK, 02L70DK, 02L70ZK, 02L73CK, 02L73DK,
02L73ZK, 02L74CK, 02L74DK, and 02L74ZK as non-O.R. procedures affecting
the MS-DRGs to which they are assigned.
Comment: Commenters supported maintaining the current designation
of procedure codes describing left atrial appendage closure as non-O.R.
procedures affecting the MS-DRGs to which they are assigned. Another
commenter stated although they believe it would be reasonable for these
PCS codes to be designated as O.R. procedures in the event they are
necessitated during a hospitalization with a principal diagnosis
outside of MDC 05, their own data analysis showed when performed, cases
reporting LAAC procedures are being assigned to MS-DRGs 273 and 274 or
into higher-weighted cardiac MS-DRGs corresponding with other cardiac
procedures performed during the same stay.
Response: After consideration of the public comments we received,
we are finalizing our proposal to maintain the current designation of
ICD-10-PCS procedure codes 02L70CK, 02L70DK, 02L70ZK, 02L73CK, 02L73DK,
02L73ZK, 02L74CK, 02L74DK, and 02L74ZK as non-O.R. procedures affecting
the MS-DRGs to which they are assigned, without modification, for FY
2022.
[[Page 44900]]
(7) Arthroscopic Drainage of Joints
One requestor identified six ICD-10-PCS procedure codes that
describe the percutaneous endoscopic drainage of joints that the
requestor stated are currently not recognized as O.R. procedures for
purposes of MS-DRG assignment. The six procedure codes are listed in
the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.103
The requestor stated that these procedures should be designated as
O.R. procedures because procedures describing the arthroscopic drainage
of major joints such as knee, hip, and shoulder are performed in the
operating room under general anesthesia. The requestor stated these
procedures are indicated for conditions such as symptomatic septic/
pyogenic arthritis, which can require inpatient admission for
intravenous antibiotics and arthroscopic drainage to resolve infection.
Therefore, the requestor stated it is reasonable for these arthroscopic
procedures to be designated as O.R. procedures to compensate for
operating room resources.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ are
currently designated as non-O.R. procedures for purposes of MS-DRG
assignment. In the proposed rule, we stated our clinical advisors
reviewed this issue and disagreed that procedures describing the
percutaneous endoscopic drainage of major joints such as knee, hip, and
shoulder are typically performed in the operating room under general
anesthesia. With development of better instrumentation and surgical
techniques, many patients now have arthroscopic procedures performed in
an outpatient setting and return home several hours after the
procedure. Our clinical advisors also stated the percutaneous
endoscopic drainage of joints can be performed using local or regional
anesthesia, and general anesthesia is not always required. We stated
that in cases where the patient is admitted for diagnoses such as
septic/pyogenic arthritis, as identified by the requestor, the
requirement for intravenous antibiotics would be the main reason for
admission because the percutaneous endoscopic drainage procedure could
be done as an outpatient. Therefore, we proposed to maintain the
current non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ,
0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ.
Comment: A commenter supported CMS' proposal to maintain the non-
O.R. designation of procedure codes describing percutaneous endoscopic
drainage of shoulder, knee, and hip joints.
Response: We appreciate the commenters' support.
Comment: A commenter opposed CMS' proposal to maintain the current
non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ,
0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ. This commenter stated that an
O.R. designation should not be determined based on whether or not a
surgery is most often performed as an outpatient or based on the type
anesthesia required during the surgery. This commenter also noted that
some patients who undergo outpatient surgery require inpatient
admission instead of release home. The commenter stated that retention
of non-O.R. procedure status for surgeries most often performed as
outpatient results in providers not being reimbursed for surgical
resources when patients require conversion to inpatient, while those
discharged from outpatient surgery are paid a surgical APC. The
commenter also included a portion of an operative report from its
facility to demonstrate that an arthroscopic drainage procedure was
performed under general anesthesia at their facility.
Response: Our clinical advisors reviewed the commenters' concerns
and continue to support maintaining the current non-O.R. designation
for ICD-10-PCS procedure codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ,
0R9J4ZZ, and 0R9K4ZZ. In reviewing the operative report included in the
comment, our clinical advisors note that using a single isolated case,
with only an operative report provided and without other diagnostic
information on the patient, does not provide a clear picture of the
circumstances of that admission, nor does it inform whether the
procedure requires the resources of an operating room more broadly. For
any procedure, there may be instances where performing this procedure
is best done in the setting of an operative room using general
anesthesia. However, when looking more broadly at the procedure being
described by the ICD-10-PCS codes 0S9C4ZZ, 0S9D4ZZ, 0S994ZZ, 0S9B4ZZ,
0R9J4ZZ, and 0R9K4ZZ, our clinical advisors state in most instances,
the percutaneous endoscopic drainage of joints does not require the
resources of an operative room.
With regard to the comments about the implications for
reimbursement when cases are converted from outpatient to inpatient, we
note that the goals of changing the designation of procedures from non-
O.R. to O.R., or vice versa, are to better clinically represent the
resources involved in caring for these patients and to enhance the
overall accuracy of the system.
Therefore, after consideration of the public comments we received,
for the reasons stated, we are finalizing our proposal to maintain the
current non-O.R. designation of ICD-10-PCS procedure codes 0S9C4ZZ,
0S9D4ZZ, 0S994ZZ, 0S9B4ZZ, 0R9J4ZZ, and 0R9K4ZZ, without modification,
for FY 2022.
(8) Arthroscopic Irrigation of Joints
One requestor identified ICD-10-PCS procedure codes 3E1U48X
(Irrigation of joints using irrigating substance, percutaneous
endoscopic approach, diagnostic) and 3E1U48Z (Irrigation of joints
using irrigating substance,
[[Page 44901]]
percutaneous endoscopic approach) that the requestor stated are
currently not recognized as O.R. procedures for purposes of MS-DRG
assignment. The requestor stated that these procedures should be
designated as O.R. procedures because the arthroscopic irrigation of
joints such as knee, hip, and shoulder is performed in the operating
room under general anesthesia. The requestor states procedure codes
3E1U48X and 3E1U48Z are used to describe surgical joint irrigations in
the absence of more definitive procedures, therefore procedure codes
3E1U48X and 3E1U48Z should be recognized as O.R. procedures for
purposes of MS-DRG assignment.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 3E1U48X and 3E1U48Z are currently designated as non-O.R.
procedures for purposes of MS-DRG assignment. In the proposed rule, we
stated that our clinical advisors reviewed this issue and disagreed
that procedure codes describing the arthroscopic irrigation of joints
should be designated as O.R. procedures. Our clinical advisors noted
the arthroscopic irrigation of joints is rarely performed independently
as a standalone procedure in the inpatient setting to be considered the
principal driver of resource expenditure in those admissions. Instead,
the arthroscopic irrigation of joints is generally performed with other
definitive procedures such as debridement or synovectomy. We noted that
in the operative note sent by the requestor to support the requested
change in O.R. status, the arthroscopic irrigation of the joint was
performed along with a surgical debridement procedure. Therefore, we
proposed to maintain the current non-O.R. designation of ICD-10-PCS
procedure codes 3E1U48X and 3E1U48Z.
Comment: A commenter supported CMS' proposal to maintain the non-
O.R. designation of procedure codes describing arthroscopic irrigation
of joints.
Response: We appreciate the commenters' support.
Comment: Another commenter opposed CMS' proposal to maintain the
non-O.R. designation of ICD-10-PCS procedure codes 3E1U48X and 3E1U48Z.
This commenter acknowledged that arthroscopic irrigations may be
performed with other definitive procedures such as bone debridement and
synovectomy, but stated that some are indeed performed as sole
definitive operating room procedures. This commenter stated there are
no other PCS codes for irrigational debridement of joints; when minor
debridement is performed in conjunction with more significant primary
procedures, minor debridement is considered inherent and not separately
reportable.
Response: We appreciate the commenters' feedback. We are unclear
from the comment why the commenter references the ICD-10-PCS guidelines
related to debridement procedures, as this topic relates to the
arthroscopic irrigation of joints. Our clinical advisors reviewed the
commenters' concerns and continue to note the arthroscopic irrigation
of joints is rarely performed independently as a standalone procedure
in the inpatient setting to be considered the principal driver of
resource expenditure in those admissions.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the current non-O.R. designation of
ICD-10-PCS procedure codes 3E1U48X and 3E1U48Z, without modification,
for FY 2022.
(9) Percutaneous Reposition With Internal Fixation
One requestor identified four ICD-10-PCS procedure codes describing
procedures performed on the sacroiliac and hip joints that involve
percutaneous repositioning with internal fixation that the requestor
stated are not recognized as O.R. procedures for purposes of MS-DRG
assignment but warrant an O.R. designation. The procedure codes are
listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.104
We stated in the proposed rule that our clinical advisors reviewed
the procedures described by these four procedure codes and agreed that
these percutaneous reposition procedures involving internal fixation in
the sacroiliac and hip joint warrant an O.R. designation. They noted
that these procedures are major operations that would require the
resources of an operating room, involve a higher level of technical
complexity and a greater utilization of hospital resources.
Therefore, we proposed to add the two procedure codes describing
percutaneous reposition of the sacroiliac joint with internal fixation
procedures (0SS734Z and 0SS834Z) to the FY 2022 ICD-10 MS-DRGs Version
39 Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index as O.R. procedures, assigned to MS-DRGs
515, 516, and 517 (Other Musculoskeletal System and Connective Tissue
O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in
MDC 08 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue) and to MS-DRGs 987, 988, and 989 (Non-Extensive O.R.
Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without MCC/CC, respectively). We also proposed to add the two
procedure codes describing percutaneous reposition of the hip joint
with internal fixation procedures (0SS934Z and 0SSB34Z) to the FY 2022
ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E--Operating
Room Procedures and Procedure Code/MS- DRG Index as O.R. procedures,
assigned to MS-DRGs 480, 481, and 482 (Hip and Femur Procedures Except
Major Joint with MCC, with CC, and without CC/MCC, respectively) in MDC
08 (Diseases and Disorders of the Musculoskeletal System
[[Page 44902]]
and Connective Tissue) and to MS-DRGs 987, 988, and 989 (Non-Extensive
O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and
without MCC/CC, respectively).
Comment: Commenters supported our proposal to designate procedure
codes 0SS734Z, 0SS834Z, 0SS934Z and 0SSB34Z as O.R. procedures.
Response: After consideration of the public comments we received,
we are finalizing our proposal to change the designation of procedure
codes 0SS734Z, 0SS834Z, 0SS934Z and 0SSB34Z from non-O.R. procedures to
O.R. procedures, without modification, effective October 1, 2021.
(10) Open Insertion and Removal of Spacer Into Shoulder Joint
One requestor identified four ICD-10-PCS procedure codes describing
procedures performed on the shoulder joint that involve the insertion
or removal of a spacer by an open approach that the requestor stated
are not recognized as O.R. procedures for purposes of MS-DRG
assignment. The procedure codes are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.105
According to the requestor, insertion and removal of joint spacers
from the hips and knees are designated with an O.R. procedure status
and although similar procedures performed on the shoulder joint may be
performed less frequently, these procedures warrant an O.R. designation
because they are performed in the operating room under general
anesthesia.
In the proposed rule we stated that during our review, we noted
that the following procedure codes describing procedures performed on
the shoulder joint that involve the insertion or removal of a spacer by
a percutaneous endoscopic approach are also not recognized as O.R.
procedures for purposes of MS-DRG assignment.
[GRAPHIC] [TIFF OMITTED] TR13AU21.106
We stated that our clinical advisors reviewed the procedures
described by these eight procedure codes and agreed that these
procedures involving the insertion or removal of a spacer in the
shoulder joint with an open or percutaneous endoscopic approach warrant
an O.R. designation. They noted that the insertion of a spacer is
typically performed to treat an infection at the site of a previously
placed prosthesis and the removal of a spacer is typically performed
once the infection is healed and the site is ready for a new prosthetic
replacement or to exchange for a new spacer if the infection is not yet
healed.
Therefore, we proposed to add the listed procedure codes describing
the insertion or removal of spacer in the shoulder joint to the FY 2022
ICD-10 MS-DRGs Version 39 Definitions Manual in Appendix E--Operating
Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures,
assigned to MS-DRGs 510, 511, and 512 (Shoulder, Elbow or Forearm
Procedures, Except Major Joint Procedures with MCC, with CC, and
without CC/MCC, respectively) in MDC 08 (Diseases and Disorders of the
Musculoskeletal System and Connective Tissue) and to MS-DRGs 987, 988,
and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC and without MCC/CC, respectively).
Comment: Commenters supported our proposal to designate the listed
procedure codes as O.R. procedures.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of procedure codes
0RHK08Z, 0RHJ08Z, 0RPK08Z, 0RPJ08Z, 0RPJ48Z, 0RPK48Z, 0RHJ48Z, and
0RHK48Z from non-O.R. procedures to O.R. procedures, without
modification, effective October 1, 2021.
(11) Open/Percutaneous Extirpation of Jaw
One requestor identified four ICD-10-PCS procedure codes that
describe the extirpation of matter from the upper or lower jaw that the
requestor stated are currently not recognized as O.R. procedures for
purposes of MS-DRG assignment. The four procedure codes are listed in
the following table.
[[Page 44903]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.107
The requestor stated that the procedure codes that describe the
extirpation of matter from the upper or lower jaw by an open or
percutaneous endoscopic approach should be designated as O.R.
procedures. The requestor stated these procedures would commonly be
performed under general anesthesia and require the resources of an
operating room. The requestor also stated that these ICD-10-PCS codes
were specifically created to describe the surgical evacuation of solid
matter from deep jaw structures therefore, it is important for these
codes to be designated with O.R. procedure status.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ are currently designated as
non-O.R. procedures for purposes of MS-DRG assignment. We stated in the
proposed rule that we agreed with the requestor that these four ICD-10-
PCS procedure codes typically require the resources of an operating
room. Therefore, to the FY 2022 ICD-10 MS-DRG Version 39 Definitions
Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-
DRG Index, we proposed to add codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ
as O.R. procedures assigned to MS-DRGs 143, 144 and 145 (Other Ear,
Nose, Mouth and Throat O.R. procedures, with MCC, with CC, and without
CC/MCC, respectively) in MDC 03 (Diseases and Disorders of the Ear,
Nose, Mouth and Throat).
Comment: Commenters supported our proposal to designate ICD-10-PCS
procedure codes 0WC40ZZ, 0WC44ZZ, 0WC50ZZ, and 0WC54ZZ as O.R.
procedures. A commenter noted that they agreed that these procedures do
typically require the resources of an operating room.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of procedure codes
0WC40ZZ, 0WC44ZZ, 0WC50ZZ, 0WC54ZZ from non-O.R. procedures to O.R.
procedures, without modification, effective October 1, 2021.
(12) Open Extirpation of Subcutaneous Tissue and Fascia
One requestor identified 22 ICD-10-PCS procedure codes that
describe the open extirpation of matter from the subcutaneous tissue
and fascia that the requestor stated are currently not recognized as
O.R. procedures for purposes of MS-DRG assignment. The 22 procedure
codes are listed in the following table.
BILLING CODE 4120-01-P
[[Page 44904]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.108
BILLING CODE 4120-01-C
The requestor stated that procedure codes that describe the open
extirpation of matter from the subcutaneous tissue and fascia should be
designated as O.R. procedures because these procedures are performed
through open incisions with direct visualization of subcutaneous tissue
and fascia in the operating room under general anesthesia. The
requestor noted procedure codes that describe the open drainage of
subcutaneous tissue and fascia and use comparable resources are
currently designated as O.R. procedures. The requestor noted that root
operation ``Drainage'' is assigned when fluid is drained; and root
operation of ``Extirpation'' is assigned when any of the substance
evacuated is solid. The requestor stated whether the evacuated
substance is fluid, gelatinous, or solid, a procedure involving an open
incision with direct visualization of subcutaneous tissue and fascia
for evacuation of substances should be classified as an O.R. procedure.
Therefore, the requestor stated that these procedures should also be
recognized as O.R. procedures for purposes of MS-DRG assignment.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, the 22 ICD-
10-PCS procedure codes listed in the table are currently designated as
non-O.R. procedures for purposes of MS-DRG assignment. We stated in the
proposed rule that while we disagreed that drainage procedures are
comparable to extirpation procedures, we agreed with the requestor that
these 22 ICD-10-PCS procedure codes typically require the resources of
an operating room. We noted that our clinical advisors stated that
drainage is the process of taking out, or letting out, fluids and/or
gases from a body part and is typically performed for indications such
as abscess, infection, and other systemic conditions. In contrast,
extirpation procedures are performed for a wider range of indications
because the solid matter removed may be an abnormal byproduct of a
biological function or a retained foreign body. Therefore, to the FY
2022 ICD-10 MS-DRG Version 39 Definitions Manual in Appendix E--
Operating Room Procedures and Procedure Code/MS-DRG Index, we proposed
to add the 22 ICD-10-PCS listed previously as O.R. procedures assigned
to MS-DRGs 579, 580 and 581 (Other Skin, Subcutaneous Tissue and Breast
Procedures, with MCC, with CC, and without CC/MCC, respectively) in MDC
09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast)
and MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with
MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries,
Poisonings and Toxic Effects of Drugs).
Comment: Commenters supported our proposal to designate 22 ICD-10-
PCS procedure codes that describe the open extirpation of matter from
the subcutaneous tissue and fascia as O.R. procedures. A commenter
noted that they agreed that open incision with direct visualization of
subcutaneous tissue and fascia for the evacuation of a substance
typically requires the resources of an operating room.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to change the designation of the 22 procedure
codes
[[Page 44905]]
listed in the preceding table from non-O.R. procedures to O.R.
procedures, without modification, effective October 1, 2021.
(13) Open Revision and Removal of Devices From Subcutaneous Tissue and
Fascia
One requestor identified six ICD-10-PCS procedure codes describing
open revision and removal of neurostimulator generators, monitoring
devices, and totally implantable vascular access devices (TIVADs)
procedures that are not currently designated as O.R. procedures for
purposes of MS-DRG assignment. The six procedure codes are listed in
the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.109
The requestor stated that although removal of these devices is
often performed in outpatient surgery, device complications can require
removal or revision during inpatient hospitalizations. The requestor
indicated it is reasonable for these open procedures to be designated
as O.R. procedures to compensate for operating room resources during
such inpatient stays.
In the proposed rule we stated that our clinical advisors reviewed
this request and did not agree that these procedures warrant an O.R.
designation. They noted that these procedures are generally performed
in the outpatient setting and when performed during a hospitalization,
it is typically in conjunction with another O.R. procedure. Therefore,
we proposed to maintain the current non-O.R. designation for procedure
codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ, 0JWT0WZ, and 0JWT03Z for FY
2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ,
0JWT0WZ, and 0JWT03Z.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure codes 0JPT0MZ, 0JPT02Z, 0JPT0WZ, 0JWT0MZ, 0JWT0WZ, and
0JWT03Z, effective October 1, 2021.
(14) Open Insertion of Feeding Device
One requestor identified ICD-10-PCS procedure code 0DHA0UZ
(Insertion of feeding device into jejunum, open approach) that the
requestor stated is currently not recognized as an O.R. procedure for
purposes of MS-DRG assignment. The requestor stated the open insertion
of a feeding device into the jejunum should be designated as an O.R.
procedure because this procedure is performed in the operating room
under general anesthesia. The requestor noted comparable procedure code
0DH60UZ (Insertion of feeding device into stomach, open approach) is
currently designated as an O.R. procedure. Therefore, the requestor
stated that procedure code 0DHA0UZ should also be recognized as an O.R.
procedure for purposes of MS-DRG assignment.
We stated in the proposed rule that our analysis of this issue
confirmed that in the ICD-10 MS-DRG Version 38.1 Definitions Manual,
for purposes of MS-DRG assignment, 0DHA0UZ is recognized as a non-O.R.
procedure and 0DH60UZ is currently recognized as an O.R. procedure. We
stated that in reviewing this request, we also identified the following
four related codes:
[GRAPHIC] [TIFF OMITTED] TR13AU21.110
[[Page 44906]]
In the ICD-10 MS-DRGs Version 38.1, these four ICD-10-PCS codes are
currently recognized as non-O.R. procedure for purposes of MS-DRG
assignment. In the proposal rule, we stated that while we agreed with
the requestor that procedures describing the open insertion of a
feeding device into the jejunum are comparable to procedures describing
the open insertion of a feeding device into the stomach, we did not
agree that these procedures should be designated as O.R. procedures.
Our clinical advisors stated the procedures that describe the open
insertion of a feeding device into the jejunum or the stomach should
instead have the same designation as the related ICD-10-PCS procedure
codes that describe the open insertion of a feeding device into the
esophagus, small intestine, duodenum and ileum that are currently
designated as non-O.R. procedures.
We noted with advancements in procedural techniques, feeding
devices are most commonly placed using a percutaneous endoscopic
approach. Our clinical advisors further stated feeding devices are
usually not placed using an open surgical approach; this approach is
generally only used if the patient requires another surgical procedure
at the same time. When placed at the same time as another surgical
procedure, our clinical advisors stated the surgical procedure, as the
main determinant of resource use for those cases, should drive the MS-
DRG assignment, not the procedure that describes the open insertion of
a feeding device. For these reasons, our clinical advisors stated
procedures that describe the open insertion of a feeding device in the
gastrointestinal system should all have the same non-O.R. designation
in the ICD-10 MS-DRGs Version 39 for coherence.
Therefore, we proposed to maintain the current non-O.R. designation
of ICD-10-PCS procedure code 0DHA0UZ. We also proposed to remove ICD-
10-PCS procedure code 0DH60UZ from the FY 2022 ICD-10 MS-DRG Version 39
Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index as an O.R. procedure. We stated in the
proposed rule that, under this proposal, this procedure would no longer
impact MS-DRG assignment.
Comment: A commenter supported CMS' proposal and stated they agreed
that neither the procedure code describing open insertion of feeding
device into stomach nor the procedure code describing open insertion of
feeding device into jejunum should be designated as an O.R. procedure.
Response: We appreciate the commenters' support.
Comment: Other commenters opposed CMS' proposal. A commenter stated
that ICD-10-PCS procedure codes that describe the open insertion of a
feeding device should be designated as O.R. procedures because they
require operating room resources with general anesthesia, and involve
incision through the abdominal wall and into the peritoneal cavity with
direct visualization. The commenter noted that these procedures may be
performed as standalone procedures in patients who are unable to have
feeding tubes placed by percutaneous or percutaneous endoscopic
approaches because of anatomy, prior surgeries, and adhesions. Another
commenter stated that open feeding tube insertions are associated with
higher resource use, are prone to more complications, have higher
mortality rates, and can have extended recovery times and these
procedures should have an OR designation to accurately reflect the
resource use for the patient.
Response: We appreciate the commenters' feedback and concern. In
response to the comment that these procedures may be performed as
standalone procedures in patients who are unable to have feeding tubes
placed by percutaneous or percutaneous endoscopic approaches, our
clinical advisors note there may be instances when performing any
procedure is best done in the setting of an operative room using
general anesthesia. However, when looking more broadly at the
procedures being described, and the manner in which these procedures
are most often performed and their associated resource use our clinical
advisors believe that the open insertion of a feeding device in the
gastrointestinal system do not warrant an O.R. designation. They noted
that these procedures, when performed during a hospitalization, are
typically in conjunction with another O.R. procedure and maintain that
procedures that describe the open insertion of a feeding device into
the esophagus, stomach, small intestine, duodenum, jejunum and ileum
are all clinically aligned. Accordingly, our clinical advisors state
procedures that describe the open insertion of a feeding device in the
gastrointestinal system should all have the same non-O.R. designation
in the ICD-10 MS-DRGs Version 39 for coherence.
After consideration of the public comments we received, for the
reasons stated, we are finalizing our proposal to maintain the current
non-O.R. designation of ICD-10-PCS procedure code 0DHA0UZ for FY 2022,
without modification. We are also finalizing our proposal to change the
designation of ICD-10-PCS procedure code 0DH60UZ from O.R. procedure to
non-O.R. procedure, without modification, effective October 1, 2021.
(15) Laparoscopic Insertion of Feeding Tube
One requestor identified ICD-10-PCS procedure codes 0DH64UZ
(Insertion of feeding device into stomach, percutaneous endoscopic
approach) and 0DHA4UZ (Insertion of feeding device into jejunum,
percutaneous endoscopic approach) that the requestor stated are
currently not recognized as O.R. procedures for purposes of MS-DRG
assignment. The requestor stated the procedures describing the
percutaneous endoscopic insertion of a feeding device into the stomach
or the jejunum should be designated as O.R. procedures because these
procedures are performed in the operating room under general
anesthesia. The requestor stated all laparoscopic procedures,
regardless if they are diagnostic or therapeutic, should be classified
as O.R. procedures to compensate for operating room resources.
In the proposed rule, we stated our analysis of this issue
confirmed that in the ICD-10 MS-DRG Version 38.1 Definitions Manual,
0DH64UZ and 0DHA4UZ are currently designated as non-O.R. procedures for
purposes of MS-DRG assignment. We stated in reviewing this request, we
also identified the following four related codes:
[[Page 44907]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.111
In the ICD-10 MS-DRGs Version 38.1, these four ICD-10-PCS codes are
currently recognized as non-O.R. procedures for purposes of MS-DRG
assignment. We stated in the proposed rule that our clinical advisors
reviewed this request and did not agree that unilaterally all
laparoscopic procedures should be designated as O.R. procedures. We
stated that while the procedural approach is an important consideration
in the designation of a procedure, there are other clinical factors
such as the site of procedure, the procedure complexity, and resource
utilization that should also be considered. In this regard, our
clinical advisors indicated that codes 0DH64UZ and 0DHA4UZ describing
the percutaneous endoscopic insertion of a feeding device into the
stomach or the jejunum, do not require the resources of an operating
room, are not surgical in nature, and are generally performed in the
outpatient setting. The percutaneous endoscopic insertion of a feeding
device also does not require general anesthesia. As opposed to being
rendered unconscious, patients can receive a local anesthetic (usually
a lidocaine spray), an intravenous (IV) pain reliever, and a mild
sedative if needed. Patients receiving these devices usually return
home the same day after placement, unless they are in the hospital for
treatment of another condition.
Our clinical advisors stated the percutaneous endoscopic insertion
of a feeding device into the stomach or the jejunum is comparable to
the related ICD-10-PCS procedure codes that describe the insertion of
feeding devices of other gastrointestinal system body parts that are
currently designated as non-O.R. procedures. We stated our clinical
advisors believed all procedures that describe the percutaneous
endoscopic insertion of a feeding device in the gastrointestinal system
should continue to have the same non-O.R. designation in the ICD-10 MS-
DRGs Version 39 for coherence. Therefore, for the reasons discussed, we
proposed to maintain the current non-O.R. designation of ICD-10-PCS
procedure codes 0DH64UZ and 0DHA4UZ.
Comment: A commenter supported CMS' proposal and stated they agreed
that all procedures that describe the percutaneous endoscopic insertion
of a feeding device in the gastrointestinal system should continue to
have the same non-O.R. designation.
Response: We appreciate the commenters' support.
Comment: Other commenters opposed CMS' proposal. A commenter stated
that ICD-10-PCS procedure codes that describe the percutaneous
endoscopic insertion of a feeding device should be designated as O.R.
procedures. This commenter stated that laparoscopic procedures, whether
performed inpatient or outpatient, are indeed surgical procedures which
require general anesthesia, have increased procedural risks, and
require high skill and specialized equipment. The commenter stated that
when necessitated during inpatient stays, even if infrequent, providers
should be compensated for operating room resources. Another commenter
stated that these procedures require the use of an operating room and
should be classified in a manner that reflects the resources expended
by the facility in the care and treatment of the patient.
Response: We appreciate the commenters' feedback and concern. Our
clinical advisors reviewed the commenters' concerns and continue to
state the percutaneous endoscopic insertion of a feeding device into
the stomach or the jejunum, does not require the resources of an
operating room or general anesthesia. Our advisors state these
procedures are not surgical in nature, and because treatment practices
have shifted are generally performed in the outpatient setting. When
performed in the inpatient setting, patients are generally in the
hospital for the treatment of another condition as opposed to the need
for operating room resources in an inpatient setting. Accordingly, when
considering clinical factors such as the site of procedure, the
procedure complexity, and resource utilization, when performed in the
inpatient setting, they believe the non-O.R. designation of procedure
codes describing the percutaneous endoscopic insertion of a feeding
device is supported.
Therefore, after consideration of the public comments we received,
we are finalizing our proposal to maintain the current non-O.R.
designation of ICD-10-PCS procedure codes 0DH64UZ and 0DHA4UZ, without
modification, for FY 2022.
(16) Endoscopic Fragmentation and Extirpation of Matter of Urinary
Tract
As discussed in the proposed rule, one requestor sent two separate
but related requests related to endoscopic procedures performed in the
urinary system. With regard to the first request, the requestor
identified six ICD-10-PCS procedure codes that describe endoscopic
fragmentation in the kidney pelvis, ureter, bladder, and bladder neck
that the requestor stated are currently not recognized as O.R.
procedures for purposes of MS-DRG assignment. The six procedure codes
are listed in the following table.
[[Page 44908]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.112
The requestor stated that these procedures should be designated as
O.R. procedures because procedures such as the endoscopic fragmentation
of calculi within the kidney pelvis, ureter, bladder, and bladder neck
are performed in the operating room under anesthesia. The requestor
stated that procedures that describe the endoscopic extirpation of
calculi from the kidney pelvis or ureter use comparable resources, and
are designated as O.R. procedures. Therefore, the requestor asserted it
is reasonable that procedure codes that describe endoscopic
fragmentation in kidney pelvis, ureter, bladder, and bladder neck also
be designated as O.R. procedures.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and 0TFC8ZZ are
designated as non-O.R. procedures for purposes of MS-DRG assignment. We
stated in the proposed rule that our clinical advisors reviewed this
issue and disagreed that procedures describing the endoscopic
fragmentation of calculi within the kidney pelvis, ureter, bladder, and
bladder neck are typically performed in the operating room. We stated
that in endoscopic fragmentation procedures in the kidney pelvis,
ureter, bladder, and bladder neck, the scope is passed through a
natural or artificial orifice. The procedure is not surgical in nature
and involves no skin incisions. With advancements in scope size,
deflection capabilities, video imaging, and instrumentation, many
patients now have these endoscopic urinary procedures performed in an
outpatient setting, instead of the inpatient setting. Therefore, we
proposed to maintain the current non-O.R. designation of ICD-10-PCS
procedure codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and
0TFC8ZZ.
In the second request, the requestor also identified two ICD-10-PCS
procedure codes that describe endoscopic extirpation of matter from the
bladder and bladder neck that the requestor stated are also currently
not recognized as O.R. procedures for purposes of MS-DRG assignment.
The two procedure codes are listed in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.113
The requestor stated that these procedures also should be
designated as O.R. procedures because they performed in the operating
room under anesthesia.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0TCB8ZZ and 0TCC8ZZ are currently designated as a non-O.R.
procedure for purposes of MS-DRG assignment. As indicated in the
proposed rule, in response to the second request to designate 0TCB8ZZ
and 0TCC8ZZ as O.R. procedures and in response to the requestor's
suggestion that resource consumption is comparable in procedures
describing endoscopic fragmentation in the urinary system and
procedures describing the endoscopic extirpation in the urinary system,
we examined the following procedure codes:
[[Page 44909]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.114
BILLING CODE 4120-01-C
In the ICD-10 MS-DRG Version 38.1 Definitions Manual, these six
ICD-10-PCS procedure codes are currently recognized as O.R. procedures
for purposes of MS-DRG assignment. We stated in the proposed rule that
our clinical advisors indicated that these procedures are not surgical
in nature. In endoscopic extirpation procedures, the scope enters the
urinary tract through the urethra, which is the tube that carries urine
out of the body, or through an artificial orifice. Our clinical
advisors further stated the urinary system is one conduit so the scope
continues to pass through the urethra, bladder, and into the ureter or
kidney (if necessary) to access the stone. For that reason, we stated
the procedures describing endoscopic extirpation from a urinary body
part should all have the same non-O.R. designation in the ICD-10 MS-
DRGs Version 39 for coherence.
Therefore, we proposed to maintain the current non-O.R. designation
of ICD-10-PCS procedure codes 0TCB8ZZ and 0TCC8ZZ. We also proposed to
remove ICD-10-PCS procedure codes 0TC08ZZ, 0TC18ZZ, 0TC38ZZ, 0TC48ZZ,
0TC68ZZ, and 0TC78ZZ from the FY 2022 ICD-10 MS-DRG Version 39
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.
Comment: Commenters supported CMS' proposal. A commenter stated
they supported maintaining the non-O.R. designation of procedure codes
describing fragmentation in the kidney pelvis, ureter, bladder, and
bladder neck via natural or artificial opening endoscopic approach.
This commenter supported maintaining the non-O.R. designation of the
procedure codes describing endoscopic extirpation of matter from the
bladder and bladder neck and removing six procedure codes describing
endoscopic extirpation of matter from the kidney, kidney pelvis, and
ureter from the O.R. procedure list. This commenter stated they agreed
that procedures describing endoscopic extirpation from a urinary body
part should all have the same non-O.R. designation.
Response: We appreciate the commenters' support.
Comment: Other commenters opposed CMS' proposal. These commenters
stated endoscopic kidney and ureter procedures traverse narrow tubular
structures and require the operating room with specialized equipment,
positioning, image-guidance, and general anesthesia to obtain the
surgical precision and satisfactory pain control that cannot be
provided at the bedside. A commenter stated that although providers
attempt to manage conditions that might warrant the performance of
these procedures in the outpatient setting, some patients fail
outpatient preventative measures and require both medical and surgical
interventions in an inpatient setting.
Response: We appreciate the commenters' feedback and concern.
Our clinical advisors reviewed the commenters' concerns and state
with development of better instrumentation and surgical techniques,
many patients now have endoscopic fragmentation procedures and
endoscopic extirpation procedures performed in an outpatient setting.
In response to the comment that these procedures cannot be provided at
the bedside, we wish to clarify the designation of a procedure as a
non-O.R. procedure is not limited to procedures that can be performed
at the patient's bedside. While the site in which the procedure is
performed and the procedural approach are important considerations in
the designation of a procedure, there are other clinical factors such
as procedure complexity, resource utilization, and need for anesthesia
administration that should also be considered. In this regard, our
clinical advisors state endoscopic fragmentation procedures and
endoscopic extirpation procedures are not surgical in nature, because
treatment practices have shifted and they do not generally require the
resources of an operating room or general anesthesia in an inpatient
setting.
After consideration of the public comments we received, for the
reasons stated, we are, without modification, (1) finalizing our
proposal to maintain the current non-O.R. designation of ICD-10-PCS
procedure codes 0TF38ZZ, 0TF48ZZ, 0TF68ZZ, 0TF78ZZ, 0TFB8ZZ, and
0TFC8ZZ for FY 2022 and (2) finalizing our proposal to maintain the
current non-O.R. designation of ICD-10-PCS procedure codes 0TCB8ZZ and
0TCC8ZZ for FY 2022. We are also finalizing our proposal to change the
designation of ICD-10-PCS procedure codes 0TC08ZZ, 0TC18ZZ, 0TC38ZZ,
0TC48ZZ, 0TC68ZZ, and 0TC78ZZ from O.R. procedures to non-O.R.
procedures, without modification, effective October 1, 2021.
(17) Endoscopic Removal of Ureteral Stent
One requestor identified ICD-10-PCS procedure code 0TP98DZ (Removal
of intraluminal device from ureter, via natural or artificial opening
endoscopic) that the requestor stated is not recognized as an O.R.
procedure for
[[Page 44910]]
purposes of MS-DRG assignment. The requestor suggested that this
procedure warrants an O.R. designation because the procedure code
describes a procedure that is performed in the operating room with
anesthesia. The requestor stated that while most ureteral stents can be
removed by string, some complicated cases require endoscopic removal
using forceps in the operating room under general anesthesia and may be
performed during inpatient stays precipitated by severe urinary tract
infection, sepsis, or urinary obstructions. The requestor asserted that
procedure codes for insertion of ureteral stent(s) via a ureteroscopic,
endoscopic approach have been justifiably designated as O.R. procedures
because they are performed in the O.R. under anesthesia. Therefore, the
requestor suggested it is reasonable for endoscopic removal of the
stent to be designated with OR procedure status to compensate for
operating room resources and anesthesia.
We stated in the proposed rule that our clinical advisors reviewed
this procedure and did not agree that it warrants an O.R. designation.
They noted that this procedure is generally not the focus of the
admission when it is performed and does not reflect the technical
complexity or resource intensity in comparison to other procedures that
are designated as O.R. procedures. Therefore, we proposed to maintain
the current non-O.R. designation for procedure code 0TP98DZ for FY
2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure code 0TP98DZ.
Response: We appreciate the commenters' support.
Comment: A commenter did not support our proposal based on the
rationale provided. According to the commenter, patients may be
admitted with sepsis and/or urinary tract infections associated with
ureteral stents and require joint focuses of treatment consisting of
removal of a stent(s) and intravenous antibiotics. The commenter stated
that patients who require stent removal during hospitalization are
those who have chronic diagnoses, altered anatomy, or encrusted stents
that prevent removal from being performed elsewhere.
Response: Our clinical advisors maintain that generally, the
procedure to remove a ureteral stent endoscopically is not the focus or
driver of resources for an inpatient admission. With respect to
patients who may be admitted with or acquire an infection during the
hospitalization, it is understood that these patients typically consume
additional resources, however, our clinical advisors do not believe
that the endoscopic removal of a ureteral stent is a contributing
factor. For those patients who have a chronic diagnosis, altered
anatomy or an encrusted stent requiring stent removal specifically in
an inpatient setting, we believe additional analysis may be
advantageous to determine if a subset of the claims reporting these
conditions warrant any modifications to the GROUPER logic. However, the
commenter did not provide a list of the specific ICD-10-CM diagnoses
describing these conditions for CMS to consider in its analysis for FY
2022. We intend to work with the commenter and examine this issue for
consideration in future rulemaking.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure code 0TP98DZ, effective October 1, 2021.
(18) Endoscopic/Transorifice Inspection of Ureter
One requestor identified ICD-10-PCS procedure code 0TJ98ZZ
(Inspection of ureter, via natural or artificial opening endoscopic),
that describes procedures involving endoscopic viewing of the ureter
that the requestor stated is currently not recognized as an O.R.
procedure for purposes of MS-DRG assignment.
The requestor stated this ureteroscopy procedure is performed in
the operating room with anesthesia. According to the requestor, the
inspection of ureter procedure code is assigned when obstruction is
found during the ureteroscopy and procedures to break up
(fragmentation), remove calculi (extirpation), or place a ureteral
stent cannot be performed.
In the proposed rule we stated that our clinical advisors reviewed
this procedure and disagree that it warrants an O.R. designation. They
noted that this procedure typically does not require hospitalization
and is generally not the reason for the patient's admission since it is
often performed in connection with another O.R. procedure when it is
performed. Therefore, we proposed to maintain the current non-O.R.
designation for procedure code 0TJ98ZZ for FY 2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure code 0TJ98ZZ.
Response: We appreciate the commenters' support.
Comment: A commenter did not support our proposal to maintain the
non-O.R. designation for procedure code 0TJ98ZZ based on the rationale
that this procedure typically does not require hospitalization and is
generally not the reason for the patient's admission since it is often
performed in connection with another O.R. procedure. According to the
commenter, whether or not a procedure is most often performed as an
outpatient should not be the determining factor for designating O.R.
status.
Response: Our clinical advisors maintain that typically, this
procedure is not the basis for an inpatient admission and as noted
earlier in this section, when we state a current non-O.R. procedure is
typically performed in conjunction with another O.R. procedure, we are
indicating that there is generally another O.R. procedure reported on
the claim that is primarily responsible for impacting the utilization
of resources for that admission. We wish to clarify that statements
indicating a procedure is most often performed as an outpatient or in
an outpatient setting are not the single determining factor in our
proposals to maintain or modify the designation of a procedure code
from O.R. to non-O.R. or vice versa, rather, the proposals set forth in
rulemaking are based on a combination of clinical judgment and data,
when applicable.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure code 0TJ98ZZ, without modification, effective October 1,
2021.
(19) Endoscopic Biopsy of Ureter and Kidney
One requestor identified six ICD-10-PCS procedure codes that
describe endoscopic biopsy procedures performed on the ureter and
kidney structures that the requestor stated are currently not
recognized as O.R. procedures for purposes of MS-DRG assignment.
According to the requestor, regardless of whether it is a diagnostic or
therapeutic procedure, these procedures should be designated as O.R.
procedures because the procedures utilize operating room, anesthesia
and recovery room resources. The requestor stated that after the
surgeon places the scope into the bladder that ureteral orifices must
be identified and instruments carefully navigated to obtain excisional
biopsies from within the ureter or further within the kidney. The six
procedure codes are listed in the following table.
[[Page 44911]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.115
In the proposed rule we noted that under the ICD-10-PCS procedure
classification, biopsy procedures are identified by the 7th digit
qualifier value ``diagnostic'' in the code description.
We also noted that our clinical advisors do not agree that
endoscopic biopsy procedures performed on the ureter and kidney
structures warrant an O.R. designation. They stated these procedures
are typically not the focus for the patient's admission and are
frequently performed in conjunction with another O.R. procedure.
Therefore, we proposed to maintain the current non-O.R. designation for
procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX, 0TB68ZX, and
0TB78ZX for FY 2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX,
0TB68ZX, 0TB78ZX.
Response: We appreciate the commenters' support.
Comment: A commenter did not support our proposal. According to the
commenter, urinary obstructions and associated urinary tract infections
with or without sepsis can necessitate inpatient admissions, and
abnormalities on imaging can raise suspicion for malignancy requiring
biopsy for diagnosis and treatment. The commenter stated that when
these procedures are standalone procedures performed during inpatient
hospitalizations, they warrant O.R. procedure status for the same
reasons as the procedures describing endoscopic fragmentation or
extirpation of the urinary tract described previously.
Response: We appreciate the commenter's feedback. Similar to the
reasons discussed for procedures describing the endoscopic
fragmentation or extirpation of the urinary tract, our clinical
advisors maintained that with the development of better instrumentation
and surgical techniques, many patients now have endoscopic procedures
involving urinary tract structures performed in an outpatient setting.
In addition, they stated that these procedures are not surgical in
nature.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure codes 0TB08ZX, 0TB18ZX, 0TB38ZX, 0TB48ZX, 0TB68ZX, and
0TB78ZX, without modification, effective October 1, 2021.
(20) Transorifice Insertion of Ureteral Stent
One requestor identified three ICD-10-PCS procedure codes that the
requestor stated are not recognized as O.R. procedures for purposes of
MS-DRG assignment. The requestor suggested that the procedure described
by these procedure codes warrants an O.R. designation because it
involves the insertion of an indwelling ureteral stent through a
nephrostomy with image-guidance in the interventional radiology suite.
According to the requestor, image-guided technology now allows
placement of ureteral stents through nephrostomy tracts. The requestor
stated this procedure may or may not be performed in the operating
room, however, it involves placement of device(s), interventional
radiology resources, sedation, and continuous monitoring of vital
signs. The three procedure codes are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.116
In the proposed rule we stated that our clinical advisors reviewed
this request and do not agree that this procedure warrants an O.R.
designation. They noted that this procedure is not surgical in nature,
does not require the resources of an operating room and is not a
technically complex procedure requiring increased hospital resources.
Therefore, we proposed to maintain the current non-O.R. designation for
procedure codes 0T767DZ, 0T777DZ, and 0T787DZ for FY 2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure codes 0T767DZ, 0T777DZ, and 0T787DZ.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure codes 0T767DZ, 0T777DZ, and 0T787DZ, without modification,
effective October 1, 2021.
[[Page 44912]]
(21) Percutaneous Insertion of Ureteral Stent
One requestor identified three ICD-10-PCS procedure codes that the
requestor stated are not recognized as O.R. procedures for purposes of
MS-DRG assignment. The requestor suggested that the procedure described
by these procedure codes warrants an O.R. designation because the
procedure is typically performed following a failed ureteral stent
insertion procedure in the operating room, which can only be reported
as a cystoscopy or ureteroscopy, neither of which are designated as
O.R. procedures. According to the requestor, percutaneous ureteral
stenting through the abdominal wall is subsequently performed in an
interventional radiology suite with image-guidance, sedation, and
continuous vital sign monitoring. The three procedure codes are shown
in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.117
In the proposed rule we stated that our clinical advisors reviewed
this request and do not agree that the procedure warrants an O.R.
designation. They noted that this procedure is not surgical in nature,
does not involve technical complexity or require the resources of an
operating room. Therefore, we proposed to maintain the current non-O.R.
designation for procedure codes 0T763DZ, 0T773DZ, and 0T783DZ for FY
2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure codes 0T763DZ, 0T773DZ, and 0T783DZ.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure codes 0T763DZ, 0T773DZ, and 0T783DZ, without modification,
effective October 1, 2021.
(22) Endoscopic Dilation of Urethra
One requestor identified ICD-10-PCS procedure code 0T7D8DZ
(Dilation of urethra with intraluminal device, via natural or
artificial opening endoscopic) that the requestor stated is not
recognized as an O.R. procedure for purposes of MS-DRG assignment. The
requestor suggested that this procedure warrants an O.R. designation
because the procedure code describes a procedure that utilizes the
UroLift[supreg] System, a minimally invasive technology to treat lower
urinary tract symptoms (LUTS) due to benign prostatic hyperplasia
(BPH). According to the requestor, the technology is placed
endoscopically within the prostatic urethra in the operating room under
anesthesia.
In the proposed rule we stated that our clinical advisors reviewed
this request and do not agree that the procedure warrants an O.R.
designation. They noted that this procedure is performed without
incision, resection or thermal injury to the prostate and is primarily
performed in the outpatient setting. It is generally not the cause for
the patient's admission and utilization of resources when it is
performed. Therefore, we proposed to maintain the current non-O.R.
designation for procedure code 0T7D8DZ for FY 2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure code 0T7D8DZ.
Response: We appreciate the commenters' support.
Comment: A commenter did not support our proposal to maintain the
non-O.R. designation for procedure code 0T7D8DZ based on the rationale
that this procedure is primarily performed in the outpatient setting
and is generally not the cause for the patient's admission and
utilization of resources. According to the commenter, whether or not a
procedure is most often performed as an outpatient should not be the
determining factor in O.R status. The commenter asserted that in its
review of procedures currently assigned to MS-DRGs 671 and 672, the
procedure described by procedure code 0T7D8DZ utilizes comparable O.R.
resources.
Response: We thank the commenter for their feedback. Our clinical
advisors maintain that typically, this procedure is not the basis for
an inpatient admission and if performed, it does not increase the
consumption of hospital resources to warrant O.R. status. With regard
to the list of procedures currently assigned to MS-DRGs 671 and 672 and
the assertion that code 0T7D8DZ utilizes comparable O.R. resources, as
stated in previous rulemaking, as well as, the preamble of the FY 2022
IPPS/LTCH PPS proposed rule and this final rule, we are in the process
of reviewing prior stakeholder feedback on criteria and factors to
consider on what constitutes a procedure being designated as O.R versus
non-O.R. as a component of our broader comprehensive procedure code
review. We are allowing additional time for the claims data to
stabilize prior to selecting the timeframe to analyze for this review
considering the PHE, and to develop our proposed methodology.
Therefore, we will be examining all the procedures currently assigned
to MS-DRGs 671 and 672 in connection with that process and discuss if
modifications to the designation of code 0T7D8DZ are warranted.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure code 0T7D8DZ, without modification, effective October 1,
2021.
(23) Open Repair of Scrotum
One requestor identified ICD-10-PCS procedure code 0VQ50ZZ (Repair
scrotum, open approach) that the requestor stated is not recognized as
an O.R. procedure for purposes of MS-DRG assignment. The requestor
suggested that this procedure warrants an O.R. designation because it
involves repair of scrotal tissue deeper than the skin with direct
visualization and utilizes general anesthesia in the operating room.
We noted in the proposed rule that our clinical advisors do not
agree that open repair of the scrotum merits an O.R. designation. They
stated this procedure would not typically require the resources of an
operating room and would generally not be a contributing factor
impacting hospital resource use during the patient's admission when it
is performed. Therefore, we proposed to maintain the current non-O.R.
designation for procedure code 0VQ50ZZ for FY 2022.
[[Page 44913]]
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure code 0VQ50ZZ.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure code 0VQ50ZZ, without modification, effective October 1,
2021.
(24) Open Drainage of Vestibular Gland
One requestor identified ICD-10-PCS procedure code 0U9L0ZZ
(Drainage of vestibular gland, open approach) that describes a
procedure commonly performed for the treatment of an abscess that the
requestor stated is performed in the operating room under general
anesthesia and therefore warrants an O.R designation. The requestor
stated this procedure is comparable to the procedure described by
procedure code 0UBL0ZZ (Excision of vestibular gland, open approach)
which is currently designated as an O.R. procedure.
We stated in the proposed rule that during our review of procedure
code 0U9L0ZZ, we also examined procedure codes 0U9L0ZX (Drainage of
vestibular gland, open approach, diagnostic), 0U9LXZX (Drainage of
vestibular gland, external approach, diagnostic), and 0UBL0ZZ.
Separately, we reviewed procedure code 0T9D0ZZ (Drainage of urethra,
open approach) because it represents the male equivalent of the female
procedure described by procedure code 0U9L0ZZ.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
codes 0T9D0ZZ, 0U9L0ZX, 0U9LXZX, and 0UBL0ZZ are currently designated
as O.R. procedures, however, procedure code 0U9L0ZZ is not recognized
as an O.R. procedure for purposes of MS-DRG assignment. In the proposed
rule we stated that we examined procedure code 0U9L0ZZ and do not
believe this drainage procedure warrants an O.R. designation, nor do we
agree that this drainage of the vestibular gland procedure (0U9L0ZZ) is
comparable to an excision of the vestibular gland procedure (0UBL0ZZ),
which is currently designated as an O.R. procedure.
In the ICD-10-PCS classification, drainage is defined as taking or
letting out fluids and/or gases from a body part and excision is
defined as cutting out or off, without replacement, a portion of a body
part. Therefore, the classification specifically defines and
distinguishes the underlying objectives of each distinct procedure. In
the proposed rule we noted that our clinical advisors stated a drainage
procedure is frequently performed in the outpatient setting and is
generally not the cause for the patient's admission and utilization of
resources when it is performed. Drainage of the vestibular gland, also
known as Bartholin's glands, is typically indicated when a cyst or
abscess is present and may or may not involve the placement of a Word
catheter. Conversely, excision of the vestibular gland is not
considered an office-based procedure and is generally reserved for a
vulvar mass or for patients who have not responded to more conservative
attempts to create a drainage tract. In addition, after review, our
clinical advisors recommended changing the O.R. status for procedure
codes 0U9L0ZX and 0U9LXZX from O.R. to non-O.R. for similar reasons.
These procedures do not typically require the resources of an operating
room.
Therefore, we proposed to remove procedure codes 0U9L0ZX and
0U9LXZX from the FY 2022 ICD-10 MS-DRGs Version 39 Definitions Manual
in Appendix E- Operating Room Procedures and Procedure Code/MS-DRG
Index as O.R. procedures and noted that under this proposal, these
procedure codes would no longer impact MS-DRG assignment. We refer the
reader to section II.D.10 of the preamble of the proposed rule and this
final rule for further discussion related to procedure code 0T9D0ZZ.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation of procedure code 0U9L0ZZ and to change the designation of
procedure codes 0U9L0ZX and 0U9LXZX from O.R. to non-O.R.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation of
procedure code 0U9L0ZZ and to change the designation of procedure codes
0U9L0ZX and 0U9LXZX from O.R. to non-O.R., effective October 1, 2021.
(25) Transvaginal Repair of Vagina
One requestor identified ICD-10-PCS procedure code 0UQG7ZZ (Repair
vagina, via natural or artificial opening) that the requestor stated is
currently not recognized as an O.R. procedure for purposes of MS-DRG
assignment. The requestor stated that procedures described by this code
such as the non-obstetric transvaginal repair of the vaginal cuff and
the non-obstetric transvaginal repair of vaginal lacerations should be
designated as O.R. procedures because these procedures are performed in
the operating room under general anesthesia. The requestor noted
procedure codes 0USG7ZZ (Reposition vagina, via natural or artificial
opening), 0UBG7ZZ (Excision of vagina, via natural or artificial
opening), and 0UQG8ZZ (Repair vagina, via natural or artificial opening
endoscopic) are currently designated as O.R. procedures, therefore
procedure code 0UQG7ZZ should also be recognized as an O.R. procedure
for purposes of MS-DRG assignment.
In the ICD-10 MS-DRGs Definitions Manual Version 38.1, procedure
code 0UQG7ZZ is currently designated as a non-O.R. procedure for
purposes of MS-DRG assignment. In the proposed rule, we stated that our
clinical advisors reviewed this issue and disagreed that a correlation
can be made between procedures described as the transvaginal repair of
the vagina and the procedures described by ICD-10-PCS codes 0USG7ZZ,
0UBG7ZZ, and 0UQG8ZZ. We stated that the root operation ``repair''
represents a broad range of procedures for restoring the anatomic
structure of a body part such as suture of lacerations, while the root
operations ``reposition,'' and ``excision'' define procedures with more
distinct objectives. Also, the approach ``via natural or artificial
opening'', for example, transvaginal, is defined as the entry of
instrumentation through a natural or artificial external opening to
reach the site of the procedure while the ``via natural or artificial
opening endoscopic approach'' is defined as the entry of
instrumentation (for example a scope) through a natural or artificial
external opening to both reach and visualize the site of the procedure.
We stated that our clinical advisors also disagreed that procedures
described as the transvaginal repair of the vagina are typically
performed in the operating room under general anesthesia. Our clinical
advisors stated transvaginal repair can be performed using regional
anesthesia, used to numb only the area of the body that requires
surgery instead of rendering the patient unconscious. Therefore, for
the reasons described, we proposed to maintain the current non-O.R.
designation of ICD-10-PCS procedure code 0UQG7ZZ.
Comment: Commenters supported CMS' proposal to maintain the non-
O.R. designation of a procedure code describing repair of vagina via
natural or artificial opening.
Response: We appreciate the commenters' support.
Comment: Other commenters opposed CMS' proposal to maintain the
non-O.R. designation of ICD-10-PCS procedure code 0UQG7ZZ. A commenter
stated
[[Page 44914]]
procedures such as vaginal cuff revisions must be performed in the
operating room under general anesthesia because a sterile surgical
environment remains required for surgeons to accomplish this procedure
before safely discharging patients. Another commenter stated that
transvaginal repair of the vagina is typically an emergent procedure
and for the safety of the patient, the procedure is best performed in
the operating room under general anesthesia so the patient can stay
relaxed. This commenter also stated that when this procedure is
performed for indications such as vaginal cuff dehiscence, it is common
that a concurrent procedure may be indicated to ensure there was not
compromised/ischemic bowel since is imperative that the bowel is kept
out of the field while the cuff is closed.
Response: We appreciate the commenters' feedback and concern.
Our clinical advisors reviewed the commenters' concerns and
continue to support maintaining the current non-O.R. designation for
ICD-10-PCS procedure code 0UQG7ZZ. While our clinical advisors agree
that procedures described as the transvaginal repair of the vagina are
often performed in conjunction with another O.R. procedure, they do not
agree that this procedure warrants an O.R. designation. They stated
these procedures are typically not the focus for the patient's
admission, and that the other definitive procedures performed with the
transvaginal repair of the vagina in the inpatient setting would be
considered the principal driver of resource expenditure in those
admissions.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the current non-O.R. designation of
ICD-10-PCS procedure code 0UQG7ZZ, without modification, for FY 2022.
(26) Percutaneous Tunneled Vascular Access Devices
One requestor identified ten ICD-10-PCS procedure codes describing
percutaneous insertion of tunneled vascular access devices into various
body parts that the requestor stated are not recognized as an O.R.
procedure for purposes of MS-DRG assignment. The requestor suggested
that these procedures warrant an O.R. designation because they are
placed in an interventional radiology suite or in the operating room
under anesthesia. The ten procedure codes are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.118
According to the requestor, it does not make sense for tunneled
vascular access devices to group to procedural MS-DRGs in limited
circumstances as is the case currently with the logic in MDC 9
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast)
and MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract).
The requestor stated that these procedures should be grouping to
procedural MS-DRGs across all MDCs.
In the proposed rule we noted that we have addressed requests
related to these procedures in previous rulemaking (85 FR 58511 through
58517). We also stated that our clinical advisors reviewed this request
and disagreed that procedures performed to insert a tunneled vascular
access device should group to procedural MS-DRGs across all MDCs. They
stated that these percutaneous procedures are generally performed in
the outpatient setting and when performed during a hospitalization,
they are frequently performed in combination with another O.R.
procedure. Therefore, we proposed to maintain the current non-O.R.
status
[[Page 44915]]
for the ten procedure codes listed previously for FY 2022.
Comment: Commenters supported our proposal to maintain the non-O.R.
designation for procedure codes 0JH63XZ, 0JH83XZ, 0JHD3XZ, 0JHF3XZ,
0JHG3XZ, 0JHH3XZ, 0JHL3XZ, 0JHM3XZ, 0JHN3XZ and 0JHP3XZ.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to maintain the non-O.R. designation for
procedure codes 0JH63XZ, 0JH83XZ, 0JHD3XZ, 0JHF3XZ, 0JHG3XZ, 0JHH3XZ,
0JHL3XZ, 0JHM3XZ, 0JHN3XZ and 0JHP3XZ, effective October 1, 2021.
12. Changes to the MS-DRG Diagnosis Codes for FY 2022
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 (NonCC, 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 a MCC, a CC, or a NonCC 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 the comprehensive analysis was completed for FY 2008,
we have evaluated diagnosis codes individually when assigning severity
levels to new codes and when receiving requests to change the severity
level of specific diagnosis codes.
We noted in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235
through 19246) that with the transition to ICD-10-CM and the
significant changes that have occurred to diagnosis codes since the FY
2008 review, we believed it was necessary to conduct a comprehensive
analysis once again. Based on this analysis, we proposed changes to the
severity level designations for 1,492 ICD-10-CM diagnosis codes and
invited public comments on those proposals. As summarized in the FY
2020 IPPS/LTCH PPS final rule, many commenters expressed concern with
the proposed severity level designation changes overall and recommended
that CMS conduct further analysis prior to finalizing any proposals.
After careful consideration of the public comments we received, as
discussed further in the FY 2020 final rule, we generally did not
finalize our proposed changes to the severity designations for the ICD-
10-CM diagnosis codes, other than the changes to the severity level
designations for the diagnosis codes in category Z16- (Resistance to
antimicrobial drugs) from a NonCC to a CC. We stated that postponing
adoption of the proposed comprehensive changes in the severity level
designations would 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. We refer readers to the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42150 through 42152) for a complete discussion of our response
to public comments regarding the proposed severity level designation
changes for FY 2020.
We discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550
through 58554) that we plan to continue a comprehensive CC/MCC
analysis, using a combination of mathematical analysis of claims data
as discussed in the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19235)
and the application of nine guiding principles and plan to present the
findings and proposals in future rulemaking. The nine guiding
principles are as follows:
Represents end of life/near death or has reached an
advanced stage associated with systemic physiologic decompensation and
debility.
Denotes organ system instability or failure.
Involves a chronic illness with susceptibility to
exacerbations or abrupt decline.
Serves as a marker for advanced disease states across
multiple different comorbid conditions.
Reflects systemic impact.
Post-operative/post-procedure condition/complication
impacting recovery.
Typically requires higher level of care (that is,
intensive monitoring, greater number of caregivers, additional testing,
intensive care unit care, extended length of stay).
Impedes patient cooperation and/or management of care.
Recent (last 10 years) change in best practice, or in
practice guidelines and review of the extent to which these changes
have led to concomitant changes in expected resource use.
We refer readers to the FY 2021 IPPS/LTCH PPS final rule for a
complete discussion of our response to public comments regarding the
nine guiding principles. We continue to solicit feedback regarding
these guiding principles, as well as other possible ways we can
incorporate meaningful indicators of clinical severity. When providing
additional feedback or comments, we encourage the public to provide a
detailed explanation of how applying a suggested concept or principle
would ensure that the severity designation appropriately reflects
resource use for any diagnosis code.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25175), for new diagnosis codes approved for FY 2022, consistent with
our annual process for designating a severity level (MCC, CC or NonCC)
for new diagnosis codes, we first review the predecessor code
designation, followed by review and consideration of other factors that
may be relevant to the severity level designation, including the
severity of illness, treatment difficulty, complexity of service and
the resources utilized in the diagnosis and/or treatment of the
condition. We noted that this process does not automatically result in
the new diagnosis code having the same designation as the predecessor
code. We refer the reader to II.D.13 of this final rule for the
discussion of the proposed changes to the ICD-10-CM and ICD-10-PCS
coding systems for FY 2022.
[[Page 44916]]
In the FY 2022 IPPS/LTCH PPS proposed rule, we noted that we
received several requests to change the severity level designations of
specific ICD-10-CM diagnosis codes. We stated our clinical advisors
believed it was appropriate to consider these requests in connection
with our continued comprehensive CC/MCC analysis in future rulemaking,
rather than proposing to change the designation of individual ICD-10-CM
diagnosis codes at this time. As discussed in the proposed rule and
noted earlier in this section, we plan to continue a comprehensive CC/
MCC analysis, using a combination of mathematical analysis of claims
data and the application of nine guiding principles. We will consider
these individual requests received for changes to severity level
designations as we continue our comprehensive CC/MCC analysis and will
provide more detail in future rulemaking.
Comment: A commenter stated they agreed with the decision by CMS to
withhold its recommendations pending a complete discussion of how the
comprehensive CC/MCC analysis in future rulemaking is to be
constructed. This commenter also stated they appreciated CMS'
publication of the guiding principles of what should constitute a CC or
MCC.
Response: We appreciate the commenters'' support. In response to
the comment that the guiding principles indicate what should constitute
a CC or MCC, as noted in the FY 2021 IPPS/LTCH PPS final rule, we do
not believe the nine guiding principles would be mostly applicable, or
only applicable, to CC or MCC conditions. In applying the nine guiding
principles in our review of the appropriate severity level designation,
the intention is not to require that a diagnosis code satisfy each
principle, or a specific number of principles in assessing whether to
designate a secondary diagnosis code as a NonCC versus a CC versus a
MCC. Rather, the severity level determinations would be based on the
consideration of the clinical factors captured by these principles as
well as the empirical analysis of the additional resources associated
with the secondary diagnosis.
Comment: Other commenters expressed their willingness to partner
with CMS to provide their expertise to assist in the continuation of a
comprehensive CC/MCC analysis. These commenters requested that CMS post
another secondary diagnosis impact on resource use file so that the
public can determine how individual ICD-10-CM diagnosis codes affect
resource use when reported as secondary diagnoses. A commenter stated
providing this information will help prepare the public and inform the
feedback and advice summitted by the public in the IPPS comment periods
of future rulemaking.
Response: While CMS has already convened an internal workgroup
comprised of clinicians, consultants, coding specialists and other
policy analysts, we welcome additional public feedback. Commenters can
continue to submit their recommendations to the following email
address: [email protected] by November 1, 2021.
In response to the request that CMS make an updated impact on
resource use file available, we note that in May 2021, we made an
updated impact on resource use file available so that the public can
review the mathematical data for the impact on resource use generated
using claims from the FY 2019 MedPAR file and the FY 2020 MedPAR file.
The link to this file is posted on the CMS website at https://
www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/
AcuteInpatientPPS/MS[dash]DRG-Classifications-and-Software.
c. Potential Change to Severity Level Designation for Unspecified
Diagnosis Codes for FY 2022
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25175 through 25180), as another interval step as we continue to
address the comprehensive review of the severity designations of ICD-
10-CM diagnosis codes in which we have been engaged over the past two
years, we requested public comments on a potential change to the
severity level designations for ``unspecified'' ICD-10-CM diagnosis
codes that we were considering adopting for FY 2022. Specifically, we
noted we were considering changing the severity level designation of
all ``unspecified'' diagnosis codes to a NonCC where there are other
codes available in that code subcategory that further specify the
anatomic site, effective for FY 2022, after consideration of the public
comments we receive in response to the proposed rule.
We noted that according to the ICD-10-CM Official Guidelines for
Coding and Reporting, codes titled ``unspecified'' are for use when the
information in the medical record is insufficient to assign a more
specific code. In our review of severity level designation of the codes
in the ICD-10-CM classification, we stated we noted 3,490
``unspecified'' diagnosis codes designated as either CC or MCC, where
there are other codes available in that code subcategory that further
specify the anatomic site with an equivalent severity level
designation. For example, ICD-10-CM code L89.003 (Pressure ulcer of
unspecified elbow, stage 3) is currently designated as a MCC. In the
same code subcategory of L89.0- (Pressure ulcer of elbow), ICD-10-CM
codes L89.013 (Pressure ulcer of right elbow, stage 3) and code L89.023
(Pressure ulcer of left elbow, stage 3) are also designed as MCCs.
In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described
the categorization of diagnoses as an MCC, a CC, or a NonCC,
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. As such, the
designation of CC or MCC is intended to account for the increased
resources required to address a condition as a secondary diagnosis. The
usage of ``unspecified'' diagnosis codes where there are other codes
available in that code subcategory that further specify the anatomic
site may contribute to and eventually result in less reliable data for
researching clinical outcomes. If documentation is not available to
code to the highest level of specificity as to the laterality of the
condition treated, and an unspecified code is reported by the hospital,
it may be harder to quantify in the claims data what additional
resources were expended to address that condition in terms of requiring
clinical evaluation, therapeutic treatment, diagnostic procedures,
extended length of hospital stay, increased nursing care and/or
monitoring.
As stated in the proposed rule and previously, we discussed in the
FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through 58554) that we
plan to continue a comprehensive CC/MCC analysis, using a combination
of mathematical analysis of claims data, and the application of nine
guiding principles, and plan to present the findings and proposals in
future rulemaking. As patients present with a variety of diagnoses, in
examining the secondary diagnoses, we stated we would consider what
additional resources are required, that surpasses those that are
already being utilized to address the principal diagnosis and/or other
secondary diagnoses that might also be present on the claim. The goal
of our comprehensive analysis is to create stratification for
reimbursing inpatient hospitalization in the fewest amount of
categories with the most explanatory power in a clinically cohesive
way. We stated in the FY 2022 proposed rule that we believed more
robust claims data
[[Page 44917]]
would facilitate this effort to determine the impact on resource use
and inform our decision-making in determining the most appropriate CC
subclass (NonCC, CC, or MCC) assignment for each diagnosis as a
secondary diagnosis. As part of this effort, we solicited comments on
adopting a change to the severity level designation of the 3,490
``unspecified'' diagnosis codes currently designated as either CC or
MCC, where there are other codes available in that code subcategory
that further specify the anatomic site, to a NonCC for FY 2022.
As discussed in the HIPAA Administrative Simplification:
Modification to Medical Data Code Set Standards To Adopt ICD-10-CM and
ICD-10-PCS proposed rule (73 FR 49796 through 49803), in proposing the
adoption of ICD-10-CM and ICD-10-PCS, we listed that the addition of
laterality in ICD-10-CM--specifying which organ or part of the body is
involved when the location could be on the right, the left, or could be
bilateral, was one of several improvements over ICD-9-CM. We also noted
that in comparison to ICD-9-CM, ICD-10-CM diagnosis codes are very
specific and that this specificity improves the richness of data for
analysis and improves the accuracy of data used for medical research.
In the Modifications to Medical Data Code Set Standards To Adopt ICD-
10-CM and ICD-10-PCS final rule (74 FR 3328 through 3362), we adopted
the ICD-10-CM and ICD-10-PCS as medical data code sets under HIPAA,
replacing ICD-9-CM Volumes 1 and 2, and Volume 3 and noted that ICD-10-
CM and ICD-10-PCS provide specific diagnosis and treatment information
that can improve quality measurements and patient safety, and the
evaluation of medical processes and outcomes. We stated in the FY 2022
proposed rule that we continue to believe that reporting the most
specific diagnosis codes supported by the available medical record
documentation and clinical knowledge of the patient's health condition
would more accurately reflect the health care encounter and improve the
reliability and validity of the coded data.
We also stated we believe that changing the severity level for
these ``unspecified codes'' as compared to the more specific codes in
the same subcategory recognizing laterality would leverage the
additional specificity available under the ICD-10 system, by fostering
the reporting of the most specific diagnosis codes supported by the
available medical record documentation and clinical knowledge of the
patient's health condition to more accurately reflect each health care
encounter and improve the reliability and validity of the coded data.
However, in consideration of the PHE, and to the extent that some
providers may not currently have programs in place that focus on
improving documentation, we requested public comments on making this
change to the severity level designation for these unspecified ICD-10-
CM diagnosis codes for FY 2022.
We refer the reader to table 6P.2a associated with the proposed
rule for a detailed list of the diagnosis codes for which we solicited
comments on a change in severity level. As noted in the proposed rule,
we also made available the data describing the impact on resource use
when reported as a secondary diagnosis for all 3,490 ICD-10-CM
unspecified diagnosis codes. While these claims data were not used in
our identification of the ``unspecified'' diagnosis codes for which
there are other codes available in the code subcategory that further
specify the anatomic site, as stated in the proposed rule and earlier
in this section, these data are consistent with data historically used
to mathematically measure impact on resource use for secondary
diagnoses, and the data which we plan to use in combination with
application of the nine guiding principles as we continue a
comprehensive CC/MCC analysis. Therefore, we displayed the data on
these unspecified codes in order to facilitate public comment on these
potential changes in the severity level designation for these codes.
In Table 6P.2a associated with the proposed rule, column C displays
the FY 2020 severity level designation for these diagnosis codes in MS-
DRG Grouper Version 37.2. Column D displays CMS' current FY 2021
severity level designation in MS-DRG Grouper Version 38.1 and column E
displays the potential changes to the severity level designation that
we stated we were considering adopting. Columns F-O show data on the
impact on resource use generated using discharge claims from the
September 2019 update of the FY 2019 MedPAR file and MS-DRG Grouper
Version 37.2. Columns Q-Z show data on the impact on resource use
generated using discharge claims from the September 2020 update of the
FY 2020 MedPAR file and MS-DRG Grouper Version 38.1.
For further information on the data on the impact on resource use
as displayed in Columns F-O and Columns Q-Z, we refer readers to the FY
2008 IPPS/LTCH PPS final rule (72 FR 47159) for a complete discussion
of the methodology utilized to mathematically measure the impact on
resource use. Also, as discussed in the FY 2021 IPPS/LTCH PPS proposed
rule (85 FR 32550), to provide the public with more information on the
CC/MCC comprehensive analysis discussed in the FY 2020 IPPS/LTCH PPS
proposed and final rules, CMS hosted a listening session on October 8,
2019. The listening session included a review of this methodology
utilized to mathematically measure the impact on resource use. We refer
readers to https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/PodcastAndTranscripts.html for the transcript and audio
file of the listening session. We also refer readers to https://www.cms.gov/Medicare/MedicareFee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html for the supplementary file
containing the data describing the impact on resource use of specific
ICD-10-CM diagnosis codes when reported as a secondary diagnosis that
was made available for the listening session. We note that the
supplementary file that was made available for the listening session
contains the mathematical data for the impact on resource use generated
using claims from the FY 2018 MedPAR file. We have also made available
on the CMS website an updated impact on resource use file so that the
public can review the mathematical data for the impact on resource use
generated using claims from the FY 2019 MedPAR file and the FY 2020
MedPAR file.
This table shows the Version 38.1 ICD-10 MS-DRG categorization of
diagnosis codes by severity level.
BILLING CODE 4120-01-P
[[Page 44918]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.119
As stated in the proposed rule, we requested public comments on a
modification to the Version 38.1 severity level subclass assignments
for 4.8 percent of the ICD-10-CM diagnosis codes, potentially effective
with the Version 39 ICD-10 MS-DRG MCC/CC list. The following table
compares the Version 38.1 ICD-10 MS-DRG MCC/CC list and the potential
Version 39 ICD-10 MS-DRG MCC/CC list. There are 17,957 diagnosis codes
on the Version 38.1 MCC/CC lists. These potential MCC/CC severity level
changes would reduce the number of diagnosis codes on the MCC/CC lists
to 14,467 (2,771 + 11,696).
[GRAPHIC] [TIFF OMITTED] TR13AU21.120
The net result of these potential changes to the Version 39 ICD-10
MS-DRG MCC/CC list, for the 72,621 diagnosis codes in the ICD-10-CM
classification, would be a decrease of 507 (3,278 - 2,771) codes
designated as an MCC, a decrease of 2,983 (14,679 - 11,696) codes
designated as a CC, and an increase of 3,490 (58,154 - 54,664) codes
designated as a NonCC.
The following table compares the Version 38.1 ICD-10 MS-DRG
severity level list and the potential Version 39 ICD-10 MS-DRG severity
level list by each of the 22 chapters of the ICD-10-CM classification
to display how each chapter of ICD-10-CM might be affected by these
modifications.
[[Page 44919]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.121
[[Page 44920]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.122
As shown in the table, the Diseases of the Musculoskeletal System
and Connective Tissue (M00-M99) chapter of ICD-10-CM would have the
largest percentage reduction in codes designated as CC/MCC. Twelve
chapters would have a zero percentage change to the percentage of codes
designated as CC/MCC.
As stated in the proposed rule and previously, we requested public
comments on our possible adoption of a change to the severity level
designation of these 3,490 ``unspecified'' diagnosis codes currently
designated as either CC or MCC, where there are other codes available
in that code subcategory that further specify the anatomic site, to a
NonCC, potentially effective with the Version 39 ICD-10 MS-DRG MCC/CC
list. As part of this request, we stated we would be interested in
comments regarding whether this modification might present operational
challenges and how we might otherwise foster the reporting of the most
specific diagnosis codes supported by the available medical record
documentation and clinical knowledge of the patient's health condition
to more accurately reflect each health care encounter and improve the
reliability and validity of the coded data.
In this FY 2022 IPPS/LTCH PPS final rule, we present a summation of
the comments we received on our possible adoption of a change to the
severity level designation of the 3,490 ``unspecified'' diagnosis codes
currently designated as either CC or MCC, where there are other codes
available in that code subcategory that further specify the anatomic
site, to a NonCC, potentially effective with the Version 39 ICD-10 MS-
DRG MCC/CC list and our responses to those comments. We appreciate
commenters for sharing their views and their willingness to support CMS
in our efforts to continue a comprehensive CC/MCC analysis.
Comment: Many commenters supported CMS' possible adoption of a
change to the severity level designation of the 3,490 ``unspecified''
diagnosis codes to a NonCC when there are more specific codes available
in that code subcategory that recognize laterality. Some commenters
stated it is reasonable to expect that laterality would be documented
in the hospital inpatient setting in most cases. A commenter stated
that they agreed that reporting the most specific diagnosis codes
supported by the available medical record documentation and clinical
knowledge of the patient's health condition would more accurately
reflect the healthcare encounter and improve the reliability and
validity of the coded data. This commenter further stated the
anticipated benefits of the ICD-10-CM transition (including better data
for measuring quality and safety of patient care, assessing patient
outcomes, determining disease severity for risk and severity
adjustment, and conducting analyses and research) cannot be realized if
healthcare encounters are not coded and documented to the highest
possible level of specificity. A commenter stated that they appreciated
that CMS is considering changing the severity designation of
``unspecified'' diagnosis codes where a more specific code describing
laterality is available as they have observed that the presence of
these codes in the classification has become a challenge when
determining how to code based on vague medical record documentation.
Another commenter stated they supported CMS' aim to encourage diagnosis
coding to the highest level of specificity available, and stated
specifically, if there are codes that can be used to indicate
laterality, then those codes should be reported rather than an
unspecified code.
Response: We appreciate the commenters' support.
Comment: Other commenters questioned the need for such a change.
Commenters stated the use of unspecified codes in reporting diagnoses
that describe the patient's condition does not diminish the resources
required to care for patients. A commenter requested that CMS provide
insight pertaining to how the laterality of the condition impacts the
severity of the diagnosis. Another commenter stated the treatment plans
developed by providers to address diagnoses remains the same,
regardless of the laterality affected. Another commenter stated that
the laterality of a condition does not clinically impact the severity
of the diagnosis or make it less costly to treat, and that it also does
not offer any more value to the reported data.
Response: We appreciate the commenter's' feedback.
To clarify how the concept of laterality is reflected in the claims
data and the importance in accurately reporting this information we
provide the following examples of diagnosis codes and their impact on
resource use as represented in the claims data when reported as a
secondary diagnosis.
The following table reflects the impact on resource use data using
the September 2019 update of the FY 2019 MedPAR file for diagnosis
codes that describe stage 3 pressure ulcers of the hip. We refer
readers to the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159) for a
complete discussion of our historical approach to mathematically
[[Page 44921]]
evaluate the extent to which the presence of an ICD-10-CM code as a
secondary diagnosis resulted in increased hospital resource use, and
the explanation of the columns in the table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.123
As shown in the table, the three diagnosis codes that describe
stage 3 pressure ulcers of the hip are designated as MCCs in Version
38.1 of the ICD-10 MS-DRGs. When examining diagnosis code L89.213
(Pressure ulcer of right hip, stage 3), the value in column C1is closer
to 2.0 than to 1.0. The data suggests that when stage 3 pressure ulcers
of the right hip are reported as a secondary diagnosis, the resources
involved in caring for these patients are more aligned with a CC than a
NonCC or an MCC, as explained in the FY 2008 IPPS/LTCH PPS final rule
(72 FR 47159). However, when examining diagnosis codes L89.223
(Pressure ulcer of left hip, stage 3) and L89.203 (Pressure ulcer of
unspecified hip, stage 3), the C1 values are generally closer to 1,
which suggest the resources involved in caring for stage 3 pressure
ulcers of the left hip or an unspecified hip are more aligned with a
NonCC severity level than a CC or an MCC severity level.
The following table reflects the impact on resource use data using
the September 2020 update of the FY 2020 MedPAR file for the same three
diagnosis codes.
[GRAPHIC] [TIFF OMITTED] TR13AU21.124
BILLING CODE 4120-01-C
When examining this data file, we find opposite results. The C1
values for diagnosis code L89.213 (Pressure ulcer of right hip, stage
3) is generally close to 1 and the C2 values for L89.213 and L89.203
(Pressure ulcer of unspecified hip, stage 3) are generally close to 2,
both of which suggest the resources involved in caring for stage 3
pressure ulcers of the right hip or an unspecified hip are more aligned
with a NonCC severity level than a CC or an MCC severity level.
However, when examining diagnosis code L89.223 (Pressure ulcer of left
hip, stage 3), the value in column C1 is closer to 2.0, which suggests
that when stage 3 pressure ulcers of the left hip are reported as a
secondary diagnosis, the resources involved in caring for these
patients are more aligned with a CC than either a NonCC or an MCC.
As we have noted in prior rulemaking, these mathematical constructs
are used as guides in conjunction with the judgment of our clinical
advisors to classify each secondary diagnosis reviewed. We present
these data to highlight that when taking laterality into account, the
resources expended in caring for certain conditions may not be as
equally expressed in the claims data as some commenters may suggest and
to demonstrate how reporting the most specific diagnosis codes
supported by the available medical record documentation and clinical
knowledge of the patient's health condition could
[[Page 44922]]
more accurately reflect the health care encounter and improve the
reliability and validity of the coded data the 108 cases and 56 cases
that reported a stage 3 pressure ulcer of an unspecified hip as a
secondary diagnosis in the FY 2019 and FY 2020 MedPAR file,
respectively, may each reflect an opportunity to potentially have
reported more specific and valuable data that could be used in
evaluating the impact of resource use in the claims data, had the
laterality been specified.
We also note that in Table 6P.2a associated with the proposed rule,
of the 3,490 diagnosis codes listed, when reviewing the total counts in
the data on the impact on resource use generated using discharge claims
from the September 2019 update of the FY 2019 MedPAR file and the
September 2020 update of the FY 2020 MedPAR file, only 36 and 38 ICD-
10-CM codes respectively, were reported in numbers greater than 500 in
the claims data. The remaining codes were generally all reported in
small numbers. In fact, in as shown in table 6P.2a, 2,772 and 2,767 of
these codes were reported zero times in the claims data when reviewing
the impact on resource use generated using discharge claims from the
September 2019 update of the FY 2019 MedPAR file and the September 2020
update of the FY 2020 MedPAR file, respectively.
As noted in the proposed rule, this consideration of a possible
adoption to change the severity level designation of certain
unspecified codes was to foster the reporting of the most specific
diagnosis codes supported by the available medical record documentation
and clinical knowledge of the patient's health condition to more
accurately reflect each health care encounter and improve the
reliability and validity of the coded data. These findings demonstrate
providers are already appropriately documenting laterality in most
instances.
Comment: Other commenters noted that laterality is not one of CMS'
long-standing criteria for determining the severity level of a
condition. These commenters stated the presence (or absence) of
laterality is not a factor in the nine guiding principles for
establishing the severity level of an ICD-10 code. Therefore, these
commenters suggested that CMS withdraw its possible adoption of a
change, as the agency's own principles for establishing the severity
level of an ICD-10 code do not support this change.
Response: In prior rulemaking, our clinical advisors reviewed the
resource use impact reports and suggested modifications to the initial
CC subclass assignments when clinically appropriate based on review of
the mathematical data as well as consideration of the clinical nature
of each of the secondary diagnoses and the severity level of clinically
similar diagnoses. As discussed in the proposed rule and noted earlier
in this section, we plan to continue a comprehensive CC/MCC analysis,
using a combination of mathematical analysis of claims data and the
application of nine guiding principles. We believe the possible
adoption of a change to the severity level designation of diagnosis
codes when there are more specific codes available in that code
subcategory that recognize laterality will have the downstream effect
of strengthening the data used in such analysis. In regards to the
comment that laterality in not listed as a factor in the nine guiding
principles, our clinical advisors state that determining laterality is
inherent to the guiding principle that states ``typically requires
higher level of care (that is, intensive monitoring, greater number of
caregivers, additional testing, intensive care unit care, extended
length of stay).'' If a higher level of care is required to address the
diagnosis as a secondary diagnosis, then the laterality affected in
most instances should be able to be determined in the course of the
associated intensive monitoring, greater number of caregivers, and/or
additional testing in most instances. We also note that if a procedure
is performed to address a diagnosis as a secondary diagnosis, the
laterality must be known and documented in order to assign an ICD-10-
PCS code because ICD-10-PCS requires the use of laterality since
``unspecified'' is not an anatomical option in the procedure
classification.
Comment: A commenter requested that CMS provide transparency in
reference to the table that displays the distribution of volume within
these codes for a better representation of the impact. The commenter
noted that the table indicates that only 4% of the neoplasm codes would
be impacted under the proposal; however, when reviewing the
distribution of cases, the commenter stated that it appears that
neoplasms were actually heavily impacted with the highest volume of
cases.
Response: We note that the table displayed in the proposed rule
compares the Version 38.1 ICD-10 MS-DRG severity level list and the
potential Version 39 ICD-10 MS-DRG severity level list by each of the
22 chapters of the ICD-10-CM classification to display how each chapter
of ICD-10-CM might be affected by these modifications. This table was
not intended to represent an analysis of the claims reporting the 3,490
codes as listed.
Comment: A few commenters suggested that CMS analyze the frequency
of use of unspecified codes, their impact on resource utilization, and
also the typical documentation practices for acute stays with these
conditions which may or may not include specificity before changing the
severity designation of these codes. These commenters recommended that
CMS conduct an analysis of how often the unspecified codes in question
are actually used; how much resources they consume; and the standard
documentation for the patient stays associated with the use of these
codes.
Response: Table 6P.2a associated with the proposed rule contained
data describing the impact on resource use when reported as a secondary
diagnosis for all 3,490 ICD-10-CM unspecified diagnosis codes,
generated using discharge claims from the September 2019 update of the
FY 2019 MedPAR file and the September 2020 update of the FY 2020 MedPAR
file, including the number of cases reporting these unspecified codes
We note that we have made complete impact on resource use files
available so that the public can review the mathematical data for the
impact on resource use generated using claims from the FY 2018 MedPAR
file, FY 2019 MedPAR file and the FY 2020 MedPAR file. The link to
these files is posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
In response to the comment that CMS review the typical
documentation practices for acute stays with these conditions, we note
that medical professionals' documentation is already open to scrutiny
by many, including employers, Federal and State reviewers, and
auditors. We encourage providers to continue to focus efforts on
improving their respective facilities medical record documentation
practices.
Comment: Some commenters disagreed with the possible adoption of a
change to the severity level designation of individual diagnosis codes
listed in Table 6P. 2a associated with the proposed rule.
Many commenters opposed the inclusion of diagnosis codes that
describe neoplasms in the list of codes. Commenters stated cancer
patients typically are more complex than other types of patients, and
often their cancer leads to greater resource utilization even when
coded with an unspecified code. These commenters noted that while the
neoplasm may still be under active
[[Page 44923]]
treatment, the specific side of the neoplasm may not be documented if
the patient is admitted for a different, unrelated condition such as
trauma or infections. Also, there are instances where patients with a
known primary cancer are often evaluated, tested, and treated for a
clinically likely yet unspecified secondary cancer site. These
commenters stated in these cases, the lack of specificity is warranted,
and the clinical presentation is still aligned with a CC or MCC. A
commenter specifically identified code C56.9, Malignant neoplasm of
unspecified ovary, and stated this code should remain a CC because some
patients have extensive intraperitoneal metastases typical of
(presumed) ovarian primary, and have pelvic involvement so extensive
that resection is unable to be performed, and laterality is unable to
be determined.
Response: Our clinical advisors reviewed this condition described
by code C56.9 and agree with the commenters that this and other
unspecified diagnosis codes that describe neoplasms should not be
included in the list of unspecified diagnosis codes for consideration
for a possible adoption of a change to the severity level designation.
They agree that in certain presentations, the laterality affected might
be difficult to determine in certain instances. Our clinical advisors
believe the severity level designations for this subset of codes would
be better addressed as part of our comprehensive CC/MCC analysis, using
a combination of mathematical analysis of claims data and the
application of nine guiding principles.
Comment: A commenter identified diagnosis codes S02.113A, S02.113B,
and S02.113K that describe unspecified occipital condyle fractures
listed in Table 6P.2a associated with the proposed rule. The commenter
noted that the ICD-10-CM classification does not have diagnosis codes
that specify laterality when the type of occipital fracture (for
example, Type 1, Type II, Type III) is unknown or unobtainable. Because
unspecified codes must be assigned when the type of fracture is
unknown, even when laterality is documented, the commenter suggested
that these codes should be removed from the list of codes under
consideration and retain their CC and MCC designations.
Response: We agree with the commenter that in subcategory S02.11 of
the ICD-10-CM classification, there are no codes available that further
specify laterality in the code description when the type of occipital
condyle fracture is unknown. We further examined the list of diagnosis
codes listed in Table 6P.2a, and noted diagnosis codes S02.119A,
S02.119B and S02.119K that describe unspecified fractures of the
occiput. Our clinical advisors noted that there are also no codes
available in that classification that further specify laterality in the
code description when the type of occipital fracture is unknown.
Accordingly, our clinical advisors believe that these codes should not
be included in the list of unspecified diagnosis codes for
consideration for a possible adoption of a change to the severity level
designation.
Comment: A commenter noted that ICD-10-CM diagnosis codes S82.001N
and S82.001R that describe a fracture of the right patella were
included in the list of codes in Table 6P.2a. The commenter stated
these codes should be removed from Table 6P.2a because the laterality
of ``right'' is specified within the code description.
Response: We appreciate the commenter noting that two diagnosis
codes describing fractures affecting the right patella were included in
Table 6P.2a associated with the proposed rule. We note that this was an
inadvertent error. We further examined the list of diagnosis codes in
Table 6P.2a, and noted diagnosis codes S78.911A and S78.921A that
describe complete and partial traumatic amputation of right hip and
thigh, respectively, were also inadvertently included in the list of
``unspecified'' diagnosis codes currently designated as either CC or
MCC, where there are other codes available in that code subcategory
that further specify the anatomic site.
Comment: A commenter stated they disagreed with removing the
severity designation of an unspecified code that is internal to the
body and cannot be visualized externally. This would include all of the
codes involving conditions of internal organs, vessels or body parts
(for example, neoplasm, DVT, etc.).
Response: In response to this comment, we further examined the list
of diagnosis codes in Table 6P.2a, and note the following:
Our clinical advisors noted that codes S02.118A, S02.118B,
and S02.118Kwhich describe other fractures of occiput, S04.819A which
describes an injury of olfactory [1st] nerve, and S04.9XXA which
describes an injury of unspecified cranial nerve were listed in Table
6P.2a. Our clinical advisors stated that in cases of traumatic injury,
laterality may not be easily identified in occipital fractures or
injuries to olfactory or cranial nerves.
Our clinical advisors noted codes S32.9XXA, S32.9XXB, and
S32.9XXK that describe fractures of unspecified parts of lumbosacral
spine and pelvis; codes S36.209A, S36.249A, S36.259A, and S36.269A that
describe injury and laceration to unspecified parts of the pancreas;
code S36.509A that describes an unspecified injury of an unspecified
part of colon; code S36.90XA that describes an unspecified injury of an
unspecified intra-abdominal organ; code S37.90XA that describes an
unspecified injury of unspecified urinary and pelvic organ; code
T27.3XXA that describes a burn of an unspecified part of the
respiratory tract; and T27.7XXA that describes a corrosion of an
unspecified part of the respiratory tract were listed in Table 6P.2a.
Our clinical advisors note that while we encourage the reporting and
coding to the highest possible level of specificity based on
documentation, the codes listed in Table 6P.2a were intended to be
limited to ``unspecified'' diagnosis codes currently designated as
either CC or MCC, where there are other codes available in that code
subcategory that further specify the anatomic site involved, when the
location could be on the right, the left, or could be bilateral; and
not parts of body sites.
Therefore, after further consideration, and for the reasons noted,
we believe that the 58 ICD-10-CM diagnosis codes listed in the
following table should not be included for consideration of changing
the severity level designation as part of the list of ``unspecified''
diagnosis codes currently designated as either CC or MCC, where there
are other codes available in that code subcategory that further specify
the anatomic site.
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[[Page 44925]]
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Comment: Some commenters suggested that CMS can meet its goal to
improve coding specificity through other mechanisms, such as working
with the Cooperating Parties for ICD-10 to update coding guidelines to
allow coding specificity from other clinical staff documentation. These
commenters indicated they are supportive of CMS' efforts but believe
CMS should first focus on provider outreach and education and consider
updating the ICD-10-CM Official Guidelines for Coding and Reporting.
Commenters
[[Page 44926]]
noted the ICD-10-CM Official Guidelines require that these codes be
based only on provider documentation for the current encounter and
prohibits coders from using previous encounters or problem lists to
obtain the required specificity. These commenters stated if the coding
guidelines from the Cooperating Parties were updated in advance of any
severity level designation changes being finalized, the use of
unspecified codes would likely diminish. Another commenter stated that
unless the ICD-10-CM guidelines are liberalized so that code assignment
can be obtained from other documents other than provider documentation
for that encounter, the possible adoption of a change to the severity
level designation will create undue burden. Another commenter noted
without an update to the coding guidelines, hospitals will need to
expand their clinical documentation improvement programs to prompt
physicians to change their documentation practices on each applicable
hospital encounter.
Response: The ICD-10-CM Official Guidelines for Coding and
Reporting have been revised effective October 1, 2021 to provide
additional guidance as it relates to the source documentation for code
assignment. We believe this update will alleviate the concerns
expressed by these commenters. Specifically, Section I.B.13 of the
guidelines have been updated to state ``when laterality is not
documented by the patient's provider, code assignment for the affected
side may be based on medical record documentation from other
clinicians. If there is conflicting medical record documentation
regarding the affected side, the patient's attending provider should be
queried for clarification. Codes for ``unspecified'' side should rarely
be used, such as when the documentation in the record is insufficient
to determine the affected side and it is not possible to obtain
clarification. In this context, ``clinicians'' other than the patient's
provider refer to healthcare professionals permitted, based on
regulatory or accreditation requirements or internal hospital policies,
to document in a patient's official medical record.'' Corresponding
revisions to the guidelines can also be found in section I.B.14.
Therefore, we believe that the updates made to the coding guidelines
address that aspect of the commenters' concerns.
We encourage the commenters to review the Official ICD-10-CM Coding
Guidelines, which can be found on the CDC website at: http://www.cdc.gov/nchs/icd/icd10.htm.
Comment: A number of commenters recommended (or urged) CMS to delay
any possible change to the designation of these codes for at least two
years to give hospitals and their physicians time to prepare. These
commenters stated a change of this magnitude should not be implemented
without giving providers time to restructure physician documentation
improvement plans and to provide additional education to physicians and
coders related to documentation practices. These commenters also stated
a delay will give hospitals the time needed to update computer-assisted
coding systems to incorporate this change to reduce the administrative
burden on physicians related to documentation. Other commenters stated
more time is needed before finalizing any policy decisions since this
change impacts the quality and risk of mortality scores generated by
commercial insurers who often follow CMS' coding and MS-DRG changes.
Another commenter stated that this is a significant change from an
operational perspective that, if implemented, will create significant
administrative burden for hospitals at a time when administrative and
clinical resources are still stretched thin by the COVID-19 PHE.
Response: We appreciate the commenter's concern's after
consideration of the public comments we received, we are maintaining
the severity level designation of all ``unspecified'' diagnosis codes
currently designated as a CC or MCC where there are other codes
available in that code subcategory that further specify the anatomic
site for FY 2022. Instead, we are finalizing the Unspecified code MCE
edit option as discussed in the proposed rule, which we believe
provides additional time to educate providers while not affecting the
payment the provider is eligible to receive. We refer the reader to
section II.D.14.e. of the preamble of this final rule, for the complete
discussion.
While we remain committed to fostering the documentation and
reporting of the most specific diagnosis codes supported by the
available medical record documentation and clinical knowledge of the
patient's health condition, we believe additional time is needed before
adopting a change to the severity level designation of all
``unspecified'' diagnosis codes to a NonCC where there are other codes
available in that code subcategory that further specify the anatomic
site. This time will allow the industry an opportunity to educate
coders on the updated guidelines and to offer assistance on proper
documentation to providers.
We continue to be interested in receiving feedback on how we might
otherwise foster the documentation and reporting of the most specific
diagnosis codes supported by the available medical record documentation
and clinical knowledge of the patient's health condition to more
accurately reflect each health care encounter and improve the
reliability and validity of the coded data. Comments should be directed
to the MS-DRG Classification Change Mailbox located at:
[email protected].
d. Additions and Deletions to the Diagnosis Code Severity Levels for FY
2022
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25180) we noted
the following tables identify the proposed additions and deletions to
the diagnosis code MCC severity levels list and the proposed additions
and deletions to the diagnosis code CC severity levels list for FY 2022
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--Proposed Additions to the MCC List--FY 2022;
Table 6I.2--Proposed Deletions to the MCC List--FY 2022; and
Table 6J.1--Proposed Additions to the CC List--FY 2022.
Comment: Commenters agreed with the proposed additions and
deletions to the MCC and CC lists as shown in tables 6I.1, 6I.2, and
6J.1 associated with the proposed rule.
Response: We appreciate the commenters' support.
The following tables associated with this final rule reflect the
finalized severity levels under Version 39 of the ICD-10 MS-DRGs for FY
2022 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. --Complete MCC List--FY 2022;
Table 6I.1--Additions to the MCC List--FY 2022;
Table 6I.2--Deletions to the MCC List--FY 2022;
Table 6J. --Complete CC List--FY 2022;
Table 6J.1--Additions to the CC List--FY 2022; and
Table 6J.2--Deletions to the CC List--FY 2022.
We note that in the FY 2022 IPPS/LTCH PPS proposed rule there was
not
[[Page 44927]]
a Table 6J.2--Proposed Deletions to the CC List--FY 2022 listed because
we were not specifically proposing to delete any diagnosis codes from
the current CC list effective with discharges on October 1, 2021 for FY
2022. However, we have included Table 6J.2 in association with this
final rule for completeness, to display diagnosis code M35.8 (Other
specified systemic involvement of connective tissue) that was
previously designated as a CC in FY 2020 and was deleted effective
January 1, 2021 due to the creation of diagnosis codes, M35.81
(Multisystem inflammatory syndrome) and M35.89 (Other specified
systemic involvement of connective tissue) effective January 1, 2021 as
displayed in the footnote of Table 6A.--New Diagnosis Codes --FY 2022.
Similar to the process we described in the FY 2021 IPPS/LTCH PPS
proposed rule (85 FR 32559), where we solicited comments and provided
the public an opportunity to comment on the severity level designations
(in addition to the MDC and MS-DRG assignments) that had been
implemented for the two diagnosis codes (U07.0 and U07.1) effective
with discharges on and after April 1, 2020 (FY 2020) for FY 2021
consideration, in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25191
through 25192), we provided the list of six diagnosis codes that were
effective with discharges on and after January 1, 2021in Table 6A.--New
Diagnosis Codes--FY 2022 associated with the proposed rule and
likewise, provided the public an opportunity to comment on the severity
level designations (in addition to the MDC and MS-DRG assignments) that
had been implemented for those six diagnosis codes, for FY 2022
consideration. We did not receive any comments suggesting changes to
the severity level (or MDC and MS-DRG assignments) for diagnosis codes
M35.81 or M35.89 that were implemented on January 1, 2021, therefore,
as shown in Table 6A.-New Diagnosis Codes-FY 2022 associated with this
final rule, we are maintaining the CC severity level for these two
diagnosis codes and displaying in Table 6J.2--Deletions to the CC
List--FY 2022 also associated with this final rule, the corresponding
deletion of diagnosis code M35.8 from the CC list that was implemented
January 1, 2021 for completeness.
e. CC Exclusions List for FY 2022
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 38.1 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/index.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. For all diagnosis codes on the list, a link is
provided to a collection of diagnosis codes which, when reported as the
principal diagnosis, would cause the CC or MCC diagnosis to be
considered as a NonCC. Part 2 is the list of diagnosis codes designated
as a MCC only for patients discharged alive; otherwise, they are
assigned as a NonCC.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through
25180) we discussed our request for public comments on potential
changes to the severity level for 3,490 diagnosis codes describing an
``unspecified'' anatomic site, from a CC severity level to a NonCC
severity level, for FY 2022. We referred the reader to Table 6P.3a
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) for the list of the 3,490
diagnosis codes that are currently listed in Part 1 of the CC
Exclusions List and are defined as a CC when reported as a secondary
diagnosis. Table 6P.3a is divided into several tabs, with the first tab
titled ``SDX Codes and Exclu Categories'' containing columns A, B, and
C. Column A (titled ``ICD-10-CM Code'') lists the ``unspecified''
diagnosis codes that are currently listed in Part 1 of Appendix C of
the CC Exclusions List, column B (titled ``Description'') lists the
narrative description of each diagnosis code, and column C (titled
Exclusion Category) contains a hyperlink to the collection of diagnosis
codes which, when reported as the principal diagnosis, would cause the
CC diagnosis to be considered as a NonCC. For example, for line 2,
Column A displays diagnosis code C34.00, column B displays ``Malignant
neoplasm of unspecified main bronchus'' and column C displays a
hyperlink to Exclusion Category number 280. When the user clicks on the
hyperlink for number 280, they are directed to another tab labeled
``PDX Category 280'' that contains the list of diagnosis codes which,
when reported as the principal diagnosis, would cause the corresponding
CC diagnosis to be considered as a NonCC. In connection with the
request for public comments on the potential changes to the severity
level for 3,490 diagnosis codes describing an ``unspecified'' anatomic
site, from a CC severity level to a NonCC severity level for FY 2022,
Table 6P.3a was made available for readers to review and consider the
list of the 3,490 ``unspecified'' diagnosis codes that are currently
included in Part 1 of the CC Exclusions List and the principal
diagnosis exclusion category with which they are currently associated.
In the proposed rule we stated that if we were to finalize the
potential changes to the severity level for the 3,490 diagnosis codes
describing an ``unspecified'' anatomic site from a CC severity level to
[[Page 44928]]
a NonCC severity level for FY 2022, we would also finalize the removal
of these codes from the CC Exclusions List for FY 2022. As discussed
previously, we are not finalizing the changes to the severity level for
the 3,490 diagnosis codes describing an ``unspecified'' anatomic site
from a CC severity level to a NonCC severity level for FY 2022, and
therefore we are also not finalizing the removal of these codes from
the CC Exclusions List for FY 2022.
In the proposed rule we discussed three requests we received
related to the CC Exclusions List logic.
We received a request to review the secondary diagnoses that are
excluded as a CC or MCC in the CC Exclusions List logic when any one of
the following three diagnosis codes is reported as the principal
diagnosis.
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According to the requestor, in the ICD-10 MS-DRGs version 37.2 CC
Exclusions List logic, the predecessor code for the listed diagnosis
codes, diagnosis code O99.89 (Other specified diseases and conditions
complicating pregnancy, childbirth and the puerperium) is listed in the
collection of principal diagnosis list number 1000, therefore, when a
CC or MCC secondary diagnosis associated with that principal diagnosis
list describes a condition as occurring in pregnancy, childbirth or the
puerperium, the CC Exclusions List logic will render that diagnosis
code as a NonCC. The requestor stated that because diagnosis code
O99.89 under version 37.2 of the ICD-10 MS-DRGs is now a subcategory
under version 38.1 of the ICD-10 MS-DRGs, with three unique diagnosis
codes to specify which obstetric stage the patient is in, that further
analysis of the new diagnosis codes (O99.891, O99.892, and O99.893)
should occur to determine if changes to the collection of principal
diagnosis list is warranted. The requestor provided three examples for
CMS to review and consider for possible changes to the CC Exclusions
List logic.
In the first example, the requestor noted that diagnosis code O72.1
(Other immediate postpartum hemorrhage) is listed as a CC secondary
diagnosis associated with the collection of principal diagnosis list
number 1000, and that under the ICD-10 MS-DRGs version 38.1 CC
Exclusions List logic, the diagnosis listed in principal diagnosis
collection 1000 is now diagnosis code O99.893 (Other specified diseases
and conditions complicating puerperium). Thus, both diagnosis codes
(O72.1 and O99.893) are describing conditions occurring specifically in
the postpartum or puerperium period. The postpartum period is defined
as the period beginning immediately after delivery and continues for
six weeks following delivery. A postpartum complication is any
complication occurring within the six-week period. The requestor stated
that because diagnosis code O72.1 is assigned for documented postpartum
uterine atony with hemorrhage when it occurs immediately following the
delivery of the baby and placenta, that CMS should review diagnosis
code O99.892 (Other specified diseases and conditions complicating
childbirth) and determine if it should be added to the collection of
principal diagnosis list number 1000 to cause diagnosis code O72.1 to
be considered as a NonCC when diagnosis code O99.892 is reported as the
principal diagnosis.
In the second example, the requestor noted that diagnosis code
O98.32 (Other infections with a predominantly sexual mode of
transmission complicating childbirth) is associated with principal
diagnosis collection number 1012. The requestor also noted that
principal diagnosis collection number 1012 does not list diagnosis
codes O99.891, O99.892, or O99.893 as a principal diagnosis to exclude
the CC secondary diagnosis code O98.32, however, it does list diagnosis
codes O98.311 (Other infections with a predominantly sexual mode of
transmission complicating pregnancy, first trimester), O98.312 (Other
infections with a predominantly sexual mode of transmission
complicating pregnancy, second trimester), and O98.313 (Other
infections with a predominantly sexual mode of transmission
complicating pregnancy, third trimester) as a principal diagnosis to
exclude the CC secondary diagnosis code O98.32. The requestor
recommended CMS review diagnosis codes O98.32 (Other infections with a
predominantly sexual mode of transmission complicating childbirth) and
O98.33 (Other infections with a predominantly sexual mode of
transmission complicating the puerperium), to determine if diagnosis
codes O99.891, O99.892 or O99.893, when reported as a principal
diagnosis, should exclude CC secondary diagnosis codes O98.32 and
O98.33. Thus, the requestor suggested CMS consider if it is appropriate
to add diagnosis codes O99.891, O99.892 and O99.893 to principal
diagnosis collection number 1012 to cause diagnosis code O98.32 to be
considered as a NonCC when diagnosis codes O99.891, O99.892 or O99.893
are reported as the principal diagnosis.
In the third example, the requestor noted that diagnosis code O87.2
(Hemorrhoids in the puerperium) is associated with principal diagnosis
collection number 4041. The requestor also noted that principal
diagnosis collection number 4041 lists diagnosis code O99.893 as a
principal diagnosis to exclude the CC diagnosis code O87.2, however, it
does not list diagnosis code O99.892. The requestor further noted that
the ``Includes'' note at Category O87 (Venous complications and
hemorrhoids in the puerperium) in the FY 2021 ICD-10-CM Tabular List
includes ``venous complications in labor, delivery and the
puerperium'', therefore, diagnosis code O87.2 would also be reported
for documented hemorrhoids during labor and delivery. The requestor
recommended CMS review diagnosis code O99.892 to determine if, when
reported as a principal diagnosis, it should exclude CC diagnosis code
O87.2. Thus, the requestor suggested CMS consider if it is appropriate
to add diagnosis code O99.892 to principal diagnosis collection number
4041 to cause diagnosis code O87.2 to be considered as a NonCC when
diagnosis code O99.892 is reported as the principal diagnosis.
We stated in the proposed rule that we reviewed diagnosis codes
O99.891, O99.892 and O99.893 with respect to the principal diagnosis
collection list
[[Page 44929]]
and because these diagnosis codes are specifically describing ``other
specified diseases and conditions complicating pregnancy, childbirth,
and the puerperium,'' respectively, we do not believe that any of these
three diagnosis codes, when reported as a principal diagnosis, should
exclude any CC secondary diagnosis. In cases where any one of these
three diagnosis codes is reported as a principal diagnosis, which are
generally anticipated to be rare, it is understood that there is not a
more specific diagnosis code available in the classification to report
as the principal diagnosis that identifies the underlying or associated
cause of the disease or the condition complicating the specific
obstetric stage (pregnancy, childbirth, or puerperium), hence the
``other specified'' in the code title. Specifically, the title of
category O99 is ``Other maternal diseases classifiable elsewhere but
complicating pregnancy, childbirth and the puerperium'' and there are
nine subcategories, each of which is generally associated with a single
organ system or etiology, with the exception of the ``other specified''
subcategory (O99.8) as displayed in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.128
The instructional note at category O99 states ``use additional code
to identify specific condition'' and included at each subcategory
(O99.0-O99.7) are a range of codes that refer to diagnoses that are
associated with the condition in the title of the subcategory that are
to be reported in addition to the applicable code within the respective
subcategory. For example, at subcategory O99.0 (Anemia complicating
pregnancy, childbirth, and the puerperium), the range of associated
codes to identify the specific condition (for example, type of anemia)
includes conditions in diagnosis code range D50-D64, meaning that when
any one of the diagnosis codes under subcategory O99.0 describing
anemia complicating a specific obstetric stage (pregnancy, childbirth,
or puerperium) is reported, a code within the D50-D64 code range to
identify the specific type of anemia would also be expected to be
reported when supported by the medical record documentation. It is
therefore reasonable to associate the two conditions (one from
subcategory O99.0 and one from code range D50-D64) when reported on a
claim. However, the same cannot be stated for subcategory O99.8. There
is no range of associated codes from which users are instructed to
report located at this particular subcategory in addition to the
specific code under sub-subcategory O99.89 (Other specified diseases
and conditions complicating pregnancy, childbirth and the puerperium).
We note that subcategory O99.8 and sub-subcategory O99.89 have the same
title. Therefore, when a diagnosis code from other than that sub-
subcategory is reported that describes a condition occurring in any one
of the obstetric stages (pregnancy, childbirth, or puerperium) it is
not clear if the condition can reasonably be associated to correspond
to the ``other specified diseases and conditions'' diagnosis. In
addition, the code ranges included at subcategory O99.8 are D00-D48,
H00-H95, M00-N99, and Q00-Q99. Consequently, diagnosis codes within
those code ranges would be expected to be reported with one of the
diagnosis codes under subcategory O99.8 when reported as a principal
diagnosis.
In all three of the requestor's examples, the diagnosis codes
provided for CMS to review and consider are located in the ``O'' code
range (O72.1, O98.32, and O87.2 in addition to O99.891, O99.892, and
O99.893). As noted previously, the code ranges included at subcategory
O99.8 as listed, do not include any codes in the ``O'' code range. Upon
review of the diagnosis codes provided by the requestor, it is also
reasonable to expect that any one of those diagnosis codes (O72.1,
O98.32, and O87.2) could be
[[Page 44930]]
reported as a principal diagnosis alone. For instance, there are no
instructional notes at diagnosis code O72.1 that preclude that
diagnosis code from being reported as the principal diagnosis.
We stated in the proposed rule that during our review of the CC
Exclusions List logic in response to the requestor's recommendations,
we also identified some diagnosis codes describing the specific
trimester of pregnancy that we believe warrant further examination. We
noted that we were unable to fully evaluate these conditions for FY
2022, therefore, we will continue to analyze for future rulemaking.
For the reasons discussed, we stated in the proposed rule that we
do not believe that any of the three diagnosis codes (O99.891, O99.892,
and O99.893), when reported as a principal diagnosis, should exclude
any CC secondary diagnosis. Therefore, we proposed to remove diagnosis
codes O99.891, O99.892, and O99.893 from the CC Exclusions List logic
principal diagnosis collection lists. Specifically, we proposed to
remove those diagnosis codes from the following principal diagnosis
collection list numbers 0085, 0954, 0956 through 0963, 0972, 0988, 0991
through 0998, 1000 through 1002, 1004, 1006, 1009, 1011, 1014, 1015,
1019, 3999, 4000, 4002 through 4006, 4008, 4010, through 4013, 4017,
4020, 4021, 4023 through 4026, 4030, 4031, 4033 through 4043, 4050
through 4054, 4059 through 4063, 4065 and 4067, effective FY 2022.
We did not receive any comments opposing our proposal, therefore,
we are finalizing the removal of diagnosis codes O99.891, O99.892, and
O99.893 from the CC Exclusions List logic principal diagnosis
collection lists identified for FY 2022.
In the proposed rule we also discussed a request we received to
review diagnosis codes describing oxygen dependence, chronic
obstructive pulmonary disease with exacerbation, and chronic
respiratory failure with regard to assignment in MS-DRG 191 (Chronic
Obstructive Pulmonary Disease with CC) and to consider whether any
changes to principal diagnosis collection number 0744 in the CC
Exclusions List logic are warranted.
The requestor provided diagnosis codes J44.1 (Chronic obstructive
pulmonary disease with (acute) exacerbation), J96.11 (Chronic
respiratory failure with hypoxia (CC)) and Z99.81 (Dependence on
supplemental oxygen) for CMS to review. Specifically, the requestor
suggested that if oxygen dependence, by definition, is clinically
inherent to chronic respiratory failure, then CMS should consider
adding diagnosis code J44.1 to the CC Exclusions List logic principal
diagnosis collection list number 0744 and cause diagnosis code J96.11
to be considered as a NonCC when J44.1 is reported as the principal
diagnosis.
We stated in the proposed rule that we reviewed the diagnosis codes
and MS-DRG assignment as the requestor suggested. We confirmed that
when diagnosis code J44.1 is reported as the principal diagnosis with
the CC secondary diagnosis code J96.11, and secondary diagnosis code
Z99.81, the resulting MS-DRG assignment is MS-DRG 191. We stated our
belief that diagnosis code J96.11 should continue to group as a CC, to
the ``with CC'' MS-DRG 191, when reported as a secondary diagnosis code
with diagnosis code J44.1 reported as the principal diagnosis. We
disagreed with the requestor's suggestion that every oxygen-dependent
COPD patient has chronic respiratory failure, and that separately
reporting the chronic respiratory failure is clinically redundant.
Patients can be oxygen-dependent with COPD and not have a diagnosis of
chronic respiratory failure. Therefore, we proposed to maintain the
structure of principal diagnosis collection list number 0744 in the CC
Exclusions List logic for FY 2022.
We did not receive any comments opposing our proposal, therefore,
we are finalizing the proposal to maintain the structure of principal
diagnosis collection list number 0744 in the CC Exclusions List logic
for FY 2022.
Lastly, in the proposed rule we discussed a request we received to
reconsider the MCC exclusions for diagnosis code I11.0 (Hypertensive
heart disease with heart failure) when reported as the principal
diagnosis. According to the requestor, there appears to be an
inconsistency for the CC Exclusions List logic. Specifically, the
requestor noted that when diagnosis code I11.0 is reported as the
principal diagnosis, it causes the following MCC secondary diagnosis
codes to be considered as a NonCC.
[GRAPHIC] [TIFF OMITTED] TR13AU21.129
However, the requestor stated that diagnosis codes I50.21 (Acute
systolic (congestive) heart failure) and I50.31 (Acute diastolic
(congestive) heart failure) are not excluded from acting as MCCs when
diagnosis code I11.0 is reported as the principal diagnosis. The
requestor also stated that all diagnosis codes in category I50 (Heart
Failure) share common etiologies and demonstrate comparable severity of
illness. Therefore, the requestor suggested that none of the conditions
in this category (I50) should be excluded from acting as a MCC when
diagnosis code I11.0 is reported as a principal diagnosis.
In the proposed rule we stated that we examined all the diagnosis
codes in category I50 with regard to the CC Exclusions List logic. In
addition to diagnosis code I11.0, we also reviewed diagnosis code I13.2
(Hypertensive heart and chronic kidney disease with heart failure and
with stage 5 chronic kidney disease, or end stage renal disease) when
reported as a principal diagnosis because that diagnosis code also has
the Tabular instruction ``use additional code to identify the type of
heart failure''.
We found additional inconsistencies in the CC secondary diagnosis
heart failure codes where some diagnoses were excluded depending on the
principal diagnosis reported and others were not excluded. As a result,
we proposed to revise the CC Exclusions Logic list for diagnosis codes
I11.0 and
[[Page 44931]]
I13.2 when reported as a principal diagnosis to ensure they are
consistent in the CC and MCC diagnoses they exclude. In the proposed
rule we showed the findings for each diagnosis code in category I50 in
the following table with respect to the current severity level (MCC, CC
or NonCC), if it is currently excluded as a CC or MCC when reported
with either diagnosis code I11.0 or I13.2 as the principal diagnosis,
and our proposal under the CC Exclusions List logic for FY 2022.
[GRAPHIC] [TIFF OMITTED] TR13AU21.130
[[Page 44932]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.131
Comment: Several commenters agreed with our proposal to revise the
CC Exclusions List logic for diagnosis codes I11.0 and I13.2 when
either code is reported as a principal diagnosis. A commenter also
suggested that the changes made for diagnosis code I13.2 should be made
for diagnosis code I13.0 (Hypertensive heart and chronic kidney
[[Page 44933]]
disease with heart failure and stage 1 through stage 4 chronic kidney
disease, or unspecified chronic kidney disease).
Response: With regard to the commenter's suggestion that changes
made for diagnosis code I13.2 should also be made for diagnosis code
I13.0, we appreciate the feedback. We were unable to fully evaluate the
request for FY 2022 consideration, therefore, we will examine this
issue for future rulemaking and determine if there are other diagnoses
that should also be considered further.
After consideration of the comments received, we are finalizing our
proposal to revise the CC Exclusions Logic list for diagnosis codes
I11.0 and I13.2 when reported as a principal diagnosis, without
modification, for FY 2022.
We also proposed additional changes to the ICD-10 MS-DRGs Version
39 CC Exclusion List based on the diagnosis and procedure code updates
as discussed in section II.D.13. of the FY 2022 IPPS/LTCH PPS proposed
rule and set forth in Tables 6G.1, 6G.2, 6H.1, and 6H.2 associated with
the proposed rule and available via the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
Comment: A commenter stated they did not agree with the proposed
MCC exclusion for new diagnosis codes S06.A0XA (Traumatic brain
compression without herniation, initial encounter) and S06.A1XA
(Traumatic brain compression with herniation, initial encounter) as
shown in Tables 6G.1 and 6G.2 associated with the proposed rule, when
reported with principal diagnoses from subcategories S06.1, S06.2,
S06.3, S06.4, S06.5, or S06.6. According to the commenter, patients
with brain compression secondary to traumatic intracranial injuries
have significantly higher morbidity and mortality, longer length of
stays, and greater consumption of resources than those without brain
compression. The commenter identified that the current code for brain
compression (G93.5) has been separately reportable as a MCC with
principal diagnoses from subcategories S06.4, S06.5, and S06.6; and
maintained that the new codes for brain compression should reasonably
retain MCC severity. The commenter added that some epidural, subdural,
and subarachnoid hemorrhages are small, easily monitored and without
compression; but others result in significant brain compression with
longer length of stays and greater consumption of resources with the
MCC severity differentiating these groups of patients. The commenter
asserted that brain compression should also be a MCC when reported with
principal diagnoses from subcategories S06.2 (Diffuse traumatic brain
injury) and S06.3 (Focal traumatic brain injury) for the same reasons.
Lastly, the commenter stated that because diffuse traumatic brain
injury with diffuse cerebral edema must be reported with a single code
from subcategory S06.1- per the Excludes 1 note at subcategory S06.2-,
it is additionally reasonable for brain compression to be a MCC
severity with a principal diagnosis of traumatic cerebral edema (S06.1-
) in order to differentiate between patients with and without the life-
threatening complication of brain compression.
Response: We appreciate the commenter's feedback. It is not clear
from the commenter's statement if they were unable to differentiate the
content between Table 6G.1 and Table 6G.2 associated with the proposed
rule. We note that 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 proposed 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. We believe the commenter
may have inadvertently reviewed Table 6G.2 as if it were Table 6G.1. To
clarify, diagnosis codes S06.A0XA and S06.A1XA, as shown in Table 6G.1
with an asterisk, were proposed to be excluded from acting as a
secondary diagnosis MCC when any one of the following diagnoses are
reported as the principal diagnosis; G93.6 (Cerebral edema), G93.82
(Brain death), S06.1X0A (Traumatic cerebral edema without loss of
consciousness, initial encounter), S06.A0XA (Traumatic brain
compression without herniation, initial encounter), and S06.A1XA
(Traumatic brain compression with herniation, initial encounter). We
are providing the following table to illustrate how the contents of
Table 6G.1 associated with the proposed rule (and available via the
internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), are displayed
for these codes. We note that Table 6G.1 does not include the decimal
point for any of the diagnosis codes listed.
[GRAPHIC] [TIFF OMITTED] TR13AU21.132
BILLING CODE 4120-01-C
As shown in the table, codes S06.A0XA and S06.A1XA are the
secondary diagnosis codes that were proposed for addition to the CC
Exclusion List as shown with an asterisk, and the principal diagnoses
proposed to exclude these codes from acting as a MCC are provided in
the indented column immediately following each. Therefore, our proposal
was not to exclude codes S06.A0XA and S06.A1XA from acting as a MCC
when reported with principal diagnoses from subcategories S06.2, S06.3,
S06.4, S06.5, or S06.6, as there are no codes from those subcategories
listed in the table. With respect to subcategory S06.1, as shown in the
table, diagnosis code S06.1X0A is listed as a principal diagnosis that
would exclude codes S06.A0XA and S06.A1XA from acting as a MCC when
reported as a secondary diagnosis, as proposed.
We acknowledge that diffuse traumatic brain injury with diffuse
cerebral edema must be reported with a single code from subcategory
S06.1- per the Excludes 1 note at subcategory S06.2-, therefore, we
consulted with staff at the Centers for Disease Control's (CDC's)
National Center for Health Statistics (NCHS) because NCHS has the
[[Page 44934]]
lead responsibility for the ICD-10-CM diagnosis codes. The NCHS' staff
confirmed that the Excludes 1 note at subcategory S06.2- requires
further clinical review and consideration. We also examined the
predecessor code for new diagnosis codes S06.A0XA and S06.A1XA, (code
S06.1X0A), to identify the principal diagnosis collection list (list of
principal diagnosis codes) that exclude code S06.1X0A from acting as a
MCC and were the basis for the list of principal diagnosis codes
proposed to exclude new diagnosis codes S06.A0XA and S06.A1XA from
acting as a MCC when reported as a principal diagnosis. We note that
code S06.1X0A is associated with principal diagnosis collection number
3977 and includes diagnosis codes G93.6, G93.82, and S06.1X0A,
consistent with the principal diagnosis exclusions proposed for new
diagnosis codes S06.A0XA and S06.A1XA.
We refer the reader to Table 6G.2 associated with the proposed rule
(and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), to review how codes S06.A0XA and
S06.A1XA were displayed as principal diagnoses as shown with an
asterisk, and the conditions proposed for addition to the CC Exclusion
List to not count as a CC are provided in an indented column
immediately following the affected principal diagnosis. Among the
conditions proposed for addition to the CC Exclusion List to not count
as a CC are those from subcategories S06.1, S06.2, S06.3, S06.4, S06.5,
and S06.6. As such, we believe the commenter inadvertently reviewed
Table 6G.2 as if it were Table 6G.1.
After consideration of the public comments received, and until such
time the CDC/NCHS staff can review the Excludes note at subcategory
S06.2- further, we are finalizing our proposal to exclude diagnosis
codes S06.A0XA and S06.A1XA from acting as a MCC when one of the listed
diagnosis codes from Table 6G.1 is reported as a principal diagnosis
and we are also finalizing our proposal to exclude the listed diagnosis
codes in Table 6G.2 from acting as a MCC when diagnosis code S06.A0XA
or S06.A1XA is reported as the principal diagnosis.
As discussed in section II.D.13. of the preamble of this final
rule, we are finalizing, without modification, the proposed assignments
and designations for the diagnosis codes after consideration of the
public comments received. Therefore, the finalized CC Exclusions List
as displayed in Tables 6G.1, 6G.2, 6H.1, 6H.2, and 6K, associated with
this final rule reflect the severity levels under V39 of the ICD-10 MS-
DRGs.
We have developed Table 6G.1.--Secondary Diagnosis Order Additions
to the CC Exclusions List--FY 2022; Table 6G.2.--Principal Diagnosis
Order Additions to the CC Exclusions List--FY 2022; Table 6H.1.--
Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2022;
and Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2022; and Table 6K. Complete List of CC Exclusions-
FY 2022.
For Table 6G.1, each secondary diagnosis code finalized for
addition to the CC Exclusion List is shown with an asterisk and the
principal diagnoses finalized 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 finalized 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
finalized 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 finalized deletions to the CC Exclusions
List are provided in an indented column immediately following the
affected principal diagnosis. Table 6K is a list of all of the codes
that are defined as either CC or a MCC when used as a secondary
diagnosis. Within the table each code is specifically indicated as CC
or MCC. A table number is given 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 NonCC. Tables 6G.1., 6G.2., 6H.1., 6H.2, and
6K. associated with this final 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 ICD-10 MS-DRGs Version 39 CC Exclusion List is included as
Appendix C of the Definitions Manual (available in two formats; text
and HTML). The manuals are available via the internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/MS-DRGClassifications-and-Software and each
format 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. For all diagnosis codes on the list,
a link (HTML version) 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.
13. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2022, 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.D.16. 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
meeting 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 2022 IPPS/LTCH PPS proposed rule (86 FR 25186) 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 are set forth
in Table 6A. and the proposed O.R. status for the new procedure codes
are set forth in Table 6B. Consistent with our established process, we
examined the MS-DRG assignment and the attributes (severity level and
O.R. status) of the predecessor diagnosis or procedure code, as
applicable, to inform our proposed assignments and designations.
Specifically, we reviewed the predecessor code and MS-DRG assignment
most closely associated with the new diagnosis or procedure code, and
in the absence of claims data, we considered other factors that may be
[[Page 44935]]
relevant to the MS-DRG assignment, including the severity of illness,
treatment difficulty, complexity of service and the resources utilized
in the diagnosis and/or treatment of the condition. We noted that this
process does not automatically result in the new diagnosis or procedure
code being proposed for assignment to the same MS-DRG or to have the
same designation as the predecessor code.
Comment: A commenter stated they did not agree with the proposed
severity level for diagnosis code I5A (Non-ischemic myocardial injury
(non-traumatic)) shown as a CC in Table 6A.--New Diagnosis Codes.
According to the commenter, the 4th Universal Definition of MI states
that a non-ischemic myocardial injury is diagnosed only with an
elevated troponin. The commenter recommended that the CC severity level
for this diagnosis code be changed to a NonCC and to allow the
underlying cause of the non-ischemic myocardial injury to act as the CC
or MCC instead.
Response: We appreciate the commenter's feedback. Consistent with
our annual process of assigning new diagnosis codes to MDCs, MS-DRGs,
and designating a severity level (MCC, CC or NonCC), we reviewed the
predecessor diagnosis code assignment for code I5A. The predecessor
code for code I5A is diagnosis code I21.A9 (Other myocardial infarction
type), which is designated as a MCC. Our clinical advisors did not
agree with a MCC severity level assignment for code I5A because they
stated nonischemic myocardial injury may be secondary to cardiac
conditions such as myocarditis or non-cardiac conditions such as renal
failure and the clinical evaluation and work up vary depending on the
results of testing. Upon further review, they continue to believe that
a CC severity level designation is warranted.
Comment: A commenter stated they did not agree with the proposed
designation of procedure codes 07DT0ZX (Extraction of bone marrow, open
approach, diagnostic) and 07DT0ZZ (Extraction of bone marrow, open
approach) shown as Non-O.R. procedures in Table 6B.--New Procedure
Codes. According to the commenter, these procedures should be
classified as O.R. procedures because open incision down to bone with
direct visualization of bone marrow during extraction requires
operating room resources and anesthesia.
Response: We appreciate the commenter's feedback. Consistent with
our annual process of assigning new procedure codes to MDCs, MS-DRGs,
and classifying as an O.R. or Non-O.R. procedure, we reviewed the
predecessor procedure code assignment for codes 07DT0ZX and 07DT0ZZ.
The predecessor code for code 07DT0ZX is procedure code 079T0ZX
(Drainage of bone marrow, open approach, diagnostic), which is
designated as a Non-O.R. procedure and the predecessor code for code
07DT0ZZ is 079T0ZZ (Drainage of bone marrow, open approach) which is
also designated as a Non-O.R. procedure. Our clinical advisors did not
agree with an O.R. designation because they stated open bone marrow
biopsy procedures would rarely be performed and rarely be the primary
cause for an inpatient admission contributing to resource consumption.
They indicated that if performed, it is more likely they would be
conducted in connection with another open surgical procedure.
After consideration of the comments received, for FY 2022, we are
maintaining the CC severity level for diagnosis code I5A and finalizing
the Non-O.R. designation for procedure codes 07DT0ZX and 07DT0ZZ.
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 2022;
Table 6B.--New Procedure Codes--FY 2022;
Table 6C.--Invalid Diagnosis Codes--FY 2022;
Table 6D.--Invalid Procedure Codes--FY 2022;
Table 6E.--Revised Diagnosis Code Titles--FY 2022;
Table 6F.--Revised Procedure Code Titles--FY 2022;
Table 6G.1.--Secondary Diagnosis Order Additions to the CC
Exclusions List--FY 2022;
Table 6G.2.--Principal Diagnosis Order Additions to the CC
Exclusions List--FY 2022;
Table 6H.1.--Secondary Diagnosis Order Deletions to the CC
Exclusions List-FY 2022;
Table 6H.2.--Principal Diagnosis Order Deletions to the CC
Exclusions List--FY 2022;
Table 6I.--Complete MCC List--FY 2022;
Table 6I.1.--Additions to the MCC List--FY 2022;
Table 6I.2.--Deletions to the MCC List--FY 2022;
Table 6J.--Complete CC List--FY 2022;
Table 6J.1.--Additions to the CC List--FY 2022;
Table 6J.2.--Deletions to the CC List--FY 2022; and
Table 6K.--Complete List of CC Exclusions--FY 2022
14. 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 2021 IPPS/LTCH PPS final rule (85 FR 58448),
we made available the FY 2021 ICD-10 MCE Version 38 manual file. The
manual contains the definitions of the Medicare code edits, including a
description of each coding edit with the corresponding diagnosis and
procedure code edit lists. The link to this MCE manual file, along with
the link to the mainframe and computer software for the MCE Version 38
(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.
In the FY 2022 IPPS/LTCH PPS proposed rule, we addressed the MCE
requests we received by the November 1, 2020 deadline. We also
discussed the proposals we were making based on our internal review and
analysis. In this FY 2022 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 review 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
[[Page 44936]]
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 2022 ICD-10 MCE Version 39
Manual file, along with the link to the mainframe and computer software
for the MCE Version 39 (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.
a. External Causes of Morbidity Codes as Principal Diagnosis
In the MCE, the external cause codes (V, W, X, or Y codes) describe
the circumstance causing an injury, not the nature of the injury, and
therefore should not be used as a principal diagnosis.
As discussed in section II.D.13. of the preamble of the proposed
rule and section II.D.13. of this final rule, Table 6A.--New Diagnosis
Codes, lists the diagnosis codes that have been approved to date which
will be effective with discharges on and after October 1, 2021. We
proposed to add the following new ICD-10-CM diagnosis codes to the
External Causes of Morbidity edit code list.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.133
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in the previous table to the External Causes of Morbidity
edit code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the External Causes of Morbidity edit code list under
the ICD-10 MCE Version 39, effective October 1, 2021.
b. Age Conflict Edit
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 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 9-64 years inclusive (for example,
diabetes in pregnancy, antepartum pulmonary complication).
Adult--Age range is 15-124 years inclusive (for example,
senile delirium, mature cataract).
(1) Pediatric Diagnoses
Under the ICD-10 MCE, the Pediatric diagnoses category for the Age
conflict edit considers the age range of 0 to 17 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.
As discussed in section II.D.13. of the preamble of the proposed
rule and section II.D.13. of this final rule, Table 6A.--New Diagnosis
Codes, lists the diagnosis codes that have been approved to date which
will be effective with discharges on and after October 1, 2021. We
proposed to add the following new ICD-10-CM diagnosis codes to the
Pediatric diagnoses category code list under the Age conflict edit.
[GRAPHIC] [TIFF OMITTED] TR13AU21.134
Comment: Commenters agreed with CMS' proposal to add the diagnosis
codes listed in the previous table to the Pediatric diagnoses category
code list under the Age Conflict edit.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Pediatric diagnoses category code list under the
Age Conflict edit in the ICD-10 MCE Version 39, effective October 1,
2021.
c. Sex Conflict 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
[[Page 44937]]
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.
(1) Diagnoses for Females Only Edit
As discussed in section II.D.13. of the preamble of the proposed
rule and section II.D.13. of this final rule, Table 6A.--New Diagnosis
Codes, lists the new diagnosis codes that have been approved to date
which will be effective with discharges on and after October 1, 2021.
We proposed to add the following new ICD-10-CM diagnosis codes to the
edit code list for the Diagnoses for Females Only edit.
[GRAPHIC] [TIFF OMITTED] TR13AU21.135
Comment: Commenters supported the proposal to add the ICD-10-CM
diagnosis codes listed in the previous table to the Diagnoses for
Females Only edit code list.
Response: We appreciate the commenters' support.
After consideration of the public comments we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Diagnoses for Females Only edit code list under
the ICD-10 MCE Version 39, effective October 1, 2021.
d. Unacceptable Principal Diagnosis Edit
In the MCE, there are select codes that describe a circumstance
which 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.
As discussed in section II.D.13. of the preamble of the proposed
rule and section II.D.13. of this final rule, Table 6A.--New Diagnosis
Codes, lists the new diagnosis codes that have been approved to date
which will be effective with discharges on and after October 1, 2021.
We stated in the proposed rule that as a result of proposed new
instructional notes to ``Code first underlying disease'' (which
indicate the proper sequencing order of the codes) for existing
diagnosis codes found at subcategory M40.1 (Other secondary kyphosis)
and subcategory M41.5 (Other secondary scoliosis) discussed at the
September 8-9, 2020 ICD-10 Coordination and Maintenance Committee
meeting, we were proposing to add the following new and, if those
instructional notes were finalized, existing ICD-10-CM diagnosis codes
at subcategories M40.1 and M41.5, to the Unacceptable Principal
Diagnosis edit code list.
[[Page 44938]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.136
[[Page 44939]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.137
Comment: Many commenters supported our proposal to add the
diagnosis codes listed in the previous table to the Unacceptable
Principal Diagnosis edit code list.
Response: We appreciate the commenters' support.
Comment: A commenter expressed disagreement with the proposal to
add the listed diagnosis codes from subcategories M40.1 and M41.5 to
the unacceptable principal diagnosis code edit list if the ``code first
underlying disease'' notes are finalized. The commenter acknowledged
that physicians can reasonably diagnose acquired, new onset scoliosis
and/or kyphosis as ``secondary'' to an underlying condition; however,
the commenter stated diagnostic workup must occur (usually as an
outpatient) before the exact cause(s) can be determined, such as
degenerative disc disease, spondylosis, osteoporosis, pathologic
fracture, failed fusion, etc. According to the commenter, when there
are two or more potential causes, physicians may be unable to identify
one specific cause versus multifactorial causes and the commenter
stated their concern that when queried for the underlying cause(s), the
physician may respond that they are unable to determine. The commenter
added that when secondary scoliosis and/or kyphosis are responsible for
causing surgical hospitalizations, the ability to sequence these
conditions as a principal diagnosis should remain when the underlying
cause(s) cannot be obtained.
The commenter referenced language from the ICD-10-CM Official
Guidelines for Coding and Reporting, with an emphasis on section
I.A.13. Etiology/manifestation convention (``code first'', ``use
additional code'' and ``in diseases classified elsewhere'' notes) which
essentially states that ``Code first'' and ``Use additional code''
notes are also used as sequencing rules in the classification for
certain codes that are not part of an etiology manifestation
combination and section I.B.7. Multiple coding for a single condition,
which states ``code first'' notes are also under certain codes that are
not specifically manifestation codes but may be due to an underlying
cause. When there is a ``code first'' note and an underlying condition
is present, the underlying condition should be sequenced first, if
known.
Response: We appreciate the commenters' feedback. We note that we
consulted with the staff at the Centers for Disease Control and
Prevention's (CDC's) National Center for Health Statistics (NCHS)
because NCHS has the lead responsibility for the ICD-10-CM diagnosis
codes. The NCHS' staff confirmed that the intent is that the listed
diagnosis codes from subcategories M40.1 and M41.5 be reported as
secondary diagnoses. The staff agreed that in cases where it could be
more than one condition as the underlying cause (E.g. Multifactorial),
that the guideline for the principal diagnosis could be applied.
Section 11. C. (Two or more diagnoses that equally meet the definition
for principal diagnosis.) in the ICD-10-CM Official Guidelines for
Coding and Reporting.
After consideration of the public comments that we received, we are
finalizing our proposal to add the diagnosis codes listed in the
previous table to the Unacceptable Principal Diagnosis edit code list
under the ICD-10 MCE Version 39, effective October 1, 2021.
In addition, as discussed in section II.D.13. of the preamble of
the proposed rule and section II.D.13. of this final rule, Table 6C.--
Invalid Diagnosis Codes, lists the diagnosis codes that are no longer
effective October 1, 2021. Included in this table are the following
ICD-10-CM diagnosis codes that are currently listed on the Unacceptable
Principal Diagnosis edit code list. We proposed to delete these codes
from the Unacceptable Principal Diagnosis edit code list.
[GRAPHIC] [TIFF OMITTED] TR13AU21.138
Comment: Commenters agreed with our proposal to remove the codes
listed in the previous table from the Unacceptable Principal Diagnosis
edit code list since they are no longer valid effective October 1,
2021.
Response: We appreciate the commenters' support.
After consideration of the public comments that we received, we are
finalizing our proposal to remove the diagnosis codes previously listed
from
[[Page 44940]]
the Unacceptable Principal Diagnosis edit code list under the ICD-10
MCE Version 39, effective October 1, 2021.
e. Unspecified Codes
As discussed in section II.D.12.c. of the preamble of the proposed
rule and this final rule, we requested public comments on a potential
change to the severity level designations for ``unspecified'' ICD-10-CM
diagnosis codes that we were considering adopting for FY 2022. In
connection with that request, we also requested public comments on the
potential creation of a new MCE code edit involving these
``unspecified'' codes for FY 2022. Specifically, this MCE code edit
could trigger when an ``unspecified'' diagnosis code currently
designated as either a CC or MCC, that includes other codes available
in that code subcategory that further specify the anatomic site, is
entered. We referred the reader to table 6P.3a 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 list of unspecified diagnosis
codes that would be subject to this edit. We stated that this edit
could signal to the provider that a more specific code is available to
report. We also stated we believed this edit aligns with documentation
improvement efforts and leverages the specificity within ICD-10. As
part of our request for comment on the potential creation of this new
MCE code edit for these ``unspecified'' codes, we noted we were
interested in comments on how this MCE code edit may be developed for
FY 2022 to more accurately reflect each health care encounter and
improve the reliability and validity of the coded data.
Comment: Many commenters expressed support for the creation of a
new ``unspecified'' code edit where other codes in the subcategory
(family) exist describing laterality, however, the commenters stated
that the edit should be phased in with a subset of the ``unspecified''
codes at a time. The commenters also stated this approach would help
provide training time for coding professionals and clinical
documentation program staff on the potential changes to the severity
level for the unspecified codes. A commenter stated a phased approach
could also better prepare teams to adapt to potential operational
challenges in addressing these edits industry wide. Another commenter
who expressed support stated they agreed with the list of codes, with
the exception of the neoplasm codes.
Another commenter expressed support for the creation of a new
``unspecified'' code MCE edit to align with the potential change to the
severity level designation of ``unspecified'' diagnosis codes to a
NonCC when there are other codes available in that code subcategory
that further specify the anatomic site.
Other commenters stated they appreciated CMS assisting hospitals to
more accurately code and not negatively impact MS-DRG group assignment,
however according to the commenters, edits at the time of claim
submission will add significant administrative burden to hospitals.
According to the commenters, it would necessitate every case being
routed from billing staff back to coding staff and then coding staff
having to query physicians to amend the medical record with
specificity. The commenters stated they did not object to CMS
instructing providers to no longer report unspecified codes if it was
done in concert with updates to the coding guidelines. Commenters
suggested a delay in the implementation of the edit to allow the
Cooperating Parties for ICD-10 time to update the current guidelines to
include reporting specificity (for example laterality) based on non-
physician clinical staff documentation.
Other commenters recommended that CMS conduct an analysis of how
often the unspecified codes that were listed in Table 6P.2a in
association with the proposed rule are reported and how many resources
they consume.
Response: In response to the recommendation that CMS implement the
edit using a phased approach to allow time for staff to prepare for
potential changes to the severity level for the unspecified codes, we
do not believe that a phased approach is necessary. As discussed in
section II.D.12.c. of the preamble of this final rule, we are not
finalizing any changes to the severity level designations for the
unspecified codes that were subject to the potential change and listed
in Table 6P.2a in association with the proposed rule (available via the
internet on the CMS website at: https://www.cms.gov/medicare/medicare-
fee-for-service-payment/acuteinpatientpps), at this time. As also
discussed in section II.D.12.c. of the preamble of this final rule, in
response to public comments, we removed the diagnosis codes describing
neoplasm of an unspecified site from the list of codes that were being
considered for possible adoption of a change to the severity level
designation.
In response to commenters' concerns that an edit for
``unspecified'' codes would create an administrative burden to
hospitals, as it may result in additional physician queries, we note
that the intent of the edit is not to create the need for physician
queries. In anticipation of such potential concerns and suggested
updates to the coding guidelines, we note that, as one of the four
Cooperating Parties for ICD-10, we considered these issues in advance
and updated the guidelines accordingly, as shown in the FY 2022 ICD-10-
CM Official Guidelines for Coding and Reporting (available via the
internet on the CMS website at: https://www.cms.gov/medicare/icd-10/2022-icd-10-cm) and discussed in section II.D.12.c. of the preamble of
this final rule. Specifically, as stated in section I.B.13. of the
guidelines, ``When laterality is not documented by the patient's
provider, code assignment for the affected side may be based on medical
record documentation from other clinicians. If there is conflicting
medical record documentation regarding the affected side, the patient's
attending provider should be queried for clarification. Codes for
``unspecified'' side should rarely be used, such as when the
documentation in the record is insufficient to determine the affected
side and it is not possible to obtain clarification.'' Corresponding
revisions to the guidelines can also be found in section I.B.14.
Therefore, we believe that the updates made to the coding guidelines
address that aspect of the commenters' concerns.
With respect to the commenters' recommendation that CMS conduct an
analysis of how often the unspecified codes that were listed in Table
6P.2a are reported and how many resources they consume, we refer to the
discussion in section II.D.12.c. of the preamble of this final rule,
and note that Table 6P.2a associated with the proposed rule
specifically provided this information.
After consideration of the public comments received, we are
finalizing the implementation of a new code edit for ``unspecified''
codes, where there are other codes available in that code subcategory
that further specify the anatomic site. As noted previously, the
severity level of the unspecified diagnosis codes is unaffected and
therefore this edit does not affect the payment the provider is
eligible to receive. We also note that, in consideration of commenters'
concerns that more time is needed to educate providers, the
implementation date for this new edit is April 1, 2022. As such, we are
finalizing the new edit for FY 2022, effective with discharges on and
after April 1, 2022. Stakeholders can anticipate future information
regarding
[[Page 44941]]
an updated version of the ICD-10 Medicare Severity Diagnosis Related
Group (MS-DRG) GROUPER Software and Medicare Code Editor (MCE) ICD-10
Software to be released by February 1, 2022 via the internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
We are finalizing a new ``Unspecified Code Edit: to read as
follows:
20. Unspecified Code Edit
Unspecified codes exist in the ICD-10-CM classification for
circumstances when documentation in the medical record does not provide
the level of detail needed to support reporting a more specific code.
However, in the inpatient setting, there should generally be very
limited and rare circumstances for which the laterality (right, left,
bilateral) of a condition is unable to be documented and reported.
The following pages contain the list of unspecified ICD-10-CM
diagnosis codes for which there is a more specific code to identify
laterality (right, left, bilateral) within that code family.''
The list of codes subject to this edit are identified in Table
6P.3a associated with this final rule. In addition to the removal of
the neoplasm codes from the unspecified codes list discussed
previously, we also removed the following codes from consideration in
response to public comments and further internal review, as discussed
previously in connection with the potential change to the severity
level designation.
BILLING CODE 4120-01-P
[[Page 44942]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.139
BILLING CODE 4120-01-C
When a code from the list displayed in Table 6P.3a is entered on
the claim, the edit will be triggered. It is the provider's
responsibility to determine if a more specific code from that
subcategory is available in the medical
[[Page 44943]]
record documentation by a clinical provider. If, upon review,
additional information to identify the laterality from the available
medical record documentation by any other clinical provider is unable
to be obtained or there is documentation in the record that the
physician is clinically unable to determine the laterality because of
the nature of the disease/condition, then the provider must enter that
information into the remarks section. Specifically, the provider may
enter ``UNABLE TO DET LAT 1'' to identify that they are unable to
obtain additional information to specify laterality or they may enter
``UNABLE TO DET LAT 2'' to identify that the physician is clinically
unable to determine laterality.'' This action and language will enable
the Medicare Administrative Contractor (MAC) to bypass the edit and
process the claim accordingly. If there is no language entered into the
remarks section as to the availability of additional information to
specify laterality and the provider submits the claim for processing,
the claim would then be returned to the provider.
f. 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. Subsequently, in the FY 2019 IPPS/LTCH PPS proposed rule (83
FR 20235) we stated that we engaged a contractor to assist in the
review of the limited coverage and non-covered 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 is 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 also noted that the purpose of the MCE is to ensure that
errors and inconsistencies in the coded data are recognized during
Medicare claims 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.
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, 2021.
15. 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.
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule, we
received a request to examine the MS-DRG hierarchy within MDC 05
(Diseases and Disorders of the Circulatory System). The requestor
stated its request to review the hierarchy within MDC 05 was based on
the relative weights within each MS-DRG subdivision which they stated
are supportive of higher position within the hierarchy. The requestor
stated that when multiple procedures are performed, it is
[[Page 44944]]
reasonable for providers to be compensated for the highest weighted
procedure. The requestor did not specify which data year it analyzed to
identify the relative weights. As discussed in the proposed rule and
previously in this section, in reviewing the surgical hierarchy, we
weigh the average costs of each MS-DRG in the class by frequency (that
is, by the number of cases in the MS-DRG), not the relative weights of
each MS-DRG as suggested by the requestor, to determine average
resource consumption for the surgical class; therefore, consistent with
our annual process, we stated we used the methodology as described
previously to review the surgical hierarchy within MDC 05.
Based on our review of the surgical hierarchy within MDC 05 in
response to this request, and in response to the request we received to
review the MS-DRG assignments for cases involving the surgical ablation
procedure for atrial fibrillation as discussed in section II.D.5.e. of
the preamble of the proposed rule and this final rule, we proposed to
revise the surgical hierarchy for the MS-DRGs in MDC 05 for FY 2022.
Specifically, we proposed to sequence MS-DRGs 231-236 above MS-DRGs
222-227 and below MS-DRGs 216-221, sequence MS-DRGs 222-227 above MS-
DRGs 266-227 and below MS-DRGs 231-236, sequence MS-DRGs 266-267 above
MS-DRGs 268-269 and below MS-DRGs 222-227, sequence MS-DRGs 228-229
above MS-DRGs 319-320 and below MS-DRGs 268-269.
Our proposal for Appendix D MS-DRG Surgical Hierarchy by MDC and
MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 39 is
illustrated in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.141
Comment: Commenters supported our proposal. A commenter stated that
this reordering of the surgical hierarchy appears reasonable. However,
other commenters opposed portions of our proposal and requested that
CMS reconsider and maintain MS-DRGs 222-227 (Cardiac Defibrillator
Implant) as higher in the surgical hierarchy than MS-DRGs 231-236
(Coronary Bypass). These commenters stated that if CABG procedures are
considered in the surgical hierarchy before procedures to insert a
cardiac defibrillator implant, the majority of the cases would probably
be assigned to MS-DRGs 235 and 236 (Coronary Bypass without Cardiac
Catheterization with and without MCC, respectively), which would not
account for the higher cost of the defibrillators.
Another commenter stated while they agreed with the proposal to
sequence MS-DRGs 231-236 above MS-DRGs 228 and 229 (Other
Cardiothoracic Procedures), they stated that CMS did not provide
specific discussion regarding the more extensive re-sequencing in MDC
05 and suggested that CMS to hold on these revisions to the surgical
hierarchy pending a clear and specific rationale for each, to which the
public can respond. Another commenter proposed an alternative option by
stating that it seemed more appropriate to sequence MS-DRG 245 (AICD
Generator Procedures) above MS-DRGs 270--272 (Other Major
Cardiovascular Procedures) and below MS-DRGs 228-229 (Other
Cardiothoracic Procedures) and to sequence MS-DRGs 270-272 above MS-
DRGs 319-320 (Other Endovascular Cardiac Valve Procedures) and below
MS-DRG 245. However, this commenter did not provide any rationale for
their alternative option.
Response: We appreciate the commenters' support.
In response to the comment that CMS did not provide specific
discussion, we note that we indicated in the proposed rule and
previously in this section, that in reviewing the surgical hierarchy,
we 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. Consistent with our annual
process, we stated we used the methodology as described previously to
review the surgical hierarchy within MDC 05.
To compare and analyze the impact of our suggested modifications in
response to the commenter's suggestion that we sequence MS-DRGs 222-227
above MS-DRGs 231-236, we reviewed the surgical hierarchy once again.
Specifically, we examined the redistribution of cases that is
anticipated to occur as a result of the proposal to move MS-DRGs 231-
236 (Coronary Bypass) above MS-DRGs 222-227 (Cardiac Defibrillator
Implant) in the surgical hierarchy of MDC 05 for Version 39 of the ICD-
10 MS-DRGs. We processed the claims data from the March 2020 update of
the FY 2019 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38
and then processed the same claims data through the ICD-10 MS-DRG
GROUPER Version 39 for comparison. The number of cases from this
comparison that result in different MS-DRG assignments is the number of
the cases that are anticipated to potentially shift or be
redistributed. Our findings are shown in the following table.
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[[Page 44945]]
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We found that a small number of cases, 67 cases and 24 cases, are
anticipated to potentially shift or be
[[Page 44946]]
redistributed into MS-DRGs 235 and 236, respectively.
As we did with March 2020 update of the FY 2019 MedPAR file, we
then examined the redistribution of cases that is anticipated to occur
by processing the claims data, this time from the September 2020 update
of the FY 2020 MedPAR file through the ICD-10 MS-DRG GROUPER Version 38
and then processed the same claims data through the ICD-10 MS-DRG
GROUPER Version 39 for comparison. Our findings are shown in the
following table.
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[[Page 44947]]
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Similarly, we found that a small number of cases, 84 cases and 23
cases, are anticipated to potentially shift or be redistributed into
MS-DRGs 235 and 236, respectively.
Our clinical advisors reviewed these data and the commenter's
concerns and state, as in open concomitant surgical ablation
procedures, when a CABG procedure is performed along with the insertion
of a cardiac defibrillator implant, the CABG component of the procedure
is more technically complex than the procedure to insert the cardiac
defibrillator implant. The redistribution of the small number of cases
to MS-DRGs 235 and 236 as a result of the proposed hierarchy change
more appropriately reflects resource utilization when multiple cardiac
procedures are performed and will result in the most suitable MS-DRG
assignment.
In the absence of a compelling rationale to further modify our
proposal as suggested by the alternate option provided by the
commenter, our clinical advisors continue to state that the proposed
revision to the surgical hierarchy leads to a grouping that is more
coherent and better accounts for the resources expended to address the
more complex procedures from other cases redistributed during the
hierarchy change.
Therefore, after consideration of the public comments we received,
we are finalizing the proposed changes to the surgical hierarchy for
the MS-DRGs in MDC 05 as illustrated in the table for the surgical
hierarchy within Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG
of the ICD-10 MS-DRG Definitions Manual Version 39, without
modification, for FY 2022.
16. 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 Centers for Disease Control and Prevention's (CDC)
National Center for Health Statistics (NCHS) 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: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes. 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 stated
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
[[Page 44948]]
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 during the
public meetings and in writing, the Committee formulates
recommendations, which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2022 at a public meeting held on September 8-9,
2020 and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 09, 2020.
The Committee held its 2021 meeting on March 9-10, 2021. The
deadline for submitting comments on the code proposals being considered
for an October 1, 2021 implementation was April 9, 2021. 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 June 2021 would be
included in the October 1, 2021 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 and final rules, they are not subject
to comment in the proposed or final rule. Because of the length of
these tables, they are not published in the Addendum to the proposed or
final rule. Rather, they are available via the internet as discussed in
section VI. of the Addendum to the proposed rule and this final rule.
Recordings for the virtual meeting discussions of the procedure
codes at the Committee's September 8-9, 2020 meeting and the March 9-
10, 2021 meeting can be obtained from the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials. The
materials for the discussions relating to diagnosis codes at the
September 8-9, 2020 meeting and March 9-10, 2021 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, participating in a
Committee meeting, timeline requirements and meeting dates.
We encourage commenters to submit questions and comments on coding
issues involving diagnosis codes via Email to: cdc.gov">nchsicd10cm@cdc.gov.
Questions and comments concerning the procedure codes should be
submitted via Email to: [email protected].
We stated in the proposed rule that as a result of the ongoing
COVID-19 public health emergency, the CDC implemented six new diagnosis
codes describing conditions related to COVID-19 into the ICD-10-CM
effective with discharges on and after January 1, 2021. The diagnosis
codes are
[GRAPHIC] [TIFF OMITTED] TR13AU21.146
We refer the reader to the CDC web page at https://www.cdc.gov/nchs/icd/icd10cm.htm for additional details regarding the
implementation of these new diagnosis codes.
As we discussed in the proposed rule, we provided the MS-DRG
assignments for the six diagnosis codes effective with discharges on
and after January 1, 2021, consistent with our established process for
assigning new diagnosis codes. Specifically, we review the predecessor
diagnosis code and MS-DRG assignment most closely associated with the
new diagnosis code, and consider other factors that may be relevant to
the MS-DRG assignment, including the severity of illness, treatment
difficulty, and the resources utilized for the specific condition/
diagnosis. We note that this process does not automatically result in
the new diagnosis code being assigned to the same MS-DRG as the
predecessor code. The assignments for the previously listed diagnosis
codes are reflected in Table 6A--New Diagnosis Codes 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). As with the other new diagnosis codes and
MS-DRG assignments included in Table 6A of the proposed rule, we
solicited public comments on the most appropriate MDC, MS-DRG, and
severity level assignments for these codes for FY 2022, as well as any
other options for the GROUPER logic.
We did not receive any comments opposing the MDC, MS-DRG, and
severity level assignments for the listed codes and are therefore,
finalizing the assignments as reflected in Table 6A--New Diagnosis
Codes in association with this final rule.
In addition, we noted in the proposed rule that CMS implemented 21
new procedure codes describing the introduction or infusion of
therapeutics, including monoclonal antibodies and vaccines for COVID-19
treatment, into the ICD-10-PCS effective with
[[Page 44949]]
discharges on and after January 01, 2021. The 21 procedure codes listed
in this section of this rule are designated as non-O.R. and do not
affect any MDC or MS-DRG assignment as shown in the following table.
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[[Page 44950]]
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The ICD-10 MS-DRG assignment for cases reporting any one of the 21
procedure codes is dependent on the reported principal diagnosis, any
secondary diagnoses defined as a CC or MCC, procedures or services
performed, age, sex, and discharge status. The 21 procedure codes are
reflected in Table 6B--New Procedure Codes 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.) As with the other new procedure codes and MS-DRG
assignments included in Table 6B of the proposed rule, we solicited
public comments on the most appropriate MDC, MS-DRG, and operating room
status assignments for these codes for FY 2022, as well as any other
options for the GROUPER logic.
We did not receive any comments opposing the MDC, MS-DRG, and
operating room status assignments for the listed codes and are
therefore, finalizing the assignments as reflected in Table 6B--New
Procedure Codes in association with this final rule.
In the proposed rule we also noted that Change Request (CR) 11895,
Transmittal 10654, titled ``Fiscal Year (FY) 2021 Annual Update to the
Medicare Code Editor (MCE) and International Classification of
Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and
Procedure Coding System (ICD-10-PCS)'', was issued on March 12, 2021
(available via the internet on the CMS website at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r10654cp)
regarding the release of an updated version of the ICD-10 MS-DRG
GROUPER and Medicare Code Editor software, Version 38.1, effective with
discharges on and after January 1, 2021, reflecting the new diagnosis
and procedure codes. The updated software, along with the updated ICD-
10 MS-DRG V38.1 Definitions Manual and the Definitions of Medicare Code
Edits V38.1 manual is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
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) of Public Law 108-173 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.
Historically, 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 Pub. L.
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 during the Committee's public meeting. The
request must identify the reason why a new code is needed in April for
purposes of the new technology process. Meeting participants and those
reviewing the Committee meeting materials are provided the opportunity
to comment on this expedited request. All other topics are considered
for the October 1 update. Participants of the Committee meeting and
those reviewing the Committee meeting materials are encouraged to
comment on all such requests. There were no code requests approved for
an expedited April 1, 2021 implementation at the September 8-9, 2020
Committee meetings. Therefore, there were no new codes implemented
April 1, 2021.
We noted in the proposed rule that during the March 9-10, 2021 ICD-
10 Coordination and Maintenance Committee meeting we announced our
consideration of an April 1 implementation date for ICD-10-CM diagnosis
and ICD-10-PCS procedure code updates, in addition to the current
October 1 annual update for ICD-10-CM diagnosis codes and ICD-10-PCS
procedure codes. We stated that this April 1 code update would be in
addition to the existing April 1 update under section
1886(d)(5)(k)(vii) of the Act for diagnosis or procedure code
[[Page 44951]]
revisions needed to describe new technologies and medical services for
purposes of the new technology add-on payment process. As explained
during the March 9-10, 2021 meeting, we stated we believe this
additional April 1 implementation date for new codes would allow for
earlier recognition of diagnoses, conditions, and illnesses as well as
procedures, services, and treatments in the claims data. We also stated
we believe this earlier recognition would be beneficial for purposes of
reporting, data collection, tracking clinical outcomes, claims
processing, surveillance, research, policy decisions and data
interoperability. We noted, as previously summarized, that in 2005, in
connection with the implementation of the current April 1 update for
diagnosis or procedure code revisions for purposes of the new
technology add-on payment process, stakeholders expressed concerns with
an April 1 update, specifically with regard to the time needed to
update hospital systems and obtain new code books and coding software.
We further stated we believe that the advances in technology that have
occurred since that time, including the use of electronic health
records (EHRs), electronic coding books, and updated encoder software
that are now utilized by the majority of providers, would alleviate
those concerns and make a broader April 1 update more feasible today.
Consistent with our established process for the existing April 1 update
under section 1886(d)(5)(k)(vii) of the Act, if adopted, any new ICD-10
code updates finalized for implementation on the following April 1
would be announced in November of the prior year, which would provide a
4-month timeframe for the public to receive notice about the diagnosis
and/or procedure code updates with respect to the codes, code
descriptions, code designations (severity level for diagnosis codes or
O.R. status for procedure codes) and code assignment under the ICD-10
MS-DRGs. As discussed during the March 9-10, 2021 meeting, all April 1
code update files would be made publicly available by February 1,
providing a 2-month timeframe for providers to incorporate systems
updates. We also noted in the proposed rule that we do not anticipate
any need for code book publishers to issue new code books as a result
of an April 1 code update, if adopted. Rather, as was done in the past
at the publisher's discretion, supplemental pages containing the code
update information were made available and sent to purchasers of the
code book products. We further noted that historically, coders would
hand-write any updates or notes directly into their code books. In
addition, we stated in the proposed rule that with the availability of
electronic code book files, we would anticipate any April 1 code
updates, if adopted, could be reasonably completed in the allotted
timeframe. For these same reasons, we also stated we do not believe a
5-month time period would continue to be needed to update providers'
systems to reflect newly approved coding changes. We further noted that
if an April 1 update were to be adopted, it could be through a phased
approach, such that initially, the number and nature of the code
updates would be fewer and less comprehensive as compared to the
existing October 1 update. For example, it was discussed during the
meeting that consideration could first be given to proposals identified
as ``Addenda''. For diagnosis codes, the proposed addenda update
typically consist primarily of minor revisions to the Index and Tabular
List, such as corrections to typos and changes to instructional notes.
For procedure codes, the proposed addenda update typically consist
primarily of minor revisions to the Index and Tables, such as adding or
deleting entries to describe a body part or approach value or making
changes to the Substance and Device Keys. We stated we would use our
established process to implement an April 1 code update, which would
include presenting proposals for April 1 consideration at the September
ICD-10 Coordination and Maintenance Committee meeting, requesting
public comments, reviewing the public comments, finalizing codes, and
announcing the new codes with their assignments consistent with the new
GROUPER release information. We also stated that under our contemplated
process, requestors would indicate whether they are submitting their
code request for consideration for an April 1 implementation date, if
adopted, or an October 1 implementation date. We further stated that
the ICD-10 Coordination and Maintenance Committee would make efforts to
accommodate the requested implementation date for each request
submitted. However, the Committee would determine which requests would
be presented for consideration for an April 1 implementation date or an
October 1 implementation date. We refer the reader to the Agenda packet
from the meeting at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional information regarding this
announcement and our request for comments.
We stated that if this new April 1 implementation date is adopted,
we would assign the codes approved for the April 1 update to an MS-
DRG(s) using our established process for GROUPER assignments for new
diagnosis and procedure codes. Specifically, consistent with our
established process for assigning new diagnosis and procedure codes, we
would review the predecessor code and MS-DRG assignment most closely
associated with the new diagnosis or procedure code, and in the absence
of claims data, we would consider other factors that may be relevant to
the MS-DRG assignment, including the severity of illness, treatment
difficulty, complexity of service and the resources utilized in the
diagnosis and/or treatment of the condition. We noted that this process
would not automatically result in the new diagnosis or procedure code
being assigned to the same MS-DRG or having the same designation as the
predecessor code.
Comment: Several commenters expressed support for an April 1
update, in addition to the October 1 annual update. The commenters
encouraged the CDC/NCHS and CMS to develop policies that expedite the
assignment of new diagnosis and procedure codes to meet the needs of
clinical advancements. Other commenters commended CMS for its ongoing
efforts to improve the timeliness of coding and payment decisions for
new technologies, and expressed their support for an April 1 update as
a key piece of those efforts. Some commenters stated that more timely
coding updates will allow CMS additional time to analyze how therapies
are utilized in the inpatient setting and will improve the completeness
of claims data capture that includes volume, length of stay, and cost
data that should lead to better informed rate-setting methodologies.
According to the commenters, expedited coding could potentially reduce
the amount of time required to stabilize payments to hospitals for
utilizing first-in-class therapies. Many commenters agreed that an
additional update for ICD-10 codes would allow for earlier recognition
of diagnoses, conditions, and illnesses as well as procedures,
services, and treatments in the claims data. A commenter stated they
strongly support the timely and specific data capture of ICD-10-CM and
ICD-10-PCS codes for the purposes of tracking rare diseases, research,
tracking of social determinants of health (SDOH), advancing medicine
through quality data, and for public health. This
[[Page 44952]]
commenter stated that processes are already in place for code updates
in October and this new proposed update, if adopted, would not be a
departure from that process, but would yield more timely implementation
of important codes. According to the commenter, this would lessen the
burden of putting all updates into one annual update in October.
Another commenter emphasized that the availability of an April 1
process for updating and implementing new technology related ICD-10-CM
and ICD-10-PCS codes is especially important for encouraging access to
transformative therapies, including novel cell and gene therapies-such
as TIL therapies and chimeric antigen receptor (CAR) T-cell therapies.
According to the commenter, these new technologies target some of the
most serious medical conditions imaginable, offer treatment that is
highly personalized to each individual patient, and carry vast
transformational potential in terms of patient care and clinical
outcomes. The commenter stated that to the extent CMS and CDC/NCHS are
considering a phased-in implementation of the April 1 code
implementation as the agencies suggested during the March 9-10, 2021
ICD-10 Coordination and Maintenance Committee meeting, the commenter
strongly urged the agencies to ensure that if adopted, the initial
implementation permit new technology codes related to novel cell and
gene therapies to be implemented effective April 1, as well as October
1. The commenter asserted that these types of therapies are limited in
number and there is a profound and unique need for the prompt
availability of such therapies in order to encourage more timely
beneficiary access to these potentially lifesaving new therapies.
Another commenter expressed its support for the approach to
integrating the potential April 1 implementation of new codes into the
IPPS based on the MS-DRG policies in effect under the established
process. According to the commenter, if adopted, this April 1
implementation option could offer several specific advantages for MS-
DRG assignment for technologies receiving market approval too late to
have coding and payment in place on October 1, particularly related to
applications for new technology add-on payments. The commenter stated
their belief that it also maintains the current public notice and
comment rulemaking process for proposing, considering, and implementing
decisions affecting MS-DRG assignments, with the additional flexibility
to establish policies in anticipation of codes implemented on April 1.
This commenter stated that its support for an April 1 implementation
presumes that conditional decisions are established through prior
notice and comment rulemaking.
In response to the request for feedback on what criteria or factors
should be taken into consideration for determining whether to consider
a code request for an April 1 or October 1 implementation date, some
commenters stated CMS should consider expedited access. Specifically,
according to the commenters, CMS should work with manufacturers to
identify an implementation date that most closely aligns with approval
by the Food and Drug Administration as the implementation date of the
new procedure code and consideration for a new technology add-on
payment (NTAP) as well. By doing so, the commenters indicated CMS will
take steps to align the IPPS and provider reimbursement with the pace
of innovation. The commenters also stated CMS should consider new codes
that are related to new therapies that will be up for regulatory
approval, or for diagnoses that are new and important to public health
(such as those from the COVID-19 PHE). The commenters stated it is
better to have coding in place before, and certainly as soon as, a
product is approved, and sooner rather than later when an emerging
public health issue is identified. A commenter suggested that if a
sponsor anticipates receiving approval from the Food and Drug
Administration in the third quarter of the year, the ICD-10 code update
could occur in April. Similarly, if an approval is anticipated in the
first quarter, then the ICD-10 code update could occur October 1.
According to the commenter, the Committee should strive to make data
collection as accurate and timely as possible.
Other commenters recommended that the Committee should consider the
goal of facilitating and promoting patient access and well-being. These
commenters stated the Committee should prioritize updates for which
significant public feedback and corresponding medical literature
indicate a pronounced need for expedited implementation to further
understanding of particular conditions and advance clinical research on
potential treatment options.
A few commenters stated that although the coding changes associated
with COVID-19 under the PHE have demonstrated it is possible to
implement more frequent coding updates that are limited in number,
significant adjustments were needed to incorporate the updates and
resulted in operational issues for hospitals. These commenters
suggested that CMS consider limiting the number of codes approved with
respect to adoption of an April 1 implementation date for ICD-10-CM
diagnosis and ICD-10-PCS procedure code updates, in addition to the
current October 1 annual update. In addition to limited updates, other
commenters specifically recommended that if adopted, April 1 code
updates should be restricted to simple, straightforward changes, such
as the Addenda proposals involving proposed updates to the Alphabetic
Index and Tabular List of Diseases and the correction of errors. The
commenters stated that clear and consistent criteria should be applied
to determine the need for new codes such as consideration of a new or
emerging disease/illness/condition, an innovative technology that is
unable to be reported with existing codes, or codes related to
proposals that have been presented at the Coordination and Maintenance
Committee meetings more than one time as a repeat proposal due to
public comments and feedback.
Another commenter stated that consideration of an April 1
implementation should include a public process, similar to HCPCS and
rulemaking, that allows stakeholders to weigh in on both procedure code
creation and MS-DRG assignment and provides stakeholders with CMS
reasoning behind its decisions.
With respect to the request for feedback on how an April 1
implementation date may affect business processes, a few commenters
stated their belief that, initially, there may be some increased work
to ensure that the April 1 codes released (and the MS-DRG grouping
assignments) are up to date in their systems. The commenters stated
this effort would include checking with software vendors to ensure that
they are also updating their software for the new codes and groupings.
A commenter stated that the benefits of adding the new release cycle,
however, will be well worth the time and resource investment at the
beginning. According to the commenter, having codes released in a
timely manner so that data can be collected sooner rather than later
will give insights that could lead to a reduction in burden elsewhere.
The commenter stated that modernization to existing codes so they match
current physician documentation terminology and practices will also
reduce coders' work downstream over time.
A commenter stated that the addition of another cycle will enable
ICD-10-CM diagnosis codes to be released in a more
[[Page 44953]]
timely manner to reflect new diseases or conditions and facilitate
clinical research, as well as data collection, all of which would
ultimately improve patient care. This commenter stated the adoption of
an April 1 implementation is particularly important for diagnosis
codes, since proposals discussed at the March meetings generally do not
go into effect until October 1 of the following year, resulting in an
18-month delay. According to the commenter, more timely releases of
diagnosis codes would be crucial in the area of advanced cell therapy
research, as it would facilitate better identification and tracking for
this distinct subset of patients, which can advance clinical
understanding and subsequently improve diagnostic and treatment
standards.
Some commenters who supported an April 1 implementation date also
expressed concerns with having twice a year code updates. Specifically,
commenters noted concerns with payor/vendor updates being incorporated
timely, training and education, and the ability to comment on MS-DRG
assignments. The commenters also requested additional clarity and
transparency on how the agencies intend to communicate timelines and
decisions on which coding requests would be considered for April 1
versus October 1 during the ICD-10 Coordination and Maintenance
Committee meetings.
A few commenters opposed consideration of the April 1
implementation date in addition to the October 1 annual update, for
similar reasons described previously, as to how it may affect business
processes. A commenter stated it will be a work intensive process in
terms of systems updates, training time, and data comparison. A few
commenters indicated they did not support an April 1 implementation and
corresponding updated Grouper release without a comment period. A
commenter stated the current GROUPER allows for a comment period prior
to implementation in October (of the new GROUPER) and it is important
to recognize that revisions may be made from the proposed and final
GROUPER considerations especially for new codes. The commenter provided
the example that for FY 2021 rulemaking, the comment period was
important to allow CMS to consider provider feedback on the proposed
MCC/CC designations for new ICD-10-CM diagnosis codes which also
provided specificity for the grades of Cytokine Release Syndrome which
were all proposed to be NonCC severity level. The commenter stated that
after review of the comments, the diagnosis codes for Grades 3, 4, 5
(D89.833, D89.834, D89.835) were revised and finalized by CMS to a CC
Severity Level. This commenter also stated that the ICD-10-CM and ICD-
10-PCS code sets are not limited to the use of CMS providers as all
providers utilize the ICD-10 codes and may not be able to turn around
code updates as quickly as CMS. The commenter further stated that the
code set is used to update computer systems, contracts, reimbursement
systems and is not limited to MS-DRGs only. A few commenters expressed
concern with operational challenges and stated that there are providers
and commercial payors that currently do not incorporate the annual
update timely, so it is important for systems to be able to adapt to
the version of the code set in place for the provider. The commenters
stated a second release date in April would result in addressing payor
non-compliance twice a year. Other commenters who opposed adoption of
an April 1 implementation date for code updates stated it would be
costly for providers, payors, insurance companies and all healthcare
organizations as it would involve purchase of code books, code tables,
encoder updates and other related materials twice per year rather than
once per year.
A commenter who opposed the potential adoption of an April 1 code
update submitted the following questions or statements about the
process.
1. What is the process and/or criteria that will be used in
identifying which codes will be implemented in April versus October? Is
it solely based on the date the submitter requested?
2. Will both April and October proposed codes be covered in the
ICD-10 Coordination and Maintenance Committee meetings?
3. Right now, 99% of the codes proposed in March are not for the
upcoming October 1 release but the following October 1 release (two
years away). Will adding an April update increase the turnaround time
for implementing a new code, that is, reducing it to a 1-year proposal
to implementation versus a 2-year proposal to implementation?
4. What will be the effective dates of the codes and guidelines
added in April? Will this alter the effective dates of the October
codes and guidelines?
Example:
April codes/guidelines--effective April 1, 2022 to September 30, 2022
October codes/guidelines--effective October 1, 2022 to March 31, 2023
OR
April codes/guidelines--effective April 1, 2022 to March 31, 2023
October codes/guidelines--effective October 1, 2022 to September 30,
2023
5. Can you provide examples of codes that would require immediate
implementation, outside of a public health emergency? For 2020, there
were at least three separate code updates outside the April and October
``regular'' dates. If it is essential that a code be added to the
classification, can this just occur on an as-needed basis, that is, due
to public health emergency or pandemic situations, instead of having
two regulatory updates?
According to the commenter, although many were able to adjust to
the changes that happened through 2020, a PHE presents very different
circumstances compared to adding codes to the classification on an
annual or semi-annual basis.
6. How will this affect other regulatory agencies, payment systems
and processes?
How will rulemaking be affected, two proposed rules and two final
rules?
MS-DRGs
APR-DRGs
Medicaid
HH Agencies--Patient-Driven Groupings Model
SNF--Patient Driven Payment Model
IRF PPS
Medicare Advantage Plans--HCC
Commercial HCCs
OPPS
Worker's Compensation
Other state agencies
We also received comments in response to this topic that we
consider to be outside the scope of the request for feedback. Because
we consider these public comments to be outside the scope of the
proposed rule, we are not addressing them in this final rule.
Response: We appreciate the commenters' support and feedback
received on what criteria or factors the agencies (Committee) should
consider for determining whether to consider a code request for an
April 1 or October 1 implementation date, as well, as how it may impact
provider's business processes. With respect to commenters' concerns
regarding clarity and transparency in the process for how the agencies
will communicate timelines and information on which code requests would
be considered for April 1 versus an October 1 implementation date, we
note that we provide detailed information regarding the ICD-10
Coordination and Maintenance Committee meetings, including detailed
timelines in the Agenda and meeting
[[Page 44954]]
materials made available on each agency's respective websites. Members
of the public may refer to the prior meeting's Agenda and meeting
materials for information about upcoming deadlines. Additionally, we
discuss information related to the code updates as a result of
proposals brought forth to the meetings in the annual IPPS rulemaking
process. As noted in the preamble of this final rule, and discussed
earlier in this section, 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. We note
that, on July 26, 2021, the Federal Register Notice announcing the
September 14-15, 2021 committee meetings was published with the
tentative agenda items listed for both diagnosis and procedure code
topics. This notice is located at https://www.federalregister.gov/documents/2021/07/26/2021-15801/national-center-for-health-statistics-nchs-icd-10-coordination-and-maintenance-candm-committee and
specifically indicates for the ICD-10-PCS procedure code topics, which
topics are associated with a new technology add-on payment application
for FY 2023, as well as, which topic was requested for consideration of
an April 1, 2022 implementation date. We note that there were no
diagnosis code topics at the time of the development of the Federal
Register Notice identified as requesting an April 1, 2022
consideration. With respect to communication, in addition to the
resources previously discussed, CMS maintains an ICD-10 Maintenance
subscriber list to enable members of the public to remain informed of
updates related to ICD-10. Instructions on how to join this subscriber
list are available on the CMS website at: https://www.cms.gov/Medicare/Coding/ICD10/ICD-10-Coordination-and-Maintenance-Committee-Meetings
We believe the combination of these various resources provide the
necessary level of transparency regarding information pertaining to the
ICD-10 Coordination and Maintenance Committee meeting process.
With regard to concerns about the ability to comment on the MS-DRG
assignment of any new codes that may be considered for an April 1
implementation, we note that our current and long-established process
includes finalizing procedure codes that have been presented at the
March meeting that were unable to be included in the proposed rule.
(Diagnosis code proposals discussed at the March meeting are typically
not considered for implementation until the following October (18 month
delay)). As discussed throughout section II.D. of the preamble of the
FY 2022 IPPS/LTCH PPS proposed and final rules, using our established
process, we review the predecessor codes MDC, MS-DRG assignment and
designation (severity level or O.R. versus Non-O.R.) and consider other
relevant factors in the assignment of a new code under the IPPS ICD-10
MS-DRGs. Members of the public have the opportunity to provide feedback
on the assignment and designation of the codes if they disagree, which
are then considered in the following or future year's rulemaking cycle.
As discussed in more detail later in this section of this final rule,
as shown in Table 6A.--New Diagnosis Codes associated with this final
rule (and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, there were diagnosis codes discussed at the March 9-
10, 2021 ICD-10 Coordination and Maintenance Committee meeting that
were not finalized in time to include in the proposed rule. These 12
codes are identified in Table 6A with an asterisk and have been
assigned to the most appropriate MDC, MS-DRG, and severity level
designation using our established process, for FY 2022. As noted
previously, members of the public have the opportunity to provide
feedback on the assignment and designation of the codes finalized after
the March meeting if they disagree, which are then considered in the
following or future year's rulemaking cycle.
The process that was described for the MS-DRG assignment of new
procedure codes (and/or diagnosis codes) that could potentially be
finalized for an April 1 implementation is the same process that was
utilized when the new diagnosis codes for COVID-19 and vaping related
disorder were implemented April 1, 2020 and, as discussed earlier in
this section, the MS-DRG assignments for the six diagnosis codes that
were effective with discharges on and after January 1, 2021. We
provided members of the public the opportunity to comment on the MDC,
MS-DRG and severity level designation of the six diagnosis codes for FY
2022 consideration in association with the proposed rule, and we did
not receive any comments suggesting we consider alternative
assignments. To summarize, with respect to an April 1 implementation
date, the process as described would consist of the initial assignment
for any code finalized for an April 1 implementation to be assigned to
the most appropriate MDC, MS-DRG and designation using our established
process which would be in effect from April 1 through September 30 of
that same calendar and fiscal year, along with the opportunity for
members of the public to comment (during the public comment period in
association with the proposed rule for the upcoming fiscal year), on
any alternate suggestions should they not agree with the initial
assignment. As a commenter noted in its comments and discussed earlier
in this section, the current GROUPER allows for a comment period prior
to implementation in October (of the new GROUPER) and it is important
to recognize that revisions may be made from the proposed and final
GROUPER especially for new codes.
With respect to commenters' concerns regarding training and
education, as outlined in the materials and discussed during the March
9-10, 2021 meetings, if adopted, any codes implemented effective April
1 would be incorporated into the ICD-10-CM Official Guidelines for
Coding and Reporting, if applicable, and coding advice would be
published in AHA's Coding Clinic for ICD-10-CM/PCS publication. We note
that the same opportunities, methods and options that are currently
utilized to provide education and training on the code updates for the
annual October update would also be available for an April 1
implementation date. These include, but are not limited to, workshops,
seminars, webinars, podcasts, presentations, electronic communications,
announcements via social media, etc.
In response to commenters' concerns regarding the ability of
commercial payors to stay up to date on code changes if an April 1
implementation date were to be adopted, we believe that these concerns
can be mitigated with limited code updates using a phased in approach.
In addition, outreach efforts to better understand why systems are
[[Page 44955]]
currently not being updated in a timely manner will help inform where
process improvements can begin to ensure compliance. It is not clear to
us if payors are not familiar with the HIPAA requirements for use of
the current code set.
With respect to concerns about increased costs related to the
production and purchase of additional code books or software, we do not
believe there is a specific need for publishers to produce new code
books for the reasons discussed in the proposed rule. With regard to
new software, we were not and have not been made aware of any
significant challenges encountered by vendors or programmers during the
PHE with the additional GROUPER releases that were made available.
In response to the commenter's process questions, we have provided
the following sample timeline from the March 9-10, 2021 ICD-10
Coordination and Maintenance Committee meeting materials and are
sharing here to illustrate the process.
Sample Timeline
June 11, 2021
Deadline for requestors: Those members of the public requesting
that topics be discussed at the September 14-15, 2021 ICD-10
Coordination and Maintenance Committee Meeting, must have their
requests submitted to CMS for procedures and NCHS for diagnoses.
Requestors should indicate if they are submitting their code
request for consideration for an April 1, 2022 implementation date, if
adopted, or an October 1, 2022 implementation date.
The ICD-10 Coordination and Maintenance Committee will make efforts
to accommodate the requested implementation date for each request
submitted, however, the Committee will determine which requests will be
presented for consideration for an April 1, 2022 implementation date or
an October 1, 2022 implementation date.
*We are also seeking input on what factors the Committee should
consider when determining which requests should be considered for
either an April 1, 2022 or October 1, 2022 implementation date.
July 2021
Federal Register notice for the September 14-15, 2021 ICD-10
Coordination and Maintenance Committee Meeting will be published. This
will include the tentative agenda.
August 2021
FY 2022 Hospital Inpatient Prospective Payment System final rule is
issued. This rule will also include links to tables listing all the
final codes to be implemented on October 1, 2021.
This rule can be accessed at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
August 2021
Tentative agenda for the Procedure portion of the September 14,
2021 ICD-10 Coordination and Maintenance Committee Meeting will be
posted on the CMS web page at: https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html.
Tentative agenda for the Diagnosis portion of the September 15,
2021 ICD-10 Coordination and Maintenance Committee Meeting will be
posted on the NCHS web page at: https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm.
If adopted, topics being considered for an April 1 implementation
will be identified.
August 9, 2021
On-line registration opens for the September 14-15, 2021 ICD-10
Coordination and Maintenance Committee Meeting at: https://www.eventbrite.com/e/icd-10-coordination-and-maintenance-committee-meeting-tickets.
Please note that this meeting will be conducted virtually and
registration is not required to attend. However, we are providing the
ability to register on-line for those required to provide proof of
attendance for continuing education purposes. The on-line registration
will be available through September 9, 2021.
September 14-15, 2021
The September 2021 ICD-10 Coordination and Maintenance Committee
Meeting will be held fully virtual, with no in-person audience. Those
who wish to attend must participate via Zoom Webinar or by dialing in.
September 2021
Recordings and slide presentations of the September 14-15, 2021
ICD-10 Coordination and Maintenance Committee Meeting will be posted on
the following web pages:
Diagnosis code portion of the recording and related materials
https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm;
Procedure code portion of the recording and related materials
https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html.
October 1, 2021
New and revised ICD-10-CM and ICD-10-PCS codes go into effect along
with MS-DRG changes. Final addendum available on web pages as follows:
Diagnosis addendum https://www.cdc.gov/nchs/icd/icd10cm.htm;
Procedure addendum https://www.cms.gov/Medicare/Coding/ICD10/.
October 15, 2021
Deadline for receipt of public comments on proposed new codes
discussed at the September 14-15, 2021 ICD-10 Coordination and
Maintenance Committee Meeting being considered for implementation on
April 1, 2022.
November 2021
Any new ICD-10 codes that will be implemented on the following
April 1 will be announced. Information on any new codes to be
implemented April 1, 2022 will be posted on the following websites:
https://www.cdc.gov/nchs/icd/icd10cm.htm, https://www.cms.gov/Medicare/Coding/ICD10/.
November 15, 2021
Deadline for receipt of public comments on proposed new codes and
revisions discussed at the September 14-15, 2021 ICD-10 Coordination
and Maintenance Committee Meeting being considered for implementation
on October 1, 2022.
December 3, 2021
Deadline for requestors: Those members of the public requesting
that topics be discussed at the March XX, 2022 ICD-10 Coordination and
Maintenance Committee Meeting, must have their requests submitted to
CMS for procedures and NCHS for diagnoses.
Requestors should indicate if they are submitting their code
request for consideration for an October 1, 2022 implementation date,
or an April 1, 2023 if adopted, implementation date.
The ICD-10 Coordination and Maintenance Committee will make efforts
to accommodate the requested implementation date for each request
submitted, however, the Committee will determine which requests will be
presented for consideration for an October 1, 2022 implementation date
or an April 1, 2023 implementation date.
January 2022
Federal Register notice for the March X-X, 2022 ICD-10 Coordination
and Maintenance Committee Meeting will be published. This will include
the tentative agenda.
February 1, 2022
ICD-10 MS-DRG Grouper software and related materials posted on CMS
web page at: https://www.cms.gov/
[[Page 44956]]
Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-
Classifications-and-Software.
February 1, 2022
Any updates to the ICD-10-CM and ICD-10-PCS Coding Guidelines will
be posted on the following websites: https://www.cdc.gov/nchs/icd/icd10cm.htm https://www.cms.gov/Medicare/Coding/ICD10/.
February 1, 2022
All ICD-10-CM and ICD-10-PCS code update files (includes April 1
update and full files from prior October 1) will be posted on the
following websites: https://www.cdc.gov/nchs/icd/icd10cm.htm https://www.cms.gov/Medicare/Coding/ICD10/.
March 8-9, 2022
ICD-10 Coordination and Maintenance Committee Meeting.
March 2022
Recordings and slide presentations of the March 9-10, 2021 ICD-10
Coordination and Maintenance Committee Meeting will be posted on the
following web pages:
Diagnosis code portion of the recording and related materials
https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm.
Procedure code portion of the recording and related materials
https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.html.
April 1, 2022
New and revised ICD-10-CM and ICD-10-PCS codes go into effect along
with MS-DRG changes.
We note that, as outlined in the sample timeline, by the June 11,
2021 deadline, requestors were encouraged to indicate in their
submission of a code request whether they sought consideration for an
April 1, 2022 implementation date, if adopted, or an October 1, 2022
implementation date. As discussed earlier in this section, we received
one procedure code request for consideration of an April 1, 2022
implementation date for discussion at the September 14-15, 2021 ICD-10
Coordination and Maintenance Committee meeting. There were no diagnosis
code requests submitted by that deadline. The process and/or criteria
to determine which codes would be implemented in April versus October
would include identifying the number of code requests received for
consideration of each date, providing the Agenda and meeting materials
which indicate the implementation date (April or October) being
considered for each topic, using our established process for presenting
the code proposal to members of the public participating in the ICD-10
Coordination and Maintenance Committee meeting process, allowing the
opportunity for public comments to be submitted following the meeting,
agency review of the public comments to determine if there is support
for the code proposal, as well as, support for the proposed
implementation date.
We also note that enabling code proposals related to diagnosis code
topics that are presented in March to be considered for implementation
the following April would assist in reducing the current 18-month
timeframe that exists to incorporate new diagnosis codes into the
classification. We further note that there is additional flexibility
with regard to repeat diagnosis code proposals that have been updated
and brought back for consideration to be implemented sooner as well.
This scenario (repeat proposals) was also suggested by a commenter for
the agencies to consider as one of the criteria for consideration of an
April 1 implementation date.
With respect to coding guideline updates, any updates to the ICD-
10-CM Official Guidelines for Coding and Reporting would depend on the
circumstances relating to the new code(s), such that, there may be
instances in which no guideline updates are needed and in other
instances there may. However, if updates to the guidelines are
necessary, the four Cooperating Parties for ICD-10 (AHA, AHIMA, CDC,
and CMS) would evaluate and incorporate the necessary information into
the appropriate section for all users of the classification
accordingly. Coding guideline updates in response to April 1 code
updates effective with discharges on and after April 1 are valid
beginning on that April 1 date of that fiscal year. These April 1
coding guideline updates would be in addition to the coding guidelines
that were effective at the beginning of that same fiscal year. A fiscal
year for IPPS purposes begins with discharges on and after October 1
through September 30 of the following year. As displayed in the sample
timeline, all materials requiring updates would be made publicly
available by February 1 for an April 1 code implementation, including
coding guidelines.
Finally, similar to the current process that is involved for users
of the classification when incorporating changes associated with the
annual October 1 code update, we anticipate that other regulatory
agencies would continue to utilize their existing processes to update
their payment systems accordingly.
After consideration of the public comments and feedback received,
we are adopting an April 1 implementation date, in addition to the
annual October 1 update, beginning with April 1, 2022. We note that the
intent of this April 1 implementation date is to allow flexibility in
the ICD-10 code update process for the reasons previously discussed and
based on the feedback received by commenters.
We appreciate the commenters' suggestions on the criteria and/or
factors that should be considered by the Committee in determining
whether to consider a code request for an April 1 versus an October 1
implementation and note that, as discussed during the March 9-10, 2021
ICD-10 Coordination and Maintenance Committee meeting that we recommend
a phased in approach with limited code updates. We acknowledge the
concerns that some commenters expressed with respect to potential
operational issues and with commercial payers and compliance issues. As
noted previously, we intend to work with stakeholders and identify how
we can address issues that may arise in this process. We will continue
to provide additional information pertaining to the adoption of the
April 1 implementation date for new codes in connection with the ICD-10
Coordination and Maintenance Committee meeting process and our annual
IPPS rulemaking.
ICD-9-CM addendum and code title information is published on the
CMS website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/addendum. 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 electronic
files containing 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 be found on the CDC website at:
https://www.cdc.gov/nchs/icd/icd10cm.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. The AHA also distributes coding update information to
publishers and software vendors.
[[Page 44957]]
In the proposed rule we noted that for FY 2021, there are currently
72,621 ICD-10-CM diagnosis codes and 78,136 ICD-10-PCS procedure codes.
We also noted that as displayed in Table 6A--New Diagnosis Codes and in
Table 6B--New Procedure Codes associated with the proposed rule (and
available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index/,
there were 147 new diagnosis codes and 106 new procedure codes that had
been finalized for FY 2022 at the time of the development of the
proposed rule. As discussed in section II.D.13 of the preamble of this
final rule, we are making available 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 via the internet on the CMS
website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html in association with this final
rule. As shown in Table 6A--New Diagnosis Codes, there were diagnosis
codes discussed at the March 9-10, 2021 ICD-10 Coordination and
Maintenance Committee meeting that were not finalized in time to
include in the proposed rule. These 12 codes are identified in Table 6A
with an asterisk and are as follows.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.149
The addition of these 12 new diagnosis codes to the 147 diagnosis codes
that had been finalized at the time of the development of the proposed
rule result in a total of 159 (147 + 12 = 159) new diagnosis codes for
FY 2022.
Similarly, there were procedure codes discussed at the March 9-10,
2021 ICD-10 Coordination and Maintenance Committee meeting that were
not finalized in time to include in the proposed rule and are also
identified with an asterisk, as shown in Table 6B--New Procedure Codes.
We refer the reader to Table 6B--New Procedure Codes associated with
this 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 for the detailed list of these additional
85 new procedure codes. The addition of these 85 new procedure codes to
the 106 procedure codes that had been finalized at the time of the
development of the proposed rule result in a total of 191 (106 + 85 =
191) new procedure codes for FY 2022.
We also note, as reflected in Table 6C--Invalid Diagnosis Codes and
in Table 6D--Invalid Procedure Codes, there are a total of 32 diagnosis
codes and 107 procedure codes that will become invalid effective
October 1, 2021. Based on these code updates, effective October 1,
2021, there are a total of 72,748 ICD-10-CM diagnosis codes and 78,220
ICD-10-PCS procedure codes for FY 2022 as shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR13AU21.150
[[Page 44958]]
As stated 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. The code
titles are adopted as part of the ICD-10 Coordination and Maintenance
Committee process. Thus, although we publish the code titles in the
IPPS proposed and final rules, they are not subject to comment in the
proposed or final rules. We will continue to provide the October
updates in this manner in the IPPS proposed and final rules.
17. 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 2022
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25195 through 25198) for FY 2022, we proposed to not add any MS-DRGs to
the policy for replaced devices offered without cost or with a credit.
We proposed to continue to include the existing MS-DRGs currently
subject to the policy as displayed in the following table.
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We did not receive any public comments opposing our proposal 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 in this final rule that will be
subject to the replaced devices offered without cost or with a credit
policy effective October 1, 2021.
The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will be issued to
providers in the form of a Change Request (CR).
18. Out of Scope Public Comments Received
We received public comments on MS-DRG related issues that were
outside the scope of the proposals included in the FY 2022 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.D.1.b. of the preamble of this final rule, we
encourage individuals with comments about MS-DRG classifications to
submit these comments no later than November 1, 2021 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.
E. Recalibration of the FY 2022 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
In accordance with our final policy in section I.F. of this final
rule, for the purposes of establishing the FY 2022 MS-DRG relative
weights, we are finalizing our proposal to use the FY 2019 MedPAR
claims data, based on claims received by CMS through March 31, 2020,
and the March 2020 update of the FY 2018 HCRIS file where we ordinarily
would have used the FY 2020 MedPAR claims data, based on claims
received by CMS through December 31, 2020, and the December 2020 update
of the FY 2019 HCRIS file. We refer the reader to section I.F. of this
final rule for further discussion of our analysis of the best available
data for purposes of the FY 2022 ratesetting and our related policies.
Consistent with our established policy, in developing the MS-DRG
relative weights for FY 2022, we proposed to use two data sources:
claims data and cost report data. The claims data source is the MedPAR
file, which includes fully coded diagnostic and procedure data for all
Medicare inpatient hospital claims. The FY 2019 MedPAR data used in
this final rule include discharges occurring on October 1, 2018,
through September 30, 2019, based on claims received by CMS through
March 31, 2020, 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 2019 MedPAR file used in calculating the relative weights
includes data for approximately 9,216,615 Medicare discharges from IPPS
providers. Discharges for Medicare beneficiaries enrolled in a Medicare
Advantage managed care plan are excluded from this analysis. These
discharges are excluded when the MedPAR ``GHO Paid'' indicator field on
the claim record is equal to ``1'' or when the MedPAR DRG payment
field, which represents the total payment for the claim, is equal to
the MedPAR ``Indirect Medical Education (IME)'' payment field,
indicating that the claim was an ``IME only'' claim submitted by a
teaching hospital on behalf of a beneficiary enrolled in a Medicare
Advantage managed care plan. In addition, the March 31, 2020 update of
the FY 2019 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 2022 also
excludes claims with claim type values not equal to ``60.'' The data
exclude CAHs, including hospitals that subsequently became CAHs after
the period from which the data were taken. We note that the FY 2022
relative weights are based on the ICD-10-CM diagnosis codes and ICD-10-
PCS procedure codes from the FY 2019 MedPAR claims data, grouped
through the ICD-10 version of the FY 2022 GROUPER (Version 39).
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. However, as discussed earlier in this section, we proposed
to use the March 31, 2020 update of the FY 2018 HCRIS for calculating
the FY 2022 cost-based relative weights. Consistent with our historical
practice, for this FY 2022 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 2022 IPPS Final Rule Home Page'' or ``Acute
Inpatient Files for Download.'' We note that this file is identical to
the file used for the FY 2021 IPPS/LTCH PPS final rule. As discussed
previously and in the proposed rule, we also made available the FY 2019
HCRIS and the FY 2020 MedPAR file as well as other related information
and data files for purposes of public comment on our alternative
approach of using the same FY 2020 data that we would ordinarily use
for purposes of FY 2022 ratesetting.
Comment: A few commenters requested that CMS consider whether an
adjustment needs to be made to the normalization factor since the FY
2021 and FY 2022 relative weights were both calculated using the same
set of claims data (FY 2019 MedPAR). Specifically, the commenters were
concerned about the impact holding real changes in case-mix constant
(when calculating the relative weights) might have on accuracy of the
FY 2022 relative weights. A commenter stated that ``by using FY 2019
utilization in place of FY 2020 data, the base year weights (FY 2021)
will not reflect any changes in case mix that would occur from using FY
2020 compared to FY 2019 utilization. Thus, CMS will be making the
payment year weights (FY 2022) budget neutral to a base year that does
not reflect any change in real case mix as would normally occur.''
Response: We believe the commenters may have misinterpreted the
purpose of the normalization adjustment. The normalization adjustment
is the first of two steps performed by CMS to ensure that the
recalibration of the relative weights does not increase nor decrease
total payments under the IPPS.
The purpose of the normalization factor is to ensure that changes
in average case-mix do not impact the final relative weights used for
payment purposes. For example, if the average cost of cases grouped to
each MS-DRG remained the same from one year to the next, and all that
changed was the number of cases grouped to each MS-DRG, the
normalization factor would ensure that the final relative weights
calculated in each year were the same. This is appropriate since it
ensures that when the relative costliness of cases across MS-DRGs is
unchanged, the relative weights are unchanged as well. Therefore, if
CMS were to somehow
[[Page 44962]]
develop a method for introducing some level of real-case mix growth
into the FY 2019 claims, the revised normalization factor would produce
the same set of final relative weights, since the average cost of
claims grouped to each MS-DRG would not have changed.
The result of the normalization adjustment is that the relative
weights from both years result in the same average case-mix value when
using the same set of utilization. However, the normalization
adjustment alone does not completely meet the goal of ensuring that the
recalibration of the relative weights does not increase nor decrease
total payments under the IPPS. Due to other factors that impact IPPS
payments (for example, the wage index), a budget neutrality factor is
calculated that ensures the normalized relative weights for the current
year result in the same total payments as the normalized relative
weights from the previous year. We refer readers to section II.A.4.a of
the Addendum to this final rule for a complete discussion on the
calculation of the budget neutrality factor for recalibration of MS-DRG
relative weights.
To the extent commenters were implying that CMS should simply
increase the normalization factor by an estimate of real case mix
growth without somehow introducing it into the FY 2019 claims, even
putting aside the methodological issues with such an approach, we note
that such an increase in the normalization factor would be offset by a
larger budget neutrality adjustment.
2. Methodology for Calculation of the Relative Weights
a. General
We calculated the FY 2022 relative weights based on 19 CCRs, as we
did for FY 2021. The methodology we proposed to use to calculate the FY
2022 MS-DRG cost-based relative weights based on claims data in the FY
2019 MedPAR file and data from the FY 2018 Medicare cost reports is as
follows:
To the extent possible, all the claims were regrouped
using the FY 2022 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 2019 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.
Section 108 of the Further Consolidated Appropriations Act, 2020
provides that, for cost reporting periods beginning on or after October
1, 2020, costs related to hematopoietic stem cell acquisition for the
purpose of an allogeneic hematopoietic stem cell transplant shall be
paid on a reasonable cost basis. We refer the reader to the FY 2021
IPPS/LTCH PPS final rule for further discussion of the reasonable cost
basis payment for cost reporting periods beginning on or after October
1, 2020 (85 FR 58835 to 58842). For FY 2022 and subsequent years, we
proposed to subtract the hematopoietic stem cell acquisition charges
from the total charges on each transplant bill that showed
hematopoietic stem cell 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 92.8 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
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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).
The participation of hospitals in the BPCI initiative concluded on
September 30, 2018. The participation of hospitals in the BPCI Advanced
model started on October 1, 2018. The BPCI Advanced model, tested under
the authority of 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/. Consistent with our
policy for FY 2021, and consistent with how we have treated hospitals
that participated in the BPCI Initiative, for FY 2022, 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 previously, these hospitals are still receiving IPPS payments
under section 1886(d) of the Act. Consistent with the FY 2021 IPPS/LTCH
PPS final rule, we also proposed to include all applicable data from
subsection (d) hospitals participating in the Comprehensive Care for
Joint Replacement (CJR) Model in our IPPS payment modeling and
ratesetting calculations.
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 2018 cost report data, consistent with our FY 2022 ratesetting
discussed in section II.A.4 of the Addendum of this final rule.
The 19 cost centers that we used in the relative weight calculation
are shown in a supplemental data file, Cost Center HCRIS Lines
Supplemental Data File, posted via the internet on the CMS website for
this final rule and available at http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The
supplemental data file shows the lines on the cost report and the
corresponding revenue codes that we used to create the 19 national cost
center CCRs. In the proposed rule, we stated that if we receive
comments about the groupings in this supplemental data file, we may
consider these 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.
Consistent with historical practice, we account for rare situations
of non-monotonicity in a base MS-DRG and its severity levels, where the
mean cost in the higher severity level is less than the mean cost in
the lower severity level, in determining the relative weights for the
different severity levels. If there are initially non-monotonic
relative weights in the same base DRG and its severity levels, then we
combine the cases that group to the specific non-monotonic MS-DRGs for
purposes of relative weight calculations. For example, if there are two
non-monotonic MS-DRGs, combining the cases across those two MS-DRGs
results in the same relative weight for both MS-DRGs. The relative
weight calculated using the combined cases for those severity levels is
monotonic, effectively removing any non-monotonicity with the base DRG
and its severity levels. For this FY 2022 final rule, this calculation
was applied to address non-monotonicity for cases that grouped to MS-
DRG 504 and MS-DRG 505. We note that cases were also combined in
calculating the relative weights for these two MS-DRGs for FY 2021. In
the supplemental file titled AOR/BOR File, we include statistics for
the affected MS-DRGs both separately and with cases combined.
In the proposed rule, we invited public comments on our proposals
related to recalibration of the FY 2022 relative weights and the
changes in relative weights from FY 2021. We did not receive any public
comments on these proposals. Therefore, we are finalizing our proposed
policies with respect to the recalibration of the FY 2022 relative
weights.
b. Relative Weight Calculation for MS-DRG 018
As discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58599
through 58600), we created MS-DRG 018 for cases that include procedures
describing CAR T-cell therapies, which were reported using ICD-10-PCS
procedure codes XW033C3 or XW043C3. We refer the reader to section
II.D.2. of this final rule for discussion of the procedure codes for
CAR T-cell and non-CAR T-cell therapies and other immunotherapies that
are finalizing for assignment to MS-DRG 018 for FY 2022.
In the FY 2021 IPPS/LTCH PPS final rule, we finalized our proposals
to modify our existing relative weight methodology to ensure that the
relative weight for new MS-DRG 018 appropriately reflects the relative
resources required for providing CAR T-cell therapy outside of a
clinical trial, while still accounting for the clinical
[[Page 44964]]
trial cases in the overall average cost for all MS-DRGs, with
additional refinements in response to comments. For cases that group to
MS-DRG 018, we finalized to not include claims determined to be
clinical trial claims that group to new MS-DRG 018 when calculating the
average cost for new MS-DRG 018 that is used to calculate the relative
weight for this MS-DRG, with the additional refinements that (a) when
the CAR T-cell therapy product is purchased in the usual manner, but
the case involves a clinical trial of a different product, the claim
will be included when calculating the average cost for new MS-DRG 018
to the extent such claims can be identified in the historical data, and
(b) when there is expanded access use of immunotherapy, these cases
will not be included when calculating the average cost for new MS-DRG
018 to the extent such claims can be identified in the historical data
(85 FR 58600). We also finalized our proposal to calculate an
adjustment to account for the CAR T-cell therapy cases determined to be
clinical trial cases, as described in the FY 2021 IPPS/LTCH PPS final
rule, with the additional refinement of including revenue center 891 in
our calculation of standardized drug charges for MS-DRG 018. Applying
this finalized methodology, based on the March 2020 update of the FY
2019 MedPAR file for the FY 2021 IPPS/LTCH PPS final rule, we estimated
that the average costs of CAR T-cell therapy cases determined to be
clinical trial cases ($46,062) were 17 percent of the average costs of
CAR T cell therapy cases determined to be non-clinical trial cases
($276,042), and therefore, in calculating the national average cost per
case for purposes of the FY 2021 IPPS/LTCH PPS final rule, each case
identified as a clinical trial case was adjusted by 0.17. We also noted
that we were applying this adjustor for cases determined to be CAR T-
cell therapy clinical trial cases for purposes of budget neutrality and
outlier simulations. We refer the reader to the FY 2021 IPPS/LTCH PPS
final rule for complete discussion of our finalized modifications to
the relative weight calculation for MS-DRG 018.
Since we proposed to use the same FY 2019 MedPAR claims data for FY
2022 ratesetting that we did for the FY 2021 final rule, we also
proposed to continue to use the same process to identify clinical trial
claims in the FY 2019 MedPAR for purposes of calculating the FY 2022
relative weights. We continue to use the proxy of standardized drug
charges of less than $373,000, which was the average sales price of
KYMRIAH and YESCARTA, which are the two CAR T-cell biological products
in the MedPAR data used for the FY 2021 final rule and this final rule.
Using the same methodology from the FY 2021 IPPS/LTCH PPS final rule,
we proposed to apply an adjustment to account for the CAR T cell
therapy cases identified as clinical trial cases in calculating the
national average standardized cost per case that is used to calculate
the relative weights for all MS-DRGs:
Step 1--Calculate the average cost for cases to be assigned to new
MS-DRG 018 that contain ICD-10-CM diagnosis code Z00.6 or contain
standardized drug charges of less than $373,000.
Step 2--Calculate the average cost for cases to be assigned to new
MS-DRG 018 that do not contain ICD-10-CM diagnosis code Z00.6 or
standardized drug charges of at least $373,000.
Step 3--Calculate an adjustor by dividing the average cost
calculated in step 1 by the average cost calculated in step 2.
Step 4--Apply the adjustor calculated in step 3 to the cases
identified in step 1 as clinical trial cases, then add this adjusted
case count to the non-clinical trial case count prior to calculating
the average cost across all MS-DRGs.
Additionally, we are continuing our finalized methodology for
calculating this payment adjustment, such that: (a) When the CAR T-cell
therapy product is purchased in the usual manner, but the case involves
a clinical trial of a different product, the claim will be included
when calculating the average cost for cases not determined to be
clinical trial cases and (b) when there is expanded access use of
immunotherapy, these cases will be included when calculating the
average cost for cases determined to be clinical trial cases. However,
we continue to believe to the best of our knowledge there are no claims
in the historical data (FY 2019 MedPAR) used in the calculation of the
adjustment for cases involving a clinical trial of a different product,
and to the extent the historical data contain claims for cases
involving expanded access use of immunotherapy we believe those claims
would have drug charges less than $373,000. Consistent with our
proposal to use the FY 2019 data for the FY 2022 ratesetting, we also
proposed to calculate this adjustor based on the March 2020 update of
the FY 2019 MedPAR file for purposes of establishing the FY 2022
relative weights. Accordingly, as we did for FY 2021, we proposed to
adjust the transfer-adjusted case count for MS-DRG 018 by applying the
proposed adjustor of 17 percent to the applicable clinical trial cases,
and to use this adjusted case count for MS-DRG 018 in calculating the
national average cost per case, which is used in the calculation of the
relative weights. Therefore, in calculating the national average cost
per case for purposes of the proposed rule, each case identified as a
clinical trial case was adjusted by 17 percent. As we did for FY 2021,
we proposed to apply this same adjustor for the applicable cases that
group to MS-DRG 018 for purposes of budget neutrality and outlier
simulations.
As discussed in section I.F. of this final rule, we also solicited
comments on an alternative approach of using the same FY 2020 data that
we would ordinarily use for purposes of the FY 2022 rulemaking, which
we stated we may consider finalizing for FY 2022 based on consideration
of comments received. We noted that using the methodology as finalized
in the FY 2021 IPPS/LTCH PPS final rule, we calculated an adjustor of
0.25 based on this alternative approach of using the FY 2020 MedPAR
file.
Comment: The majority of commenters supported CMS' proposal to use
the same ratesetting methodology for MS-DRG 018 in FY 2022 as it did in
FY 2021. Commenters stated that the inclusion of cases without product
acquisition costs would compromise the relative weight calculation. The
majority of commenters also supported CMS' proposal to apply an
adjustor to expanded access or clinical trial cases. While the majority
of commenters generally supported CMS' proposed adjustor of 0.17,
calculated based on the FY 2019 MedPAR data, some commenters requested
that we use the calculated adjustment of 0.25 from the FY 2020 MedPAR
data. Some commenters also requested that CMS raise the $373,000
threshold or otherwise modify the methodology so that more cases would
be classified into the expanded access or clinical trial case cohort.
Response: We appreciate the support and feedback on our proposal to
use the same ratesetting methodology for MS-DRG 018 in FY 2022 as we
did in FY 2021, including the application of an adjustor for expanded
access or clinical trial cases.
In response to commenters who requested that CMS raise the $373,000
threshold or otherwise modify the methodology so that more cases would
be classified into the expanded access or clinical trial case cohort,
as noted earlier, we are using the FY 2019 MedPAR to approximate the
relative resource use for each MS-DRG. This is the same data source
that was used to approximate the relative resource use
[[Page 44965]]
for determining the FY 2021 MS-DRG relative weights. As we discussed in
the FY 2021 IPPS/LTCH PPS final rule, we believe that given this data
source, our methodology to divide cases into these cohorts provides
reasonable estimates on average of the costs of the cases in these
cohorts. (85 FR 58599) As we are continuing to use the same data source
that was used for purposes of the FY 2021 MS-DRG relative weights and
the calculation of the adjustor to the relative weight for MS-DRG 018,
it continues to be reasonable that in that data source, hospitals would
not generally have charges of greater than $373,000 in the absence of
incurring the cost of the CAR T-cell drug. As previously noted, we used
the proxy of standardized drug charges of less than $373,000, which was
the average sales price of KYMRIAH and YESCARTA, which are the two CAR
T-cell biological products in the MedPAR data used for the FY 2021
final rule and this final rule.
In response to commenters who requested that we use the calculated
adjustment of 0.25, we disagree that we should use the adjustment of
0.25 calculated from the FY 2020 MedPAR data instead of the 0.17
adjustment calculated from the FY 2019 MedPAR data. Given that under
the IPPS the relative weight assigned to each MS-DRG reflects the
relative hospital resources used with respect to discharges classified
within that group compared to discharges classified within other MS-
DRGs, it would be inappropriate to use the FY 2019 MedPAR to
approximate the relative resource use for each MS-DRG, including the
majority of MS-DRG 018 cases, but then a different data source (that
is, the FY 2020 MedPAR) to determine the relative resources required
for MS-DRG 018 cases that are expanded access or clinical trial cases
to calculate the adjustor.
Comment: Several commenters stated that the MS-DRG relative weight
for MS-DRG 018 does not result in payment that fully covers the
hospital resource costs, including the cost of the drug. Some
commenters indicated that CMS should make structural changes to the
IPPS, such as incorporating the Average Sales Price of the CAR T-cell
drug into the IPPS relative weight calculation rather than use our
usual methodology for determining the MS-DRG relative weight, or we
should base the Medicare payment itself on the Average Sales Price of
the CAR T-cell drug. For example, some commenters stated that the price
of the CAR T-cell drug is expected to increase soon and the IPPS
payment does not reflect price increases in a timely manner.
Response: With regard to the comment that the MS-DRG relative
weight for MS-DRG 018 does not result in payment that fully covers the
hospital resource costs, we note that the IPPS is a prospective payment
system and not a cost reimbursement system. The primary objective of
the IPPS is to create incentives for hospitals to operate efficiently
and minimize unnecessary costs, while at the same time ensuring that
payments are sufficient to adequately compensate hospitals for their
costs in delivering necessary care to Medicare beneficiaries. In
addition, we share national goals of preserving the Medicare Hospital
Insurance Trust Fund. Cost reimbursement is not the optimal means of
achieving these objectives. As indicated earlier, under the IPPS the
relative weight assigned to each MS-DRG reflects the relative hospital
resources used with respect to discharges classified within that group
compared to discharges classified within other MS-DRGs. For the reasons
described earlier, CMS is using the FY 2019 MedPAR data to determine
the MS-DRG relative weights for FY 2022, including the relative weight
for MS-DRG 018.
We appreciate the commenters' recommendations for structural
changes to the IPPS, but as we stated in response to similar comments
in the FY 2021 rulemaking, we believe that is premature to make
structural changes to the IPPS at this time to pay for CAR T-cell
therapies. (85 FR 58453). As we gain more experience paying for these
therapies under the IPPS, we may consider these comments to inform
future rulemaking.
Comment: Some commenters requested clarifications or raised
concerns regarding hospital charging practices for CAR T-cell
therapies, including the ability of hospitals to set charges for CAR T-
cell drugs consistent with their CCRs. Some commenters requested that
CMS establish a dedicated CAR T-cell cost center, which they stated
would allow hospitals to set charges appropriate for CAR T-cell
therapy.
Response: As we noted in response to similar comments in the FY
2021 IPPS final rule, there is nothing that precludes hospitals from
setting their drug charges consistent with their CCRs (85 FR 58453). We
also highlight our statements in prior rulemaking regarding our
existing administrative mechanisms for hospitals to voluntarily
establish lower charges (85 FR 58874). Specifically, if a hospital is
planning on voluntarily lowering its charges, it can request a CCR
change in accordance with 42 CFR 412.84(i)(1) and as also discussed in
prior rulemaking (84 FR 42630). For example, a hospital could use these
existing administrative mechanisms to request a CCR closer to 1.0. We
appreciate the commenters' requests regarding the creation of new cost
centers and may consider this request in future rulemaking. However, we
believe that such a step is not necessary at this time given that
hospitals are not precluded from setting their charges consistent with
their CCRs and the existing administrative mechanisms for hospitals to
request CCR changes consistent with lower charges.
We also note that some commenters requested additional
clarifications regarding billing instructions for CAR T-cell therapies,
for example, relating to the use of hospital charges in apportioning
costs under section 2203 of the Provider Reimbursement Manual. We do
not believe changes to billing guidance are needed at this time but
will take these comments into consideration when developing policies
and program requirements for future years for CAR T-cell therapy
policy.
After consideration of the public comments received, we are
finalizing our proposal regarding the calculation of the relative
weight for MS-DRG 018.
3. Development of National Average CCRs
Consistent with our final policy to use the FY 2019 data for the FY
2022 ratesetting, as discussed earlier in this section, we are
finalizing our proposal to continue to use the national average CCRs
that were calculated for the FY 2021 final rule using that same data.
Specifically, we calculated these national average CCRs as follows:
Using the FY 2018 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. Then we created CCRs for each provider for each cost
center (see the supplemental data file 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. Then we took the logs of the normalized cost center
CCRs and removed any cost center CCRs where the log of the cost center
CCR was greater or less than the mean log plus/minus 3 times the
standard deviation for the log of that cost center CCR. Once the
[[Page 44966]]
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
2022 cost-based relative weights were then normalized by an adjustment
factor of 1.820829 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 2022 are as follows:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.153
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
used that same case threshold in recalibrating the MS-DRG relative
weights for FY 2022. Using data from the FY 2019 MedPAR file, there
were 7 MS-DRGs that contain fewer than 10 cases. For FY 2022, 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
2021 relative weights by the percentage change in the average weight of
the cases in other MS-DRGs from FY 2021 to FY 2022. The crosswalk table
is as follows:
[[Page 44967]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.154
BILLING CODE 4120-01-C
We did not receive any public comments on our proposals and we are
finalizing our proposals without modification.
F. Add-On Payments for New Services and Technologies for FY 2022
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 42 CFR 412.87(b) specifies 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 addition, certain transformative new devices and
antimicrobial products may qualify under an alternative inpatient new
technology add-on payment pathway, as set forth in the regulations at
Sec. 412.87(c) and (d). We note that section 1886(d)(5)(K)(i) of the
Act requires that the Secretary establish a mechanism to recognize the
costs of new medical services and technologies under the payment system
established under that subsection, which establishes the system for
paying for the operating costs of inpatient hospital services. The
system of payment for capital costs is established under section
1886(g) of the Act. Therefore, as discussed in prior rulemaking (72 FR
47307 through 47308), we do not include capital costs in the add-on
payments for a new medical service or technology or make new technology
add-on payments under the IPPS for capital-related costs. In this 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 of the new technology add-
on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51572 through 51574), FY 2020 IPPS/LTCH PPS final
rule (84 FR 42288 through 42300) and the FY 2021 IPPS/LTCH PPS final
rule (85 FR 58736 through 58742).
a. New Technology Add-On Payment Criteria
(1) Newness Criterion
Under the first criterion, as reflected in Sec. 412.87(b)(2), a
specific medical service or technology will no longer be considered
``new'' for purposes of new medical service or technology add-on
payments after CMS has recalibrated the MS-DRGs, based on available
data, to reflect the cost of the technology. 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 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).
(2) Cost Criterion
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
[[Page 44968]]
payment rate, we evaluate whether the charges of the cases involving a
new medical service or technology will exceed a threshold amount that
is the lesser of 75 percent of the standardized amount (increased to
reflect the difference between cost and charges) or 75 percent of one
standard deviation beyond the geometric mean standardized charge for
all cases in the MS-DRG to which the new medical service or technology
is assigned (or the case-weighted average of all relevant MS-DRGs if
the new medical service or technology occurs in many different MS-
DRGs). The MS-DRG threshold amounts generally used in evaluating new
technology add-on payment applications for FY 2022 are presented in a
data file that is available, along with the other data files associated
with the FY 2021 IPPS/LTCH PPS final rule and correction notice, on the
CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
We note that, under the policy finalized in the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58603 through 58605), beginning with FY 2022, we
use the proposed threshold values associated with the proposed rule for
that fiscal year to evaluate the cost criterion for all applications
for new technology add-on payments and previously approved technologies
that may continue to receive new technology add-on payments, if those
technologies would be assigned to a proposed new MS-DRG for that same
fiscal year.
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 proposed thresholds for
applications for new technology add-on payments for FY 2023 were
presented in a data file that is available on the CMS website, along
with the other data files associated with the FY 2022 proposed rule, by
clicking on the FY 2022 IPPS Proposed Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index. We note, for the reasons discussed in section
I.F. of the preamble of the proposed rule and this final rule, we
proposed to use the FY 2019 MedPAR claims data where we ordinarily
would have used the FY 2020 MedPAR claims data for purposes of proposed
FY 2022 ratesetting. We refer the reader to section I.F. of the
preamble of this final rule for further discussion of our analysis of
the best available data for FY 2022 ratesetting and our related
proposals, as well as our finalized policy to use the FY 2019 MedPAR
claims data where we ordinarily would have used the FY 2020 MedPAR
claims data for purposes of FY 2022 ratesetting. For the FY 2023
proposed threshold values, consistent with our proposal, we proposed to
use FY 2019 claims data to evaluate whether the charges of the cases
involving a new medical service or technology will exceed a threshold
amount that is the lesser of 75 percent of the proposed FY 2022
standardized amount (increased to reflect the difference between cost
and charges) or 75 percent of one standard deviation beyond the
geometric mean standardized charge (using FY 2019 claims data) for all
cases in the MS-DRG (using FY 2019 claims data) to which the new
medical service or technology is assigned (or the case-weighted average
of all relevant MS-DRGs if the new medical service or technology occurs
in many different MS-DRGs), rather than the FY 2020 data we would
otherwise use. As discussed in section I.F. of the preamble of this
final rule, we also considered, as an alternative to our proposal, the
use of the same FY 2020 data that we would ordinarily use for purposes
of FY 2022 ratesetting. We stated that if we were to finalize this
alternative approach for FY 2022, we would use the FY 2020 claims data
for purposes of the final thresholds for applications for new
technology add-on payments for FY 2023 in the FY 2022 IPPS/LTCH PPS
final rule. We made available the threshold values calculated using the
FY 2020 claims data at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
As discussed in section I.F. of the preamble of this final rule, we
are finalizing our proposal to use the FY 2019 MedPAR claims data where
we ordinarily would have used the FY 2020 MedPAR claims data for
purposes of FY 2022 ratesetting. Accordingly, consistent with this
final policy, we are finalizing to use FY 2019 claims data to set the
thresholds for applications for new technology add-on payments for FY
2023 in this final rule. The finalized thresholds for applications for
new technology add-on payments for FY 2023 are presented in a data file
that is available on the CMS website, along with the other data files
associated with this FY 2022 final rule, by clicking on the FY 2022
IPPS Final Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
In the September 7, 2001 final rule that established the new
technology add-on payment regulations (66 FR 46917), we discussed that
applicants should submit a significant sample of data to demonstrate
that the medical service or technology meets the high-cost threshold.
Specifically, applicants should submit a sample of sufficient size to
enable us to undertake an initial validation and analysis of the data.
We also discussed in the September 7, 2001 final rule (66 FR 46917) 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.
(3) Substantial Clinical Improvement Criterion
Under the third criterion at Sec. 412.87(b)(1), a medical service
or technology must represent an advance that substantially improves,
relative to technologies previously available, the diagnosis or
treatment of Medicare beneficiaries. In the FY 2020 IPPS/LTCH PPS final
rule (84 FR 42288 through 42292), we prospectively codified in our
regulations at Sec. 412.87(b) the following aspects of how we evaluate
substantial clinical improvement for purposes of new technology add-on
payments under the IPPS:
The totality of the circumstances is considered when
making 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.
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;
++ 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
[[Page 44969]]
service or technology to make a diagnosis affects the management of the
patient;
++ 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.
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.
The medical condition diagnosed or treated by the new
medical service or technology may have a low prevalence among Medicare
beneficiaries.
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.
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule for
additional discussion of the evaluation of substantial clinical
improvement for purposes of new technology add-on payments under the
IPPS.
We note, consistent with the discussion in the FY 2003 IPPS final
rule (67 FR 50015), that although we are affiliated with the FDA and we
do not question the FDA's regulatory responsibility for decisions
related to marketing authorization (for example, approval, clearance,
etc.), we do not rely upon FDA criteria in our determination of what
drugs, devices, or technologies qualify for new technology add-on
payments under Medicare. Our criteria do not depend on the standard of
safety and efficacy on which the FDA relies but on a demonstration of
substantial clinical improvement in the Medicare population
(particularly patients over age 65).
c. Alternative Inpatient New Technology Add-On Payment Pathway
Beginning with applications for FY 2021 new technology add-on
payments, under the regulations at Sec. 412.87(c), a medical device
that is part of FDA's Breakthrough Devices Program may qualify for the
new technology add-on payment under an alternative pathway.
Additionally, under the regulations at Sec. 412.87(d) for certain
antimicrobial products, beginning with FY 2021, a drug that is
designated by the FDA as a Qualified Infectious Disease Product (QIDP),
and, beginning with FY 2022, a drug that is approved by the FDA under
the Limited Population Pathway for Antibacterial and Antifungal Drugs
(LPAD), may also qualify for the new technology add-on payment under an
alternative pathway. We refer the reader to the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42292 through 42297) and the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58737 through 58739) for a complete discussion on
this policy. We note that a technology is not required to have the
specified FDA designation at the time the new technology add-on payment
application is submitted. CMS will review the application based on the
information provided by the applicant under the alternative pathway
specified by the applicant. However, to receive approval for the new
technology add-on payment under that alternative pathway, the
technology must have the applicable FDA designation and meet all other
requirements in the regulations in Sec. 412.87(c) and (d), as
applicable.
(1) Alternative Pathway for Certain Transformative New Devices
For applications received for new technology add-on payments for FY
2021 and subsequent fiscal years, if a medical device is part of FDA's
Breakthrough Devices Program 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 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. This policy is codified at Sec.
412.87(c). Under this 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, FDA)
and that is part of FDA's Breakthrough Devices Program will need to
meet the cost criterion under Sec. 412.87(b)(3), and will be
considered new as reflected in Sec. 412.87(c)(2). We note, in the FY
2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736), we clarified
our policy that a new medical device under this alternative pathway
must receive marketing authorization for the indication covered by the
Breakthrough Devices Program designation. We refer the reader to the FY
2021 IPPS/LTCH PPS final rule (85 FR 58734 through 58736) for a
complete discussion regarding this clarification.
(2) Alternative Pathway for Certain Antimicrobial Products
For applications received for new technology add-on payments for
certain antimicrobial products, beginning with FY 2021, if a technology
is designated by FDA as a QIDP and received FDA marketing
authorization, and, beginning with FY 2022, if a drug is approved under
FDA's LPAD pathway and used for the indication approved under the LPAD
pathway, 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. We codified this
policy at Sec. 412.87(d). Under this alternative pathway for QIDPs and
LPADs, a medical product that has received FDA marketing authorization
and is designated by FDA as a QIDP or approved under the LPAD pathway
will need to meet the cost criterion under Sec. 412.87(b)(3), and will
be considered new as reflected in Sec. 412.87(d)(2).
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR
42292 through 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58737
through 58739) for a complete discussion on this policy. We note, in
the FY 2021 IPPS/LTCH PPS final rule (85 FR 58737
[[Page 44970]]
through 58739), we clarified that a new medical product seeking
approval for the new technology add-on payment under the alternative
pathway for QIDPs must receive marketing authorization for the
indication covered by the QIDP designation. We also finalized our
policy to expand our alternative new technology add-on payment pathway
for certain antimicrobial products to include products approved under
the LPAD pathway and used for the indication approved under the LPAD
pathway.
d. Additional Payment for New Medical Service or Technology
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. As noted
previously, we do not include capital costs in the add-on payments for
a new medical service or technology or make new technology add-on
payments under the IPPS for capital-related costs (72 FR 47307 through
47308).
For discharges occurring before October 1, 2019, under Sec.
412.88, if the costs of the discharge (determined by applying operating
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), CMS made 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.
Beginning with discharges on or after October 1, 2019, for the
reasons discussed in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42297
through 42300), we finalized an increase in the new technology add-on
payment percentage, as reflected at Sec. 412.88(a)(2)(ii).
Specifically, for a new technology other than a medical product
designated by 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 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. For a new
technology that is a medical product approved under FDA's LPAD pathway,
beginning with discharges on or after October 1, 2020, 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. As set forth in Sec. 412.88(b)(2), 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 certain antimicrobial products (QIDPs and LPADs)) of the estimated
costs of the new technology or medical service.
We refer the reader to the FY 2020 IPPS/LTCH PPS final rule (84 FR
42297 through 42300) for complete discussion on the increase in the new
technology add on payment beginning with discharges on or after October
1, 2019.
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 subsequent years have not been subjected to budget neutrality.
e. Evaluation of Eligibility Criteria for New Medical Service or
Technology Applications
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 specified 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. In the FY 2021 IPPS final rule, to more precisely
describe the various types of FDA approvals, clearances and
classifications that we consider under our new technology add-on
payment policy, we finalized a technical clarification to the
regulation to indicate that new technologies must receive FDA marketing
authorization (such as pre-market approval (PMA); 510(k) clearance; the
granting of a De Novo classification request, or approval of a New Drug
Application (NDA)) by July 1 of the year prior to the beginning of the
fiscal year for which the application is being considered. Consistent
with our longstanding policy, we consider FDA marketing authorization
as representing that a product has received FDA approval or clearance
when considering eligibility for the new technology add-on payment
under Sec. 412.87(e)(2) (85 FR 58742).
Additionally, in the FY 2021 IPPS final rule (85 FR 58739 through
58742), we finalized our proposal to provide conditional approval for
new technology add-on payment for a technology for which an application
is submitted under the alternative pathway for certain antimicrobial
products at Sec. 412.87(d) that does not receive FDA marketing
authorization by the July 1 deadline specified in Sec. 412.87(e)(2),
provided that the technology otherwise meets the applicable add-on
payment criteria. Under this policy, cases involving eligible
antimicrobial products would begin receiving the new technology add-on
payment sooner, effective for discharges the quarter after the date of
FDA marketing authorization provided that the technology receives FDA
marketing authorization by July 1 of the particular fiscal year for
which the applicant applied for new technology add-on payments.
f. Council on Technology and Innovation (CTI)
The Council on Technology and Innovation at CMS oversees the
agency's cross-cutting priority on coordinating coverage, coding and
payment processes
[[Page 44971]]
for Medicare with respect to new technologies and 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[dash]23[dash]15.pdf.
As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we
invited 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].
g. Application Information for New Medical Services or Technologies
Applicants for add-on payments for new medical services or
technologies for FY 2023 must submit a formal request, including a full
description of the clinical applications of the medical service or
technology and the results of any clinical evaluations demonstrating
that the new medical service or technology represents a substantial
clinical improvement (unless the application is under one of the
alternative pathways as previously described), along with a significant
sample of data to demonstrate that the medical service or technology
meets the high-cost threshold. Complete application information, along
with final deadlines for submitting a full application, will be posted
as it becomes available on the CMS 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 2023, 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 and approved under OMB
control number 0938-1347.
As discussed previously, in the FY 2020 IPPS/LTCH PPS final rule,
we adopted an alternative inpatient new technology add-on payment
pathway for certain transformative new devices and for Qualified
Infectious Disease Products, as set forth in the regulations at Sec.
412.87(c) and (d). The change in burden associated with these changes
to the new technology add-on payment application process were discussed
in a revision of the information collection requirement (ICR) request
currently approved under OMB control number 0938-1347. In accordance
with the implementing regulations of the PRA, we detailed the revisions
of the ICR and published the required 60-day notice on August 15, 2019
(84 FR 41723) and 30-day notice on December 17, 2019 (84 FR 68936) to
solicit public comments.
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 2022 prior
to publication of the FY 2022 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on October 16, 2020 (85 FR 65815), and
held a virtual town hall meeting on December 15 and 16, 2020. 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 the FY 2022 new medical
service and technology add on payment applications before the
publication of the FY 2022 IPPS/LTCH PPS proposed rule.
[[Page 44972]]
Approximately 330 individuals registered to attend the 2-day
virtual town hall meeting. We posted the recordings of the 2-day
virtual town hall on the CMS web page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech. We
considered each applicant's presentation made at the town hall meeting,
as well as written comments received by the December 28, 2020 deadline,
in our evaluation of the new technology add-on payment applications for
FY 2022 in the development of the FY 2022 IPPS/LTCH PPS proposed rule.
In response to the published notice and the December 15-16, 2020
New Technology Town Hall meeting, we received written comments
regarding the applications for FY 2022 new technology add on payments.
As explained earlier and in the Federal Register notice announcing the
New Technology Town Hall meeting (85 FR 65815 through 65817), the
purpose of the meeting was specifically to discuss the substantial
clinical improvement criterion with regard to pending new technology
add-on payment applications for FY 2022. Therefore, we did not
summarize the written comments in the proposed rule that were unrelated
to the substantial clinical improvement criterion. In section II.H.5.
of the preamble of the proposed rule, 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: https://www.cms.gov/medicare/icd-10/2021-icd-10-pcs,
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 2022 Status of Technologies Approved for FY 2021 New Technology
Add-On Payments
In this section of the final rule, we discuss the proposed FY 2022
status of 23 technologies approved for FY 2021 new technology add-on
payments, and our finalized policies, as set forth in the tables that
follow. 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. We refer the reader to section II.F.6.b.(1). of the
preamble of this final rule for discussion of CONTEPO, which we
conditionally approved for FY 2021 new technology add-on payments under
the alternative pathway for certain antimicrobial products, subject to
the technology receiving FDA marketing authorization by July 1, 2021.
We note that CONTEPO did not receive FDA marketing authorization by
July 1, 2021. As discussed in section II.F.6.b.(1). of the preamble of
this final rule, because the applicant for CONTEPO submitted a new
application for FY 2022, we are conditionally approving CONTEPO for FY
2022 new technology add-on payments under the alternative pathway for
certain antimicrobial products, subject to the technology receiving FDA
marketing authorization by July 1, 2022.
a. Continuation of New Technology Add-On Payments for FY 2022 for
Technologies Still Considered to be New
In the table in section II.F (Proposed Add-On Payments for New
Services and Technologies for FY 2022) of the proposed rule (86 FR
25208 through 25211), we presented our proposals to continue the new
technology add-on payment for FY 2022 for those technologies that were
approved for the new technology add-on payment for FY 2021 and which
would still be considered ``new'' for purposes of new technology add-on
payments for FY 2022.
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).
In the proposed rule, we provided a table listing the technologies
for which we proposed to continue making new technology add-on payments
for FY 2022 because they would still be considered new for purposes of
new technology add-on payments (86 FR 25209). This table also presented
the newness start date, new technology add-on payment start date,
relevant final rule citations from prior fiscal years, proposed maximum
add-on payment amount, and coding assignments. We referred readers to
the cited final rules in the table for a complete discussion of the new
technology add-on payment application, coding and payment amount for
these technologies, including the applicable indications and discussion
of the newness start date.
We summarize in this section of this final rule the comments we
received regarding our proposal to continue making new technology add-
on payments for FY 2022 for the technologies listed in the table in the
proposed rule because they would still be considered new for purposes
of new technology add-on payments.
Comment: Commenters overwhelmingly supported our proposed
continuation of new technology add-on payments for FY 2022 for those
technologies that were approved for the new technology add-on payment
for FY 2021 and which would still be considered ``new'' for purposes of
new technology add-on payments for FY 2022.
Response: We appreciate the commenters' support.
Comment: A commenter, the applicant for Jakafi[supreg], requested
the maximum new technology add-on payment amount for Jakafi[supreg] be
updated from $4,096.21 to $6,885.20 to reflect the updated Wholesale
Acquisition Cost (WAC) for 60 Jakafi tablets using a 14-day anticipated
duration.
Response: We appreciate the updated cost information from the
applicant. Jakafi's current WAC is $14,754.00 per 60 tablets. The
maximum NTAP, using
[[Page 44973]]
the WAC for 60 Jakafi tablets, determining the per tablet amount,
multiplying that figure by two (Jakafi taken twice daily), and using a
14 day anticipated duration, the average cost per case would change to
$4,475.38 ($14,754.00/60 * 2 * 14) * .65. Based on this updated
information, the maximum new technology add-on payment for
Jakafi[supreg] for FY 2022 would be $4,475.38, as reflected in the
table in this section.
Comment: The manufacturer for Azedra[supreg] stated that the
newness period for Azedra[supreg] should start with the first sale
which would be June 6, 2019 instead of July 30, 2018. Based on this
date, the commenter stated that the three-year anniversary of that date
would be June 6, 2022, which would be in the latter half of FY 2022.
The applicant noted that under longstanding CMS practice and policy, a
technology generally receives an additional year of new technology add-
on payments if the third anniversary of the product's market entry date
occurs in the latter half of the relevant fiscal year.
The commenter added if CMS does not agree that the date of the
first sale of Azedra[supreg] should be used as the date when the
product became available on the market, then it believes that an
appropriate alternative for the start date of Azedra's[supreg] market
availability is May 21, 2019, as this was the date that the first doses
of the product were delivered to be used as dosimetry doses for two
patients who subsequently received their first therapeutic doses of
Azedra[supreg] in June 2019 and July 2019, respectively. More
specifically, the commenter explained that its records indicate that,
prior to May 2019, it received but was not able to fulfill attempted
orders for Azedra[supreg] due to lack of product availability.
Accordingly, the records reflect that the first doses of Azedra[supreg]
became available on the market in May 2019. The commenter confirmed,
however, that the first orders of Azedra[supreg] that were fulfilled in
May 2019 were used for dosimetry doses for two patients who, as noted,
subsequently received their first therapeutic doses of Azedra[supreg]
in June 2019 and July 2019, respectively. The first therapeutic doses
of Azedra[supreg] were not available or possible to calculate until
after the results of the dosimetry dose were obtained.
Commenters also stated that CMS should finalize its proposal to
continue Azedra's[supreg] new technology add-on payments for FY 2022
even if CMS does not finalize its proposal to use the FY 2019 MedPAR
claims data for the FY 2022 IPPS ratesetting. Commenters emphasized
that the condition Azedra[supreg] is indicated to treat is exceedingly
rare and as a result, use of Azedra[supreg] is quite infrequent. A
commenter believes that the realities with respect to the nature of
Azedra[supreg], the ultra-orphan condition it treats, and the
infrequency of its use provide further support for the continuation of
new technology add-on payments for Azedra[supreg] for FY 2022,
particularly in light of the unique circumstances in FY 2020 and FY
2021 related to utilization of hospital services because of the COVID-
19 pandemic and PHE. The commenter believes another year of new
technology add-on payments for Azedra[supreg] will be critical for
purposes of additional data collection and further opportunity for
relevant MS-DRGs to adjust to the availability of this innovative, yet
very infrequently used, therapy.
Response: We thank the commenter for their comments and we agree
that the newness date for Azedra[supreg] should begin on May 21, 2019.
We believe Azedra[supreg] was available on the market beginning May 21,
2019 rather than July 30, 2018 as May 21, 2019 was the date that the
first doses of the product were delivered to be used. Based on the
information available at the time, we indicated in the proposed rule
that the newness date for Azedra[supreg] started on July 30, 2018 and
we included Azedra[supreg] in our table of technologies that we
proposed a one-year extension of new technology add-on payments for
those technologies for which the new technology add-on payment would
otherwise be discontinued. Based on the comment from the manufacturer,
Azedra[supreg] is still new for FY 2022 and is eligible to continue new
technology add-on payments for FY 2022 since the 3-year anniversary
date of the entry of Azedra[supreg] onto the U.S. market (May 21, 2022)
will occur in the second half of FY 2022. Therefore, we are including
Azedra[supreg] in the table below for technologies that were approved
for the new technology add-on payment for FY 2021 and that would still
be considered ``new'' for purposes of new technology add-on payments
for FY 2022. Finally, with regard to the comment about the FY 2020
MedPAR data, we did not finalize use of the FY 2020 MedPAR data for the
FY 2022 ratesetting and Azedra[supreg] is still new for FY 2022. Also,
in the FY 2006 IPPS final rule (70 FR 47349), we state that case volume
is not a relevant consideration for making the determination as to
whether a product is new. We refer the reader to the FY 2006 IPPS final
rule for a complete discussion on this.
After consideration of the public comments we received, we are
finalizing our proposal to continue new technology add-on payments for
FY 2022 for the technologies that were approved for the new technology
add-on payment for FY 2021 and that would still be considered ``new''
for purposes of new technology add-on payments for FY 2022, as listed
in the proposed rule and in the following table in this section of this
final rule. We note, the table below is the same as it was in the
proposed rule, but the table in this final rule includes Azedra[supreg]
and the updated cost information for Jakafi[supreg], as discussed
previously. The following table also presents the newness start date,
new technology add-on payment start date, relevant final rule citations
from prior fiscal years, maximum add-on payment amount, and coding
assignments. We refer readers to the cited final rules in the following
table for a complete discussion of the new technology add-on payment
application, coding and payment amount for these technologies,
including the applicable indications and discussion of the newness
start date.
BILLING CODE 4120-01-P
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[[Page 44975]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.156
BILLING CODE 4120-01-C
b. Extension of New Technology Add-On Payments
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. As explained in the FY 2005 IPPS final rule (69 FR 49002),
the intent of section 1886(d)(5)(K) of the Act and regulations under
Sec. 412.87(b)(2) is to pay for new medical services and technologies
for the first 2 to 3 years that a product comes on the market, during
the period when the costs of the new technology are not yet fully
reflected in the DRG weights. Generally, we use FDA, marketing
authorization (for example, approval of an NDA) as the indicator of the
time when a technology begins to become available on the market and
data reflecting the costs of the technology begin to become available
for recalibration of the DRGs. The costs of the new medical service or
technology, once paid for by Medicare for this 2-year to 3-year period,
are accounted for in the MedPAR data that are used to recalibrate the
DRG weights on an annual basis. Therefore, we limit the add-on payment
window for those technologies that have passed this 2-to 3-year
timeframe.
As discussed in the FY 2006 IPPS final rule (70 FR 47349) and
subsequent years, we do not believe that case volume is a relevant
consideration for making the determination as to whether a product is
``new.'' Consistent with the statute, a technology no longer qualifies
as ``new'' once it is more than 2 to 3 years old, irrespective of how
frequently it has been used in the Medicare population. Therefore, if a
product is more than 2 to 3 years old, we have historically considered
its costs to be included in the MS-DRG relative weights whether its use
in the Medicare
[[Page 44976]]
population has been frequent or infrequent.
However, in light of the unique circumstances for FY 2022
ratesetting, for which we proposed to use the FY 2019 MedPAR claims
data where we ordinarily would have used the FY 2020 MedPAR claims data
for purposes of developing the FY 2022 relative weights, for the
reasons discussed in section I.F. of the preamble of the proposed rule
and this final rule, we stated in the proposed rule that we believe it
may be appropriate to make a one-time exception to this long-standing
policy for all technologies approved for new technology add-on payments
for FY 2021, but for which the add-on payments would otherwise be
discontinued beginning in FY 2022 because the technologies would no
longer be considered new.
As discussed in section I.F. of the preamble of the proposed rule
and this final rule, ordinarily, the best available MedPAR data for
ratesetting would be the most recent MedPAR file that contains claims
from discharges for the fiscal year that is 2 years prior to the fiscal
year that is the subject of the rulemaking. For FY 2022 ratesetting,
under ordinary circumstances, the best available data would be the FY
2020 MedPAR file. As discussed in section I.F. of the preamble of the
proposed rule and this final rule, the FY 2020 MedPAR claims file
contains data significantly impacted by the COVID-19 PHE, primarily in
that the utilization of inpatient services was generally markedly
different for certain types of services in FY 2020 than would have been
expected in the absence of the PHE. Accordingly, we questioned whether
the FY 2020 MedPAR claims file is the best available data to use for
the FY 2022 ratesetting.
In our discussion in section I.F. of the preamble of the proposed
rule and this final rule, we highlighted two factors we considered in
assessing which data sources would represent the best available data to
use in the FY 2022 ratesetting. The first factor is whether the FY 2019
data, which is from before the COVID-19 PHE, or the FY 2020 data, which
includes the COVID-19 PHE time period, is a better overall
approximation of the FY 2022 inpatient experience. After analyzing this
issue, for the reasons discussed in section I.F. of the preamble of the
proposed rule and this final rule, we stated in the proposed rule that
we believe for purposes of the proposed rule that FY 2019 data are
generally a better overall approximation of FY 2022. The second factor
is to what extent the decision to use the FY 2019 or FY 2020 data
differentially impacts the FY 2022 IPPS ratesetting. As discussed more
fully in section I.F. of the preamble of the proposed rule and this
final rule, after analyzing this issue, we determined that the decision
does differentially impact the overall FY 2022 IPPS ratesetting. For
example, we determined that the effect of the FY 2022 MS-DRG relative
weights is more limited if the FY 2019-based weights are used rather
than the FY 2020-based weights, should the FY 2022 inpatient experience
not match the assumption used to calculate the MS-DRG relative weights.
Based on our analyses, we proposed to use FY 2019 data for the FY
2022 ratesetting for circumstances where the FY 2020 data is
significantly impacted by the COVID-19 PHE. We stated in the proposed
rule that because we believe the FY 2020 MedPAR claims data is
significantly impacted by the COVID-19 PHE, we were proposing to use
the FY 2019 MedPAR claims data for purposes where we ordinarily would
have used the FY 2020 MedPAR claims data, including for purposes of
developing the FY 2022 relative weights. We referred the reader to
section I.F. of the preamble of the proposed rule for a further
discussion on our analysis of the best available data for FY 2022
ratesetting. We refer the reader to section I.F. of the preamble of
this final rule for a discussion of our finalized policy on the use the
FY 2019 data for the FY 2022 ratesetting.
As discussed previously, 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. We stated in the proposed rule that
because we were proposing to use FY 2019 MedPAR data instead of FY 2020
MedPAR data for the FY 2022 IPPS ratesetting, the costs for a new
technology for which the 3-year anniversary date of the product's entry
onto the U.S. market occurs prior to the latter half of the upcoming
fiscal year (FY 2022) may not be fully reflected in the MedPAR data
used to recalibrate the MS-DRG relative weights for FY 2022. Therefore,
in light of our proposal to use FY 2019 data instead of FY 2020 data to
develop the FY 2022 relative weights, we stated that we believe it
would be appropriate to allow for a 1-year extension of new technology
add-on payments for those technologies for which the new technology
add-on payment would otherwise be discontinued beginning with FY 2022.
Accordingly, we proposed to use our authority under section
1886(d)(5)(I) of the Act to provide for a 1-year extension of new
technology add-on payments for FY 2022 for those technologies listed in
the table presented in section II.F of the proposed rule (86 FR 25213).
We noted that if we were to finalize our alternative approach of using
the same FY 2020 data that we would ordinarily use for purposes of FY
2022 ratesetting, including development of the FY 2022 relative
weights, as discussed in section I.F. of the preamble of the proposed
rule and this final rule, we would also finalize to discontinue the new
technology add-on payments for these expiring technologies beginning in
FY 2022, consistent with our historic policies.
We noted that the table in the proposed rule also presented the
newness start date, new technology add-on payment start date, relevant
final rule citations from prior fiscal years, proposed maximum add-on
payment amount, and coding assignments for these technologies. We
referred readers to the final rules cited in the table for a complete
discussion of the new technology add-on payment application, coding and
payment amount for these technologies, including the applicable
indications and discussion of the newness start date.
We invited public comment on our proposal to use our authority
under section 1886(d)(5)(I) of the Act to provide for a 1-year
extension of new technology add-on payments for FY 2022 for those
technologies for which the new technology add-on payment would
otherwise be discontinued beginning with FY 2022.
We also noted with regard to ContaCT, which is a technology sold on
a subscription basis, we continued to welcome comments from the public
as to the appropriate method to determine a cost per case for
technologies sold on a subscription basis, including comments on
whether the cost per case should be estimated based on subscriber
hospital data as described previously, and if so, whether the cost
analysis should be updated based on the most recent subscriber data for
each year for which the technology may be eligible for the new
technology add-on payment.
We summarize in this section the comments we received regarding our
proposal to provide for a 1-year extension of new technology add-on
payments for FY 2022 for those technologies listed in the table in the
proposed rule for which the new technology add-on payment would
otherwise be discontinued beginning with FY 2022.
Comment: Commenters overwhelmingly supported our proposal to use FY
2019 data instead of FY 2020
[[Page 44977]]
data to develop the FY 2022 relative weights and allow for a one-year
extension of new technology add-on payments for those technologies for
which the new technology add-on payment would otherwise be discontinued
beginning with FY 2022.
Response: We appreciate the commenters' support.
Comment: We received a public comment from the applicants for
NUZYRA[supreg] and IMFINZI[supreg] supporting our proposal to extend
new technology add-on payments and requesting an additional extension
for add-on payments through FY 2023. The applicant for IMFINZI[supreg]
stated that CMS should evaluate the impact of the COVID 19 PHE on FY
2021 MedPAR claims data to determine if FY 2019 data should also be
utilized in lieu of FY 2021 data for FY 2023 rate-setting. The
applicant for NUZYRA[supreg] asserted that this extension would align
with CMS' analysis and acknowledgement in the proposed rule that claims
data from FY 2020 may not be appropriate to use in determining
prospective hospital payment in the future due to the extenuating
circumstances surrounding the COVID public health crisis.
Response: We thank the commenters for their comments. As noted, we
proposed a one-year extension of new technology add-on payments for
those technologies for which the new technology add-on payment would
otherwise be discontinued beginning with FY 2022 because of our
proposal to use FY 2019 data instead of FY 2020 data to develop the FY
2022 relative weights. We refer the reader to the discussion in section
I.F. of the preamble of this final rule for a discussion of our
finalized policy on the use the FY 2019 data for the FY 2022
ratesetting.
Comment: A commenter stated that effective May 5, 2021, the new
Wholesale Acquisition Cost (WAC) for ELZONRISTM is
$28,065.44 and requested that CMS update the new technology add-on
payment amount accordingly.
Response: We appreciate the updated information from the applicant.
Based on this updated information and the information regarding dosage
in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42237), the maximum new
technology add-on payment for ELZONRISTM for FY 2022 would
be $144,116.04, as reflected in the table in this section.
Comment: We received a few comments on our request for comment
regarding technologies sold on a subscription basis and whether the
cost per case should be estimated based on subscriber hospital data,
and if so, whether the cost analysis should be updated based on the
most recent subscriber data for each year for which the technology may
be eligible for the new technology add-on payment. Commenters agreed
that in determining the cost per case for technologies seeking new
technology add-on payment that utilize a subscription model, we should
limit our analysis to subscriber hospitals and update the cost analysis
on an annual basis. A commenter noted that alternative methodologies
involving estimating the number of patients who would be eligible to
receive treatment utilizing a technology sold on a subscription basis
would be likely to result in a payment amount that does not adequately
reflect the estimated average cost of such service or technology as
required by the statute. The commenter believes that given the direct
impact of utilization changes on cost per case when using a
subscription model, it is reasonable for CMS to annually update the
payment amount using the most recent subscriber utilization data.
Response: We thank commenters for their comments and will take the
comments into consideration in future rulemaking where applicable. CMS
will continue to consider the issues pertaining to technologies sold on
a subscription basis relative to the calculation of the cost per unit
of these technologies including the merits of calculating the cost per
case across all IPPS hospitals versus limiting the cost per case
analysis to current users and whether the cost analysis should be
updated based on the most recent subscriber data for each year for
which the technology may be eligible for the new technology add-on
payment, as we gain more experience in this area.
However, for FY 2022, we believe the cost per case from the ContaCT
applicant's original cost analysis is still appropriate to be used.
Specifically, updated data from FY 2020 may be affected by the COVID-19
PHE as noted in our discussion in section I.A. where we finalize our
policy to use the FY 2019 MedPAR data instead of the FY 2020 data. The
applicant estimated that the average cost of ContaCT to the hospital is
$1,600 based on customer data (85 FR 58630). Based on this information,
the maximum new technology add-on payment for a case involving the use
of ContaCT continues to be $1,040 for FY 2022.
As previously noted, we are finalizing our proposal to use FY 2019
data instead of FY 2020 data to develop the FY 2022 relative weights,
as discussed in section I.F of the preamble of this final rule. For the
reasons discussed previously, in light of this final policy, and after
consideration of the public comments received, we are finalizing our
proposal to use our authority under section 1886(d)(5)(I) of the Act to
allow for a 1-year extension of new technology add-on payments for FY
2022 for the technologies listed in the proposed rule (except for
Azedra[supreg] which is discussed above) and in the following table in
this section of this final rule for which the new technology add-on
payment would otherwise be discontinued beginning with FY 2022. As we
discussed previously, because of the unique circumstances associated
with ratesetting for FY 2022, we believe it is appropriate to make a
one-time exception to our long-standing policy for all technologies
approved for new technology add-on payments for FY 2021, but for which
the add-on payments would otherwise be discontinued beginning in FY
2022 because the technologies would no longer be considered new.
The following table lists the technologies for which we are
finalizing this 1-year extension of new technology add-on payments for
FY 2022, including the newness start date, new technology add-on
payment start date, relevant final rule citations from prior fiscal
years, maximum add-on payment amount, and coding assignments. We refer
readers to the cited final rules in the following table for a complete
discussion of the new technology add-on payment application, coding and
payment amount for these technologies, including the applicable
indications and discussion of the newness start date.
BILLING CODE 4120-01-P
[[Page 44978]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.157
[[Page 44979]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.158
BILLING CODE 4120-01-C
5. FY 2022 Applications for New Technology Add-On Payments (Traditional
Pathway)
We received 26 applications for new technology add-on payments for
FY 2022. Four applicants withdrew their applications prior to the
issuance of the FY 2022 IPPS/LTCH PPS proposed rule. Five applicants,
Iovance Biotherapeutics, Omeros Corporation, Mallinckrodt
Pharmaceuticals, Janssen Biotech, Inc., and Vericel withdrew their
applications for lifileucel, narsoplimab, TERLIVAZ (terlipressin),
ciltacabtagene autoleucel, and Nexobrid respectively, prior to the
issuance of this FY 2022 IPPS/LTCH PPS final rule. In addition, 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 each year prior to the beginning of the fiscal year for which
the application is being considered. One applicant, Ischemia Care, LLC
for ISC-REST, did not receive FDA approval for its technology by July
1, 2021. Therefore, ISC-REST is not eligible for consideration for new
technology add-on payments for FY 2022. We are not including in this
final rule the description and discussion of this application which was
included in the FY 2022 IPPS/LTCH PPS proposed rule.
We note that we received public comments on the applications for
technologies that were withdrawn. However, because these technologies
are ineligible for new technology add-on payments for FY 2022 because
their applications were withdrawn, we are not summarizing nor
responding to public comments regarding the new technology criteria for
these technologies in this final rule. A discussion of the 16 remaining
applications is presented below.
a. Aidoc Briefcase for PE
Aidoc Medical Ltd. (Aidoc) applied for new technology add-on
payments for Aidoc Briefcase for PE (``Briefcase for PE'') for FY 2022.
According to the applicant, Briefcase for PE is an FDA cleared,
artificial intelligence (AI)-based solution for triage and notification
of suspected pulmonary embolism (PE) cases.
The applicant stated that the device assists hospitals and
radiologists by flagging and communicating suspected positive findings
of PE in computed tomography (CT) pulmonary angiography (CTPA)
examinations, which prompts the radiologist to assess relevant Digital
Imaging and Communications in Medicine (DICOM) imaging files, allowing
suspect cases to receive attention sooner than otherwise would have
occurred, which in turn improves clinical outcomes. According to the
applicant, patients with PE or suspected PE typically present at
hospital emergency departments (EDs). The applicant stated that for
these patients, ED physicians complete a brief evaluation and order
imaging, which typically includes CTPA. With Briefcase for PE, CTPA
images are automatically forwarded to the applicant's cloud-based
engine where they are analyzed by an AI algorithm. The applicant claims
that when Briefcase for PE detects a suspected PE, the radiologist is
alerted via the user interface of the Aidoc Worklist Application that
is installed on the radiologist's desktop. The applicant asserted that
the notification prompts the radiologist to review the CTPA images and
communicate with the emergency room team currently caring for the
patient so that the appropriate clinical action may be taken sooner
than it would otherwise have occurred in the absence of the tool.
The applicant stated that acute PE is a severe manifestation of
venous thromboembolism (VTE) and occurs when a blood clot (thrombus)
forms in a vein and then dislodges and travels to the pulmonary
arteries in the lungs. The applicant stated acute symptomatic PE can
cause death within 1 hour of onset in up to 10 percent of cases\9\ and
it is
[[Page 44980]]
estimated to be the third largest cause of cardiovascular death after
coronary artery disease and stroke.10, 11, 12, 13 The
applicant further noted that acute PE is a life-threatening medical
emergency that demands urgent intervention and clinical studies have
demonstrated a strong correlation between time to communication of PE
findings, treatment, and clinical outcomes.14,15,16
According to the applicant, in a typical workflow, a patient presenting
to a hospital with signs or symptoms of PE would move through the
system as follows: (1) Patient presents with suspected PE to the ED;
(2) Patient receives contrast-enhanced CTPA imaging; (3) Technologist
processes and reconstructs the CT images and manually routes them to
the hospital picture archiving and communication system (PACS); (4) The
exam enters a first-in-first-out (FIFO) reading queue, where it awaits
radiological interpretation; (5) Radiologist reads the CT images and
makes the diagnosis of PE; (6) The radiologist informs the referring
physician of positive PE either verbally or through the radiologist
report; (7) ED physician and/or on-call pulmonologist decide on the
management strategy; (8) If appropriate, the patient proceeds to
treatment.
---------------------------------------------------------------------------
\9\ Naess IA, Christiansen SC, Romundstad P, Cannegieter SC,
Rosendaal FR, Hammerstr[oslash]m J. Incidence and mortality of
venous thrombosis: a population-based study. J Thromb Haemost. 2007
Apr;5(4):692-9. doi: 10.1111/j.1538-7836.2007.02450.x. PMID:
17367492.
\10\ Giuntini C, Di Ricco G, Marini C, Melillo E, Palla A.
Pulmonary embolism: Epidemiology. Chest. 1995 Jan;107(1 Suppl):3S-
9S. doi: 10.1378/chest.107.1_supplement.3s. PMID: 7813326.
\11\ Becattini C, Agnelli G. Risk factors for adverse short-term
outcome in patients with pulmonary embolism. Thromb Res. 2001 Sep
15;103(6):V239-44. doi: 10.1016/s0049-3848(01)00291-2. PMID:
11567661.
\12\ Goldhaber SZ, Visani L, De Rosa M. Acute pulmonary
embolism: Clinical outcomes in the International Cooperative
Pulmonary Embolism Registry (ICOPER). Lancet. 1999 Apr
24;353(9162):1386-9. doi: 10.1016/s0140-6736(98)07534-5. PMID:
10227218.
\13\ Klok FA, Mos IC, Huisman MV. Brain-type natriuretic peptide
levels in the prediction of adverse outcome in patients with
pulmonary embolism: A systematic review and meta-analysis. Am J
Respir Crit Care Med. 2008 Aug 15;178(4):425-30. doi: 10.1164/
rccm.200803-459OC. Epub 2008 Jun 12. PMID: 18556626.
\14\ Smith SB, Geske JB, Maguire JM, Zane NA, Carter RE,
Morgenthaler TI. Early anticoagulation is associated with reduced
mortality for acute pulmonary embolism. Chest. 2010 Jun;137(6):1382-
90. doi: 10.1378/chest.09-0959. Epub 2010 Jan 15. PMID: 20081101;
PMCID: PMC3021363.
\15\ Soh S, Kim JM, Park JH, Koh SO, Na S. Delayed
anticoagulation is associated with poor outcomes in high-risk acute
pulmonary embolism. J Crit Care. 2016 Apr; 32:21-5. doi: 10.1016/
j.jcrc.2015.11.024. Epub 2015 Dec 8. PMID: 26764578.
\16\ Wood KE. Major pulmonary embolism: review of a
pathophysiologic approach to the golden hour of hemodynamically
significant pulmonary embolism. Chest. 2002 Mar; 121(3):877-905.
PMID: 11888976.
---------------------------------------------------------------------------
The applicant asserted that the FIFO workflow is the standard of
care. The applicant stated that Briefcase for PE allows facilities to
substantially shorten the period of time between when the patient
receives CTPA imaging (Step 2) and when the radiologist informs the
referring physician of positive PE (Step 5). The applicant stated that
Briefcase for PE streamlines this workflow using AI to analyze CTPA
images of the chest automatically and notifies the radiologist that a
suspected PE has been identified, enabling the radiologist to review
imaging and make diagnostic decisions faster by prioritizing these
images for review in the queue.
With respect to the newness criterion, Briefcase for PE received
FDA 510(k) clearance on April 15, 2019 to market the device under FDA
510(k) number K190072. The FDA clearance for Briefcase for PE was based
on substantial equivalence to the legally marketed predicate device,
Briefcase for Intracranial Hemorrhage (ICH) (FDA 510(k) number
K180647), as both of these devices use AI algorithms to analyze images
and highlight cases for further action based on CT images. Briefcase
for ICH received FDA 510(k) clearance on August 1, 2018. The predicate
device for Briefcase for ICH is Viz.AI's ContaCT, which received De
Novo premarket approval in February of 2018. The applicant asserted
Briefcase for ICH is indicated for use in the analysis of non-enhanced
head CT images, whereas Briefcase for PE is indicated for use in the
analysis of non-enhanced CTPA images. The applicant submitted a request
for approval of a unique ICD-10-PCS procedure code to identify use of
the technology and was granted approval for the following procedure
code effective October 1, 2021: XXE3X27 (Measurement of pulmonary
artery flow, computer-aided triage and notification, new technology
group 7).
Under the newness criterion, 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 respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, Briefcase for PE is the only FDA-cleared
technology that uses computer-aided triage and notification to rapidly
detect PE and shorten time to notification of the radiologist. The
applicant claimed that no other FDA approved or cleared technology uses
the same mechanism of action for computer-aided triage and
prioritization of PE.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated it expects that
patients evaluated for PE or suspected PE using Briefcase for PE will
be assigned to the same DRGs as patients evaluated for PE or suspected
PE under the current workflow or standard of care. The applicant
estimates that under the MS-DRG grouper for FY 2021, Briefcase for PE
could map to 279 different MS-DRGs, with MS-DRGs 175 (Pulmonary
embolism with major complication or comorbidity (MCC) or acute cor
pulmonale) and 176 (Pulmonary embolism without MCC) accounting for
approximately 45 percent of the estimated cases.
With respect to the third criterion, whether the new use of
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 did not directly respond to the
criterion but reiterated that no other existing technology is
comparable to Briefcase for PE and that Briefcase for PE is the only
FDA-cleared technology that uses computer aided triage and notification
to rapidly detect PE and shorten time to notification of the
radiologist.
We noted the following concerns in the proposed rule (86 FR 25218)
regarding whether the technology meets the substantial similarity
criteria and whether it should be considered new. We noted that the
applicant asserted that Briefcase for ICH, the predicate device for
Briefcase for PE, is identical in all aspects and differs only with
respect to the training of the algorithm on PE (that is, non-enhanced
head CT) and ICH (that is, non-enhanced CTPA) images. We noted that we
were unclear whether the training of the algorithim on PE and ICH
images would distinguish the mechanism of action for Briefcase for PE
from Briefcase for ICH, or its predicate device, ContaCT, and we
invited comment on whether Briefcase for PE represents a new mechanism
of action. We noted that although the applicant did not directly state
whether Briefcase for PE involves the treatment of the same or similar
type of disease and the same or similar patient population, we believe
that Briefcase for PE would be used for a different disease and patient
population than Briefcase for ICH and ContaCT.
We noted our interest in public comments regarding issues related
to
[[Page 44981]]
determining newness for technologies that use AI, an algorithm, or
software, as discussed in the FY 2021 IPPS/LTCH PPS final rule (85 FR
58628). Specifically, we stated that we are interested in public
comment on how these technologies, including devices classified as
radiological computer aided triage and notification software and
radiological computer-assisted diagnostic software, may be considered
for the purpose of identifying a unique mechanism of action; how
updates to AI, an algorithm or software would affect an already
approved technology or a competing technology; whether software changes
for an already approved technology could be considered a new mechanism
of action, and whether an improved algorithm by competing technologies
would represent a unique mechanism of action if the outcome is the same
as an already approved AI new technology.
We invited public comments on whether Briefcase for PE is
substantially similar to other technologies and whether Briefcase for
PE meets the newness criterion.
Comment: The applicant submitted a letter maintaining that
Briefcase for PE meets the newness criterion. With regard to commercial
availability, the applicant commented that Briefcase for PE was
commercially available on a very limited basis for less than six months
during the FY 2019 time period of the data CMS is proposing to use to
recalibrate MS-DRG weights and, therefore, that the claims from that
time period do not reflect the cost of Briefcase for PE.
With respect to whether Briefcase for PE uses the same or a similar
mechanism of action when compared to an existing technology, the
applicant commented that the concern that Briefcase for PE is identical
in all aspects to its predicate device, Briefcase for ICH, overlooks
key components of the technology and the anatomy on which it focuses.
The applicant cited the FDA definition of mechanism of action, which is
``the means by which a product achieves its intended therapeutic effect
or action,'' in its assertion that the analysis of CTPA images for
suspected findings of PE and subsequent computer-assisted triage and
notification is the new mechanism of action. The applicant also noted
that the images analyzed by the algorithm are of the pulmonary
arteries, not of vessels in the brain as with Briefcase for ICH or
ContaCT. The applicant stated that while AI is a necessary component of
Briefcase for PE, it is not the mechanism of action per se, and is not
sufficient to achieve the therapeutic effect alone.
With regard to the second and third newness criteria, the applicant
commented that while Briefcase for PE and its predicate technologies
are all AI-based triage and notification systems, these technologies
are distinctly different in that the technologies focus on different
patient populations and would be assigned to different MS-DRGs.
The applicant also responded to our question as to how AI, an
algorithm, or software may be viewed as identifying a unique mechanism
of action. The applicant concurred with other commenters in stating
that such technologies should be evaluated for newness in the same way
as CMS evaluates any other medical device applying for new technology
add-on payment. That is, the commenters stated that human intelligence
and human processes are not FDA approved or cleared technologies and
should not be used as a comparator to evaluate whether Briefcase for
PE, or any technology, meets the definition of newness. A commenter
also noted that each of the AI technologies that applied for new
technology add-on payments for FY 2022 are distinctly different in that
the technologies focus on different patient populations and/or would be
assigned to different MS-DRGs. This commenter stated, along with the
applicant, that because there are no other technologies that have been
approved or cleared by the FDA for the identification, triage and
notification of suspected findings of PE that have been on the market
for more than 2 to 3 years, Briefcase for PE meets the newness
criterion.
A commenter noted how updates to an AI, an algorithm or software
would affect an already approved technology or a competing technology.
This commenter noted a phenomenon known as ``model drift,'' which can
occur over time due to changes in healthcare workflows, practices,
populations, and data. The commenter explained that when this occurs,
the underlying algorithm does not automatically change and adapt to the
new inputs, but its output predictions can become less accurate over
time. The commenter further noted that model drift can be detected
using the same statistical analyses that rigorously tested the
algorithm's initial training data inputs and output predictions to
ensure that they are free of statistically significant variances or
biases. The commenter stated that if the AI/Machine Learning model or
the algorithms that comprise the model change over time, they ideally
should be subjected to this extensive statistical testing regimen that
occurred before its original deployment, and developers should gauge
the nature and extent of any model drift that occurs and make slight
modifications if possible that would allow for its continued use in
clinical care.
Response: We appreciate the clarification from the applicant with
respect to whether the product meets the newness criterion. After
consideration of the comments received and information submitted by the
applicant as part of its FY 2022 new technology add-on payment
application, at this time and given our ongoing consideration of
assessing newness for technology that use AI, an algorithm or software,
we believe that Briefcase for PE uses a new mechanism of action to
achieve a therapeutic outcome when compared to existing treatments
because there are currently no FDA approved or cleared technologies
that analyze CTPA images for suspected findings of PE and subsequent
computer-assisted triage and notification. Therefore, we believe that
Briefcase for PE is not substantially similar to an existing technology
and meets the newness criterion.
We also thank the commenters for their input on determining newness
for technologies that use AI, an algorithm or software, as discussed in
the proposed rule. We will continue consider how these technologies may
be used to identify a unique mechanism of action; how updates to AI, an
algorithm or software would affect an already approved technology or a
competing technology; whether software changes for an already approved
technology could be considered a new mechanism of action, and whether
an improved algorithm by competing technologies would represent a
unique mechanism of action if the outcome is the same as an already
approved AI new technology, as we gain more experience in this area.
With regard to the cost criterion, the applicant presented the
following analysis. The applicant first identified the principal
diagnoses associated with the PE-related MS-DRGs 175 (``Pulmonary
embolism with MCC or acute cor pulmonale'') and 176 (``Pulmonary
embolism without MCC''). The applicant then searched the FY 2019
proposed rule MedPAR Limited Data Set (LDS) for claims where the
principal diagnoses were listed in any position on an inpatient claim.
The applicant mapped the 2,517 identified claims to the list of unique
MS-DRGs corresponding to these claims and aggregated the claims by MS-
DRG. Per the applicant, under the MS-DRG grouper for FY 2021, potential
cases representing patients who may be eligible for treatment using
Briefcase for
[[Page 44982]]
PE map to 279 MS-DRGs, with MS-DRGs 175 and 176 accounting for
approximately 45 percent of estimated cases. The applicant also
provided a table of the top 10 MS-DRGs, which represent approximately
69 percent of estimated cases.
[GRAPHIC] [TIFF OMITTED] TR13AU21.159
The applicant standardized the charges and applied the 2-year
charge inflation factor used to adjust the outlier threshold
determination, which the applicant stated was 10.22 percent. We note
that the actual 2-year inflation factor in the FY 2021 IPPS/LTCH PPS
final rule was 13.2 percent (85 FR 59039), which would have increased
the inflated charges figure. The applicant did not remove charges for
prior technology as the applicant maintained that no existing
technology is comparable to Briefcase for PE. However, the applicant
removed 31.9 percent of total accommodation charges, which the
applicant maintained is consistent with their internal study which
indicated that Briefcase for PE reduced the length of stay for PE-
diagnosed patients.\17\ Per the applicant, the study demonstrated a
mean length of stay of 8.77 and 5.97 days for pre-AI and post-AI time
periods, respectively.\18\
---------------------------------------------------------------------------
\17\ Maya M. et al. Artificial Intelligence Software for
Flagging Pulmonary Embolism on CTPA Associated with Reduced Length
of Stay. Abstract draft of an internal study performed by the
applicant (unpublished).
\18\ Ibid.
---------------------------------------------------------------------------
Next, the applicant added charges for the new technology. To
calculate the charges for the new technology, the applicant multiplied
the cases involving Briefcase for PE from each of its subscribing
providers by a Medicare share of 52 percent to obtain the total
estimated Medicare and non-Medicare cases. The applicant obtained the
52 percent Medicare share figure from a nationwide sample of inpatient
claims provided by the Agency for Healthcare Research and Quality
(AHRQ). Specifically, the applicant searched data from the Healthcare
Cost and Utilization Project for discharges with the following codes:
I2699, I2609, I2692, I2602, I2782, T790XXA, T800XXA, T791XXA, I2693,
I2694, and I2601.\19\ The applicant found 189,575 discharges, of which
52 percent identified Medicare as the payer. The applicant divided the
total cost of the technology by the estimated total number of cases for
each customer to obtain a provider-specific cost per case, which it
then averaged across all customers to obtain an overall average cost
per case. Finally, the applicant divided the average cost per case by
the national average CCR for the CT cost center of 0.034 from the FY
2021 IPPS/LTCH PPS final rule (85 FR 58601).
---------------------------------------------------------------------------
\19\ Healthcare Cost and Utilization Project. Free Health Care
Statistics. https://hcupnet.ahrq.gov/#setup.
---------------------------------------------------------------------------
The applicant calculated a final inflated average case-weighted
standardized charge per case of $87,483, which exceeded the average
case-weighted threshold amount of $71,312. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that Briefcase
for PE meets the cost criterion.
We stated in the proposed rule (86 FR 25219) that we would like
more information regarding the methodology by which the applicant
selected the diagnosis codes associated with MS-DRGs 175 and 176, as
well as subanalyses that limit the cases to MS-DRGs 175 and 176 and the
top 10 MS-DRGs, which per the applicant represent 45 percent of
estimated cases and 69 percent of estimated cases, respectively.
Additionally, we noted that the applicant appeared to have used a
single list price of Briefcase for PE per hospital with a cost per
patient that can vary based on the volume of cases. We questioned
whether the cost per patient varied based on the utilization of the
technology by the hospitals. We stated that we were interested in more
information about the applicant's cost per case calculation, including
how the applicant selected the codes it used to search for discharges
from the Healthcare Cost and Utilization Project, as well as the per
unit cost of Briefcase for PE and how the total cost of the technology
was calculated for each subscribing provider.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630), we stated
our
[[Page 44983]]
understanding that there are unique circumstances to determining a cost
per case for a technology that utilizes a subscription for its cost. We
stated our intent to continue to consider the issues relating to the
calculation of the cost per unit of technologies sold on a subscription
basis as we gain more experience in this area. In the FY 2022 IPPS/LTCH
PPS proposed rule, we continued to welcome comments from the public as
to the appropriate method to determine a cost per case for such
technologies, including comments on whether the cost per case should be
estimated based on subscriber hospital data as described previously,
and if so, whether the cost analysis should be updated based on the
most recent subscriber data for each year for which the technology may
be eligible for the new technology add-on payment. We also invited
public comment on whether Briefcase for PE meets the cost criterion,
particularly in light of the subscription model, for which the number
of subscribers and the estimated cost per case based on that subscriber
data may change over time.
Comment: The applicant submitted a comment in response to our
concerns in the proposed rule regarding the methodology for conducting
the cost analysis for Briefcase for PE. With respect to our inquiry
regarding the specific MS-DRGs selected for the analysis and the
reasoning for selecting the identified ICD-10-CM diagnosis codes, the
applicant explained that because Briefcase for PE is a new technology,
there is no current utilization available for analysis and that,
additionally, CT pulmonary angiogram, the imaging procedure that is
specific to Briefcase for PE, is not reliably reported in the inpatient
setting using ICD-10-PCS procedure codes. Therefore, to estimate the
potential utilization of Briefcase for PE among Medicare beneficiaries,
the applicant stated that it used a multi-step approach that involved
identifying MS-DRGs specific to pulmonary embolism and determining the
principal diagnoses associated with those MS-DRGs. The applicant
determined the principal diagnoses associated with MS-DRG 175
(``Pulmonary embolism with MCC or acute cor pulmonale'') and MS-DRG 176
(``Pulmonary embolism without MCC'') and re-examined those diagnosis
codes used in the initial calculation. The applicant decided to
eliminate claims with the ICD-10-CM diagnosis of I27.82 (chronic
pulmonary embolism) as it does not reflect incidental pulmonary
embolism, the type of suspected positive cases that Briefcase for PE is
intended to flag. The applicant then searched for all claims where the
remaining principal diagnoses were listed as a diagnosis in any
position on the claim, including the admitting diagnosis. Based on this
methodology, the applicant aggregated the claims by MS-DRG and compiled
a list of unique MS-DRGs corresponding to these claims. Per the
applicant, the total claims for those providers who currently use
Briefcase for PE were then aggregated by these MS-DRGs.
With respect to our inquiry regarding the applicant's cost per case
methodology, the applicant clarified that the cost per case for each
provider was not based on a single list price per hospital, as CMS
described in the proposed rule, but rather the individual customer's
specific list price based on the applicant's actual pricing. The
applicant explained that it calculated the cost per case for each
provider using the individual list price and total Medicare and non-
Medicare cases, before taking an average of these unique costs per case
to derive an average cost per case across all users, which the
applicant then converted to charges.
In response to concerns CMS previously raised and continues to
raise concerning variation in the cost per patient for a technology
with subscription-based pricing, the applicant acknowledged that the
cost per patient may change as the applicant adds more customers. The
applicant conducted additional analyses beyond the one submitted in its
new technology add-on payment application to examine how the cost per
patient varied when data from all IPPS hospitals are included, versus
the sample of subscriber hospitals used in its original analysis.
According to the applicant, these analyses were performed using the
methodology described in detail in the proposed rule with two
additional changes: The elimination of ICD-10-CM code I27.82 as noted
previously and an inflation factor of 13.2 percent instead of 10.22
percent. The applicant stated that it calculated the cost per patient
by dividing the total cost of Briefcase for PE per year per hospital by
the number of total estimated cases for which Briefcase for PE would be
used at each hospital, and then averaging across all such hospitals.
The applicant noted that it took a conservative approach and used the
lowest pricing tier for hospitals that are not current users of the
technology. After excluding hospitals with fewer than 11 cases, the
applicant calculated a cost per case across 2,187 general acute care
hospitals that was higher than the cost per case across subscriber
hospitals. In updating its analysis, the applicant noted that the final
inflated average case-weighted standardized charge per case is $104,688
which exceeded the case-weighted threshold amount of $71,507.
The applicant conducted two additional analyses for all current
hospital clients and for all IPPS hospitals. For these analyses, the
applicant calculated an average cost per case using the methodology
described previously as well as a case-weighted average cost per case
where the average was determined by assigning weight to each
institution in relation to their relative importance and/or
significance. Per the applicant, the additional analyses use the same
methodology described previously but limit the cases included. Under
the first alternative analysis, the applicant limited cases to only
those in the top 10 MS-DRGs by volume. Under the second alternative
analysis, the applicant limited cases to only those in the two
pulmonary embolism MS-DRGs (MS-DRG 175 and 176). Under each scenario,
the applicant determined that the final inflated case-weighted
standardized charge per case exceeded the case-weighted threshold.
[[Page 44984]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.160
Response: We thank the applicant for its input. We note that the
applicant did not specify how it determined the relative weight and
importance of institutions when calculating the case-weighted cost per
case in its supplemental analyses; although it appears to have been
determined based on each institution's case volume relative to others
in the sample, we would appreciate a clarification in the future.
However, we agree with the applicant that the final inflated case-
weighted standardized charge per case exceeded the case-weighted
threshold under the twelve scenarios presented in its original
application and in response to our concerns stated in the FY 2022 IPPS/
LTCH PPS proposed rule. Therefore, we agree with the applicant that
Briefcase for PE meets the cost criterion.
Comment: The applicant also responded to CMS' request for public
comment as to the appropriate method to determine a cost per case for
technologies sold on a subscription basis, including whether the cost
per case should be estimated based on subscriber hospital data and, if
so, whether the cost analysis should be updated based on the most
recent subscriber data for each year for which the technology may be
eligible for the new technology add-on payment. The applicant concurred
with other commenters that, in determining the cost per case for
technologies seeking new technology add-on payment that utilize a
subscription model, we should limit our analysis to subscriber
hospitals and update the cost analysis on an annual basis. The
applicant also concurred that alternative methodologies involving
estimating the number of patients who would be eligible to receive
treatment utilizing a technology sold on a subscription basis would be
likely to result in a payment amount that does not adequately reflect
the estimated average cost of such service or technology as required by
Section 1886(d)(5)(K)(ii)(III) of the Act.
According to the applicant, technologies sold on a subscription
basis are provided to the customer at a fixed price per period of time,
resulting in a cost per unit that is directly impacted by the frequency
that the customer utilizes the technology. The applicant explained that
customers with low utilization of a subscription-based technology have
a higher cost per unit than customers with high utilization. The
applicant also stated that because the overall cost per unit of
subscription technologies is determined by each customer's ratio of
price to utilization, an analysis that requires an estimate of cost per
unit should be limited to subscribers only, as including estimates of
cost per unit for potential customers that do not currently subscribe
to the technology may result in a cost-per-case that does not reflect
the actual costs of current users. The applicant recommends that the
cost per unit of technologies sold on a subscription basis should be
based on data from
[[Page 44985]]
current subscribers only and that yearly updates to the cost per unit
analysis are reasonable to reflect changes in subscribers and thus the
overall cost per unit.
The applicant stated that this recommendation is consistent with
how CMS calculates costs across a variety of payment systems and
programs, including MS-DRG relative weights and APC relative weights
where CMS only considers costs from hospitals for cases billed to
Medicare and does not attempt to estimate what the cost an MS-DRG or
APC relative weight might be if a broader range of hospitals delivered
the type of care described by a specific MS-DRG or APC. Similarly, the
applicant stated that the average sales price methodology used by CMS
to determine payment for certain separately payable products includes
only data from actual customer sales. The applicant noted that,
although the unit price for these separately payable products often
varies based on utilization, with customers with low utilization paying
more per unit than customers with higher utilization, CMS does not
attempt to calculate average sales price by forecasting how future
customers may alter the current average sales price.
Response: We appreciate the applicant's comments relating to
calculation of the cost per unit of technologies sold on a subscription
basis and will take the comments into consideration in future
rulemaking where applicable. CMS will continue to consider the issues
pertaining to technologies sold on a subscription basis relative to the
calculation of the cost per unit of these technologies including the
merits of calculating the cost per case across all IPPS hospitals
versus limiting the cost per case analysis to current users and whether
the cost analysis should be updated based on the most recent subscriber
data for each year for which the technology may be eligible for the new
technology add-on payment, as we gain more experience in this area.
With regard to the substantial clinical improvement criterion, the
applicant claimed that Briefcase for PE represents an advance that
substantially improves the ability to diagnose pulmonary embolism by
pre-reading images of CTPAs, automatically identifying suspected PE in
CTPA images, and notifying the radiologist before the radiologist would
have opened the study in the standard of care, which the applicant
claims is the FIFO workflow. The applicant also asserted that because
of a reduction in time-to-exam-open, where Briefcase for PE notifies
the radiologist to open and read CTPA studies that have a high
probability of being positive for PE sooner than the radiologist would
have under the FIFO workflow, the treating physician can initiate
treatment sooner, which can reduce mortality and reduce length of stay
related to PE.
The applicant provided data from an FDA pivotal study in support of
its assertion that Briefcase for PE reduces time-to-exam-open compared
to the standard of care and helps in prioritization of diagnosis.\20\
For the FDA pivotal study, the applicant conducted a retrospective,
blinded, multicenter, multinational study of the assessment of 184
CTPAs from 3 clinical sites (2 U.S. and 1 outside U.S.) using Briefcase
for PE. The primary endpoint was to evaluate the software's performance
in identifying pulmonary embolism on an approximately equal number of
positive and negative cases (images with PE versus without PE), with a
performance goal of at least 80 percent sensitivity (true positive
rate) and specificity (true negative rate). Per the applicant, both
measures exceeded the performance goal, with 90.6 percent sensitivity
(95 percent CI: 82.2 percent-95.9 percent) and 89.9 percent specificity
(95 percent CI: 82.2 percent-95.1 percent).
---------------------------------------------------------------------------
\20\ Aidoc Briefcase for PE--Pivotal Study 1--FDA 510(k)--
K190072. http://www.accessdata.fda.gov/cdrh_docs/pdf19/K190072.pdf.
---------------------------------------------------------------------------
According to the applicant, the secondary endpoint of the FDA
pivotal study was to evaluate time-to-notification for true positive PE
cases compared to the FIFO workflow. The study showed that time-to-
notification with Briefcase for PE is 3.9 minutes (95 percent CI: 3.7-
4.1). The applicant noted that, in contrast, the time-to-exam-open in
the FIFO workflow was significantly longer at 64.1 minutes (95 percent
CI 36.6-91.5). The applicant stated the mean difference of 60.2 minutes
(95 percent CI 32.7-87.6) for these two metrics is statistically
significant, and assuming the radiologist receives a notification on a
true positive PE case and acts on it immediately, it can save an
average of 60.2 minutes (95 percent CI 32.7-87.6) compared to the time-
to exam-open in a FIFO reading queue. Based on this data, the applicant
concluded Briefcase for PE substantially shortened the time to
diagnosis for PE cases as compared with the FIFO workflow.
The applicant further claimed that clinical studies and other real-
world data have demonstrated comparable performance characteristics and
shown that the integration of the Briefcase for PE software into the
radiology workflow markedly improves time to notification for PE
patients across a variety of clinical settings, geographies, and
facilities. The applicant submitted a retrospective, single-site study
by Weikert T., et al., which evaluated Briefcase for PE performance on
1,465 retrospective CTPA examinations from 2017 in an academic center
outside the US.\21\ The sensitivity and specificity were measured to be
92.7 percent (95 percent CI: 88.3-95.5 percent) and 95.5 percent (95
percent CI:94.2- 96.6 percent), respectively. The researchers concluded
that the system has high diagnostic performance for the automatic
detection of PE on CTPA exams and as such, speeds up the diagnostic
workup of critical cases.
---------------------------------------------------------------------------
\21\ Weikert T, Winkel DJ, Bremerich J, Stieltjes B, Parmar V,
Sauter AW, Sommer G. Automated detection of pulmonary embolism in CT
pulmonary angiograms using an AI-powered algorithm. Eur Radiol. 2020
Jul 3. doi: 10.1007/s00330-020-06998-0. Epub ahead of print. PMID:
32621243
---------------------------------------------------------------------------
The applicant stated that unpublished data maintained by Aidoc
suggest that real-world performance of Briefcase for PE is consistent
with what was found in the FDA pivotal study.22 23 The
applicant stated that across 26 sites encompassing a variety of
geographic locations across the United States, a total of 36,084 CTPA
examinations were analyzed over a 90-day period (July 13, 2020-October
11, 2020). Time-to-notification metrics were calculated for all 4,748
CTPAs analyzed by the software and identified as positive for PE. Time-
to-notification was calculated as the time to get the DICOM exam, de-
identify it, upload it to the cloud, analyze and send a notification
back to the worklist application. The applicant claimed that the mean
time-to-notification for PE was 7.0 minutes (median: 6.1/IQR: 4.8).
According to the applicant, over 85 percent of CTPA examinations
identified as positive for PE were notified in under 10 minutes. The
applicant concluded that the study demonstrates the ability of
Briefcase for PE to provide fast time-to-notification on positive PE
cases and its generalizability across different centers and patient
populations.
---------------------------------------------------------------------------
\22\ Avondo, J. Yalon R., Ashkenasi C. Time-to-notification
Analysis Across US Facilities with Aidoc Briefcase for PE. Internal
study performed by the applicant (unpublished).
\23\ Ibid.
---------------------------------------------------------------------------
The applicant submitted additional unpublished data from the 26
sites spread across a variety of geographic locations of the United
States aggregated over a different 90-day period (September 17, 2020 to
December 17,
[[Page 44986]]
2020).\24\ Seven sites were excluded from the analysis due to having
third-party integrations that prevented the ability to capture
engagement metrics. Two engagement metrics were calculated: The open
percentage and the time-to-open. The open percentage metric was
calculated as the percentage of notifications that were presented to
the radiologist and opened by at least one radiologist. The time-to-
open metric was measured by calculating the time between the arrival of
the Briefcase for PE notification and the time first opened by a
radiologist. A total of 2,138 notifications for CTPA examinations found
to be positive for PE by Briefcase for PE were analyzed. The open
percentage was found to be 97 percent across all sites (min: 80
percent, max: 100 percent), and the mean time-to-open was found to be
2.13 minutes (median: 1.0/interquartile range: 2.0). The data provided
by the applicant indicated over 90 percent of notifications were found
to be opened in under 5 minutes. Based on this data, the study
concluded that radiologists in the US readily engage with notifications
for positive PE cases provided by Briefcase for PE and do so in a
timely manner. The study asserted that engagement is an important
metric to assess radiologist adoption of this technology, which is
critical to its practical utility in shortening time to diagnosis and
communication of PE to reduce the time to treatment and improve
clinical outcomes.
---------------------------------------------------------------------------
\24\ Avondo, J. Yalon R., Ashkenasi C. Radiologist Engagement
Analysis Across US Facilities with Aidoc Briefcase for PE. Internal
study performed by the applicant (unpublished).
---------------------------------------------------------------------------
The applicant also claimed that Briefcase for PE significantly
improves clinical outcomes relative to the current standard of care
using the FIFO workflow because the use of Briefcase for PE reduces
time to diagnosis and treatment by notifying the radiologist to review
the image for suspected PE faster in the workflow. The applicant
claimed early diagnosis and treatment is important in acute PE where
there exists a ``golden hour,'' during which a timely approach to
diagnosis and therapy can affect outcomes by reducing mortality and
reducing length of stay.\25\
---------------------------------------------------------------------------
\25\ The term ``golden hour'' references a critical period of
time which may be longer or shorter than a literal hour.
---------------------------------------------------------------------------
The applicant provided two unpublished internal studies in support
of the impact of Briefcase for PE on clinical outcomes. The applicant
stated that in a single-site retrospective study, Maya M., et al. have
shown a reduction in hospital length of stay for PE patients following
the use of the Briefcase for PE system, compared to an equivalent time
period prior to the use of the system.\26\ The applicant stated that
Maya M., et al. compared mean length of stay for 366 patients with a
positive PE diagnosis during 10-month periods before and after
Briefcase for PE was implemented at Cedars-Sinai Medical Center in
December 2018 (206 patients before the use of Briefcase for PE and 160
patients after the AI intervention). 3,997 patient encounters that
underwent CTPA imaging but that were not diagnosed with PE were split
as 1,926 and 2,071 patient encounters for the pre/post-AI periods based
on the admission dates. Hip fracture was chosen as a comparison group
due to acuity, treatment-related factors, and similar length of stay to
PE. 2,422 patient encounters for patients diagnosed with hip fractures,
identified by ICD9 code 820 and 821, were split as 1,279 and 1,143
patient encounters for the pre/post-AI periods based on the admission
dates. According to the applicant, the pre- and post-implementation had
similar seasonality and numbers of ``hospital-wide patient encounters''
(103,626 vs 104,733 encounters). The applicant noted that for the PE
diagnosed patients, a mean length of stay of 8.77 and 5.97 days was
observed for the pre-AI and post-AI time periods, respectively. The
applicant stated that the mean difference was 2.80 days (p-value
<0.05). For the group that underwent related PE imaging but was not
diagnosed with PE, a mean length of stay of 9.28 and 9.70 days was
observed for the pre-AI and post-AI time periods, respectively (mean
difference was -0.42 days (p-value <0.05)). For the hip fracture
diagnosed patients, a mean length of stay of 6.90 and 6.69 days was
observed for the pre-AI and post-AI time periods, respectively. The
mean difference was 0.21 days (p-value > 0.05). Additionally, for the
hospital wide patients, a mean length of stay of 5.78 and 5.96 days was
observed for the pre-AI and post-AI time periods, respectively. The
mean difference was -0.18 days (p-value <0.05). According to the
applicant, Maya et al. concluded that implementation of Briefcase for
PE for flagging and prioritization of patients with PE resulted in
significant reduction of length of stay that was not observed in other
control groups.
---------------------------------------------------------------------------
\26\ Maya M. et al. Artificial Intelligence Software for
Flagging Pulmonary Embolism on CTPA Associated with Reduced Length
of Stay. Abstract draft of an internal study performed by the
applicant (unpublished).
---------------------------------------------------------------------------
The applicant also submitted a study by Raskin D., et al. which
completed an additional retrospective, single-armed, single-site, study
that indicated improved outcomes in PE patients, compared to a time
period prior to the use of Briefcase for PE.\27\ In Raskin D., et al.,
data for all patients older than 18 years with a diagnosis of PE on
CTPA and admitted to the institution's ED was collected for the period
before the use of the AI software (January 1, 2016-January 1, 2018;
pre-AI) and afterwards (January 1, 2019-December 6, 2019; post-AI).
According to the applicant, study variables included demographics,
clinical data, and imaging data. The applicant stated the primary
variables for outcomes were 30- and 120-day all-cause mortality. 175
patients were eligible for the entire analyzed period (123 pre-AI, 52
Post-AI). The study found that 30- and 120-day all-cause mortality were
significantly reduced post-AI (8.1 percent vs 7.7 percent, 15.5 percent
vs 9.6 percent, respectively, p <0.05). According to the applicant,
Raskin D., et al. concluded that implementation of Briefcase for PE for
flagging patients with PE resulted in significant reduction of 30- and
120-day all-cause mortality.
---------------------------------------------------------------------------
\27\ Daniel Raskin D., MD, Chen Hoffmann C., MD, Gilad Twig G.,
MD Ph.D., Eli Konen E., MD, Gal Yaniv GMD Ph.D. Artificial
Intelligence Software for Flagging Pulmonary Embolism on CTPA
Associated with Reduction of Mortality. Abstract draft of an
internal study performed by the applicant (unpublished).
---------------------------------------------------------------------------
The applicant submitted five additional clinical studies that do
not directly involve the use of Briefcase for PE to demonstrate a
strong correlation between time to communication of PE findings,
initiation of treatment, and clinical outcomes. The applicants
submitted a review by Kenneth E. Wood, further establishing a ``golden
hour'' of PE during which a timely approach to diagnosis and therapy
can potentially impact outcomes. According to the applicant, Wood
states that major PE results whenever the combination of embolism size
and underlying cardiopulmonary status interact to produce hemodynamic
instability and that most deaths in patients occur within the first few
hours after presentation, and rapid diagnosis and treatment is
therefore essential to save patients' lives. One prospective, single-
site study, Kumamaru K., et al. indicates the prevalence of a ``golden
hour'' for PE diagnosis and treatment and concluded that delay (> 1.5
hours of CTPA acquisition) in direct communication of acute PE
diagnosis from radiologists to referring physicians was significantly
correlated with a higher risk of delayed treatment initiation and death
within 30 days. Another prospective, single-site study, Kline J., et
al., concluded that
[[Page 44987]]
patients with a delayed diagnosis had a higher rate of in-hospital
adverse events (9 percent vs. 30 percent; p = 0.01). An additional
retrospective, single-site study by Smith S., et al. observed an
association between early administration of anticoagulation therapy and
reduced mortality for patients with acute PE. Lastly, a retrospective,
single-site study asserting a ``golden hour'' by Soh S., et al. was
submitted by the applicant to demonstrate an association between early
initiation of anticoagulation therapy and in-hospital mortality in
high-risk PE patients who needed ICU care. According to the applicant,
Soh S., et al. concluded that their analysis showed that the cutoff
point of anticoagulation initiation to achieve improved survival rates
was 5.2 hours (that is, golden hour). The applicant stated that the
study observed an association between early anticoagulation and reduced
mortality for patients with acute PE.
In reviewing the information submitted by the applicant as part of
its FY 2022 new technology add-on payment application for Briefcase for
PE, we noted that the clinical literature provided by the applicant
only compares the technology to unassisted FIFO workflows and not
against existing electronic (for example, EHR ``stat'' orders) or
manual (for example, verbal communication to radiologist) forms of
prioritization, or other types of existing risk stratification tools or
features currently available in EHRs. Additionally, we noted that some
of the studies provided by the applicant that took place over many
years may not have accounted for confounding variables (for example,
improvements in care for patients with suspected PE) that may have
occurred during the study period. Comparing to the FIFO workflow alone
assumes that no other changes occurred before and after the adoption of
the system and that the hospitals in question did not implement any
other changes to their standard operating procedures to stratify
suspected PE cases over the period of time many of the provided studies
took place. We also noted that the applicant has not provided data on
potential outcome concerns associated with this type of clinical
decision support tool (for example, treatment delays due to false
negatives, false positives, or multiple workflow prioritization alerts
presented to the physician at the same time). We invited public comment
on whether these issues may affect the tool's ability to help diagnose
a medical condition earlier in a patient population.
Lastly, we noted that the applicant does not measure the effect of
its technology on actual treatment outcomes, instead relying on the
assumption that faster treatment results in better outcomes. Without
measuring this impact on treatment outcomes, we noted that we were
uncertain if the technology will lead to substantive clinical outcomes.
Given that the applicant references a critical ``golden hour'' which
may be as long as 5.2 hours, the potential time savings resulting from
the use of Briefcase for PE may be insubstantial in relation to the
time within which outcomes are affected in the setting of PE.
We invited public comments on whether Briefcase for PE meets the
substantial clinical improvement criterion.
Comment: Several commenters indicated their support for Briefcase
for PE. Some of these commenters offered their general positive
clinical experiences as anecdotal support for the product. Other
commenters offered opinions that the tool reduces bias, improves
knowledge sharing, reduces treatment time, and improves outcomes with
patients with pulmonary embolism but did not provide comparison to
anything other than FIFO workflow. Further, commenters reflected on the
accuracy of the tool due to its high sensitivity and specificity, and
others noted that it can help to alleviate situations where radiology
departments are overwhelmed with orders by helping staff to prioritize
the workflow.
Response: We appreciate all of the comments received related to
Briefcase for PE and have taken them into consideration in making our
determination.
Comment: The applicant submitted comments in response to CMS'
concerns in the FY 2022 IPPS/LTCH PPS proposed rule regarding whether
Briefcase for PE meets the substantial clinical improvement criterion.
In response to questions raised at the Town Hall, as referenced in
the proposed rule (86 FR 25221 through 25222) as to whether the
shortening of time to notification by Briefcase for PE represents
substantial clinical improvement, the applicant reiterated data shared
previously from the FDA Pivotal Study for Aidoc Briefcase for PE.\28\
The applicant conducted a blinded, multi-center, multi-national study
with Briefcase for PE that used the software's performance in
identifying CTPAs containing pulmonary embolism as the primary
endpoint, and time to notification for true positive PE cases compared
to the standard of care as the secondary endpoint. The applicant noted
a statistically significant mean difference of 60.2 minutes in time-to-
notification between Briefcase for PE and the standard of care. Per the
applicant, these data indicate that implementation of Briefcase for PE
saves 60.2 minutes relative to the standard of care clinical workflow.
The applicant further noted that data collected by the applicant in an
unpublished study demonstrate that the real-world performance of
Briefcase for PE is consistent with the results achieved in the
aforementioned FDA study. Specifically, the applicant noted that across
4,748 CTPA examinations analyzed by Briefcase over a 90-day period and
positive for PE, that the mean time-to-notification was seven minutes.
The applicant also examined how radiologists engage with Briefcase for
PE, noting that across 2,795 CTPA examinations analyzed by Briefcase
over a 90-day period and positive for PE, the mean time-to-open as
measured by calculating the time between when a notification first
becomes available and the time of open, was 2.13 minutes. In this same
data, the mean open rate across all customers were found to be 97
percent, and that over 90 percent of notifications were found to be
opened in under 5 minutes. The applicant asserted in light of this data
that by identifying cases of suspected PE and triaging and notifying
radiologists of such cases, Briefcase for PE substantially shortens the
time to diagnosis and therefore can impact the time to treat PE cases
compared to the standard of care.
---------------------------------------------------------------------------
\28\ Aidoc Briefcase for PE--Pivotal Study 1--FDA 510(k)--
K190072.
---------------------------------------------------------------------------
Further, the applicant submitted additional clinical evidence from
Bader et al,\29\ that demonstrates that implementation of Briefcase for
PE resulted in significant reduction of time to anticoagulation and
reduction in length of stay in patients diagnosed with PE who were
administered anticoagulation (intravenous or subcutaneous). In Bader et
al, the study evaluated patient records prior to and following
installation of Briefcase for PE, analyzing time to anticoagulation and
patient length of stay. A total of 118 patients diagnosed with PE-77
pre-installation and 41 post-installation-were identified. The study
found a 23.8-minute reduction in mean time to
[[Page 44988]]
anticoagulation following the installation of Briefcase for PE from
61.74 minutes to 37.92 minutes. The study also found a 1.56 day
reduction in mean length of stay following the installation of
Briefcase for PE from 5.71 days to 4.15 days.
---------------------------------------------------------------------------
\29\ Bader AS. ``Artificial Intelligence software for flagging
Pulmonary Embolism on CTPA is associated with a reduced Time to
Anticoagulation and reduced Hospital Length of Stay.'' Unpublished
manuscript submitted for publication.
---------------------------------------------------------------------------
In response to our concerns about using FIFO workflow as the
standard of care against which Briefcase for PE was evaluated, the
applicant stated that other forms of prioritization such as verbal
communication or STAT orders have limitations. The applicant stated
that verbal communication is typically used only in severe cases, which
are rare and represent less than 5 percent of positive PE cases. The
applicant also stated that most patients diagnosed with PE have less
severe clinical signs and symptoms at the time of presentation, making
verbal communication impossible without the determination of the
absence or presence of PE using CTPA.\30\ The applicant asserted that
STAT orders can be overused, citing one article published by Fairview
Health Services that up 70% of all portable chest x-rays are ordered
STAT,\31\ and another article citing data from Emory University that up
to 60% of all brain MRI studies are ordered as STAT and demonstrated
that the STAT designation had a negative effect on read time.\32\ The
applicant stated that this overuse of STAT orders would reduce the
benefit of the prioritization method. The applicant stated that many
Briefcase for PE customers in fact rely on the product to re-prioritize
the STAT cases using the additional insight from the AI image-based
triage and prioritization.
---------------------------------------------------------------------------
\30\ Kucher N, Rossi E, De Rosa M, and Goldhaber S. Massive
Pulmonary Embolism. Circ J. 2006;113:577-582.
\31\ Wesp W. Using STAT Properly. Radiology Management 2006;26-
33. https://www.ahra.org/AM/Downloads/OnlineEd/2005JanFeb2.pdf
\32\ https://www.radiologybusiness.com/topics/care-delivery/rsna-2017-overuse-stat-designation-slows-mri-workflow-causes-confusion.
---------------------------------------------------------------------------
In response to our concerns that the applicant had not discussed
any potential outcome concerns associated with this type of clinical
decision support tool, the applicant reasserted its position from the
Town Hall that the device is not intended to diagnose PE, and as a
triage and notification system, no patient harm results from suspected
false positive or negative findings because the radiologist would
review images to make final determinations per the standard of care.
The applicant cited post-market surveillance data, which show that
there have been zero reports of adverse effects since FDA clearance, to
support the notion that Briefcase for PE has not led to significant
changes in the volume of CTPAs ordered prior to and following
installation.33 34
---------------------------------------------------------------------------
\33\ Raskin D, Hoffmann C, Twig G, Konen E, et al. Artificial
Intelligence Software for Flagging Pulmonary Embolism on CTPA
Associated with Reduction of Mortality.
\34\ Maya M et al. Artificial Intelligence Software for Flagging
Pulmonary Embolism on CTPA Associated with Reduced Length of Stay.
Cedars Sinai Medical Center, abstract submitted to RSNA 2020.
---------------------------------------------------------------------------
In response to our concerns on the impact of the use of Briefcase
for PE on treatment outcomes and whether a reduction in time of
notification translates into a positive treatment outcome and thus a
substantial clinical improvement, the applicant submitted data shared
previously from Raskin et al,\35\ Bader et al.,\36\ Maya et al.,\37\
that indicated a reduction on 120-day and 30-day mortality
respectively; and reductions in length of stay after the introduction
of Briefcase for PE into the clinical workflow. Specifically, in Raskin
et al. the retrospective study examined the impact of the use of
Briefcase for PE on outcomes in PE patients. This study involved a
retrospective analysis of 1,258 patient medical records for cases
performed over the two time periods and observed statistically
significant reductions of 21.8% and 26.6% in 120-day and 30-day
mortality respectively. Additionally, both Maya et al and Bader et al
observed statistically significant reductions in length of stay when
comparing pre and post-implementation of Briefcase for PE and found
observed reductions of 26.3% and 27.3% in length of stay respectively.
---------------------------------------------------------------------------
\35\ Raskin D, Hoffmann C, Twig G, Konen E, et al. Artificial
Intelligence Software for Flagging Pulmonary Embolism on CTPA
Associated with Reduction of Mortality.
\36\ Bader AS. ``Artificial Intelligence software for flagging
Pulmonary Embolism on CTPA is associated with a reduced Time to
Anticoagulation and reduced Hospital Length of Stay.'' Unpublished
manuscript submitted for publication.
\37\ Maya M et al. Artificial Intelligence Software for Flagging
Pulmonary Embolism on CTPA Associated with Reduced Length of Stay.
Cedars Sinai Medical Center, abstract submitted to RSNA 2020.
---------------------------------------------------------------------------
Response: We appreciate the additional data shared by the applicant
to address our concerns. However, after review of all the data received
to date, we continue to have concerns regarding the substantial
clinical improvement criterion as noted in the FY 2022 IPPS/LTCH PPS
proposed rule. Specifically, it remains unclear if the data provides
sufficient evidence that use of Briefcase for PE significantly improves
clinical outcomes for PE patients as compared to currently available
workflows. While the applicant provided evidence that implementation of
Briefcase for PE resulted in significant reduction of time to
anticoagulation and reduction in length of stay in patients diagnosed
with PE who were administered anticoagulation, we note that the studies
submitted by the applicant did not directly assess outcomes using the
technology but rather relied on the assumption that faster treatment
leads to better outcomes. We also note that studies submitted in
support of the applicant's substantial clinical improvement claims
compare the technology to unassisted (FIFO) workflows and do not
account for existing electronic (for example EHR ``STAT orders'') or
manual (for example verbal communication to radiologist) forms of
prioritization. We note the applicant's statement that STAT orders may
be overused but the evidence provided was from other imaging studies
and not for CTPA. Additionally, some of the studies provided by the
applicant took place over separate time periods and may not have
accounted for improvements in care for patients with suspected PE that
may have occurred during the study period.
Therefore, after consideration of the public comments we received
and based on the information stated previously, we remain unable to
determine that Briefcase for PE represents a substantial clinical
improvement over existing therapies, and we are not approving new
technology add-on payments for the Briefcase for PE for FY 2022.
b. RYBREVANTTM (amivantamab)
Johnson & Johnson Health Care Systems, Inc. applied for new
technology add-on payments for RYBREVANTTM (amivantamab) for
FY 2022. RYBREVANTTM is intended for the treatment of
metastatic non-small cell lung cancer (NSCLC). The applicant stated
RYBREVANTTM is a bispecific monoclonal antibody able to
inhibit the epidermal growth factor receptor (EGFR) and c-MET tyrosine
kinase signaling pathways known to be involved in the pathogenesis of
NSCLC. Per the applicant, RYBREVANTTM works by binding EGFR
and c-MET targets present on the outside of the cell. The applicant
noted lung cancer is the second most common cancer in the U.S., and
approximately 85 percent of all lung cancers are NSCLC. The applicant
stated EGFR mutations are present in 10 to 15 percent of patients with
NSCLC and are categorized as either common EGFR mutations or atypical
EGFR mutations. Per the applicant, common EGFR mutations in patients
with NSCLC can be treated with small molecule, oral tyrosine kinase
inhibitors that work inside the cell while patients with atypical EGFR
[[Page 44989]]
mutations, such as exon 20 insertion mutations, do not respond well to
small-molecule, oral EGFR inhibitors or to chemotherapy. The applicant
stated exon 20 insertion mutations are the most frequently observed
atypical EGFR mutations affecting 4 to 10 percent of NSCLC patients
with an EGFR mutation, but there are no FDA approved targeted therapies
for NSCLC patients with exon 20 insertion mutations.
With respect to the newness criterion, the applicant stated that,
in March 2020, RYBREVANTTM (also known as JNJ-61186372)
received Breakthrough Therapy designation from the FDA for the
treatment of patients with metastatic NSCLC with EGFR exon 20 insertion
mutation whose disease has progressed on or after platinum-based
chemotherapy. RYBREVANTTM was approved by the FDA on May 21,
2021, for the treatment of adult patients with locally advanced or
metastatic NSCLC with EGFR exon 20 insertion mutations, as detected by
an FDA-approved test, whose disease has progressed on or after
platinum-based chemotherapy. The applicant submitted a request for a
unique ICD-10-PCS procedure code to identify use of the technology and
was granted approval for the following procedure codes effective
October 1, 2021: XW033B7 (Introduction of amivantamab monoclonal
antibody into peripheral vein, percutaneous approach, new technology
group 7) and XW043B7 (Introduction of amivantamab monoclonal antibody
into central vein, percutaneous approach, new technology group 7).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be considered substantially similar to an existing technology and would
not be considered ``new'' for the purpose of new technology add-on
payments.
With regard to the first criterion, whether a product uses the same
or similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that the mechanism of action of
RYBREVANTTM for treating NSCLC is unique as amivantamab is
anticipated to be the first FDA-approved bispecific antibody therapy
targeting EGFR and MET mutations simultaneously. The applicant asserted
that both EGFR and MET are involved in NSCLC pathogenesis, progression,
and development of resistance to other therapies. According to the
applicant, the most common first-line treatment for atypical EGFR-
positive patients due to exon 20 insertion mutations is platinum-based
chemotherapy. Per the applicant, there is no standard of care after
progression for second-line treatment, and patients receive a variety
of therapies such as chemotherapy, immunotherapy, and tyrosine kinase
inhibitors, as well as combinations of these therapies. The applicant
reiterated that none of these treatments are FDA approved for this
patient population and that they are associated with limited efficacy
for these patients.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that the use of
amivantamab is not expected to affect the DRG assignment. In their cost
analysis, as shown below, the applicant identified several MS-DRGs
relevant to this technology.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.161
With respect to the third criterion, whether the new use of the
technology involves the treatment of the same or a similar type of
disease and the same or similar patient population, the applicant
stated that RYBREVANTTM treats a distinct patient population
with metastatic NSCLC: Metastatic NSCLC with exon 20 insertion
mutations whose disease has progressed on or after platinum-based
chemotherapy. Per the applicant, there were no FDA-approved therapies
at the time of the proposed rule for this patient population, and the
most commonly used therapies are associated with limited efficacy.
In summary, the applicant asserted that RYBREVANTTM
should be considered new and not substantially similar to an existing
technology because the mechanism of action of RYBREVANTTM
for treating NSCLC is unique and it treats a distinct patient
population.
We invited public comments on whether RYBREVANTTM is
substantially similar to other currently available therapies and/or
technologies and whether this technology meets the newness criterion.
Comment: The applicant submitted a comment reiterating that
RYBREVANTTM meets the newness criterion because it does not
meet two of the substantial similarity criteria. The applicant stated
that it does not meet the first criterion because
RYBREVANTTM's mechanism of action for treating NSCLC is
unique in that it is the first FDA-approved bispecific antibody therapy
targeting EGFR and MET mutations simultaneously, and it does not meet
the third criterion since it treats a distinct patient population with
metastatic NSCLC with exon 20 insertion mutations for which there is no
other FDA-approved therapy.
Response: We thank the applicant for their comment. Based on this
comment and on information submitted by the applicant as part of its FY
2022 new technology add-on payment application for
RYBREVANTTM, as discussed in the proposed rule (86 FR 25222
through 25227) and previously summarized, we believe that
RYBREVANTTM has a unique mechanism of action due to treating
NSCLC via bispecific antibody therapy targeting EGFR and MET mutations
simultaneously. We also agree that RYBREVANTTM treats a new
patient population, as there are no other FDA-approved therapies for
patients
[[Page 44990]]
with metastatic NSCLC with exon 20 insertion mutations. Therefore, we
believe RYBREVANTTM is not substantially similar to existing
treatment options and meets the newness criterion. We consider the
beginning of the newness period to commence when RYBREVANTTM
was approved by FDA for the indication of treatment of advanced or
metastatic NSCLC with EGFR Exon 20 insertion mutations, on May 21,
2021.
With regard to the cost criterion, the applicant provided the
following analysis to demonstrate that the technology meets the cost
criterion. The applicant searched the FY 2019 Medicare Provider
Analysis and Review (MedPAR) final rule file for cases based on the
presence of one of the following ICD-10-CM diagnosis codes for lung
cancer:
[GRAPHIC] [TIFF OMITTED] TR13AU21.162
[[Page 44991]]
We note that the applicant also provided the following ICD-10-PCS
procedure codes, which the applicant stated could be used to identify
cases involving RYBREVANTTM in the absence of a unique ICD-
10-PCS code.
[GRAPHIC] [TIFF OMITTED] TR13AU21.164
To further refine the cases used in the analysis, the applicant
used the following methodology. Per the applicant, clinical data
suggests 80 to 85 percent of lung cancer patients are NSCLC
patients.\38\ The applicant stated that, of those patients, 10-15
percent are EGFR-mutations patients,39 40 and of those, at
least 9 percent have atypical EGFR mutations like exon 20 ins.\41\ The
applicant selected 0.93% (82.5% * 12.5% * 9%) of the cases identified
based on the lung cancer diagnosis codes listed previously. The
applicant stated this is the target population for
RYBREVANTTM, which the applicant used for the cost analysis.
---------------------------------------------------------------------------
\38\ ``What is Lung Cancer?'' American Cancer Society. 1 October
2019: https://www.cancer.org/content/cancer/en/cancer/lung-cancer/about/what-is.html.
\39\ Wee, P., & Wang, Z. (2017). Epidermal growth factor
receptor cell proliferation signaling pathways. Cancers, 9(5), 52.
\40\ Pao, W., & Girard, N. (2011). New driver mutations in non-
small-cell lung cancer. The Lancet Oncology, 12(2), 175-180.
\41\ Arcila, M. E., Nafa, K., Chaft, J. E., Rekhtman, N., Lau,
C., Reva, B. A., and Ladanyi, M. (2013). EGFR exon 20 insertion
mutations in lung adenocarcinomas: prevalence, molecular
heterogeneity, and clinicopathologic characteristics. Molecular
Cancer Therapeutics, 12(2), 220-229.
---------------------------------------------------------------------------
The applicant then accounted for the circumstances where
RYBREVANTTM would be administered during an inpatient stay.
The applicant stated that RYBREVANTTM will typically be
administered in the outpatient setting, and that it assumed that
RYBREVANTTM would be administered during an inpatient stay,
possibly for care unrelated to a patient's cancer treatment, when that
stay coincided with the 2-week cycle during which a patient receiving
RYBREVANTTM would undergo an infusion in the outpatient
setting were it not for their inpatient admission. The applicant stated
that, because it is very important that patients receive continuity of
cancer care, it assumed that some patients would receive their
RYBREVANTTM infusion during their hospital stay. To account
for this scenario, the applicant calculated the average length of stay
for all of the cases in its patient population, which it asserted was
about 5.862 days. The applicant then divided the average length of stay
for all of the cases by 14, as per the applicant RYBREVANTTM
is administered on 28-day cycle, with a weekly administration for the
first cycle, and an administration every 2 weeks thereafter.
The applicant stated that current clinical guidelines are expected
to give medical professionals discretion to administer
RYBREVANTTM during the hospitalization or pause the
treatment cycle. To account for physician discretion, the applicant
included only 50 percent of these cases in the final cost analysis.
The applicant identified 349 cases mapping to the following MS-
DRGs. The applicant has not made a request for RYBREVANTTM
to map to a new or different MS-DRG for FY 2022.
[GRAPHIC] [TIFF OMITTED] TR13AU21.165
[[Page 44992]]
BILLING CODE 4120-01-C
The applicant assumed patients receiving RYBREVANTTM
would receive one dose of the drug during their inpatient stay. Because
RYBREVANTTM would be administered in addition to any other
drugs the patient was receiving during their inpatient admission, the
applicant did not remove costs associated with any previous technology.
The applicant then standardized the charges using the FY 2019 IPPS/LTCH
PPS final rule Impact file. Then the applicant applied the 2-year
inflation factor of 13.2 percent (1.13218) from the FY 2021 IPPS/LTCH
PPS final rule (85 FR 59039). The applicant then added charges for
RYBREVANTTM, which the applicant determined using the
inverse of the FY 2021 IPPS/LTCH PPS final rule pharmacy national
average cost to charge ratio (CCR) of 0.187 (85 FR 58601).
Because the applicant calculated a final inflated average case-
weighted standardized charge per case of $108,159, which exceeds the
case weighted threshold of $64,736, the applicant maintained the
technology meets the cost criterion.
Based on the information provided by the applicant, we stated in
the proposed rule that we had several concerns with regard to whether
the technology meets the cost criterion. In its cost analysis, the
applicant combined 234 cases from multiple MS-DRGs into one group with
a case-weight of 67 percent of cases. We stated that we do not believe
this is appropriate for the cost analysis. As reflected in Sec.
412.87(b)(3), where cases eligible for a particular technology may be
assigned to multiple MS-DRGs, in performing the cost analysis, the
applicant should compare the charges of the cases to a threshold amount
that is the lesser of 75 percent of the standardized amount or 75
percent of one standard deviation beyond the case-weighted average of
all MS-DRGs to which the cases map. In the event that a single MS-DRG
has fewer than 11 cases, the applicant should impute a minimum case
number of 11 rather than the actual value. In this way, the appropriate
threshold and case weighted threshold value can be calculated.
In its analysis, the applicant appeared to take a sample of a
larger case population based on clinical data. We stated that it was
unclear whether the applicant was taking a simple random sample or a
targeted sample of cases. We noted that, if the applicant obtained a
random sample, this sample may not be any more representative of the
larger population of cases identified by the lung cancer diagnosis
codes listed previously. If the applicant instead non-randomly sampled
cases from the larger population, we stated that we would like to
understand the process used by the applicant to identify this targeted
sample. We requested information under either approach on how a
sampling of cases from the greater population is more representative of
potential RYBREVANTTM patients.
We invited public comments on whether RYBREVANTTM meets
the cost criterion.
Comment: The applicant provided clarifications to their analysis.
With respect to the concern that the applicant combined cases from
multiple MS-DRGs into one group with a case weight of 67 percent, the
applicant was in agreement that it is not appropriate to combine cases
that fall below the 11-case blinding threshold. The applicant stated
that, in response to CMS' concern, they provided two versions of the
table--one in the application pdf file with MS-DRGs that had fewer than
11 cases grouped into an ``all other'' category--and the full Excel
file showing the complete list of DRGs, even if they had fewer than 11
cases.
With respect to CMS' request for information on how a random
sampling of cases from the greater population is more representative of
potential RYBREVANTTM patients, the applicant first
reiterated the assumptions behind its original cost analysis. The
applicant pointed to clinical data from the American Cancer Society
suggesting 80 to 85 percent of lung cancer patients are NSCLC patients,
and that of those patients, 10-15 percent are EGFR-mutations, and of
those, at least 9 percent are atypical EGFR mutations like exon 20
insertions which per the applicant is the target patient population for
RYBREVANTTM. The applicant also stated its assumption that,
although RYBREVANTTM will typically be administered in the
outpatient setting, there would be situations in which the patient
would be admitted to the hospital for care that is possibly unrelated
to their cancer treatment, and that this inpatient stay would coincide
with the day that they would normally receive RYBREVANTTM as
part of their ongoing cancer treatment. Per the applicant,
RYBREVANTTM's dosing regimen would mean that many
beneficiaries' inpatient stays would not coincide with the
RYBREVANTTM treatment scenario, and that to account for this
scenario, the applicant calculated the average length of stay for all
of the cases in its patient population and divided the average length
of stay for all of the cases by 14, after which the applicant
multiplied this new factor by the number of cases in the sample to
reduce the sample to those cases where the RYBREVANTTM
treatment day would occur during the hospitalization. The applicant
then reiterated the clinical guidelines that give physicians discretion
to administer RYBREVANTTM during the hospitalization or a
pause in the treatment cycle, and stated that to account for this
discretion, it included only half of these cases in its cost analysis.
Per the applicant, these calculations are intended to acknowledge that
while there are many patients with lung cancer diagnoses receiving
different types of treatment in the hospital, there are only a small
number of beneficiaries who have ESCLC and are receiving
RYBREVANTTM that happen to be in the hospital on the day
when they are normally scheduled to receive RYBREVANTTM
whose physician would like to continue treatment during the
hospitalization.
The applicant then addressed CMS' concerns by presenting a revised
analysis including only the cases with the lowest total charges at each
of its filtering points, rather than selecting a random sample. The
applicant explained that the cases with the lowest total charges are
the least likely to meet the cost criterion threshold, and so selecting
those cases represented the most conservative option in selecting a
sample. The applicant first reran the analysis selecting 0.93 percent
of cases with the lowest total charges to account for the portion of
lung cancer patients who have NSCLC and atypical EGFR mutations. The
applicant further filtered the cases to account for the patients who
would receive RYBREVANTTM in the hospital based on timing
and physician discretion, resulting in a sample of 91 cases which the
applicant reiterated had the lowest total charges. The applicant then
added charges for RYBREVANTTM based on the drug's WAC,
resulting in a final inflated case-weighted standardized charge per
case that exceeded the case weighted threshold, and the applicant
maintained that RYBREVANTTM meets the cost criterion.
Response: We thank the applicant for its comments addressing our
concerns regarding the cost criterion. We appreciate the explanation of
the sampling methodology behind the applicant's original analysis as
well as its revised analysis representing the most conservative
approach using cases with the lowest total charges that are least
likely to meet the cost criterion. We agree that the applicant's
approach
[[Page 44993]]
to sampling is reasonable and representative of potential
RYBREVANTTM patients and that RYBREVANTTM meets
the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that RYBREVANTTM represents a substantial
clinical improvement over existing technologies. The applicant asserted
several claims of substantial clinical improvement for
RYBREVANTTM: (1) RYBREVANTTM is anticipated to be
the first therapy to treat the metastatic NSCLC with exon 20 insertion
mutations for patients whose disease has progressed on or after
platinum-based chemotherapy; (2) the objective response rate (ORR) was
higher than what would be expected with chemotherapy or immunotherapy;
(3) a clinical benefit rate higher than what would be expected with
chemotherapy or immunotherapy; (4) a duration of response higher than
what would be expected with chemotherapy or immunotherapy; (5) the
median progression free survival was higher than what would be expected
with chemotherapy or immunotherapy; and (6) the incidence and severity
of diarrhea was lower than what would be expected with any oral EGFR
inhibitor.
The applicant stated that patients with NSCLC and EGFR exon 20
insertion mutations have a form of disease that is generally
insensitive to available EGFR TKI treatments and, as a result, carries
a worse prognosis compared to patients with more common EGFR
mutations.\42\ Per the applicant, the current standard of care for the
initial treatment of exon 20 insertion metastatic NSCLC is platinum-
based chemotherapy; \43\ and, after a patient with EGFR exon 20
insertion metastatic NSCLC disease progresses on or during platinum-
based chemotherapy, there is no standard of care. The applicant stated
there are currently no FDA-approved targeted therapies for patients
with lung cancer who have EGFR exon 20 insertion mutations.\44\ The
applicant cited an analysis of the Flatiron Health database, which
includes electronic health data records from over 265 cancer clinics
representing over 2 million active US cancer patients, that found
prescribers use a wide variety of treatment strategies, all of which
have an unclear role in the second-line treatment of exon 20 insertion
mutated metastatic NSCLC or are known to be ineffective and/or have
potential tolerability issues.\45\ Specifically, the analysis showed
that in the second-line treatment of exon 20 insertion metastatic
NSCLC, approximately 33 percent of patients received single-agent
immunotherapy, 14.1 percent received an EGFR-targeting oral agent, 5.9
percent received chemoimmunotherapy combination, 5.9 percent received
chemotherapy with a VEGF inhibitor, 5.9 percent received a clinical
study drug, and the remainder received a variety of single-agent
chemotherapies or other regimens. The applicant stated this re-iterates
the lack of an accepted standard of care for the second-line treatment
of exon 20 insertion metastatic NSCLC and thus underscores the unmet
need of these patients. The applicant stated in their application that
based on the Breakthrough Therapy designation for
RYBREVANTTM, it was anticipated that
RYBREVANTTM's first expected approval would be for the
second-line treatment of exon 20 insertion metastatic NSCLC.
---------------------------------------------------------------------------
\42\ Vyse, S., and Huang, P. H. (2019). Targeting EGFR exon 20
insertion mutations in non-small cell lung cancer. Signal
Transduction and Targeted Therapy, 4(1), 1-10.
\43\ Chantharasamee, J., Poungvarin, N., Danchaivijitr, P., and
Techawatanawanna, S. (2019). Clinical outcome of treatment of
metastatic non-small cell lung cancer in patients harboring uncommon
EGFR mutation. BMC Cancer, 19(1), 701.
\44\ Yasuda, H., Kobayashi, S., and Costa, D. B. (2012). EGFR
exon 20 insertion mutations in non-small-cell lung cancer:
preclinical data and clinical implications. The Lancet Oncology,
13(1), e23-e31.
\45\ Flatiron Health database, Second Line Treatment Regimens in
Advanced NSCLC (January 2015-October 2019).
---------------------------------------------------------------------------
The applicant provided three references to support a finding of
substantial clinical improvement for RYBREVANTTM as well as
some supplementary information in the application itself. The first
reference was a conference presentation given at the 2019 Annual
Meeting of the Society for Clinical Oncology titled ``JNJ-61186372
(JNJ-372), an EGFR-cMet bispecific antibody, in EGFR-driven advanced
non-small cell lung cancer (NSCLC)'' by Haura et al. The second was a
poster presented at the 2020 Annual Meeting of the American Society for
Clinical Oncology titled ``Amivantamab (JNJ-61186372), an anti-EGFR-MET
bispecific antibody, in patients with EGFR Exon 20 insertion
(Exon20ins)-mutated non-small cell lung cancer (NSCLC)'' by Park et al.
The third was a conference presentation given in January 2021 at the
World Conference on Lung Cancer titled ``Amivantamab in Post-platinum
EGFR Exon 20 Insertion Mutant Non-small Cell Lung Cancer'' by Sabari et
al.
These three references all describe the ongoing Phase 1 trial
titled ``A Phase 1, First-in-Human, Open-Label, Dose Escalation Study
of JNJ-61186372, a Human Bispecific EGFR and cMet Antibody, in Subjects
With Advanced Non-Small Cell Lung Cancer'' (https://clinicaltrials.gov/ct2/show/NCT02609776). This open label, multicenter, first-in-human
study, also known as ``CHRYSALIS,'' consists of two parts.\46\ Part 1
was a dose escalation study used to establish the recommended Phase 2
dosing regimen.\47\ Part 2 was a dose expansion study to assess safety
and efficacy at the recommended Phase 2 dosing regimen.\48\ The primary
efficacy endpoint was the overall response rate per Response Evaluation
Criteria in Solid Tumors v1.1.\49\ Key secondary endpoints included
clinical benefit rate (CBR), duration of response (DOR), progression-
free survival (PFS), and overall survival (OS).\50\
---------------------------------------------------------------------------
\46\ https://clinicaltrials.gov/ct2/show/study/NCT02609776
https://clinicaltrials.gov/ct2/show/study/NCT02609776.
\47\ Sabari JK, Shu CA, Park K, et al. Amivantamab in post-
platinum EGFR exon 20 insertion mutant non-small cell lung cancer.
Oral presentation presented at: International Association for the
Study of Lung Cancer (IASLC) 2020 World Conference on Lung Cancer
Singapore (WCLC 2020); January 28-31, 2021; Worldwide Virtual Event.
\48\ Ibid.
\49\ Ibid.
\50\ Ibid.
---------------------------------------------------------------------------
Key eligibility criteria for the post-platinum population of
patients enrolled in the study included: Metastatic/unresectable NSCLC,
EGFR exon 20 insertion mutation, and progression on platinum-based
chemotherapy.\51\ Patients received the recommended Phase 2 dose of
1050 mg (1400 mg for patients >=80 kg) amivantamab intravenously once
weekly for the first cycle and biweekly thereafter.\52\ The safety
population (N=114) included all post-platinum exon 20 ins patients who
received amivantamab at the recommended Phase 2 dose, and the response-
evaluable population (n=81) included post-platinum exon 20 ins patients
who had at least three disease assessments or had discontinued,
progressed, or died prior to the third post-baseline assessment at the
time of clinical cut-off.\53\
---------------------------------------------------------------------------
\51\ Ibid.
\52\ Ibid.
\53\ Ibid.
---------------------------------------------------------------------------
In the efficacy population, the median age was 62.\54\ In addition,
59 percent of the patients were female, 49 percent of the patients were
Asian, and 47 percent had a history of smoking.\55\ Median time from
initial diagnosis was 17 months
[[Page 44994]]
with a range of 1-130 months.\56\ All patients, by definition, had a
prior history of platinum-based chemotherapy while 46 percent had prior
immuno-oncology therapy and 25 percent had a history of EGFR TKI
treatment.\57\
---------------------------------------------------------------------------
\54\ Ibid.
\55\ Ibid.
\56\ Ibid.
\57\ Ibid.
---------------------------------------------------------------------------
In the safety population, 98 percent of patients experienced a
treatment-related adverse event.\58\ Of these, 16 percent were Grade 3
or higher, 9 percent were serious, 4 percent led to discontinuation, 13
percent led to dose reduction, and 21 percent led to dose
interruption.\59\ Of note, 2 percent discontinued due to rash and 10
percent had treatment-related diarrhea with 8.5 percent at grade 1-2
and 3.5 percent at grade 3.\60\
---------------------------------------------------------------------------
\58\ Ibid.
\59\ Ibid.
\60\ Ibid.
---------------------------------------------------------------------------
The applicant stated that preliminary safety results from the
CHRYSALIS trial presented at the 2020 ASCO meeting appear to
demonstrate that amivantamab has a manageable safety profile, with 60%
of adverse events at grade 1 to 2.\61\ Per the applicant, this appears
to be an improvement relative to the types and frequency of adverse
events reported for platinum based chemotherapies overall in advanced
NSCLC, with over half of patients reporting adverse events of grade 3
to 5, such as neutropenia, nausea, and vomiting.\62\ The applicant
noted the best tolerated EGFR-targeting oral agent osimertinib was
associated with a rate of discontinuation due to adverse events of 13
percent in the phase 3 FLAURA study.\63\ In addition, the applicant
noted osimertinib was associated with a rate of any grade diarrhea of
58 percent with 2 percent of patients having grade 3 or higher in this
study.\64\ In the same phase 3 FLAURA study, the applicant noted the
comparator arm (gefitinib or erlotinib) was associated with a 57
percent incidence of any grade diarrhea with 2 percent of patients
experiencing grade 3 or higher.
---------------------------------------------------------------------------
\61\ 2020 ASCO Annual Meeting: Park, K, et al. J Clin Oncol
38:2020 (suppl; abstr 9512).
\62\ Schiller, JH et al. (2002). Comparison of four chemotherapy
regimens for advanced non-small-cell lung cancer. New England
Journal of Medicine, 346(2), 92-98.
\63\ Ibid.
\64\ Ibid.
---------------------------------------------------------------------------
Regarding efficacy, in the Sabari et al reference, a blinded
independent central review found an ORR in the efficacy population of
40 percent (95 percent CI 29-51) and a median DOR of 11.1 months (95
percent CI 6.9-not reached).\65\ Patients experienced a complete
response in 4 percent of cases, partial response in 36 percent of
cases, stable disease in 48 percent of cases, progressive disease in 10
percent of cases, and one percent of patients was not evaluable.\66\
Finally, the CBR (defined as complete response, partial response, or
stable disease for at least two disease assessments) was 74 percent (95
percent CI 63-83).\67\ The median patient follow-up in this most recent
analysis was 9.7 months (range 1.1-29.3). Of note, 47 percent of
patients remained on treatment at time of data cutoff and 63 percent
had responses of at least six months.\68\ The median PFS was 8.3 months
(95 percent CI 6.5-10.9), and the median overall survival was 22.8
months (95 percent CI 14.6-not reached).\69\
---------------------------------------------------------------------------
\65\ Sabari JK, Shu CA, Park K, et al. Amivantamab in post-
platinum EGFR exon 20 insertion mutant non-small cell lung cancer.
Oral presentation presented at: International Association for the
Study of Lung Cancer (IASLC) 2020 World Conference on Lung Cancer
Singapore (WCLC 2020); January 28-31, 2021; Worldwide Virtual Event.
\66\ Ibid.
\67\ Ibid.
\68\ Ibid.
\69\ Ibid.
---------------------------------------------------------------------------
The applicant stated that, while direct comparison between
therapies cannot be definitively made in the absence of comparative
trials, amivantamab results appear promising and numerically better
than those expected with current therapies (chemotherapy,
immunotherapy, chemoimmunotherapy combination, or oral EGFR tyrosine
kinase inhibitors) based on available data. The applicant stated
platinum-based chemotherapy has been associated with a median
progression free survival of 5.1 to 6.0 months in patients with exon 20
T790m mutations--the most common mutation observed following resistance
to small molecule TKI inhibitors commonly used in advanced EGFR
mutation positive NSCLC.\70\ The applicant stated that oral EGFR
tyrosine kinase inhibitors (for example, erlotinib, gefitinib,
afatinib, dacomitinib, osimertinib) and immunotherapies are also used
to treat patients with exon 20 insertion metastatic NSCLC but generally
have limited efficacy as exon 20 insertion mutations have been
associated with resistance to EGFR tyrosine kinase inhibitors.\71\ The
applicant stated most immunotherapy and chemoimmunotherapy studies have
excluded patients with EGFR mutation because single-agent
immunotherapies have very limited efficacy in patients with EGFR-
mutated NSCLC.
---------------------------------------------------------------------------
\70\ Yoshida, T., Kuroda, H., Oya, Y., Shimizu, J., Horio, Y.,
Sakao, Y., et al. . . . and Yatabe, Y. (2017). Clinical outcomes of
platinum-based chemotherapy according to T790M mutation status in
EGFR-positive non-small cell lung cancer patients after initial
EGFR-TKI failure. Lung Cancer, 109, 89-91.
\71\ Vyse, S., & Huang, P.H. (2019). Targeting EGFR exon 20
insertion mutations in non-small cell lung cancer. Signal
Transduction and Targeted Therapy, 4(1), 1-10.
---------------------------------------------------------------------------
The applicant provided the following table 1, which outlines median
progression free survival (mPFS) and response rate (ORR) data among
patients with exon 20 insertion mutation for amivantamab and some of
the currently existing therapies. The applicant noted this table is
intended to provide general information about individual therapies and
is not intended for making direct comparisons between therapies as
differences between study populations, follow-up time, prior
treatments, and other factors may exist.
[GRAPHIC] [TIFF OMITTED] TR13AU21.166
[[Page 44995]]
Finally, the applicant cited an analysis presented at the 2020
American Society of Clinical Oncology (ASCO) Annual Meeting, which
found patients experienced a median ORR of 13% and PFS of 3.5 months
when receiving a wide variety of different therapies, including
immunotherapies, chemoimmunotherapies, EGFR-targeting TKIs, and other
chemotherapy regimens as second-line treatment.\72\
---------------------------------------------------------------------------
\72\ Park, K. (2020, May). Amivantamab (JNJ-61186372), an anti-
EGFR-MET bispecific antibody, in patients with EGFR Exon 20
insertion (Exon20ins)-mutated non-small cell lung cancer (NSCLC).
Poster presented at the 2020 Annual Meeting of the American Society
of Clinical Oncology.
---------------------------------------------------------------------------
In the proposed rule, after review of the information provided by
the applicant, we noted the following concerns regarding whether the
technology meets the substantial clinical improvement criterion. We
stated that at the time, results provided by the applicant were based
on an ongoing Phase 1 trial. We were concerned that these are
potentially partial results, from which end conclusions may not be
drawn, and also about the potential for overestimating treatment
effects when trials stop early or report interim results. We further
noted that the only study cited by the applicant to establish
substantial clinical improvement is a single-armed study assessing the
safety and efficacy of RYBREVANTTM in the target population.
As noted by the applicant, no formal comparisons to other therapies
were made. Without the ability to control for factors such as study
design, patient characteristics, etc., we noted that we may be unable
to determine whether any differences seen are the result of
RYBREVANTTM's potentially superior efficacy or confounding
variables. We also noted that the single-arm study design results in an
inability to distinguish between the effect of RYBREVANTTM
treatment, a placebo effect, and the effect of natural course of the
disease.
We invited public comments on whether RYBREVANTTM meets
the substantial clinical improvement criterion.
Comment: The applicant submitted a comment regarding substantial
clinical improvement. With regard to the concern that results provided
by the applicant are based on an ongoing Phase 1 trial from which end
conclusions may not be drawn, the applicant stated that these results
supported the accelerated approval granted to RYBREVANTTM by
the US FDA on May 21, 2021.73 74 75 The applicant also
reiterated that RYBREVANTTM received Priority Review and
Breakthrough Therapy designation, and explained that these designations
are significant because they are only granted to applications for drugs
that would be significant improvements in the safety or effectiveness
of the treatment, diagnosis or prevention of serious conditions when
compared to standard applications (in the case of Priority Review) or
drugs that are intended to treat a serious condition and whose
preliminary clinical evidence demonstrated substantial improvement over
available therapy on clinically significant endpoints (in the case of
Breakthrough Therapy). Per the applicant, the study that supported
approval, CHRYSALIS (NCT02609776), is an ongoing, phase 1 multi-cohort,
multi-center study that has not been stopped prematurely. The applicant
noted that although enrollment has been closed for the study, patients
continue to be followed for efficacy and safety for final data that
will be provided to FDA when available. The applicant also noted that
RYBREVANTTM received FDA approval based on overall response
rate (ORR) and duration of response (DoR) which were assessed and
confirmed by blinded independent central review (BICR) in CHRYSALIS.
The applicant emphasized that there were no currently approved
therapies for the target patient population with high unmet medical
needs.76 77
---------------------------------------------------------------------------
\73\ PR Newswire. FDA approves first targeted therapy for subset
of non-small cell lung cancer; https://www.prnewswire.com/news-releases/fda-approves-first-targeted-therapy-for-subset-of-non-small-cell-lung-cancer-301296998.html. May 21, 2021. Accessed June
1, 2021.
\74\ Janssen Announces U.S. FDA Breakthrough Therapy Designation
Granted for JNJ-6372 for the Treatment of Non-Small Cell Lung
Cancer. https://www.jnj.com/janssen-announces-u-s-fda-breakthrough-therapy-designationgranted-for-jnj-6372-for-the-treatment-of-non-small-cell-lung-cancer. May 21, 2021. Accessed June 01, 2021.
\75\ RYBREVANT (amivantamab-vmjw) [Prescribing Information].
Horsham, PA: Janssen Biotech, Inc.; https://www.janssenlabels.com/package-insert/product-monograph/prescribing-information/RYBREVANT-pi.pdf.
\76\ Ibid. PR Newswire
\77\ Ibid. Janssen Announces US FDA Breakthrough Therapy
Designation Granted.
---------------------------------------------------------------------------
The applicant also acknowledged that continued approval for this
indication may be contingent upon verification and description of
clinical benefit in the confirmatory trials (RYBREVANTTM
Prescribing Information). Per the applicant, the confirmatory phase 3
trial, which is currently enrolling, is a study of
RYBREVANTTM in combination with platinum-based chemotherapy,
compared to platinum-based chemotherapy alone in participants with
advanced or metastatic NSCLC characterized by EGFR Exon 20
insertions.\78\
---------------------------------------------------------------------------
\78\ Janssen Research & Development, LLC. A study of combination
amivantamab and carboplatin-pemetrexed therapy, compared with
carboplatin-pemetrexed, in participants with advanced or metastatic
NSCLC characterized by EGFR Exon 20 insertions. In:
ClinicalTrials.gov [internet]. Bethesda (MD): National Library of
Medicine (US). 2000- [cited 2021 June 01]. Available from: https://clinicaltrials.gov/ct2/show/NCT04538664. NLM Identifier:
NCT04538664.
---------------------------------------------------------------------------
With respect to the concern that CHRYSALIS is a single-armed study
assessing the safety and efficacy of RYBREVANTTM in the
target patient population, the applicant stated that because there is
no standard of care (SOC) therapy and no randomized, comparative (head-
to-head) studies published in patients with NSCLC and EGFR exon 20
insertion mutations, no formal comparisons to existing treatments can
be made. The applicant stated that external controls can add valuable
context in interpreting RYBREVANTTM efficacy and
appreciating unmet needs with current real-world therapies, the most
common of which are single-agent chemotherapies, immuno-oncology
therapies, and EGFR tyrosine kinase inhibitors (TKIs). Per the
applicant, an external control arm was constructed using three real
world datasets from US companies. The datasets were de-duplicated and
adjusted using propensity score weighting for differences in age, brain
metastases, ECOG PS, and prior lines of therapy. The applicant stated
that patients receiving RYBREVANTTM had longer OS and PFS
than patients treated with real world therapies in the post-platinum-
based chemotherapy setting based on a recent analysis. Specifically,
the overall response rate (ORR) was 40 percent among
RYBREVANTTM-treated patients, 13 to 18 percent among
external controls, and 16 percent for the pooled real-world dataset.
The applicant also noted that RYBREVANTTM-treated patients
had a 53 percent risk reduction in progression, a 60 percent risk
reduction in commencement of next therapy, and a 51 percent risk
reduction in death compared to external controls. Per the applicant,
poor performance of the external controls reflects the ineffectiveness
of currently available real world treatments and highlights the urgent
need to find more targeted treatments for the patient population.\79\
---------------------------------------------------------------------------
\79\ Minchom AR, et al. Amivantamab compared with real world
therapies in patients with NSCLC with EGFR Exon 20 insertion
mutations who have progressed after platinum doublet chemotherapy.
Poster presented at: 2021 American Society of Clinical Oncology
(ASCO) Annual Meeting; June 4-8, 2021; Virtual. Abstract 9052.
---------------------------------------------------------------------------
[[Page 44996]]
In response to our concern that the single-arm CHRYSALIS study
results in an inability to distinguish between the effect of
RYBREVANTTM treatment, a placebo effect, and the effect of
natural course of the disease, the applicant provided a poster of
results to distinguish between the effects of RYBREVANTTM
treatment. The applicant stated that the poster revealed that most Exon
20 insertion mutations in NSCLC have been associated with insensitivity
or resistance to currently available small-molecule TKIs and are
associated with poor prognosis (93% increased risk of progression or
death with EGFR Exon20ins compared to common EGFR mutations);
therefore, this represents an area of high unmet medical
need.80 81 82 83 The applicant stated that the 5-year
relative survival rate for patients with lung and bronchus cancer is
20.5%, with rates varying by stage from 59% with localized disease to
6% with metastatic disease.\84\ In addition, the 5-year relative
survival rate for patients with NSCLC is 24.9%, with rates varying by
stage from 63% to 7% for localized and metastatic disease,
respectively.\85\ The applicant further stated that a retrospective
cohort study of real-world data from the Flatiron Health Database (1
January 2011 through 21 May 2020) found that patients with metastatic
NSCLC harboring exon 20 insertion mutations have an estimated 5-year
survival of 8% compared to 19% for patients with common EGFR
mutations.\86\ For these reasons, the applicant asserts that
RYBREVANTTM demonstrates substantial clinical improvement
for this population of patients.
---------------------------------------------------------------------------
\72\ Arcila ME, et al. ECGR exon 20 insertion mutations in lung
adrenocarcinomas: Prevalence, molecular heterogeneity, and
clincopathologic characteristics. Mol Cancer Ther. 2013;12(2):220-
229.
\81\ Yasuda H, et al. Structural, biochemical and clinical
characterization of epidermal growth factor receptor (EGFR) exon 20
insertion mutations in lung cancer. Sci Transl Med.
2013;5(216):216ra177
\82\ Yun J, et al. Antitumor activity of amivantamab (JNJ-
61186372), an EGFR-cMet bispecific antibody, in diverse models of
EGFR Exon 20 insertion-driven NSCLC. Cancer Discov. 2020;10(8):1194-
1209.
\83\ Girard N, et al. Comparative clinical outcomes for patients
with NSCLC harboring EGFR exon 20 insertion mutations and common
EGFR mutations. Oral presentation presented at: International
Association for the Study of Lung Cancer (IASLC) 2020 World
Conference on Lung Cancer Singapore (WCLC 2020); January 28-31,
2021; Worldwide Virtual Event.
\84\ National Cancer Institute Surveillance, Epidemiology, and
End Results Program (NCI SEER). Cancer stat facts: lung and bronchus
cancer. 2020a. Available at: https://seer.cancer.gov/statfacts/html/lungb.html. Accessed June 01, 2021.
\85\ National Cancer Institute Surveillance, Epidemiology, and
End Results Program (NCI SEER). Cancer statistics review, 1975-2017;
Table 15.14. April 15, 2020b. Available at: https://seer.cancer.gov/csr/1975_2017/. Accessed June 01, 2021.
\86\ Ibid. Girard.
---------------------------------------------------------------------------
Response: We appreciate the additional information 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 with the
applicant that RYBREVANTTM represents a substantial clinical
improvement over existing technologies because, based on the
information provided by the applicant, the technology offers a
treatment option for patients with metastatic NSCLC with exon 20
insertion mutations whose disease has progressed on or after platinum-
based chemotherapy, for which it is the first and only FDA approved
treatment.
After consideration of the public comments we received, we have
determined that RYBREVANTTM meets all of the criteria for
approval for new technology add-on payments. Therefore, we are
approving new technology add-on payments for RYBREVANTTM for
FY 2022. Cases involving the use of RYBREVANTTM that are
eligible for new technology add-on payments will be identified by ICD-
10- PCS procedure codes XW033B7 (Introduction of amivantamab monoclonal
antibody into peripheral vein, percutaneous approach, new technology
group 7) or XW043B7 (Introduction of amivantamab monoclonal antibody
into central vein, percutaneous approach, new technology group 7).
RYBREVANTTM is administered in 26 treatments annually
and is estimated that the annual cost of the product will be $180,000
per patient. In its application, the applicant stated that
RYBREVANTTM is administered on a 28-day cycle. It is
administered weekly for the first cycle, and every 2 weeks thereafter.
The dose is 1050 mg (3 vials) for patients who weigh less than 80 kg
and 1400 mg (4 vials) for patients who weigh 80 kg or more. Per the
applicant, the WAC of RYBREVANTTM is $2,986.43 for a 350mL
vial. According to the applicant, 70% of patients with exon 20
mutations weigh less than or equal to 80 Kg, while 30% exceed 80 kg.
Therefore, the average cost per patient for RYBREVANTTM is
$9,855.22 ($2,986.43 per vial * 3 vials * 0.70) + ($2,986.43 per vial *
4 vials * 0.30). Under Sec. 412.88(a)(2), 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
RYBREVANTTM is $6,405.89 for FY 2022.
c. BREYANZI[supreg] (lisocabtagene maraleucel)
Juno Therapeutics, a Bristol-Myers Squibb Company, submitted an
application for new technology add-on payment for FY 2022 for
BREYANZI[supreg]. BREYANZI[supreg] is a CD19-directed, autologous
chimeric antigen receptor (CAR) T-cell immunotherapy that is comprised
of individually formulated CD8 (killer) and CD4 (helper) CAR T-cells
indicated for the treatment of adult patients with relapsed or
refractory (r/r) large B-cell lymphoma after at least two prior
therapies. We note that Juno Therapeutics previously submitted an
application for new technology add-on payments for BREYANZI[supreg] for
FY 2021, as summarized in the FY 2021 IPPS/LTCH PPS proposed rule,
under the name lisocabtagene maraleucel (85 FR 32647-32652).
According to the National Comprehensive Cancer Network, Diffuse
Large B-cell lymphoma (DLBCL) is the most common type of Non-Hodgkin's
Lymphoma (NHL) in the U.S. and worldwide, accounting for nearly 30% of
newly diagnosed cases of B-cell NHL in U.S.\87\ DLBCL is characterized
by spreading of B-cells through the body that have either arrived de
novo or by the transformation from indolent lymphoma.
---------------------------------------------------------------------------
\87\ Ferlay J, Colombet M, Soerjomataram, et al., Estimating the
global cancer incidence and mortality in 2018: GLOBOCAN sources and
methods, Int J Cancer. 144: 1941-1953 (Ferlay, 2019); NCCN Clinical
Practice Guidelines in Oncology (NCCN Guidelines[supreg]) for B-Cell
Lymphomas V. 5.2019. (copyright) National Comprehensive Cancer
Network, Inc. 2019 (NCCN, 2019).
---------------------------------------------------------------------------
According to the applicant, the standard-of-care, first-line
immune-chemotherapy for DLBCL includes regimens such as
cyclophosphamide, doxorubicin, vincristine, and prednisone plus
rituximab (R-CHOP).\88\ These regimens result in long-lasting remission
in more than 50% of patients.\89\ However, approximately 10% to 15% of
patients will have primary refractory disease (that is, nonresponse or
relapse within 3 months of first-line therapy), and an additional 20%
to 25% will relapse following an initial response to therapy.\90\
Patients with relapses of aggressive B-cell lymphomas are believed to
have a poor
[[Page 44997]]
prognosis because of potential treatment resistance and rapid tumor
growth, with only about 30% to 40% responding to salvage chemotherapy
(for example, R-ICE, DHAP, or Gem-ox) followed by high-dose therapy and
autologous stem cell transplantation for patients demonstrating
chemotherapy-sensitive disease.91 92 Among patients eligible
to undergo autologous stem cell transplantation (ASCT), only 50% will
achieve a remission adequate to proceed to ASCT, and approximately 50%
will relapse after transplantation.\93\ The applicant also noted that
transplant eligibility is also restricted based on age and tolerance to
high dose chemotherapy and thus excludes a moderate subset of patients
with r/r DLBCL.
---------------------------------------------------------------------------
\88\ Coiffier, BBertrand et al., Long-term outcome of patients
in the LNH-98.5 trial, the first randomized study comparing
rituximab-CHOP to standard CHOP chemotherapy in DLBCL patients: A
study by Group d'Etudes des Lymphomes de l'Adulte, blood 2010 116:
2040-2045. (Coiffier, 2010).
\89\ Ibid.
\90\ Ibid.
\91\ Crump M, Neelapu SS, Farooq U, et al., Outcomes in
refractory diffuse large B-cell lymphoma: Results from the
international SCHOLAR-1 study, Blood. 2017; 130(16): 1800-1808
(Crump, 2017).
\92\ Cunningham D, Hawkes EA, Jack A, et al. Rituximab plus
cyclophosphamide, doxorubicin, vincristine, and prednisolone in
patients with newly diagnosed diffuse large B-cell non-Hodgkin
lymphoma: A phase 3 comparison of dose intensification with 14-day
versus 21-day cycles Lancet. 2013; 381: 1817-1826 (Cunningham,
2013).
\93\ Ibid.
---------------------------------------------------------------------------
Additionally, the applicant explained that the available therapies
for 3L+ large B-cell lymphoma include the following:
CD19-directed genetically modified autologous CAR T-cell
immunotherapy axicabtagene ciloleucel (YESCARTA[supreg]), approved in
October 2017 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
(FL).\94\
---------------------------------------------------------------------------
\94\ YESCARTA[supreg]'s approval was based on a single arm study
(ZUMA-1) demonstrating an IRC-assessed ORR of 72%, CR of 51%, and an
estimated median DOR of 9.2 months in 101 subjects included in the
modified intent-to-treat (mITT population).
---------------------------------------------------------------------------
CAR T-cell therapy tisagenlecluecel (KYMRIAH[supreg]),
approved in May 2018, 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, high grade B-cell lymphoma,
and DLBCL arising from FL.\95\
---------------------------------------------------------------------------
\95\ KYMRIAH[supreg]'s approval was based on a single-arm study
(JULIET) demonstrating an ORR of 50% and a CR rate of 32% in 68
efficacy-evaluable subjects. A median DOR was not reached with a
median follow-up of 9.4 months.
---------------------------------------------------------------------------
Programmed death receptor-1 (PD-1)-blocking antibody
(KEYTRUDA[supreg]), approved in 2018, for the treatment of adult and
pediatric patients with refractory primary mediastinal B-cell lymphoma
(PMBCL), or who have relapsed after two or more prior lines of
therapy.\96\
---------------------------------------------------------------------------
\96\ KEYTRUDA is not recommended for treatment of patients with
PMBCL who require urgent cytoreductive therapy. Keytruda USPI
(2019).
---------------------------------------------------------------------------
CD79b-directed antibody-drug conjugate polatuzumab vedotin
(POLIVY[supreg]), in combination with bendamustine and rituximab,
approved in 2019, for the treatment of adult patients with r/r DLBCL,
not otherwise specified, after at least two prior therapies.
According to the applicant, despite the availability of these
therapies, r/r large B-cell lymphoma remains a major cause of morbidity
and mortality due to the aggressive disease course. The applicant noted
that the safety profiles of these therapies exclude many r/r large B-
cell lymphoma patients from being able to undergo treatment with these
therapies.\97\
---------------------------------------------------------------------------
\97\ Smith SD, Reddy P, Sokolova A, et al., Eligibility for CAR
T-cell therapy: An analysis of selection criteria and survival
outcomes in chemorefractory DLBCL, Am. J. Hematol. 2019; E119: 1-4
(Smith, 2019).
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant submitted a
BLA for BREYANZI[supreg] in October 2019, and was approved by FDA on
February 5, 2021. BREYANZI[supreg] was granted Breakthrough Therapy
Designation (BTD) on December 15, 2016 and Regenerative Medicine
Advanced Therapy (RMAT) designation on October 20, 2017, for the
treatment of patients with r/r aggressive large B-cell NHL, including
DLBCL, not otherwise specified (DLBCL NOS; de novo or transformed from
indolent lymphoma), primary mediastinal B-cell lymphoma (PMBCL), or
follicular lymphoma Grade 3B (FL3B)). BREYANZI[supreg] is a CD19-
directed genetically modified autologous T cell immunotherapy indicated
for the treatment of adult patients with relapsed or refractory large
B-cell lymphoma after two or more lines of systemic therapy, including
diffuse large B-cell lymphoma (DLBCL) not otherwise specified
(including DLBCL arising from indolent lymphoma), high-grade B-cell
lymphoma, primary mediastinal large B-cell lymphoma, and follicular
lymphoma grade 3B. BREYANZI[supreg] is not indicated for the treatment
of patients with primary central nervous system lymphoma. We note that
effective October 1, 2021 the following ICD-10-PCS codes may be used to
uniquely describe procedures involving the infusion of
BREYANZI[supreg]: XW033N7 (Introduction of lisocabtagene maraleucel
immunotherapy into peripheral vein, percutaneous approach, new
technology group 7) and XW043N7 (Introduction of lisocabtagene
maraleucel immunotherapy into central vein, percutaneous approach, new
technology group 7). The applicant also submitted a request for a new
HCPCS code, which will uniquely describe procedures involving the use
of BREYANZI[supreg]. The applicant noted in their application that
BREYANZI[supreg] would likely map to the same MS-DRG as other CAR T-
cell therapies, MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell
Immunotherapy).
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 described two ways in which it believes the mechanism of
action for BREYANZI[supreg] differs from previously approved therapies
for DLBCL. First, the applicant described the therapy as being
comprised of individually formulated cryopreserved patient-specific
helper (CD4) and killer (CD8) CAR T-cells in suspension that are
administered as a defined composition of CAR-positive viable T-cells
(from individually formulated CD8 and CD4 components). The applicant
stated that the therapy involves a different mechanism of action from
other CAR-T cell therapies because the CD4 and CD8 T-cells are purified
and cultured separately to maintain compositional control of each cell
type. Furthermore, during culture, each cell type is separately
modified to have the CAR on the cell surface, expanded and quantified,
and frozen in two separate cell suspensions. The applicant then
described how BREYANZI[supreg] is infused with the same target dose of
CD4 and CD8 CAR T-cells for every patient. The applicant asserted that
because BREYANZI[supreg] controls the same dosage for both CD4 and CD8,
it differs from other CAR T-cell therapies for DLBCL and could
potentially provide for higher safety and efficacy; the applicant
stated that CAR T-cell therapies that do not control for CD8 CAR T-cell
dosage have demonstrated higher rates of severe and life-threatening
toxicities, such as cytokine release syndrome (CRS) and neurotoxicity
(NT).
The second feature the applicant described as distinguishing
BREYANZI[supreg]'s mechanism of action from existing CD19-directed CAR
T-cell therapies was the presence of an EGFRt cell surface tag. The
applicant explained
[[Page 44998]]
that the EGFRt cell surface tag could hypothetically be targeted for
CAR T-cell clearance by separately administering cetuximab, a
monoclonal antibody. According to the applicant, if the patient was
separately administered cetuximab, the presence of the EGFRt cell
surface tag within BREYANZI[supreg] would allow cetuximab to bind to
the CAR T-cells and clear the cells from the patient. The applicant
highlighted studies that showed that persistent functional CD19-
directed CAR T-cells in patients caused sustained depletion of a
patient's normal B-cells that expressed CD19, resulting in
hypogammaglobulinemia and an increased risk of life-threatening or
chronic infections.\98\ The applicant further explained that such
prolonged low levels of normal B-cells could place a patient at risk of
life-threatening or chronic infections. According to the applicant, the
ability to deplete CAR T-cells, via the administration of cetuximab,
when a patient achieves a long-term remission could hypothetically
allow recovery of normal B-cells and potentially reduce the risk of
life-threatening or chronic infections. The applicant noted that
experiments in a laboratory setting showed that targeting EGFRt with
the monoclonal antibody cetuximab eliminated CAR T-cells expressing the
EGFRt marker, which resulted in long-term reversal of B-cell aplasia in
mice.\99\ However, the applicant noted that this mechanism of CAR T-
cell clearance, via administration of cetuximab and EGFRt cell surface
tags/markers, has not been tested in humans, including patients treated
with BREYANZI[supreg].
---------------------------------------------------------------------------
\98\ Kalos M, Levine BL, Porter DL, et al., T Cells with
Chimeric Antigen Receptors Have Potent Antitumor Effects and Can
Establish Memory in Patients with Advanced Leukemia, Sci Transl Med.
2011; 3(95): 1-21 (Kalos, 2011).
\99\ Paszkiewicz PJ, Frable SP, Srivastava S, et al., Targeted
antibody-mediated depletion of murine CD19 CAR T cells permanently
reverses B cell aplasia, J Clin Invest. 2016; 126(11): 4262-4272
(Paszkiewicz, 2016).
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant acknowledged that the
ICD-10-PCS procedure codes used to uniquely identify procedures
involving the administration of BREYANZI[supreg] XW033N7 (Introduction
of lisocabtagene maraleucel immunotherapy into peripheral vein,
percutaneous approach, new technology group 7) and XW043N7
(Introduction of lisocabtagene maraleucel immunotherapy into central
vein, percutaneous approach, new technology group 7) are assigned to
MS-DRG 018 (Chimeric Antigen Receptor (CAR) T-cell Immunotherapy). The
applicant has not made a request for the technology to map to a new or
different MS-DRG for FY 2022.
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, BREYANZI[supreg] fills an unmet need in the treatment of
large B-cell lymphoma because BREYANZI[supreg] would be indicated as a
third-line treatment option for patients with r/r DLBCL, who cannot be
treated with existing CAR T-cell therapies. The applicant asserted that
BREYANZI[supreg] would be able to treat these patients that present
with uncommon subtypes of DLBCL including, PMBCL, FL3B, and DLBCL
transformed from indolent lymphoma from other follicular lymphoma,
elderly patients (>=65 years old), patients with secondary CNS
involvement by lymphoma, and those with moderate renal or cardiac
comorbidities. The applicant asserted that these patient populations
were excluded from registrational trials for YESCARTA[supreg] and
KYMRIAH[supreg], and therefore represent an unmet patient need.
Regarding newness, we stated in the proposed rule that we were
concerned whether a differing production and/or dosage represented a
different mechanism of action as compared to previously FDA-approved
CAR T-cell therapies. We were also concerned about whether the
existence of an EGFRt cell surface tag equates to a new mechanism of
action given that in order to activate this cell surface tag, an
additional medication, cetuximab, which targets the CAR T-cells for
clearance, would be needed. We also expressed concern that, based on
our understanding, the presence of the EGFRt cell surface tag is a
potential way to treat an adverse event of the BREYANZI[supreg] therapy
and is not critical to the way the drug treats the underlying disease.
We noted that the applicant referenced that while this EGFRt cell
surface tag is included within the BREYANZI[supreg] compound, it
remains dormant without activation by cetuximab. Finally, the applicant
noted that BREYANZI[supreg] has been shown safe and effective for
patient populations excluded from registrational trials for
YESCARTA[supreg] and KYMRIAH[supreg], including patients with uncommon
subtypes of large B-cell lymphoma, including PMBCL, FL3B, and DLBCL
transformed from indolent lymphoma other than FL, elderly patients
(>=65 years old), patients with secondary CNS involvement by lymphoma
and those with moderate renal or cardiac comorbidities.\100\ We noted
that the FDA label for YESCARTA[supreg] and KYMRIAH[supreg] does not
appear to specifically exclude these patient populations or NHL
subtypes. As such, it was unclear whether BREYANZI[supreg] would in
fact treat a patient population different from other CAR T-cell
therapies that treat patients with DLBCL.
---------------------------------------------------------------------------
\100\ Lisocabtagene maraleucel Biologics License Application
(BLA).
---------------------------------------------------------------------------
We invited public comments on whether BREYANZI[supreg] is
substantially similar to other technologies and whether
BREYANZI[supreg] meets the newness criterion.
Comment: A commenter, the manufacturer of a competitor CAR T-cell
product to BREYANZI[supreg], stated that despite small differences in
production and dosage, they agree with CMS that BREYANZI[supreg]'s
mechanism of action does not represent a different mechanism of action
as compared to KYMRIAH[supreg] and YESCARTA[supreg]. The commenter next
provided the FDA-approved prescribing information for BREYANZI[supreg],
KYMRIAH[supreg], and YESCARTA[supreg] which they asserted describe the
same or similar mechanism of action for these technologies. The
commenter added BREYANZI[supreg], KYMRIAH[supreg], and YESCARTA[supreg]
are all CD19-directed genetically modified autologous T-cell
immunotherapies that bind to CD19-expressing cancer cells and normal B
cells. The commenter next stated that according to the applicant,
BREYANZI[supreg]'s mechanism of action can be distinguished from
existing CD19-directed CAR T-cell therapies given the presence of an
EGFRt cell surface tag. According to the commenter, the applicant noted
that EGFRt cell surface tag could ``hypothetically'' be targeted for
CAR T-cell clearance by separately administering cetuximab, a
monoclonal antibody. The commenter asserted that nevertheless, there is
only preclinical murine data to support the claim that the presence of
an EGFRt cell surface tag for BREYANZI[supreg] improves safety or
efficacy. Therefore, the commenter asserted that the claim about the
mechanism of action made by the applicant is merely hypothetical and
should not be the basis to evaluate a claim for newness under the new
technology add-on payment criteria. Lastly, the commenter stated that
according to the applicant, BREYANZI[supreg] controls the same dosage
for both CD4 and CD8, which ``could potentially provide for higher
safety and efficacy'' than previously FDA-approved CAR T-
[[Page 44999]]
cell therapies. In response, the commenter described an analysis of how
different product attributes of KYMRIAH[supreg], including CD4:CD8
ratio, affect efficacy and safety, in which the investigators found
that the CD4:CD8 ratio had no significant impact on response rate, CRS,
or neurotoxicity.\101\ The commenter added that in the phase 2 trial
for YESCARTA[supreg], investigators also found that response rates did
not appear to be influenced by product characteristics, including the
CD4:CD8 ratio.\102\
---------------------------------------------------------------------------
\101\ Backanova V, Tam CS, Borchmann P, et al. Impact of
Tisagenlecleucel Chimeric Antigen Receptor (CAR)-T Cell Therapy
Product Attributes on Clinical Outcomes in Adults with Relapsed or
Refractory Diffuse Large B-Cell Lymphoma (r/r DLBCL). Oral
presentation presented at: 61st ASH Annual Meeting; December 7-10,
2019; Orlando, FL; Abstract 242.
\102\ Neelapu SS, Locke FL, Bartlett NL, et al. Axicabtagene
Ciloleucel CAR T-Cell Therapy in Refractory Large B-Cell Lymphoma. N
Engl J Med. 2017;377(26):2531-2544. doi:10.1056/NEJMoa1707447.
---------------------------------------------------------------------------
Next, the commenter asserted BREYANZI[supreg] treats the same or
similar type of disease and patient populations as KYMRIAH[supreg] and
YESCARTA[supreg]. The commenter stated its disagreement that
BREYANZI[supreg] presents a new treatment option for patients with r/r
DLBCL that cannot be treated with existing FDA-approved CAR T-cell
therapies. The commenter stated there is large overlap in the eligible
patient populations for all three therapies as the patient populations
or NHL subtypes are not excluded from the FDA label of the existing
FDA-approved CAR T-cell therapies.
Response: We appreciate the information provided by the commenter
and have taken this comment into consideration in our determination of
the newness criterion.
Comment: In response to CMS' concerns in the proposed rule, a
commenter stated their agreement and support that BREYANZI[supreg]
needs additional data to show that it meets the newness criterion to
support an approval for new technology add-on payment. The commenter
stated specifically that they do not believe BREYANZI[supreg] is
significantly different from the current two FDA approved CAR T-cell
products YESCARTA[supreg] and KYMRIAH[supreg] for the treatment of
Diffuse Large B-cell lymphoma (DLBCL). The commenter added that there
have not been any head-to-head clinical trials performed to support the
request from the manufacturer of BREYANZI[supreg].
A few commenters encouraged CMS to consider assigning new
technology add-on payments for new CAR T-cell therapies including
lisocabtagene maraleucel to ensure patient access.
Response: We appreciate the information submitted by the commenters
and have taken this into consideration in our final determination of
new technology add-on payment status.
Comment: In response to CMS' concerns in the proposed rule, the
applicant submitted a comment. The applicant stated that
BREYANZI[supreg] does not use the same or similar mechanism of action
to achieve a therapeutic outcome. The applicant asserted that in terms
of the CAR construct and design, the therapy is impacted by differences
in length of the transmembrane/hinge region, domain type, and
costimulatory/activation domains. According to the applicant, new data
demonstrates that the length of the transmembrane/hinge region, along
with the domain type (CD28, CD8, etc.) in combination with the
costimulatory/activation domains (CD28, 4-1BB, etc.), can affect
cytokine production, proliferation, and T-cell memory generation, which
are critical to the activity of CAR T-cell therapy.\103\ According to
the applicant, BREYANZI[supreg] utilizes a different mechanism of
action from other CAR T-cell therapies, including KYMRIAH[supreg] and
YESCARTA[supreg], which are also indicated to treat certain patient
populations with DLBCL. The applicant added that BREYANZI[supreg] has a
unique mechanism of action because it is comprised of two individually
formulated cryopreserved patient-specific helper (CD4) and killer (CD8)
CAR T-cells in suspensions administered as a defined composition of
CAR-positive viable T-cells in a 1:1 ratio (CD4/CD8) as compared to
KYMRIAH[supreg] and YESCARTA[supreg] which are comprised of varying
CD4/CD8 CAR T-cell ratios and are manufactured as mixed populations.
The applicant further asserted that BREYANZI[supreg] also has the
unique attribute of incorporating an EGFRt cell surface tag that could
potentially be used in combination with cetuximab to eliminate the
genetically altered T-cells through antibody dependent cell-mediated
cytotoxicity should the patient experience a catastrophic adverse
event, as compared to KYMRIAH[supreg] and YESCARTA, neither of which
has this same EGFRt cell surface tag.
---------------------------------------------------------------------------
\103\ Brudno JN, Lam N, Vanasse, D, et al. Safety and
feasibility of anti-CD19 CAR T cells with fully human binding
domains in patients with B-cell lymphoma, Nature Medicine. 2020;
26:270-280; Ying Z, Huang XF, Xiang X, et al. A safe and potent
anti-CD19 CAR T cell therapy, Nature Medicine. 2019; 25:947-953.
---------------------------------------------------------------------------
The applicant stated that BREYANZI[supreg] does not involve the
treatment of the same or similar type of disease or same or similar
patient population as other technologies. The applicant asserted
BREYANZI[supreg] has been shown to be safe and effective for patient
populations excluded from registrational trials for YESCARTA[supreg]
and KYMRIAH[supreg], including patients with uncommon subtypes of large
B-cell lymphoma, including refractory primary mediastinal B-cell
lymphoma (PMBCL), FL3B, and DLBCL transformed from indolent lymphoma
other than follicular lymphoma (FL), elderly patients (>=65 years old),
patients with secondary central nervous system (CNS) involvement by
lymphoma and those with moderate renal or cardiac comorbidities. The
applicant added the FDA labels for YESCARTA[supreg] and KYMRIAH[supreg]
may not exclude all these B cell lymphoma subtypes; however, clinical
studies for YESCARTA[supreg] and KYMRIAH[supreg] failed to include
patients transformed from indolent lymphomas (for example, chronic
lymphocytic leukemia (CLL) and marginal zone lymphoma (MZL)) and
patients with FL3b. Additionally, according to the applicant, clinical
studies for YESCARTA[supreg] and KYMRIAH[supreg] did not allow
enrollment of patients with prior allogeneic hematopoietic stem cell
transplant (HSCT) or with secondary CNS disease, reduced renal
function, and other specific comorbidities. The applicant asserted its
belief that it would be unlikely for a clinician to prescribe
KYMRIAH[supreg] or YESCARTA[supreg] for patients that were expressly
excluded from the clinical trials for those therapies and even more
unlikely for a commercial payor to reimburse for the use of
KYMRIAH[supreg] or YESCARTA[supreg] in a patient population that was
excluded from the clinical trials. Lastly, the applicant asserted
patients with FL3b are excluded from Medicare coverage for
KYMRIAH[supreg] and YESCARTA[supreg] under National Coverage
Determination (NCD) 110.24 (Chimeric Antigen Receptor (CAR) T cell
Therapy), but are covered for BREYANZI[supreg].\104\
---------------------------------------------------------------------------
\104\ CMS Manual System, Pub 100-04 Medicare Claims Processing
Manual, Transmittal 10796, Change Request 12177 (May 20, 2021),
available at https://www.cms.gov/files/document/r10796cp.pdf.
---------------------------------------------------------------------------
Response: We appreciate the information submitted by the commenters
in response to whether BREYANZI[supreg] meets the newness criterion. In
regard to the first criterion, whether a technology uses the same or
similar mechanism of action to achieve a therapeutic outcome, we do not
believe there is a clear differentiation between the mechanism of
action of BREYANZI[supreg] and currently available
[[Page 45000]]
CAR T-cell therapies, namely KYMRIAH[supreg] and YESCARTA[supreg].
While the applicant highlights differences, such as the length of the
transmembrane/hinge region, domain type, costimulatory/activation
domains and CD4/CD8 ratios, we do not believe these meaningfully
differentiate the mechanism of action of BREYANZI[supreg] from other
CD-19 directed CAR T-cell therapies, which are all genetically modified
autologous T-cell immunotherapies that bind to CD-19 expressing cancer
cells. We refer the reader to the FY 2019 IPPS/LTCH PPS final rule (83
FR 41287 through 41291) for a further discussion of this issue, where
we determined that KYMRIAH[supreg] and YESCARTA[supreg] were
substantially similar to one another based on similar concerns. We
agree with the first commenter that the differences in production and
dosage between BREYANZI[supreg], YESCARTA[supreg], and KYMRIAH[supreg]
do not represent a different mechanism of action. We also agree with
the first commenter that the EGFRt surface tag characteristic of
BREYANZI[supreg] has not been shown to be a meaningful difference due
to the experimental nature from which these results are derived.
In regard to the second criterion, whether a product is assigned to
the same or a different MS-DRG, as noted in the proposed rule, the
procedure codes used to describe the administration of BREYANZI[supreg]
are assigned to MS-DRG 018 with other CAR T-cell therapies.
In regard to the third criterion, whether a technology treats the
same or similar type of disease and patient populations, CMS notes
there is substantial overlap between the patient populations treated by
BREYANZI[supreg], YESCARTA[supreg], and KYMRIAH[supreg]. Based on B-
cell lymphoma classifications and FDA indications for adult patients
with relapsed or refractory (r/r) large B-cell lymphoma after two or
more lines of systemic therapy, there appear to be only limited
clinical differences between BREYANZI[supreg] and the two prior
therapies. Specifically, based on coverage determinations by CMS, we
believe that while YESCARTA[supreg] and KYMRIAH[supreg] treat DBLCL
transformed from follicular lymphoma, BREYANZI[supreg] can also treat
follicular lymphoma grade 3b that does not coexist with DLBCL.
Based on the information received to date, we believe that
BREYANZI[supreg] is generally intended to treat the same or similar
disease in the same or similar patient population as existing CAR T-
cell technologies using the same mechanism of action as previously
approved CAR T-cell therapies, that of engineered autologous cellular
immunotherapy comprised of CAR T-cells that recognizes CD-19 expressing
cancer cells, and mapping to the same MS-DRGs. However, because
BREYANZI[supreg] can also be used to treat follicular lymphoma grade 3b
that does not coexist with DLBCL, we believe that this represents a new
indication for BREYANZI[supreg]. Therefore, based on the information
stated previously, BREYANZI[supreg] is substantially similar to
YESCARTA[supreg] and KYMRIAH[supreg] with regard to the other forms of
large B-cell lymphoma listed on the indication and is therefore not new
for these indications. However, BREYANZI[supreg] is considered new and
not substantially similar to YESCARTA[supreg] and KYMRIAH[supreg] for
the specific subpopulation of cases without DLBCL but with follicular
lymphoma grade 3b.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR correction notice (December 1, 2020) data file to identify
potential cases representing patients who may be eligible for treatment
using BREYANZI[supreg]. The applicant identified claims that reported
an ICD-10-CM diagnosis code of: C83.30 (DLBCL, unspecified site);
C83.31 (DLBCL, lymph nodes of head, face and neck); C83.32 (DLBCL,
intrathoracic lymph nodes); C83.33 (DLBCL, intra-abdominal lymph
nodes); C83.34 (DLBCL, lymph nodes of axilla and upper limb); C83.35
(DLBCL, lymph nodes of inquinal region and lower limb); C83.36 (DLBCL,
intrapelvic lymph nodes); C83.37 (DLBCL, spleen); or C83.38 (DLBCL,
lymph nodes of multiple sites) in one of the first five diagnosis code
positions on the claim. The applicant excluded claims if they had one
or more diagnoses from the list below because these conditions would
preclude use of BREYANZI[supreg].
BILLING CODE 4120-01-P
[[Page 45001]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.167
[[Page 45002]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.168
[[Page 45003]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.169
BILLING CODE 4120-01-C
However, the applicant noted that the aforementioned C83.XX ICD-10-
CM codes do not differentiate r/r patients from the broader DLBCL
population. A clinical literature search completed by the applicant
found that the r/r population makes up one-fourth of the DLBCL
population, but since r/r patients typically have higher inpatient
costs the applicant selected 19.36 percent of the cases with the
highest total charges for their cost analysis. Applying the previously
mentioned parameters, the applicant found a total of 991 cases mapped
to 12 MS-DRGs.
The applicant stated that the use of BREYANZI[supreg]'s therapy
would replace chemotherapy or other drug therapies, including other CAR
T-cell therapies. Because of this, the applicant stated they removed
all charges in the drug cost center since it was not possible to
differentiate between different drugs on inpatient claims. The
standardized charges per case were then calculated using the 2019 IPPS/
LTCH PPS final rule Impact file and the 2-year inflation factor of 13.2
percent (1.3218) was applied. Finally, to determine the charges for
BREYANZI[supreg], the applicant used the inverse of a simulated
alternative cost-to-charge ratio (CCR) specifically for CAR T-cell
therapies to account for CAR T-cell therapies' higher costs compared to
other drugs. To determine this alternative CCR for CAR T-cell
therapies, the applicant referred to the FY 2021 IPPS final rule AOR/
BOR file and calculated an alternative markup percentage by dividing
the AOR drug charges within MS-DRG 018 by the number of cases to
determine a per case drug charge. The applicant then divided the drug
charges per case by $373,000, the acquisition cost of YESCARTA[supreg]
and KYMRIAH[supreg], the CAR T-cell products used in those claims, to
arrive at a CCR of 0.295. The applicant noted that the cost of
BREYANZI[supreg] had not yet been determined at the time of
application. However, for the purposes of its cost analysis, the
applicant assumed the per-patient cost to the hospital will be
$373,000. Based on the FY 2021 IPPS/LTCH PPS final rule correction
notice data file thresholds for FY 2022, the applicant calculated a
final inflated average case-weighted standardized charge per case of
$1,377,616 which exceeded the MS-DRG 018 average case-weighted
threshold of $1,251,127 by $126,489. Therefore, the applicant stated
that BREYANZI[supreg] met the cost criterion.
In the proposed rule, we stated that as noted in previous
discussions, the submitted costs for CAR T-cell therapies vary widely
due to differences in provider billing and charging practices for this
therapy. Therefore, with regard to the use of this data for purposes of
calculating a CAR T-cell CCR, we were uncertain how representative this
data is for use in the applicant's cost analyses given this potential
for variability.
We also stated that we continued to be interested in public
comments regarding the eligibility of CAR T-cell technologies for new
technology add-on payments when assigned to MS-DRG 018. As we have
noted in prior rulemaking with regard to the CAR T-cell therapies (83
FR 41172 and 85 FR 58603 through 58608), if a new MS-DRG were to be
created, then consistent with section 1886(d)(5)(K)(ix) of the Act,
there may no longer be a need for a new technology add-on payment under
section 1886(d)(5)(K)(ii)(III) of the Act. We welcomed comment on this
issue.
We invited public comment on whether BREYANZI[supreg] meets the
cost criterion.
Comment: MedPAC's comments addressed the cost criterion in general
as it relates to CAR T-cell therapies. In particular, MedPAC stated
that CMS should provide a more detailed discussion of the NTAP cost
criterion and whether under the current methodology a new CAR-T product
priced similarly to existing CAR-T products can meet the cost
criterion. MedPAC noted that at least one of the new CAR-T products may
meet the NTAP cost criterion with a manufacturer price of $373,000, but
that, with a price of $373,000, the new product's price would be
similar to the prices of existing CAR-T products that are paid under
the existing Chimeric Antigen Receptor (CAR) T-cell Immunotherapy MS-
DRG (MS-DRG 018). MedPAC further noted that the possibility that a new
CAR-T product with a price similar to existing CAR-T products might
meet the cost criterion and qualify for additional payments (over and
above what is paid for cases using other, similarly priced CAR-T
products) seems inconsistent with the intent of current NTAP policy and
the new CAR-T MS-DRG.
In addition, MedPAC stated that the discussion of each NTAP
applicant's cost calculations in the proposed rule is not granular
enough to discern the different factors that may contribute to this
potential outcome, and urged CMS to provide a more detailed discussion
of this issue.
MedPAC also stated that the current cost criterion provides an
incentive for manufacturers and hospitals to increase their prices and
charges and noted that the Commission may examine ways to improve how
Medicare pays for new products to better balance manufacturer
incentives to innovate with value and affordability for beneficiaries
and taxpayers.
Response: We appreciate the comment from MEDPAC on this particular
issue related to CAR T-cell and the cost criterion. As we stated in
section II.F.1.a.(2) of the preamble of this final rule, the cost
criterion is evaluated consistently with the formula specified in
section 1886(d)(5)(K)(ii)(I) of the Act. Specifically, the charges of
the cases involving a new medical service or technology are compared
to, and must exceed, a threshold amount which is the lesser of 75
percent of the standardized amount or 75 percent of one standard
deviation beyond the geometric mean standardized charge for all cases
in the MS-DRG to which the new medical service or technology is
assigned.
The cost criterion is based on the average charge per case
including the cost of the technology which must exceed the threshold
rather than just comparing the given price of a technology to the price
of other similar technologies. If a technology meets all of the new
technology add-on payment criteria then it will be eligible for the
[[Page 45004]]
add-on payment. We refer the commenter to the spreadsheet we provide
with the application (on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech)
which details step-by-step calculations applicants provide with regard
to the cost criterion. We believe the step-by-step calculation, which
we summarized previously, meets the statutory criteria and is granular
with sufficient detail to determine if the average charge per case
exceeds the threshold.
With regard to MedPAC's concern that the cost criterion may provide
an incentive for manufacturers and hospitals to increase their prices
and charges, we welcome further comments from the public and MedPAC
with regard to how to examine ways to improve how Medicare pays for new
products to better balance manufacturer incentives to innovate with
value and affordability for beneficiaries and taxpayers.
Comment: Commenters strongly opposed that CAR T-cell therapies
would be ineligible for new technology add on payments consistent with
section 1886(d)(5)(K)(ix) of the Act. The commenters voiced the need
for new technology add on payments CAR T-cell therapies as they believe
they are underpaid and meet all the criteria (including the cost
criterion) to be eligible for new technology add on payments.
Response: We thank the commenters for their comments. In this final
rule we have evaluated all CAR T-cell applications based on the
traditional pathway criterion newness, cost, and substantial clinical
improvement criterion. We will take the comments into consideration for
future rulemaking.
Comment: In response to CMS' concerns, the applicant stated in its
comment that CAR T-cell therapies that meet the cost and other criteria
for new technology add-on payment status should continue to be eligible
for new technology add-on payment status notwithstanding the creation
of MS-DRG 018. The applicant stated that there is still a need for new
technology add-on payment status for new CAR T-cell therapies, like
BREYANZI[supreg], to ensure patient access. Further, the applicant
stated that while the payment amount for MS-DRG 018 is certainly more
aligned with CAR T-cell therapy costs generally, BREYANZI[supreg]
exceeds the cost threshold for MS-DRG 018, meaning that the
reimbursement rate for MS-DRG 018 is not adequate for BREYANZI[supreg].
The applicant asserted that per CMS, this is precisely the type of
scenario that the new technology add-on payment is intended to address.
In response to CMS' concerns regarding the cost criterion and the
variability of provider billing and charging practices for CAR T-cell
therapies, the applicant stated it considered the variability of CAR T-
cell charging practices when developing its cost analyses and presented
options that were intended to address this variability by using more
conservative assumptions than have typically been the case for other
new technology add-on payment applications. The applicant stated that
most new technology add-on payment applications use the national
average CCR for the cost center for which the new technology belongs to
inflate the acquisition cost for the new technology to charges. The
applicant added that in the case of a drug or biological, this would
mean that the inverse of the national average CCR for drugs would be
used to convert the WAC of BREYANZI[supreg] to charges. The applicant
stated that using the drug CCR in the prescribed manner would result in
charges that would potentially overstate actual hospital charging
practices for CAR T-cell therapies. Furthermore, the applicant noted
that numerous studies on charge compression have shown that hospital
charging practices tend to result in higher markup percentages for
lower cost drugs and lower markup percentages for higher cost drugs.
The applicant added that given that the WAC for BREYANZI[supreg] is
well above the average of drugs overall, it was concerned that using
the inverse of the national average drug CCR might overstate what
hospitals would typically charge for BREYANZI[supreg] on inpatient
claims. Therefore, the applicant calculated a CAR T-cell specific CCR
based solely on the total drug charges for CAR T-cell claims.
The applicant stated that to calculate the CAR T-cell CCR, it took
the total drugs charges for cases in MS-DRG 018 from the FY 2021 IPPS
Final Rule After Outliers Removed/Before Outliers Removed (AOR/BOR)
file ($183,433,947.58). Next the applicant divided that amount by the
number of cases (145) to determine an average drug charge per case
($1,265,061.70). Next it divided that amount by $373,000, the
acquisition cost of YESCARTA[supreg] and KYMRIAH[supreg]. This value
represents the average mark-up percentage hospitals used to convert the
cost of CAR T-cell therapies to charges on claims in FY 2019. The
applicant converted this mark-up percentage to a CCR by dividing 1 by
the percentage (1/3.39 = 0.295).
Ultimately, the applicant stated it recognizes CMS' concern that
hospitals vary in their CAR T-cell charging practices but states that
its method for calculating a CAR T-cell specific CCR is meant to
address this exact concern. The applicant asserted that by focusing
solely on CAR T-cell claims, it is able to capture the range of
charging practices in hospitals that used a CAR T-cell therapy in a
non-clinical trial case in 2019. Furthermore, the applicant stated that
in addition to addressing the concerns about variability in hospital
charging practices, the CAR T-cell CCR is also a more conservative
assumption to use in the cost threshold analysis because it inflates
CAR T-cell costs to charges at a lower percentage (339%) than if the
inverse of the national average drug CCR is used (535%).
Response: In regard to whether CAR T-cell therapies would be
ineligible for new technology add on payments consistent with section
1886(d)(5)(K)(ix) of the Act, in this final rule we have evaluated all
CAR T-cell applications based on the traditional pathway criteria of
newness, cost, and substantial clinical improvement.
We appreciate the information provided by the applicant in their
comment in regard to their calculation of a CAR T-cell CCR. As we
stated in section E.2.b. of this rule, we continue to believe that it
is premature to make structural changes to the IPPS at this time to pay
for CAR T-cell therapies (78 FR 58453). As we gain more experience
paying for these therapies under the IPPS, we may consider these
comments to inform future rulemaking. However, we appreciate the
thoughtfulness used by the applicant to provide as clear as possible a
description of CAR T-cell therapy cost calculations. We appreciate the
usage of multiple cost analyses, such as varying the CCR used to
inflate cost to charges, which potentially allowed for a more
conservative markup. After consideration of the public comments we
received and based on the information included in the applicant's new
technology add-on payment application, we believe that BREYANZI[supreg]
meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that BREYANZI[supreg] represents a substantial
clinical improvement over existing technologies because: (1) The
totality of the circumstances regarding BREYANZI[supreg]'s clinical
efficacy, safety, and data make clear that BREYANZI[supreg]
substantially improves, relative to services or technologies previously
available, the treatment of Medicare beneficiaries with R/R NHL; (2)
BREYANZI[supreg] offers a
[[Page 45005]]
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments; (3) BREYANZI[supreg]
has, overall, an improved safety profile compared to YESCARTA and
KYMRIAH; (4) BREYANZI[supreg] has a comparable or superior
effectiveness compared to existing therapies; and (5)
BREYANZI[supreg]'s patient population in its registrational study more
accurately reflects real-world NHL patients compared to the studies of
currently available CAR T-cell therapies.
The applicant asserts that the totality of the clinical efficacy
and safety data from the TRANSCEND NHL 001 trial, which is a
prospective, single arm, multicenter study of BREYANZI[supreg] in
patients with r/r aggressive B-cell NHL, and the supportive safety data
from the BREYANZI[supreg] clinical studies included in their Biologics
License Application (BLA) submission demonstrate that BREYANZI[supreg]
has equal or better efficacy and a better safety profile in a broad R/R
patient population that better approximates the real world large B-cell
lymphoma patient population--a population that the applicant asserted
includes NHL subtypes not studied or approved for treatment with
current approved or conditionally approved agents.
The applicant shared the results of the Phase I TRANSCEND NHL 001
trial, which was a prospective, single arm, multicenter study of
BREYANZI[supreg] in patients with relapsed/refractory aggressive B-cell
NHL. The applicant noted that TRANSCEND NHL 001 included subjects with
the average age of 63 years with 111 subjects (41%) over 65 years of
age and 27 (10%) subjects older than 75 years of age. These patients
also failed previous therapies. Of the total number of subjects studied
(efficacy: n=256; safety: n=269), 137 subjects (51%) had DLBCL, 60
(22%) had DLBCL transformed from FL, 18 (7%) had DLBCL transformed
other indolent lymphomas, 36 patients (13%) had high grade lymphoma, 15
(6%) had PMBCL and 3 (1%) had FL3B.\105\ Additionally, the applicant
explained that TRANSCEND NHL 001 was more inclusive, compared to the
registrational trials for KYMRIAH[supreg] and YESCARTA[supreg], of
Medicare aged patients with comorbidities and NHL disease subtypes seen
in the real world presentation of the disease. To support this, the
applicant referenced that within this study, between 40% to 50% of
subjects studied had cardiac ejection fraction, 3% had secondary CNS
lymphoma, 51 patients (19%) had a creatinine clearance between 30-60
mL/min and 39 patients (14.6%) had grade >=3 cytopenias. Furthermore,
the applicant noted that 51 patients (19%) had decreased renal function
and 13 patients (4.9%) had decreased cardiac function. The applicant
stated that the TRANSCEND NHL 001 study showcased that the patient
population treated during the study better reflected the real world
large B-cell lymphoma patient population, a population that the
applicant asserted included NHL subtypes not studied or approved for
treatment with currently approved or conditionally approved agents,
while providing similar safety and efficacy. The applicant contended
that these high-unmet need large B-cell lymphoma subsets included
patients with DLBCL transformed from rare indolent lymphomas other than
FL, patients with FL3B, patients 65 years of age and older, as well as
patients with moderate comorbidities of renal and cardiac
insufficiency.
---------------------------------------------------------------------------
\105\ Ibid.
---------------------------------------------------------------------------
The applicant further explained that BREYANZI[supreg] provided
improved effectiveness as compared to existing therapies. Patients with
aggressive large B-cell NHL who have failed at least 2 prior therapies
or SCT are treated with combinations of agents or monotherapy based on
institutional preferences, but there is no standard of care for salvage
therapies beyond first treatment therapy.\106\ The applicant noted that
commonly used salvage therapies (non-CAR T-cell therapies) for
relapsed, large B-cell lymphoma demonstrated objective response rates
(ORRs) in the range of 12% to 46% and complete response (CR) rates of
6% to 38%. Among the patients who did achieve a response, the median
duration of response (DOR) ranges from approximately 6 to 17 months and
median overall survival was generally less than 12
months.107 108 109 110 111 112 113 Comparatively, TRANSCEND
NHL 001, which provided subjects with BREYANZI[supreg], met its primary
endpoint of Independent Review Committee (IRC)-assessed ORR in adult
patients with r/r large lymphoma after at least 2 prior therapies, as
reported by the applicant. In the 256 efficacy evaluable patients, the
ORR was 73% (95% confidence interval (CI]): 67.0% to 78.3%), and the CR
rate was 53% (95% CI: 46.6% to 59.2%). With a median follow-up of 10.8
months, the median DOR per IRC assessment was 13.3 months and the
median DOR for CR was not reached. By comparison, the applicant
summarized that YESCARTA[supreg], as demonstrated in the Phase I-II
ZUMA-1 study (see the FY 2019 IPPS/LTCH PPS final rule 83 FR 41295 for
a description of this study), had an ORR of 72.0% (95% confidence
interval (CI: 62.0% to 81.0%). Also, according to the applicant,
KYMRIAH[supreg], as demonstrated by the Phase II JULIET study (see the
FY 2019 IPPS/LTCH PPS final rule 83 FR 41293 for a description of this
study), had an ORR of 50.0% (95% confidence interval (CI: 38.0% to
62.0%). The applicant contended that the results for BREYANZI[supreg]
(ORR of 73% (95% confidence interval (CI]): 67.0% to 78.3%), and the CR
rate of 53% (95% CI: 46.6% to 59.2%)) were observed across all
subgroups tested, including elderly subjects, those with high burden
disease or high baseline inflammatory biomarkers, those requiring anti-
lymphoma therapy for disease control, as well as rare patient
populations with a high unmet medical need (for example, PMBCL, DLBCL
transformed from indolent lymphoma other than FL, and FL3B). The
applicant contended that this data supports that BREYANZI[supreg]
demonstrates comparable or superior effectiveness compared to existing
therapies for patients with r/r large B-cell NHL.114 115
---------------------------------------------------------------------------
\106\ National Comprehensive CancerNetwork Treatment of Cancer:
Guidelines, 2019. NCCN, 2019.
\107\ Czuczman MS, Davies A, Linton KM, et al., A Phase 2/3
Multicenter, Randomized Study Comparing the Efficacy and Safety of
Lenalidomide Versus Investigator's Choice in Relapsed/Refractory
DLBCL, Blood. 2014; 124: 628 (Czuczman, 2014).
\108\ Jacobsen ED, Sharman JP, Oki Y, et al., Brentuximab
vedotin demonstrates objective responses in a phase 2 study of
relapsed/refractory DLBCL with variable CD30 expression, Blood.
2015; 125(9): 1394-1402 (Jacobsen, 2015).
\109\ Nagle SJ, Woo K, Schuster SJ, et al., Outcomes of patients
with relapsed/refractory diffuse large B-cell lymphoma with
progression of lymphoma after autologous stem cell transplantation
in the rituximab era, Am. J. Hematol. 2013; 88: 890-894 (Nagle,
2013).
\110\ Pettengell R, Coiffier B, Narayanan G, et al., Pixantrone
dimaleate versus other chemotherapeutic agents as a single-agent
salvage treatment in patients with relapsed or refractory aggressive
non-Hodgkin lymphoma: A phase 3, multicenter, open-label, randomised
trial, Lancet Oncol. 2012; 13: 696-706 (Pettengell, 2012).
\111\ Rigacci L, Puccini B, Cortelazzo S, et al., Bendamustine
with or without rituximab for the treatment of heavily pretreated
non-Hodgkin's lymphoma patients, Ann Hematol. 2012; 91: 1013-1022
(Rigacci, 2012).
\112\ Van Den Neste E, Schmitz N, Mounier N, et al., Outcome of
patients with relapsed diffuse large B-cell lymphoma who fail
second-line salvage regimens in the International CORAL study, Bone
Marrow Transplantation. 2016; 51: 51-57 (Van Den Neste, 2016).
\113\ Wang M, Fowler N, Wagner-Bartak N, et al., Oral
lenalidomide with rituximab in relapsed or refractory diffuse large
cell, follicular and transformed lymphoma: A phase II clinical
trial, Leukemia. 2013; 27: 1902-1909 (Wang, 2013).
\114\ YESCARTA[supreg] United States Prescribing Information
USPI (2019).
\115\ KYMRIAH[supreg] United States Prescribing Information USPI
(2018).
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[[Page 45006]]
Furthermore, the applicant stated that BREYANZI[supreg] had an
improved safety profile in comparison to YESCARTA[supreg] and
KYMRIAH[supreg]. The applicant stated that both of these FDA-approved
CAR T-cell therapies had higher rates of toxicity as compared to
BREYANZI[supreg]. In the TRANSCEND NHL 001 registrational study
(n=268), 42% and 2% of subjects developed all-grade and Grade >3 CRS,
respectively, and 30% and 10% developed all-grade and Grade >3 NT. The
applicant compared these results to the results of the JULIET study has
found in KYMRIAH's[supreg] prescribing information and summarized that
KYMRIAH[supreg] had higher rates of all-grade and Grade >3 CRS (74% and
23%, respectively) and all-grade and Grade >3 NT (58% and 18%,
respectively). The applicant provided the same comparison of the
toxicity results of BREYANZI[supreg] to the results showcased in the
ZUMA-1 study featuring YESCARTA[supreg] as found in YESCARTA[supreg]'s
prescribing information and summarized that YESCARTA[supreg] had higher
rates of all-grade and Grade >3 CRS (94% and 13%, respectively) and
all-grade and Grade >3 NT (87% and 31%,
respectively).116 117
---------------------------------------------------------------------------
\116\ YESCARTA[supreg] USPI (2019).
\117\ KYMRIAH[supreg] USPI (2018).
---------------------------------------------------------------------------
In the proposed rule, after reviewing the information submitted by
the applicant as part of its FY 2022 new technology add-on payment
application, we were concerned that there were no published studies
directly comparing BREYANZI[supreg] and the two currently available CAR
T-cell therapies for r/r DLBCL, YESCARTA[supreg] and KYMRIAH[supreg].
Additionally, we were concerned with the lack of long-term data
supporting the effectiveness and efficacy of BREYANZI[supreg] and
whether the lack of long-term data may limit the generalizability of
the findings from the TRANSCEND NHL 001 study to the general Medicare
population. While there have been no direct comparison studies of
BREYANZI[supreg], YESCARTA[supreg] and KYMRIAH[supreg], the applicant
did provide a comparison of the ORR, CR, PR and DOR across all three
CAR T-cell therapies. While we noted that BREYANZI[supreg] does appear
to provide an improved ORR, CR, PR, and DOR compared to the other FDA-
approved CAR T-cell therapies based on the data presented by the
applicant, we further noted that these differences appear to be small
in magnitude, between 1-2% for the ORR, CR, and PR. Without a direct
comparison of outcomes between these therapies, we were concerned as to
whether these differences translate to clinically meaningful
differences or improvements. We stated that BREYANZI[supreg] appeared
to demonstrate similar patient outcomes to that of YESCARTA[supreg] and
we questioned whether the TRANSCEND NHL 001 study is evidence that
BREYANZI[supreg] is a more effective therapy to treat DLBCL over
existing CAR T-cell therapies. Additionally, as previously discussed,
the applicant noted that BREYANZI[supreg] has been shown safe and
effective for patient populations excluded from registrational trials
for YESCARTA[supreg] and KYMRIAH[supreg]. However, we stated it was
unclear whether this suggests that BREYANZI[supreg] is a treatment
option for patients who cannot be treated with these existing CART-cell
therapies, given that the FDA label for YESCARTA[supreg] and
KYMRIAH[supreg] appears to not specifically exclude these patient
populations. Finally, we were concerned that the use of the EGFRt cell
surface tag was not activated in patients receiving BREYANZI[supreg] to
study the impact of clearing these CAR T-cells after remission and that
this feature has not yet been tested on humans or in conjunction with
patients treated with BREYANZI[supreg]. We expressed concern regarding
the safety and efficacy of this feature given its lack of testing.
We invited public comments on whether BREYANZI[supreg] meets the
substantial clinical improvement criterion.
Comment: In support to CMS' concerns about substantial clinical
improvement, a commenter, the manufacturer of a competitor CAR T-cell
product, submitted a comment. First, the commenter stated
BREYANZI[supreg] is not a new treatment option for patients that can be
treated by KYMRIAH[supreg] or YESCARTA[supreg]. The commenter stated
that as part of the substantial clinical improvement criterion, the
applicant argued that given that BREYANZI[supreg] has been shown to be
safe and effective for patient populations excluded from registrational
trials for KYMRIAH[supreg] and YESCARTA[supreg], then it follows that
BREYANZI[supreg] is a new treatment option for patients who cannot be
treated with these therapies. The commenter was in agreement with CMS
that these patient populations are not excluded from the FDA label of
the existing FDA-approved CAR T-cell therapies, and thus
BREYANZI[supreg] does not represent a new treatment option for these
NHL subtypes.
Next, the commenter stated BREYANZI[supreg] does not demonstrate
improved effectiveness over KYMRIAH[supreg] and YESCARTA[supreg]. The
commenter stated that the applicant claimed that BREYANZI[supreg]
demonstrated improved effectiveness as compared to existing therapies,
when comparing the TRANSCEND data to that of KYMRIAH[supreg]'s JULIET
trial and YESCARTA[supreg]'s ZUMA-1 trial. The commenter stated that it
is not appropriate to claim clinically meaningful differences including
improved effectiveness by comparing outcomes across different studies,
as opposed to performing a head-to-head study, as these differences may
be attributable to study populations and study design.
Lastly, the commenter stated that BREYANZI[supreg] does not
demonstrate an improved safety profile over KYMRIAH[supreg] and
YESCARTA[supreg]. The commenter stated that the applicant claimed that
BREYANZI[supreg] demonstrates an improved safety profile in comparison
to KYMRIAH[supreg] and YESCARTA[supreg]. As well as contending that it
is inappropriate to claim clinically meaningful differences across
different studies, the commenter stated that the safety profile between
KYMRIAH[supreg] and BREYANZI[supreg] cannot be compared. However,
according to the commenter, even using the applicant's own method of
analysis by comparing safety data across different studies, the
incidence of serious adverse reactions was in fact comparable across
BREYANZI[supreg]'s TRANSCEND trial and YESCARTA[supreg]'s ZUMA-1 trial.
The commenter added that the incidence of any grade neurologic events
was actually lower in KYMRIAH[supreg]'s JULIET trial than in
BREYANZI[supreg]'s TRANSCEND trial with a comparable incidence rate of
grade \3/4\ neurologic events. Furthermore, the commenter stated there
may also appear to be a lower incidence of Grade >3 CRS with
BREYANZI[supreg] than with KYMRIAH[supreg] when looking solely at the
pivotal trial data; however, this is likely due to differences in
adverse event management across BREYANZI[supreg]'s TRANSCEND trial and
KYMRIAH[supreg]'s JULIET trial. Lastly, the commenter stated
KYMRIAH[supreg]'s safety data from the Center for International Blood
and Marrow Transplant Research (CIBMTR)'s Cellular Therapy (CT)
registry study \118\ illustrates comparable
[[Page 45007]]
safety to the TRANSCEND trial in true real-world conditions. The
commenter stated of the 155 patients with NHL evaluated in the CIBMTR
CT registry study, the rate of grade 3 or higher CRS and neurotoxicity
occurred in 4.5% and 5.1% of patients respectively.\119\ The commenter
concluded that even if safety data is compared across the different
trials--which it stated is problematic--BREYANZI[supreg] is in fact not
a safer therapy to treat DLBCL over existing FDA-approved CAR T-cell
therapies.
---------------------------------------------------------------------------
\118\ CIBMTR is a research collaboration between the National
Marrow Donor Program[supreg] (NMDP)/Be The Match[supreg] and the
Medical College of Wisconsin (MCW). The CIBMTR[supreg] CT registry
study was a requirement from FDA's approval of Kymriah[supreg] and
required Novartis to conduct a postmarketing, prospective,
multicenter observational study to assess the long-term safety and
the risk of all secondary malignancies occurring after treatment
with tisagenlecleucel.
\119\ Pasquini MC, Hu ZH, Curran K, et al. Real-world evidence
of tisagenlecleucel for pediatric acute lymphoblastic leukemia and
non-Hodgkin lymphoma. Blood Adv. 2020;4(21):5414-5424.
---------------------------------------------------------------------------
Response: We appreciate the additional information submitted by the
commenter and have taken this comment into consideration in determining
whether BREYANZI[supreg] meets the substantial clinical improvement
criterion.
Comment: The applicant submitted a comment in response to CMS'
concerns on substantial clinical improvement. The applicant stated that
BREYANZI[supreg] is a substantial clinical improvement over existing
technologies because: (1) The totality of the circumstances regarding
BREYANZI[supreg]'s clinical efficacy, safety, and data make clear that
BREYANZI[supreg] substantially improves, relative to services or
technologies previously available, the treatment of Medicare
beneficiaries with relapsed/refractory (R/R) NHL; (2) BREYANZI[supreg]
fills an unmet need among patients with R/R NHL; (3) BREYANZI[supreg]
has, overall, an improved safety profile compared to YESCARTA[supreg]
and KYMRIAH[supreg]; (4) BREYANZI[supreg] has a comparable or superior
effectiveness compared to existing therapies; and (5)
BREYANZI[supreg]'s patient population in its registrational study more
accurately reflects real-world NHL patients compared to the studies of
currently available CAR T-cell therapies.
According to the applicant, first, CMS questions the lack of long-
term data supporting the effectiveness and efficacy of BREYANZI[supreg]
and whether the lack of long-term data may limit the generalizability
of the findings from the TRANSCEND NHL 001 study to the general
Medicare population.\120\ The applicant stated they believe this
concern is unwarranted because the duration of data is unrelated to the
generalizability of data to the Medicare population, the TRANSCEND NHL
001 trial was specifically designed to include a patient population
that is representative of real-world Medicare beneficiaries with NHL,
including comorbidities, and BREYANZI[supreg], like the other CAR T-
cell therapies, is a new technology, none of which have long-term data.
---------------------------------------------------------------------------
\120\ 86 FR at 25233.
---------------------------------------------------------------------------
Next the applicant stated that CMS raises questions regarding the
lack of published studies directly comparing BREYANZI[supreg] with
YESCARTA[supreg] and KYMRIAH[supreg].\121\ The applicant stated they
appreciate what they stated was CMS' recognition that BREYANZI[supreg]
demonstrates improved clinical outcomes compared to KYMRIAH[supreg] and
YESCARTA[supreg], which supports that BREYANZI[supreg] is a substantial
clinical improvement over prior technologies. The applicant asserted
that a head-to-head comparison of the therapies is not required for
purposes of new technology add-on payment status. The applicant further
asserted that BREYANZI[supreg] is clearly superior to both products
from a safety perspective with any grade and grade \3/4\ CRS rate of
42% and 2% respectively,\122\ compared to 94% and 13% for
YESCARTA[supreg] \123\ and 57% and 17% for KYMRIAH[supreg].\124\ The
applicant stated BREYANZI[supreg] showed equivalent efficacy and
improved safety compared to YESCARTA[supreg], and improved efficacy
with similar safety compared with KYMRIAH[supreg]. Thus, according to
the applicant, the very nature of these differences demonstrates that
BREYANZI[supreg] is in fact a substantial clinical improvement.
---------------------------------------------------------------------------
\121\ 86 FR at 25233.
\122\ Abramson JS, Palomba ML, Gordon LI, et al. Lisocabtagene
maraleucel for patients with relapsed or refractory large B-cell
lymphomas (TRANSCEND NHL001): a multicentre seamless design study.
Lancet. 2020; 396(10254): 839-852 (Abramson, 2020).
\123\ Yescarta[supreg] U.S. Prescribing Information (2020).
\124\ Kymriah[supreg] U.S. Prescribing Information (2018).
---------------------------------------------------------------------------
Next the applicant stated that CMS asks whether the TRANSCEND NHL
001 study is evidence that BREYANZI[supreg] is a more effective therapy
to treat DLBCL over existing CAR T-cell therapies or whether
BREYANZI[supreg] has similar patient outcomes to YESCARTA[supreg].\125\
The applicant contends that BREYANZI[supreg] is an equally effective
and safer CAR T-cell therapy than YESCARTA[supreg] since the TRANSCEND
NHL 001 study population represents a more accurate real-world
population and is more inclusive of patients across multiple large B-
cell lymphoma subtypes as well as patients with comorbidities than was
represented in the registrational trial for YESCARTA[supreg]. The
applicant asserted that three retrospective studies suggest that
restrictive eligibility criteria employed in the YESCARTA[supreg] ZUMA-
1 study made for an overall study population with a more favorable
prognosis and better outcomes with standard and CAR T-cell
therapy.126 127 128 According to the applicant, these three
studies each demonstrated that patients who did not meet key
eligibility criteria for ZUMA-1 were found to have a substantially
shorter survival compared to those enrolled to ZUMA-1. According to the
applicant, the TRANSCEND NHL 001 study included these patients. The
applicant further asserted that BREYANZI[supreg] results should be more
equivalent to real-world patients based on the fact that the enrolled
population that was at high risk for worse outcomes compared to the
population studied for YESCARTA[supreg] in ZUMA-1. Yet, despite that,
according to the applicant, BREYANZI[supreg] showed equivalent efficacy
and improved safety compared to YESCARTA[supreg]. The applicant stated
that one can only speculate as to what the efficacy would have been for
BREYANZI[supreg] had the patient population in TRANSCEND NHL 001 been
limited in the same manner as the patient population for ZUMA-1.
---------------------------------------------------------------------------
\125\ 86 FR at 25233.
\126\ Smith SD, Reddy P, Sokolova A, et al., Eligibility for CAR
T cell therapy: An analysis of selection criteria and survival
outcomes in chemorefractory DLBCL, Am J Hematol. 2019; 94(4): E116-
E117.
\127\ Nastoupil LJ, Jain MD, Spiegel JY, et al., Axicabtagene
Ciloleucel (Axi-cel) CD19 Chimeric Antigen Receptor (CAR) T cell
Therapy for Relapsed/Refractory Large B-Cell Lymphoma: Real World
Experience, Blood. 2018; 132:91.
\128\ Jacobson CA, Hunter B., Armand P, et al., Axicabtagene
Ciloleucel in the Real World: Outcomes and Predictors of Response,
Resistance and Toxicity, Blood. 2018; 132: 92.
---------------------------------------------------------------------------
Lastly, the applicant stated that they believe it is important to
underscore that the potential use of the EGFRt cell surface tag is a
method of last resort to alleviate any severe toxicities that may
become life threatening to a patient. The applicant added that given
the overall safety profile of BREYANZI[supreg], it is expected that the
potential use of the EGFRt cell surface tag would be extremely rare.
The applicant asserted that the existence of the EGFRt cell surface tag
at least provides a potential option for patients who are at serious
risk of death due to a rare adverse event; according to the applicant,
the lack of this option for patients treated with YESCARTA[supreg] and
KYMRIAH[supreg] means that there are limited options to mitigate
serious incidents.
Response: We thank the commenters for the additional information in
response to our substantial clinical improvement concerns. We note that
in their comment, the applicant stated that CMS recognized that
BREYANZI[supreg] demonstrates improved clinical outcomes compared to
KYMRIAH[supreg] and
[[Page 45008]]
YESCARTA[supreg], which supports that BREYANZI[supreg] is a substantial
clinical improvement over prior technologies. We believe the applicant
may have misunderstood what was stated in the proposed rule. Rather, we
stated in the proposed rule that some data may show improvement but the
differences were small and may not translate to clinically meaningful
differences or improvements (86 FR 25233). We did not claim that
BREYANZI[supreg] was a substantial clinical improvement. We further
stated that we were not certain that the benefits were meaningful and
due to differences in treatment, rather than other factors such as
sample characteristics or study design. While the applicant asserts
that BREYANZI[supreg] represents a substantial clinical improvement
over YESCARTA[supreg] and KYMRIAH[supreg], we continue to have concerns
with regard to whether BREYANZI[supreg] demonstrates an improved safety
profile compared to existing treatments as discussed by a commenter.
Furthermore, as noted previously in this section, we believe
BREYANZI[supreg] is generally substantially similar to YESCARTA[supreg]
and KYMRIAH[supreg] and not new. Moreover, the applicant did not
provide data for the specific subpopulation of patients without DLBCL
and with follicular lymphoma grade 3b, for which we consider
Breyanzi[supreg] new. Upon further review of the TRANSCEND NHL 001
study, three patients had FL3b at baseline.\129\ While the authors
report that two patients with FL3b who received Breyanzi[supreg]
remained in complete response after 1 year, we are not certain that
these results can be generalizable to the greater FL3b patient
population. We accept all information submitted by applicants and
consider it in our determination of substantial clinical improvement.
However, we believe a sample size of two or three patients is a very
small sample from which to generalize about a larger population to then
make a determination of substantial clinical improvement.
---------------------------------------------------------------------------
\129\ Abramson JS, Palomba ML, Gordon LI, et al., Lisocabtagene
maraleucel for patients with relapsed or refractory large B-cell
lymphomas (TRANSCEND NHL 001): a multicenter seamless design study.
Lancet. 2020; 396(10254):839-852.
---------------------------------------------------------------------------
While we believe head to head studies are ideal for demonstration
of superiority and to determine a difference in treatment effects, we
accept all information submitted by applicants, as stated previously.
However, we believe that we are consistent in requiring that the
applicant provide data designed to test differences in treatment
effects to allow us to distinguish the effect of a particular treatment
from the effects of study design, sample characteristics, etc.
We agree with the applicant that the generalizability of a study
may not be directly related to whether a study is long-term and we
appreciate the TRANSCEND NHL 001 was designed to include a patient
population that is representative of real-world Medicare beneficiaries
with NHL. However, we note that long-term data supports the
effectiveness and efficacy of a technology, and without long-term data,
it is difficult to determine if benefits seen are durable.
We also note the applicant commented that there is a potential use
of the EGFRt cell surface tag to alleviate severe toxicities in
patients. We appreciate that this may be a potential use, however as a
commenter stated, this is only supported by preclinical murine models.
Without clinical trial data, we remain concerned that we are unable to
verify the applicant's claims of a potential for positive clinical
outcomes related to claims made about the EGFRt cell surface tag.
Therefore, for the reasons discussed previously, particularly the
insufficiency of data evaluating the population for which Breyanzi is
considered new, we are unable to determine whether Breyanzi[supreg]
represents a substantial clinical improvement for the specific
subpopulation for which it would be eligible for new technology add-on
payments. Also, as noted previously, BREYANZI[supreg] is considered not
new and substantially similar to YESCARTA[supreg] and KYMRIAH[supreg]
with regard to the other forms of large B-cell lymphoma listed on the
indication and is therefore not new for these indications. Therefore,
we are not approving new technology add-on payments for Breyanzi for FY
2022.
d. COSELATM (trilaciclib)
G1 Therapeutics submitted an application for new technology add-on
payments for Trilaciclib for FY 2022. COSELATM (trilaciclib)
is indicated to decrease the incidence of chemotherapy-induced
myelosuppression in adult patients when administered prior to a
platinum/etoposide-containing regimen or topotecan-containing regimen
for extensive-stage small cell lung cancer (ES-SCLC).\130\
---------------------------------------------------------------------------
\130\ G1 Therapeutics Inc., Rev. 2/2021, COSELA prescribing
information: https://www.g1therapeutics.com/cosela/pi/
#:~:text=COSELA%20is%20indicated%20to%20decrease,cancer%20(ES%2DSCLC)
.&text=The%20recommended%20dose%20of%20COSELA%20is%20240%20mg%2Fm2%20
per%20dose.
---------------------------------------------------------------------------
According to the applicant, COSELATM is a first-in-class
myelopreservation therapy that has the potential to mitigate
chemotherapy-induced myelosuppression (CIM). COSELATM is a
selective, transient inhibitor of cyclin dependent kinases 4 and 6
(CDK4/6) with potential antineoplastic and chemoprotective activities.
CDK4 and CDK6 are key regulators of the G1 cell-cycle checkpoint and
play important roles in cell proliferation and associated biological
processes. One of the most common pathways dysregulated in cancer is
the cyclin D-cyclin-dependent kinase four or six (CDK4/6)-
retinoblastoma (RB) pathway. COSELATM arrests hematopoietic
stem and progenitor (HSPCs) bone marrow cells in the G1 phase of the
cell cycle during chemotherapy exposure, protecting them from
chemotherapy-induced damage.
According to the applicant, the defining characteristic of cancer
is uncontrolled cellular proliferation, a phenomenon that requires
tumor cells to avoid or disable normal, physiologic cell-cycle
regulation. While there are both CDK 4/6 independent and dependent
cells, HSPCs and immune cells are CDK 4/6 dependent whereas SCLC cells
are CDK 4/6 independent. According to the applicant, the transient
arrest of HSPCs and lymphocytes by COSELATM during the
administration of chemotherapy is thought to have a number of
beneficial effects, including a reduction in chemotherapy-induced
myelosuppression and preservation of immune function, as well as an
enhanced immune response.131 132 133 Specifically, SCLC
cells replicate independently of CDK 4/6 and therefore these cells are
damaged by chemotherapy. Because HSPCs and
[[Page 45009]]
lymphocytes are CDK 4/6 dependent, COSELATM's mechanism of
action is believed to preserve these cells by temporarily arresting
their proliferation during chemotherapy. In this way,
COSELATM reduces chemotherapy-induced myelosuppression in
patients with extensive-stage small-cell lung cancer (ES-SCLC).\134\
The applicant also asserted that in preclinical models, CDK4/6
inhibition by COSELATM also alters the tumor immune
microenvironment through transient inhibition of the immune cells known
as lymphocytes that are also dependent on CDK4/6 activity for
proliferation.\135\
---------------------------------------------------------------------------
\131\ Daniel D, Kuchava V, Bondarenko I, et al. Trilaciclib (T)
decreases myelosuppression in extensive-stage small cell lung cancer
(ES-SCLC) patients receiving first-line chemotherapy plus
atezolizumab. Ann Oncol. 2019;30:v713, Abstract 1742PD: https://www.g1741therapeutics.com/file.cfm/1734/docs/tr-G1741_ESMO2019_Daniel.pdf.
\132\ Weiss JM, Csoszi T, Maglakelidze M, et al.
Myelopreservation with the CDK4/6 inhibitor trilaciclib in patients
with small-cell lung cancer receiving first-line chemotherapy: a
phase Ib/randomized phase II trial. Ann Oncol. 2019;30(10):1613-
1621.
\133\ Hart LL, Andric ZG, Hussein MA, et al. Effect of
trilaciclib, a CDK 4/6 inhibitor, on myelosuppression in patients
with previously treated extensive-stage small cell lung cancer
receiving topotecan. J Clin Oncol. 2019;37(15_suppl): Abstract 8505:
https://www.g8501therapeutics.com/file.cfm/8534/docs/tr-G8501T8528-8503%8520ASCO%202019%202020Oral%202020Presentation%20060119-20060111.pdf.
\134\ Donjerkovic D, Scott DW. Regulation of the G1 phase of the
mammalian cell cycle. Cell Res. 2000;10(1):1-16.
\135\ Lai AY, Sorrentino JA, Dragnev KH, et al. CDK\4/6\
inhibition enhances antitumor efficacy of chemotherapy and immune
checkpoint inhibitor combinations in preclinical models and enhances
T-cell activation in patients with SCLC receiving chemotherapy. J
Immunother Cancer. 2020;0:e000847. doi:10.1136/jitc-2020-000847.
---------------------------------------------------------------------------
According to the applicant, chemotherapy remains the cornerstone of
treatment for extensive stage small cell lung cancer (ES-SCLC). The
applicant asserted that almost all of the ~18,600 ES-SCLC patients
diagnosed each year are treated with platinum/etoposide-containing or
topotecan-containing chemotherapy regimens. Chemotherapy drugs target
cells at different phases of the cell cycle. According to the
applicant, systemic chemotherapy, alone or in combination with immune
checkpoint inhibitors, is the standard of care for patients with
advanced SCLC. Additionally, per the applicant, rescue interventions,
including growth factors and blood transfusions, are commonly routine
therapies for SCLC. The applicant also indicated that granulocyte
colony-stimulating factors (G-CSFs) only address neutropenia, while
erythropoiesis stimulating agent (ESAs) and red blood cell (RBC)
transfusions only address anemia, and there is no available treatment
that broadly mitigates myelosuppressive effects and their corresponding
impact on patient well-being before chemotherapy damage occurs.
COSELATM received FDA's New Drug Application approval on
February 12, 2021. COSELATM is for intravenous use only. The
recommended dose of COSELATM is 240 mg/m2 as a 30-minute
intravenous infusion completed within four hours prior to the start of
chemotherapy on each day chemotherapy is administered.\136\ The
applicant also stated that in 2019, COSELATM was granted
Breakthrough Therapy Designation for the mitigation of clinically
significant chemotherapy-induced myelosuppression in adult patients
with SCLC. The applicant submitted a request for a new ICD-10-PCS code
and was granted approval for the following codes to uniquely identify
COSELATM effective October 1, 2021: XW03377 (Introduction of
trilaciclib into peripheral vein, percutaneous approach, new technology
group 7) and XW04377 (Introduction of trilaciclib into central vein,
percutaneous approach, new technology group 7).
---------------------------------------------------------------------------
\136\ G1 Therapeutics Inc., Rev. 2/2021, COSELA prescribing
information: https://www.g1therapeutics.com/cosela/pi/
#:~:text=COSELA%20is%20indicated%20to%20decrease,cancer%20(ES%2DSCLC)
.&text=The%20recommended%20dose%20of%20COSELA%20is%20240%20mg%2Fm2%20
per%20dose.
---------------------------------------------------------------------------
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, therefore, would not be
considered ``new'' for purposes of new technology add-on payments.
With respect 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 COSELATM, also referred to as
G1T28, has a unique mechanism of action as a small molecule,
competitive inhibitor of CDK4/6, with potential antineoplastic and
chemoprotective activities. The applicant stated that upon
administration, COSELATM binds to and inhibits the activity
of CDK4/6, thereby blocking the phosphorylation of the retinoblastoma
protein (Rb) in early G1. This prevents G1/S phase transition, causing
cell cycle arrest in the G1 phase and induced apoptosis, which inhibits
the proliferation of CDK4/6-overexpressing tumor cells. In patients
with CDK4/6-independent tumor cells, G1T28 may protect against multi-
lineage chemotherapy-induced myelosuppression (CIM) by transiently and
reversibly inducing G1 cell cycle arrest in hematopoietic stem and
progenitor cells (HSPCs) and preventing transition to the S phase. Per
the applicant, this protects all hematopoietic lineages, including red
blood cells, platelets, neutrophils and lymphocytes, from the DNA-
damaging effects of certain chemotherapeutics and preserves the
function of the bone marrow and the immune system.
The applicant stated that the cell cycle consists of four distinct
phases, Gap 1 phase (G1), S phase, Gap 2 (G2)
post-synthesis phase, and the M phase.\137\ Regulation of this process
is maintained by a series of highly conserved proteins referred to as
cyclins, and their catalytic binding partners, CDKs. The CDKs are a
family of enzymes that control several cellular processes in mammalian
cells, including the modulation of the cell cycle via binding to
cyclins A-E, which results in the activation of transcription factors
that regulate the cellular transition from G1 (growth phase) to S (DNA
replication) and G2 (growth phase) to M (mitosis).\138\
---------------------------------------------------------------------------
\137\ Ferrarotto R, Anderson I, Medgyasszay B, et al.
Trilaciclib reduces the need for growth factors and red blood cell
transfusions to manage chemotherapy-induced myelosuppression. Poster
presented at: IASLC: 2020 North America Conference on Lung Cancer;
October 16-17, 2020; Virtual congress.
\138\ Asghar U, Witkiewicz AK, Turner NC, Knudsen ES. The
history and future of targeting cyclin-dependent kinases in cancer
therapy. Nat Rev Drug Discov. 2015;14(2):130-146.
---------------------------------------------------------------------------
According to the applicant, the G1-to-S checkpoint is a critical
restriction point in the process of cell division. Cells are maintained
in a quiescent state until the proper signal is achieved for reentry
into the cell cycle. Throughout G1, expression of the D-type cyclins
(D1, D2, D3) increases until active complexes with CDK4/6 are formed.
Active CDK4/6 complexes partially phosphorylate RB, which allows
partial depression of the transcription factor E2F. This induces
additional transcript production of cyclin E1, which binds CDK2 to form
active complexes that result in the hyperphosphorylation of RB and
drives the cells through late G1 into S phase. Inhibition of cyclin D-
CDK4/6 by the tumor suppressor CDKN2A leads to a G1 arrest and cell-
cycle progression is halted.\139\
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\139\ Donjerkovic D, Scott DW. Regulation of the G1 phase of the
mammalian cell cycle. Cell Res. 2000;10(1):1-16.
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With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant asserted that
COSELATM will be assigned the same MS-DRG as existing
technologies. The applicant did not explicitly state to which MS-DRG(s)
COSELATM would be assigned, but included MS-DRGs 180
(Respiratory Neoplasms with MCC), 181 (Respiratory Neoplasms with CC),
and 182 (Respiratory Neoplasms without CC/MCC) in its cost analysis.
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 when compared to an
existing technology, the applicant stated that COSELATM is
the only proactive (preventive) multilineage
[[Page 45010]]
(erythrocytes, leukocytes, and thrombocytes, neutrophils and
lymphocytes) therapy given as a 30-minute infusion administered prior
to chemotherapy on each day of chemotherapy. Due to its mechanism of
action, COSELATM's benefit is coupled to its administration
schedule (that is, COSELATM must be administered prior to
chemotherapy to ensure G1 arrest of HSPCs when those cells are exposed
to cytotoxic chemotherapy). According to the applicant, this
therapeutic paradigm contrasts with standard available treatment
options and interventions that are administered after chemotherapy to
reactively reduce or treat chemotherapy side effects. The applicant
asserted that typical supportive care rescue interventions such as
growth factors (G-CSFs, ESAs) and red blood cell (RBC) transfusions are
used after chemotherapy causes damage to stem cells. Current supportive
care therapies are used reactively to treat single cell lineage
specific (leukocytes and erythrocytes) complications,\140\ such as
neutropenia and anemia. Additionally, the applicant indicated that
growth factor and RBC transfusion use are known to carry a number of
risks and cause complications and adverse events.
---------------------------------------------------------------------------
\140\ National Comprehensive Cancer Network. NCCN Clinical
Practice Guidelines in Oncology. Hematopoietic Growth Factors.
Version 1.2020. 27 January. 2020.
---------------------------------------------------------------------------
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25240), we noted
that the information provided by the applicant in response to whether
COSELATM treats the same or similar type of disease or the
same or similar patient population, appeared to only speak to the first
criterion and whether COSELATM has a mechanism of action
that is different than existing technologies; however, we stated we
believe COSELATM appears to treat the same patient
population and disease as existing therapies.
We invited public comments on whether COSELATM is
substantially similar to an existing technology and whether it meets
the newness criterion.
Comment: The applicant submitted a comment reiterating that
COSELATM meets the newness criterion because it is the first
and only FDA-approved therapy to provide myeloprotective efficacy. The
applicant stated that existing treatments are single lineage rescue
interventions and that COSELATM is the only available
treatment that broadly mitigates multilineage myelosuppressive effects
and their corresponding impact on patient well-being before
chemotherapy damage occurs. The applicant further explained that
existing therapies, such as growth factors (granulocyte colony
stimulating factor (G-CSF), erythropoiesis-stimulating agents (ESAs)
and red blood cell (RBC) transfusions) do not treat chemotherapy-
induced myelosuppression but that they treat the side effects of
chemotherapy-induced myelosuppression, such as single cell lineage
specific complications like neutropenia and anemia after chemotherapy
damage has occurred. The applicant also stated that existing therapies
are designed to work in different ways and treat different conditions
than COSELATM.
The applicant also stated that COSELATM does not treat
the same or similar patient population as existing therapies but that
it treats adult patients diagnosed with ES-SCLC prior to a platinum/
etoposide-containing regimen or topotecan-containing regimen whereas
the patient population treated by other therapies (for example, G-CSF,
ESAs, and RBC transfusions) is patients with side effects associated
with chemotherapy-induced myelosuppression. The applicant stated that
COSELATM treats a patient population that is not currently
served by growth factors. The applicant concluded by reiterating that
COSELATM does not use the same mechanism of action, does not
treat the same condition or disease, and does not treat the same
patient population as existing therapies.
Response: We thank the applicant for its comment and the additional
information submitted in regard to the newness criterion. Based on our
review, we agree that COSELATM has a unique mechanism of
action to decrease the incidence of chemotherapy-induced
myelosuppression in adult patients by preventing it when administered
prior to a platinum/etoposide-containing regimen or topotecan-
containing regimen for ES-SCLC. Though the applicant states that
COSELATM treats a new patient population since it treats
patients before they encounter side effects from chemotherapy-induced
myelosuppression, we disagree that patients with such side effects
would be considered a distinct patient population because
COSELATM also treats adult patients with ES-SCLC.
Based on information submitted by the applicant in its comment and
as part of its FY 2022 new technology add-on payment application for
COSELATM, as discussed in the proposed rule (86 FR 25239)
and previously summarized, we believe that COSELATM has a
unique mechanism of action. Therefore, COSELATM is not
substantially similar to existing treatment options and meets the
newness criterion. We consider the beginning of the newness period to
commence when COSELATM was approved by FDA to decrease the
incidence of chemotherapy-induced myelosuppression in adult patients
when administered prior to a platinum/etoposide-containing regimen or
topotecan-containing regimen for extensive-stage small cell lung cancer
(ES-SCLC), on February 12, 2021.
With respect to the cost criterion, the applicant conducted the
following analysis to demonstrate that COSELATM meets the
cost criterion. In identifying the cost of COSELATM, the
applicant stated that dosing is based on body surface area, 240 mg/m\2\
with an average of two vials (300mg each) per patient per dose. To
identify cases that may be eligible for the use of COSELATM,
the applicant searched the FY 2019 MedPAR LDS file for claims reporting
an ICD-10-PCS code of category C34 through C34.92 (Malignant neoplasm
related to the bronchus, lobe, or lung) as noted in the following
table.
BILLING CODE 4120-01-P
[[Page 45011]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.170
[[Page 45012]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.171
According to the applicant, based on the advice of clinical
experts, it limited case selection criteria to claims that included one
of MS-DRGs 180, 181, or 182. The applicant then randomly selected 15%
of the claims from the sample to account for the fact that SCLC
comprises 15% of lung cancer cases.\141\ Based on the FY 2019 MedPAR
LDS file, the applicant identified 3,500 cases. The applicant noted
that 2,346 cases mapped to MS-DRG 180; 1,085 cases mapped to MS-DRG
181; and 69 cases mapped to MS-DRG 182.
---------------------------------------------------------------------------
\141\ Govindan R, et al. J Clin Oncol. 2006;24:4539-44. Byers
LA, Rudin CM. Cancer. 2015;121:664-72.
---------------------------------------------------------------------------
Using these 3,500 cases, the applicant then calculated the
unstandardized average charges per case for each MS-DRG. Because the
use of COSELATM results in approximately half of patients no
longer needing drugs used to counter the effects of chemotherapy during
the inpatient stay, the applicant removed 50% of the drug charges for
the technology being replaced.
The applicant then standardized the charges using the 2019 IPPS/
LTCH PPS final rule impact file and inflated the charges by 1.13218 or
13.2 percent, the same inflation factor used by CMS to update the
outlier threshold in the FY 2021 IPPS/LTCH PPS final rule. The
applicant then added the charges for COSELATM by converting
the costs to a charge by dividing the cost by the national average
cost-to-charge ratio of 0.187 for pharmacy from the FY 2021 IPPS/LTCH
PPS final rule.
Using the data file thresholds associated with the FY 2021 IPPS/
LTCH PPS final rule correction notice, the average case-weighted
threshold amount was $57,031. In the applicant's analysis, the final
inflated average case-weighted standardized charge per case was
$95,701. 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.
With respect to the cost criterion, we noted in the proposed rule
that in listing the codes it used to identify cases that may be
eligible for the use of COSELATM, the applicant provided
several ICD-10 codes that lack four digits and thus, are considered
invalid. We stated that we would be interested in understanding the
basis for the applicant's choice of codes. We also noted that in its
analysis, the applicant randomly selected 15% of the claims from the
sample to account for the fact that SCLC comprises 15% of lung cancer
cases. In so doing, we stated that the applicant was making the
assumption that SCLC cases are randomly distributed amongst all cases
from which the applicant sampled. By randomly sampling the population,
the applicant was selecting a subsample that is ideally similar to the
population with less variance. We stated that it may be the case that
SCLC cases are systematically different from other cases in the
population. If this is true, then a random sample may not be
appropriate. Accordingly, we questioned the appropriateness of the
sampling used and whether it accurately represents cases that would use
the technology.
Finally, with respect to pricing, we stated that it appeared that
the applicant's final inflated average case-weighted standardized
charge per case reflected pricing prior to the availability of more
current total wholesale acquisition cost. We therefore requested that
the applicant update its cost analysis to reflect the final inflated
average case weighted standardized charge per case based on this more
current information. We invited public comment on whether
COSELATM meets the cost criterion.
Comment: The applicant submitted a comment in response to these
concerns. First, with respect to the ICD-10 codes included in the
application lacking four digits, the applicant stated that the codes
used in the cost criterion analysis included both the two to three-
digit code family names and all the four-digit codes that fall within
the code families. The applicant clarified that in querying the claims
data, only the codes with four digits resulted in usable claims for the
analysis. The applicant clarified that the codes used to identify the
claims for the cost criterion analysis were limited to the following
four-digit ICD-10-CM codes:
[[Page 45013]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.172
BILLING CODE 4120-01-C
Second, with respect to whether the applicant's sampling accurately
represents cases in which the technology would be used, the applicant
indicated that it relied on a random sample of lung cancer cases
derived by selecting 15 percent of the claims from the sample to
account for the fact that SCLC comprises 15 percent of lung cancer
cases, since there was a lack of evidence suggesting a more specified
sample should be used instead. The applicant further stated that in
further examining the claims data, the current ICD-10-CM codes do not
provide the level of detail and granularity to correctly identify the
SCLC population from the larger lung cancer population. The applicant
also stated that without a precise mechanism to differentiate the 15
percent of cases that would be eligible for COSELATM from
the 85 percent of cases where use of COSELATM would not be
clinically appropriate, it made the best assumption based on the
information available, acknowledging that the random sample collected
may not be perfectly representative of the target SCLC population but,
absent additional information to otherwise identify the population, a
random sample was the most appropriate assumption. The applicant stated
that it ran an additional, more conservative analysis using the 15
percent of lung cancer cases with the lowest total charges recognizing
that that sample would be the least likely to meet the cost threshold,
and that COSELATM still met the cost criterion. The
applicant concluded in noting that there is no clinical information to
suggest that this sample is more representative of the
COSELATM-eligible population than the random sample used in
the original analysis.
Finally, with respect to pricing, the applicant submitted an
updated cost analysis based on newly available total wholesale
acquisition cost (WAC) of COSELATM of $1,417 per vial. The
applicant stated that an average hospitalization would include one
[[Page 45014]]
cycle, which is comprised of three doses. The applicant further noted
that each dose includes two vials and therefore, on average, an
inpatient hospitalization would involve six vials of
COSELATM for a total cost of $8,502 per hospitalization. The
applicant also stated that in relying on the conservative analysis
using 15 percent of lung cancer cases with the lowest charges, there is
a final inflated case weighted standardized charge per case of $58,314,
which exceeds the case weighted threshold of $54,566. The applicant
also stated that it assumed hospitals will use the inverse of the
national average cost to charge ratio for pharmacy to markup charges
and therefore assumed that charges for COSELATM would be
$45,465. The applicant concluded by stating that COSELATM
meets the cost criterion because the final inflated case weighted
standardized charge per case of $58,314 exceeds the case weighted
threshold of $54,566.
Response: We appreciate the applicant's clarification that only the
codes with four digits resulted in usable claims for the cost analysis.
We also appreciate the additional information from the applicant
regarding its use of a random sample for purposes of its initial
analysis, as well as its supplemental cost analysis using the 15
percent of lung cancer cases with the lowest total charges. Based on
the information submitted by the applicant as part of its FY 2022 new
technology add-on payment application for COSELATM, as
discussed in the proposed rule (86 FR 25240 through 25242) and
previously summarized, and the updated analysis provided in the
applicant's public comment, we agree that the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount. Therefore,COSELATM meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that trilaciclib represents a substantial clinical
improvement over existing technologies because it offers a treatment
option for patients unresponsive to or ineligible for currently
available treatments and improves clinical outcomes for a patient
population as compared to currently available treatments. The applicant
stated that chemotherapy-induced myelosuppression (CIM) is typically
managed with treatment dose delays and reductions due to the slow
recovery of bone marrow after a course of chemotherapy.\142\ The
applicant also stated that CIM is managed with rescue interventions
including hematopoietic growth factors (G-CSFs and ESAs) and by RBC and
platelet transfusions.143 144 Per the applicant, despite the
availability and use of these treatment options, CIM continues to be of
clinical significance and remains a central concern in the delivery of
chemotherapy.145 146 The applicant further stated that
myelosuppression results in dose reductions, dose delays, and/or dose
discontinuations, affecting the dose intensity and intended antitumor
efficacy of chemotherapy.\147\ Per the applicant, the supportive care
interventions for treatment of myelosuppression are suboptimal and are
often administered reactively, do not protect the bone marrow from
chemotherapy-induced cytotoxic effects, are specific to single
hematopoietic lineages, and impart their own risks for adverse
reactions.\148\ The applicant concluded by stating that new approaches
that proactively prevent chemotherapy-induced damage and its associated
consequences, whilst not decreasing the efficacy of chemotherapy, are
urgently needed to improve care of patients with ES-SCLC.\149\
---------------------------------------------------------------------------
\142\ Crawford J, Dale DC, Lyman GH. Chemotherapy-induced
neutropenia: Risks, consequences, and new directions for its
management. Cancer. 2004;100(2):228.
\143\ Kurtin S. Myeloid Toxicity of Cancer Treatment. J Adv
Pract Oncol 2012;3:209-24.
\144\ Asghar U, Witkiewicz AK, Turner NC, Knudsen ES. The
history and future of targeting cyclin-dependent kinases in cancer
therapy. Nat Rev Drug Discov. 2015;14(2):130-46.
\145\ Crawford J, Dale DC, Lyman GH. Chemotherapy-induced
neutropenia: Risks, consequences, and new directions for its
management. Cancer. 2004;100(2):228.
\146\ Lyman GH. Chemotherapy dose intensity and quality cancer
care. Oncology (Williston Park). 2006;20(14 Suppl 9):16-25.
\147\ Smith RE. Trends in recommendations for myelosuppressive
chemotherapy for the treatment of solid tumors. J Natl Compr Canc
Netw. 2006;4(7):649-58.
\148\ Bisi JE, Sorrentino JA, Roberts PJ, Tavares FX, Strum JC.
Preclinical characterization of G1T28: A novel CDK4/6 inhibitor for
reduction of chemotherapy-induced myelosuppression. Mol Cancer Ther.
2016;15(5):783-93.
\149\ Nurgali K, Jagoe T, Raquel Abalo R. Editorial: Adverse
Effects of Cancer Chemotherapy: Anything New to Improve Tolerance
and Reduce Sequelae? Front Pharmacol. 2018;9:245.
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In regard to the claim that the use of COSELATM
significantly improves clinical outcomes for a patient population as
compared to currently available treatments, the applicant stated that
the administration of COSELATM prior to chemotherapy in
patients with SCLC prevented chemotherapy-induced neutropenia, reduced
chemotherapy-induced anemia, reduced CIM or sepsis-related
hospitalizations, and has the potential to improve the management and
quality of life of patients receiving myelosuppressive chemotherapy as
compared to placebo.\150\
---------------------------------------------------------------------------
\150\ Ferrarotto R, Anderson I, Medgyasszay B, et al.
Trilaciclib reduces the need for growth factors and red blood cell
transfusions to manage chemotherapy-induced myelosuppression. Poster
presented at: IASLC: 2020 North America Conference on Lung Cancer;
October 16-17, 2020; Virtual congress.
---------------------------------------------------------------------------
The applicant presented eight claims in support of the assertion
that COSELATM represents substantial clinical improvement
over existing technologies in the mitigation of clinically significant
chemotherapy-induced myelosupression in adult patients with SCLC.
In its first and second claims, the applicant asserted that
COSELATM reduces the mean duration of severe G4 neutropenia
in cycle 1 of chemotherapy and reduces the proportion of patients
experiencing severe G4 neutropenia in comparison to placebo. The
applicant submitted three sources in support of these claims. First,
the applicant submitted a poster presentation from Daniel, et. al.,
describing a global, randomized, double-blind, placebo-controlled,
multicenter, phase 2 study that assessed the potential of
COSELATM to reduce the incidence and consequences of
chemotherapy-induced myelosuppression in patients with newly diagnosed
ES-SCLC treated with etoposide, carboplatin, and atezolizumab. One
hundred seven eligible patients were randomized to receive
COSELATM (n=53) or placebo (n=54). The primary endpoints
were mean duration of severe neutropenia (SN) in cycle 1 and percent of
patients with grade 4 SN. Results summarized mean duration of SN in
cycle 1 as 0 days with trilaciclib and 4 days with placebo, and percent
of patients with grade 4 SN as 1.9% vs 49.1%, respectively.\151\
---------------------------------------------------------------------------
\151\ Daniel D, Kuchava V, Bondarenko I et al. Trilaciclib
Decreases Myelosuppression in Extensive-Stage Small Cell Lung Cancer
(ES-SCLC) Patients Receiving First-Line Chemotherapy Plus
Atezolizumab [Poster Presentation]. European Society of Medical
Oncology (ESMO). October, 2019; Barcelona, Spain.
---------------------------------------------------------------------------
Second, the applicant submitted an article by Weiss, et. al.,
summarizing a phase II randomized, double-blind placebo-controlled
study of the safety, efficacy and pharmacokinetics (PK) of
COSELATM in combination with etoposide/carboplatin (E/P)
therapy for treatment-naive extensive-stage small-cell lung cancer
patients. Thirty-nine patients were included in the COSELATM
group versus 38 in the
[[Page 45015]]
placebo group. The applicant stated that treatment with
COSELATM resulted in a reduced mean duration of severe G4
neutropenia in cycle 1 (0 days versus 3 days in placebo) and reduced
proportion of patients experiencing severe G4 neutropenia for
COSELATM (5% versus 43%).\152\
---------------------------------------------------------------------------
\152\ Weiss JM, Csoszi T, Maglakelidze M et al.
Myelopreservation with the CDK4/6 inhibitor Trilaciclib in Patients
with Small-Cell Lung Cancer Receiving First-Line Chemotherapy: A
Phase Ib/Randomized Phase II Trial. Ann Oncol. 2019;30(10):1613-
1621.
---------------------------------------------------------------------------
Third, the applicant submitted a presentation from Hart, et. al.,
describing a randomized, double-blind, placebo-controlled, phase 2
study to compare the results of 32 patients receiving
COSELATM versus 28 receiving placebo in patients being
treated with topotecan for previously treated ES-SCLC. Primary
endpoints were mean duration of SN in cycle 1 and the percentage of
patients with SN. Results demonstrated that the mean duration of severe
G4 neutropenia in cycle 1 was reported at 2 days for
COSELATM versus eight days for placebo. The proportion of
patients experiencing severe G4 neutropenia was reported at 41% for
COSELATM versus 76% for placebo.\153\
---------------------------------------------------------------------------
\153\ Hart LL, Andric ZG, Hussein MA et al. Effect of
Trilaciclib, a CDK4/6 Inhibitor, on Myelosuppression in Patients
with Previously Treated Extensive-Stage Small Cell Lung Cancer [Oral
Presentation]. Presented at: American Society of Clinical Oncology
(ASCO). June 2019; Chicago, US.
---------------------------------------------------------------------------
In the third claim, the applicant asserted that COSELATM
reduces the proportion of patients experiencing febrile neutropenia
treatment emergent adverse events (TEAE) in comparison to placebo. In
the fourth claim, the applicant asserted that COSELATM
decreases the rate of therapeutic intervention with G-CSF in comparison
to placebo, noting that growth factors are known to carry a number of
risks, cause complications and adverse events. In the fifth claim, the
applicant asserted that COSELATM reduces the proportion of
patients experiencing grade 3/4 anemia in comparison to placebo. In the
sixth claim, the applicant asserted that COSELATM decreases
the rate of therapeutic intervention with red blood cell transfusions
in comparison to placebo. To support these claims, the applicant
submitted a 2020 poster presentation from Weiss, et. al., describing a
pooled analysis across three RCTs that compared the proportion of ES-
SCLC patients experiencing febrile neutropenia between
COSELATM and placebo. The COSELATM group included
122 patients and the placebo group included 118 patients. The
presentation reflected the following results: The proportion of
patients experiencing febrile neutropenia for COSELATM was
3% versus placebo at 9%; the rate of therapeutic intervention with G-
CSF for COSELATM at 29% versus 56% for placebo; the
proportion of patients experiencing grade 3/4 anemia for
COSELATM at 20% versus 32% for placebo; and the rate of
therapeutic intervention with red blood cell transfusions for
COSELATM at 15% versus 26% for placebo.\154\
---------------------------------------------------------------------------
\154\ Weiss J, Goldschmidt J, Andric Z et al. Myelopreservation
and Reduced Use of Supportive Care with Trilaciclib in Patients with
Small Cell Lung Cancer [Poster Presentation]. Presented at: American
Society of Clinical Oncology (ASCO). May 2020.
---------------------------------------------------------------------------
In the seventh claim, the applicant asserted that
COSELATM delays time to deterioration in symptoms and
functioning domains of patient-reported quality of life measures on
Functional Assessment of Cancer Therapy (FACT) scores. The applicant
submitted a 2019 presentation from Weiss, et. al., describing a pooled
analysis across three RCTs. The applicant stated that
COSELATM delays time to confirmed deterioration in a variety
of symptoms and functioning domains compared to placebo, for example:
Median of 4.7 months delay to deterioration for fatigue; median of 3.5
months delay for anemia; and median of 4 months delay for functional
well-being.\155\
---------------------------------------------------------------------------
\155\ Weiss J, Skaltsa K, Gwaltney C, et al: Results from three
phase 2 randomized, double-blind, placebo-controlled small cell lung
cancer trials. 2019 Multinational Association of Supportive Care in
Cancer/International Society of Oral Oncology International
Symposium on Supportive Care in Cancer. Abstract eP723. Presented
June 21, 2019.
---------------------------------------------------------------------------
In the eighth claim, the applicant asserted that
COSELATM decreases the number of hospitalizations due to
myelosuppression or sepsis. The applicant submitted a conference agenda
referring to an oral presentation by Ferrarotto, et. al., at the North
America Conference on Lung Cancer, October 16, 2020. The applicant
stated that hospitalizations due to myelosuppression or sepsis occurred
in significantly fewer patients and significantly less often among
patients receiving COSELATM prior to chemotherapy versus
placebo though we were unable to locate support for this claim in the
conference agenda submitted with the application.\156\
---------------------------------------------------------------------------
\156\ Ferrarotto R, Anderson I, Medgyasszay B, et al.
Trilaciclib reduces the need for growth factors and red blood cell
transfusions to manage chemotherapy-induced myelosuppression. [Oral
Presentation]. Presented at: North America Conference on Lung
Cancer, October 2020. https://naclc2020.iaslc.org/program-at-a-glance/.
---------------------------------------------------------------------------
With respect to the substantial clinical improvement criterion, we
noted several concerns in the proposed rule (86 FR 25243 through
25244). First, the data submitted by the applicant included one
published peer reviewed article from Weiss, et. al.,\157\ abstracts
from Daniel, et. al.,\158\ and Hart, et. al.,\159\ and references to
trials exploring broader cohorts of small cell lung cancer, breast
cancer and colon cancer patients. In addition, as summarized
previously, we noted that most of the studies submitted by the
applicant had sample sizes fewer than 100 participants which may limit
generalizability of the studies. With respect to the Weiss, et. al.,
study, we noted that COSELATM was compared with placebo at a
significance level of two-sided [alpha] = 0.2 which is much lower than
the typical cutoff of 0.05 and may have increased the risk of false
positives and interfered with the ability to draw conclusions that are
based on statistical methods. We also noted the lack of any statistical
correction for multiple comparisons. We noted that in sources provided
by the applicant, mean duration of severe neutropenia was assessed in
day increments.160 161 162 163 However, it was
[[Page 45016]]
not clear that zero days would indicate that those patients experienced
no severe neutropenia. Specifically, we questioned whether mean hours
in severe neutropenia was evaluated or whether, in addition to the
groupings by days, one day or less would be an appropriate value for
inclusion. Finally, while the applicant referred to decreases in the
number of hospitalizations, we noted that the source provided was
limited to a conference agenda that only linked to an abstract
pertaining to reductions in utilization of supportive care
interventions but did not reflect hospitalization rates.\164\
---------------------------------------------------------------------------
\157\ Weiss JM, Csoszi T, Maglakelidze M, et al.
Myelopreservation with the CDK4/6 inhibitor trilaciclib in patients
with small-cell lung cancer receiving first-line chemotherapy: A
phase Ib/randomized phase II trial. Ann Oncol. 2019;30(10):1613-
1621.
\158\ Daniel D, Kuchava V, Bondarenko I, et al. Trilaciclib (T)
decreases myelosuppression in extensive-stage small cell lung cancer
(ES-SCLC) patients receiving first-line chemotherapy plus
atezolizumab. Ann Oncol. 2019;30:v713, Abstract 1742PD.https://www.g1741therapeutics.com/file.cfm/1734/docs/tr-G1741_ESMO2019_Daniel.pdf.
\159\ Hart LL, Andric ZG, Hussein MA, et al. Effect of
trilaciclib, a CDK \4/6\ inhibitor, on myelosuppression in patients
with previously treated extensive-stage small cell lung cancer
receiving topotecan. J Clin Oncol. 2019;37(15_suppl): Abstract 8505:
https://www.g8501therapeutics.com/file.cfm/8534/docs/tr-G8501T8528-8503%8520ASCO%202019%202020Oral%202020Presentation%20060119-20060111.pdf.
\160\ Weiss JM, Csoszi T, Maglakelidze M, et al.
Myelopreservation with the CDK4/6 inhibitor trilaciclib in patients
with small-cell lung cancer receiving first-line chemotherapy: A
phase Ib/randomized phase II trial. Ann Oncol. 2019;30(10):1613-
1621.
\161\ Daniel D, Kuchava V, Bondarenko I, et al. Trilaciclib (T)
decreases myelosuppression in extensive-stage small cell lung cancer
(ES-SCLC) patients receiving first-line chemotherapy plus
atezolizumab. Ann Oncol. 2019;30:v713, Abstract 1742PD: https://www.g1741therapeutics.com/file.cfm/1734/docs/tr-G1741_ESMO2019_Daniel.pdf.
\162\ Hart LL, Andric ZG, Hussein MA et al. Effect of
Trilaciclib, a CDK4/6 Inhibitor, on Myelosuppression in Patients
with Previously Treated Extensive-Stage Small Cell Lung Cancer [Oral
Presentation]. Presented at: American Society of Clinical Oncology
(ASCO). June 2019; Chicago, US.
\163\ Weiss J, Goldschmidt J, Andric Z et al. Myelopreservation
and Reduced Use of Supportive Care with Trilaciclib in Patients with
Small Cell Lung Cancer [Poster Presentation]. Presented at: American
Society of Clinical Oncology (ASCO). May 2020.
\164\ Ferrarotto R, Anderson I, Medgyasszay B, et al.
Trilaciclib reduces the need for growth factors and red blood cell
transfusions to manage chemotherapy-induced myelosuppression. [Oral
Presentation]. Presented at: North America Conference on Lung
Cancer, October 2020. https://naclc2020.iaslc.org/program-at-a-glance/.
---------------------------------------------------------------------------
We invited public comments as to whether COSELATM met
the substantial clinical improvement criterion.
Comment: The applicant submitted comments stating that
COSELATM satisfies the substantial clinical improvement
criterion. Specifically, the applicant reiterated that
COSELATM plus the standard of care demonstrated substantial
clinical improvement over placebo plus the standard of care in
decreasing the incidence of chemotherapy-induced myelosuppression in
adult patients when administered prior to a platinum/etoposide-
containing regimen or topotecan-containing regimen for ES-SCLC. The
applicant also stated that compared with placebo, COSELATM
consistently reduced the incidence and duration of chemotherapy-induced
neutropenia, as measured by both the duration and occurrence of severe
neutropenia. The applicant also stated that COSELATM
consistently reduced chemotherapy-induced anemia compared with placebo,
reflected by the reduced occurrence of RBC transfusions on or after
week 5, and a reduction in ESA use. Per the applicant, fewer patients
on COSELATM were hospitalized due to chemotherapy induced
myelosuppression or sepsis and that by reducing the incidence of
chemotherapy-induced myelosuppression and reducing the need for
associated supportive care and hospitalizations, COSELATM
has the potential to improve the management and quality of life of
patients receiving myelosuppressive chemotherapy for the treatment of
ES-SCLC and is therefore a substantial clinical improvement over prior
therapies.
In response to CMS' concerns with respect to the limited published
studies and small sample sizes of the studies, the applicant noted that
the Daniel et. al. study publication is now available and is considered
its pivotal study.\165\
---------------------------------------------------------------------------
\165\ Daniel D, et al. Trilaciclib prior to chemotherapy and
atezolizumab in patients with newly diagnosed extensive165stage
small cell lung cancer: A multicentre, randomised, double-blind,
placebo-controlled Phase II trial. International Journal of Cancer.
2020: 148(10); 2557-70.
---------------------------------------------------------------------------
The applicant further noted that within the pivotal study, the
planned sample size of this study was 106 (~53 per group) and was
calculated to support the evaluation of COSELATM prior to
carboplatin, etoposide and atezolizumab (E/P/A) placebo prior to E/P/A
on each of the primary endpoints, with at least 90 percent power at a
two-sided significance level of 0.025 (Bonferroni split of overall 2-
sided [alpha] = .05 between the two primary endpoints).\166\
---------------------------------------------------------------------------
\166\ Ibid.
---------------------------------------------------------------------------
The applicant further stated that the pivotal study assumed
treatment effects on duration of severe neutropenia (DSN) in C1 and
occurrence of severe neutropenia (SN) were a between-group mean
difference of 2 days (standard deviation 2.5), and an absolute
reduction of 34 percent (assuming a placebo event rate of 45 percent),
respectively. The applicant stated that within the pivotal study, the
sample size was adjusted for the possibility that 5 percent of patients
would not have any post-baseline absolute neutrophil count
assessments.\167\
---------------------------------------------------------------------------
\167\ Daniel D, et al. Trilaciclib prior to chemotherapy and
atezolizumab in patients with newly diagnosed extensive167stage
small cell lung cancer: A multicentre, randomised, double-blind,
placebo-controlled Phase II trial. International Journal of Cancer.
2020: 148(10); 2557-70.
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Next, in response to our concern regarding the low significance
level cutoff of the Weiss et. al.\168\ study, the applicant clarified
that they viewed this study as exploratory whereas the Daniel et
al.\169\ study was the applicant's pivotal study. The applicant further
noted that the pivotal study relied on the typical cutoff for alpha,
meaning that it did not rely on significance levels as low as [alpha] =
0.2 and thus asserted that there is less concern regarding false
positive results or the ability to draw conclusions based on
statistical methods.
---------------------------------------------------------------------------
\168\ Weiss JM, Csoszi T, Maglakelidze M, et al.
Myelopreservation with the CDK4/6 inhibitor trilaciclib in patients
with small-cell lung cancer receiving first-line chemotherapy: a
phase Ib/randomized phase II trial. Ann Oncol. 2019;30(10):1613-
1621.
\169\ Daniel D, et al. Trilaciclib prior to chemotherapy and
atezolizumab in patients with newly diagnosed extensive169stage
small cell lung cancer: A multicentre, randomised, double-blind,
placebo-controlled Phase II trial. International Journal of Cancer.
2020: 148(10); 2557-70.
---------------------------------------------------------------------------
In response to our concern related to assessing the mean duration
of severe neutropenia in day increments as opposed to smaller time
increments, the applicant clarified that in the pivotal study, zero
days indicates that in the COSELATM arm, there was a mean
duration of zero days of severe neutropenia in cycle 1. The mean
duration of severe neutropenia in cycle 1 was zero days (standard
deviation 1.0) for COSELATM vs 4 days (standard deviation
4.7) for placebo (p < 0.0001). The applicant also stated that a total
of 1 patient (1.9%) on the COSELATM arm experienced severe
neutropenia in any cycle, whereas a total of 26 patients (49.1%) on the
placebo arm experienced severe neutropenia in any cycle (p <
0.0001).\170\
---------------------------------------------------------------------------
\170\ Ibid.
---------------------------------------------------------------------------
Response: We thank the applicant for its comment and clarifications
regarding the substantial clinical improvement analysis. After
consideration of the public comments received, we believe that
COSELATM demonstrates a substantial clinical improvement
over existing technologies in decreasing the incidence of chemotherapy-
induced myelosuppression in adult patients when administered prior to a
platinum/etoposide-containing regimen or topotecan-containing regimen
for ES-SCLC. We appreciate the applicant's clarification that days of
severe neutropenia were evaluated by the mean number of days and not
partial days and agree with the applicant that COSELATM
demonstrated superior outcomes as compared to placebo given the
significant reduction in severe neutropenia and therefore believe
COSELATM offers a therapeutic option that can decrease the
occurrence and duration of neutropenia. We also believe that COSELA's
potential to improve quality of life by preventing the side effects of
chemotherapy, as opposed to treating them once they occur, is
clinically important. We note that we remain unable to confirm the
assertion that COSELATM decreases hospitalization rates as
we did not receive a source to support it.
After consideration of the public comments we received and the
information included in the applicant's new technology add-on payment
application, we have determined that COSELATM meets all of
the criteria for approval of the new technology add-on payment for the
reasons stated previously. Therefore, we are approving
[[Page 45017]]
new technology add-on payments for COSELATM for FY 2022.
Cases involving the use of COSELATM that are eligible for
new technology add-on payments will be identified by ICD-10- PCS
procedure codes XW03377 (Introduction of trilaciclib into peripheral
vein, percutaneous approach, new technology group 7) or XW04377
(Introduction of trilaciclib into central vein, percutaneous approach,
new technology group 7).
In submitting its public comment, the applicant identified the cost
of COSELATM as $8,502 per hospitalization. Under Sec.
412.88(a)(2), 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
COSELATM is $5,526.30 for FY 2022.
e. Ellipsys[supreg] Vascular Access System
Avenu Medical, Inc. submitted an application for new technology
add-on payments for the Ellipsys[supreg] Vascular Access System
(``Ellipsys'') for FY 2022. Ellipsys is a device that enables
percutaneous creation of an arteriovenous fistula (AVF), which is used
to access the bloodstream for hemodialysis for the treatment of end-
stage renal disease (ESRD). According to the applicant, to create the
fistula, a physician inserts a crossing needle through the perforating
vein and into the proximal radial artery in the forearm. A specialized
catheter is then used to bring the artery and vein together. The two
vessels are ``welded'' together with thermal resistance energy,
creating an anastomosis. According to the applicant, the only means of
creating an AVF was through open surgery before the approval of
Ellipsys, and percutaneous AVF (pAVF) offers a number of advantages
over surgical AVF (sAVF).
With respect to the newness criterion, the applicant for Ellipsys
received 510(k) clearance from the FDA on August 9, 2019, with an
indication for the creation of a proximal radial artery to perforating
vein anastomosis via a retrograde venous access approach in patients
with a minimum vessel diameter of 2.0mm and less than 1.5mm of
separation between the artery and vein at the fistula creation site who
have chronic kidney disease requiring dialysis.\171\ The subject of
this 510(k) clearance was an update to the Instructions for Use (IFU)
to allow an additional procedural step for balloon dilation of the
anastomosis junction at the radial artery and adjacent outflow vein of
the AVF immediately after creation with the Ellipsys catheter. Per the
applicant, the device was immediately available on the market. The
applicant further stated that the device was originally approved under
a De Novo clearance on June 22, 2018. Ellipsys also received two
additional 510(k) clearances dated January 25, 2019 (minor change in
the packaging of components) and October 5, 2018 (minor technological
differences in the power control unit and minor enhancements to the
catheter design) but the applicant states they are not regarded as
material for this application. The FDA has classified Ellipsys as a
Class II device under the generic name percutaneous catheter for
creation of an arteriovenous fistula for hemodialysis access. The
applicant stated that currently, two ICD-10-PCS codes identify
procedures using Ellipsys: 031B3ZF (Bypass right radial artery to lower
arm vein, percutaneous approach); and 031C3ZF (Bypass left radial
artery to lower arm vein, percutaneous approach). However, since these
codes also identify the WavelinQTM EndoAVF System
(``WavelinQ''), another percutaneous fistula device, Avenu Medical
submitted a code request for a unique ICD-10-PCS code to distinctly
identify Ellipsys beginning in FY 2022 and was granted approval for the
following procedure codes, effective October 1, 2021: X2KB317 (Bypass
right radial artery using thermal resistance energy, percutaneous
approach, new technology group 7) and X2KC317 (Bypass left radial
artery using thermal resistance energy, percutaneous approach, new
technology group 7). The applicant stated this technology was first
assigned HCPCS code C9754 on January 1, 2019, which was then replaced
by HCPCS code G2170 on July 1, 2020. Per the applicant, WavelinQ was
assigned HCPCS codes (C9755 replaced by G2171) with the same timing,
and the codes for the 2 pAVF technologies are differentiated by the use
of thermal resistance energy for Ellipsys and the use of radiofrequency
energy for WavelinQ.
---------------------------------------------------------------------------
\171\ U.S. Food and Drug Administration (FDA). Center for
Devices and Radiological Health. 510(k) Summary No. K1191114. 2019.
Retrieved from: https://www.accessdata.fda.gov/cdrh_docs/pdf19/K191114.pdf.
---------------------------------------------------------------------------
The applicant stated that hemodialysis access for the treatment of
ESRD can be provided by catheter, graft, or AVF, of which AVF is
generally preferred for patients whose vascular anatomy and condition
permit it. Per the applicant, the only method for creating an AVF was
through an open surgical approach until the introduction of Ellipsys
and WavelinQ, two devices that use a percutaneous 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 similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that Ellipsys uses a new mechanism of action
compared to its initial clearance. Per the applicant, the current
device included an additional step in the IFU, creating a different
procedure profile and a different mechanism of action. The applicant
states that the addition of this step, a balloon angioplasty performed
within the same operative session as the creation of the pAVF, instead
of days or weeks later, typically contributes to decreased time to
maturation, improved initial flow, and helps avoid early thrombosis of
the newly-created access, in addition to decreasing the number of
secondary procedures required for maturation and maintenance. According
to the applicant, the explicit inclusion of the step in the IFU, where
it was not previously explicitly included, represents a new mechanism
of action.
With respect to the second criterion, whether a product is assigned
to the same or different MS-DRG, the applicant generally stated that
Ellipsys is assigned to the same MS-DRGs as existing technologies.
According to information provided by the applicant, these MS-DRGs
appear to be MS-DRGs 264, 356, 357, 358, 628, 629, 630, 673, 674, 675,
907, 908, 909, 981, 982, and 983.
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
generally stated that Ellipsys will be used to treat the same or
similar type of disease and the same or similar patient population as
the current standard-of-care treatments.
In summary, the applicant believed that Ellipsys is not
substantially similar to other currently available therapies and/or
technologies because it uses a new mechanism of action and that
therefore, the technology meets the ``newness'' criterion. However, in
the proposed rule, we stated that we believe that the mechanism of
action for Ellipsys may be the same or similar to the original version
of the Ellipsys
[[Page 45018]]
system, which received FDA approval on June 22, 2018. We stated that
though the current IFU includes an additional procedure as part of the
index procedure, it is not clear that this step of balloon angioplasty
done concurrently changes the mechanism of action of the Ellipsys
system. Per the FDA's 510(k) summary, compared to the predicate device,
there were no changes to the device or the manner in which it creates a
percutaneous anastomosis, and other than the additional procedural step
of balloon dilation, all characteristics remain unchanged.\172\ In
addition, we noted that clinicians were not precluded from performing
this step before the change in the IFU, and in fact, balloon dilation
was already performed during the index procedure in some cases.\173\
Though the applicant maintained that performing this additional step in
all cases, as opposed to some, leads to superior clinical outcomes, we
stated that it was unclear whether this has any bearing on newness for
this technology or if it represents a change in the mechanism of action
of this device. We noted that if the current device is substantially
similar to the original version of Ellipsys, we believe the newness
period for this technology would begin on June 22, 2018 with the De
Novo approval date and, therefore, because the 3-year anniversary date
of the technology's entry onto the U.S. market (June 22, 2021) would
occur in FY 2021, the technology would no longer be considered new and
would not be eligible for new technology add-on payments for FY 2022.
We welcomed public comments on whether the change in the Ellipsys IFU
represents a change to the device's mechanism of action.
---------------------------------------------------------------------------
\172\ U.S. Food and Drug Administration (FDA). Center for
Devices and Radiological Health. 510(k) Summary No. K1191114. 2019.
Retrieved from: https://www.accessdata.fda.gov/cdrh_docs/pdf19/K191114.pdf.
\173\ Hull JE, Jennings W, et al., ``The Pivotal Multicenter
Trial of Ultrasound-Guided Percutaneous Arteriovenous Fistula
Creation for Hemodialysis Access,'' Journal of Vascular and
Interventional Radiology 2018; 29: 149-158.
---------------------------------------------------------------------------
We also noted that differences in mechanism of action between
Ellipsys and WavelinQ were not included. We noted that CMS stated in
the FY 2021 IPPS/LTCH PPS final rule (85 FR 58702) that WavelinQ uses a
unique mechanism of action that differed from that of other
commercially available devices.
We invited public comments on whether Ellipsys is substantially
similar to other currently available therapies and/or technologies and
whether this technology meets the newness criterion.
Comment: We received a comment from a competitor stating that they
believe that the mechanism of action for Ellipsys has not changed, and
is the same as the original version approved on June 22, 2018. Per the
commenter, it is still the use of thermal resistance energy that
creates the fistula, as no changes were made to the predicate device
for the 510(k) clearance, and though balloon angioplasty could
potentially assist with maturation, it does not support the actual
fistula creation. Therefore, the commenter believes the underlying
mechanism of action is unchanged. The commenter further stated that
since Ellipsys meets the other two criteria, as it is assigned to same
MS-DRGs and treats the same disease and patient population as the
earlier version of Ellipsys, and has a newness date of June 22, 2018
due to substantial similarity with the earlier version, Ellipsys should
not be considered new and would not be eligible for new technology add-
on payments for FY 2022.
Response: We appreciate the information provided by the commenter
and have taken this comment into consideration in our determination of
the newness criterion, which is described later in this section.
Comment: The applicant submitted a public comment in response to
the concerns that CMS presented in the FY 2022 IPPS/LTCH PPS proposed
rule regarding the newness criterion. In response to the concern that
the mechanism of action of Ellipsys is unchanged from the De Novo
version, the applicant stated that the additional step of immediate
balloon angioplasty creates a different procedural profile, which makes
a material difference not only in the procedure but in outcomes. The
applicant described improvements in brachial artery flow volume in the
post-market maturation study by Hull et al. described previously, which
used the additional step of balloon angioplasty immediately after
anastomosis creation, demonstrating a positive impact on patient care
by avoiding complications that may limit use of the fistula. Per the
applicant, the study demonstrated a decrease in early thrombosis,
decreased time to two-needle cannulation, and decreased secondary
procedures as compared to the pivotal trial where balloon angioplasty
was done in only a small portion of cases. The applicant further stated
that where the use of the prior version of Ellipsys might be considered
to have one aspect of fistula creation, the current version might be
considered to have two aspects: Fistula creation and balloon dilation.
The applicant believes that CMS should focus on the actions involved in
considering differences in the mechanism of action. Per the applicant,
the hardware configuration of the device may be the same, but the
clinical pattern of use has changed, and the action it accomplishes is
different as well.
In response to the note that the application did not address
differences in mechanism of action between Ellipsys and
WavelinQTM EndoAVF System, the applicant reiterated
differences between the two pAVF systems described in the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58702), where CMS recognized that WavelinQ
uses a unique mechanism of action, and stated that CMS should carry
that logic through and similarly determine that Ellipsys uses a new
mechanism of action as well.
Response: We appreciate the information provided by the applicant
regarding the newness criterion. We agree that Ellipsys and WavelinQ
have two unique mechanisms of action. In regard to the mechanism of
action of the current version of Ellipsys as compared to the previous
version, we continue to have concerns as stated in the proposed rule
and as described by a commenter. As stated in the FY 2005 IPPS final
rule (69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and
regulations under Sec. 412.87(b)(2) is to pay for new medical services
and technologies for the first 2 to 3 years that a product comes on the
market, during the period when the costs of the new technology are not
yet fully reflected in the DRG weights. We note that even if a medical
product receives a 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. Although the applicant maintains that the change in
the Ellipsys IFU represents a new mechanism of action, we believe that
regardless of whether the procedural steps have changed, the manner in
which the device functions is unchanged from the De Novo version and
therefore does not represent a new mechanism of action. That is, both
the current and De Novo versions of the Ellipsys System use thermal
resistance energy to create a percutaneous fistula in the same location
using the same catheter. As per the commenter and the FDA 510(k)
clearance, no changes have been made to the device or the manner in
which it creates a percutaneous anastomosis for the clearance of the
current version. We agree with the commenter that though the additional
[[Page 45019]]
step of balloon angioplasty may assist with maturation, it does not
change the method by which the fistula is created.
Futhermore, we agree with the applicant and commenter that the two
versions of the technology are intended to treat the same or similar
disease in the same or similar patient population--patients with ESRD
requiring hemodialysis access and eligible for a percutaneous fistula,
and cases involving the technologies would be assigned to the same MS-
DRGs. Because the current version of Ellipsys meets all three of the
substantial similarity criteria, we believe the current version of
Ellipsys is substantially similar to the original version. Therefore,
we consider the beginning of the newness period for the device to begin
on June 22, 2018, which is the date that the original version of the
Ellipsys system received FDA approval. Because the 3-year anniversary
date of the entry of Ellipsys onto the U.S. market (June 22, 2021) will
occur in FY 2021, the device does not meet the newness criterion and it
is not eligible for new technology add-on payments for FY 2022. We note
that we received public comments with regard to the cost and
substantial clinical improvement criteria for this technology, but
because we have determined that the technology does not meet the
newness criterion and therefore is not eligible for approval for new
technology add-on payments for FY 2022, we are not summarizing comments
received or making a determination on those criteria in this final
rule.
f. ENSPRYNGTM (satralizumab-mwge)
Genentech, Inc. submitted an application for new technology add-on
payments for the ENSPRYNGTM (satralizumab-mwge) injection
for FY 2022. According to the applicant, ENSPRYNG\TM\ is indicated by
the FDA for the treatment of neuromyelitis optica spectrum disorder
(NMOSD) in adult patients who are anti-aquaporin-4 (AQP4) antibody
positive. ENSPRYNG\TM\ is the first subcutaneous, first self-
administered, and third FDA-approved drug for the treatment of this
severe chronic autoimmune disease of the central nervous system.\174\
The applicant stated, due to the severity of relapses, relapse
prevention is a key disease management priority. Patients who relapse
are often admitted to the hospital for acute treatment. According to
the applicant, with every relapse, patients are at risk of becoming
blind or paralyzed, and thus it is critical to minimize the risk of
future relapses by initiating maintenance treatment with a therapy such
as ENSPRYNG\TM\ in a timely manner while the patient is still admitted.
Therefore, according to the applicant, ENSPRYNG\TM\ should be approved
for new technology add-on payments in order to maximize the likelihood
that this especially sick patient population can start the treatment
they need while in the inpatient setting.
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\174\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020. SOLIRIS (eculizumab)
[prescribing information]. Boston, MA: Alexion Pharmaceuticals,
Inc.; 2019. UPLIZNA (inebilizumab) [prescribing information].
Gaithersburg, MD: Viela Bio, Inc.; 2020.
---------------------------------------------------------------------------
According to the applicant, NMOSD is a rare, inflammatory,
potentially life-threatening autoimmune central nervous system (CNS)
disorder characterized primarily by severe, unpredictable relapses of
optic neuritis and/or acute longitudinally extensive transverse
myelitis (LETM).\175\ The applicant asserted that NMOSD has an
estimated prevalence of 0.1-10 per 100,000 individuals, affecting
nearly 15,000 individuals in the United States.\176\ NMOSD occurs in
children \177\ and adults \178\ of all races \179\ and
disproportionately affects African and Asian females aged 30 to 40
years.\180\ According to the applicant, the (bilateral) optic neuritis
and/or LETM that are characteristic of NMOSD result from inflammation
of the optic nerve, spinal cord,\181\ and brainstem,\182\ but other
regions of the CNS may be affected as well. The vast majority of
patients (80%-90%) experience repeated relapses, and disability
accumulates with each relapse.\183\ Around 60% of patients relapse
within one year of diagnosis, and 90% relapse within 3 years.\184\
Compared with patients who experience an isolated attack, patients with
relapsing disease have greater disease-related clinical burden, and
upward of 83% of patients do not fully recover after subsequent
relapses.\185\
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\175\ Jarius S, Ruprecht K, Wildemann B, et al. Contrasting
disease patterns in seropositive and seronegative neuromyelitis
optica: A multicentre study of 175 patients. J. Neuroinflammation
2012;9(1) doi:10.1186/1742-2094-9-14.
\176\ Flanagan EP, Cabre P, Weinshenker BG, et al. Epidemiology
of Aquaporin-4 Autoimmunity And Neuromyelitis Optica Spectrum. Ann
Neurol. 2016;79(5):775-783. doi:10.1002/ana.24617.
\177\ Siegel Rare Neuroimmune Association. Neuromyelitis Optica
Spectrum Disorder (NMOSD). https://wearesrna.org/living-with-myelitis/disease-information/neuromyelitis-optica-spectrum-disorder/diagnosis/#nmosd. Accessed August 19, 2020.
\178\ Etemadifar M, Nasr Z, Khalili B, Taherioun M, Vosoughi R.
Epidemiology of Neuromyelitis Optica in the World: A Systematic
Review and Meta-analysis. Mult Scler Int. 2015;2015:174720.
doi:10.1155/2015/174720.
\179\ Simon KC, Schmidt H, Loud S, Ascherio A. Risk Factors For
Multiple Sclerosis, Neuromyelitis Optica And Transverse Myelitis.
Mult Scler. 2015;21(6):703-709. doi:10.1177/1352458514551780.
\180\ Wingerchuk DM, Lennon VA, Lucchinetti CF, et al. The
spectrum of neuromyelitis optica. Lancet Neurol. 2007;6(9)805-815.
doi:10.1016/s1474-4422(07)70216-8.
\181\ Siegel Rare Neuroimmune Association. Neuromyelitis Optica
Spectrum Disorder (NMOSD). https://wearesrna.org/living-with-myelitis/disease-information/neuromyelitis-optica-spectrum-disorder/diagnosis/#nmosd. Accessed August 19, 2020.
\182\ National Organization for Rare Disorders (NORD[supreg]).
Neuromyelitis Optica Spectrum Disorder. https://rarediseases.org/rare-diseases/neuromyelitis-optica/. Accessed August 19, 2020.
\183\ Wingerchuk DM. Diagnosis and Treatment of Neuromyelitis
Optica. Neurologist 2007;13(1)2-11. doi:10.1097/
01.nrl.0000250927.21903.f8.
\184\ Wingerchuk DM, Lennon VA, Lucchinetti CF, et al. The
spectrum of neuromyelitis optica. Lancet Neurol. 2007;6(9)805-815.
doi:10.1016/s1474-4422(07)70216-8.
\185\ Jarius S, Ruprecht K, Wildemann B, et al. Contrasting
disease patterns in seropositive and seronegative neuromyelitis
optica: A multicentre study of 175 patients. J. Neuroinflammation
2012;9(1) doi:10.1186/1742-2094-9-14.
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According to the applicant, the negative impact of NMOSD on patient
quality of life (QoL) is predominantly a result of physical disability,
pain, vision impairment, and bowel and bladder dysfunction.\186\
Disease-induced disability and symptoms have a considerable impact on
patients' ability to work and thrive in social activities and personal
relationships.\187\ The applicant added that the loss of motor and
sensory function leads to approximately 50% of patients requiring a
wheelchair \188\ and 62% of patients becoming functionally blind \189\
within 5 years of diagnosis.\190\ Therefore, according to the
applicant, it is critical that treatments that consistently and
effectively reduce the risk of relapse are initiated rapidly in
patients diagnosed with NMOSD.
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\186\ Beekman J, Keisler A, Pedraza O, et al. Neuromyelitis
optica spectrum disorder. Neurol.--Neuroimmunol. Neuroinflammation
2019;6(4)e580. doi:10.1212/nxi.0000000000000580.
\187\ Ibid.
\188\ Kessler RA, Mealy MA, Levy M. Treatment of Neuromyelitis
Optica Spectrum Disorder: Acute, Preventive, and Symptomatic. Curr.
Treat. Options Neurol. 2015;18(1) doi:10.1007/s11940-015-0387-9.
\189\ Wingerchuk DM, Hogancamp WF, O'Brien PC, et al. The
clinical course of neuromyelitis optica (Devic's syndrome).
Neurology 2012;53(5)1107-1107. doi:10.1212/wnl.53.5.1107.
\190\ Wingerchuk DM, Weinshenker BG. Neuromyelitis optica:
Clinical predictors of a relapsing course and survival. Neurology
2012;60(5)848-853. doi:10.1212/01.wnl.0000049912.02954.2c.
---------------------------------------------------------------------------
With respect to the newness criterion, ENSPRYNG\TM\ received FDA
BLA approval on August 14, 2020. The applicant added that ENSPRYNG\TM\
was
[[Page 45020]]
granted Fast Track designation \191\ and Breakthrough Therapy
designation \192\ by the FDA. The applicant stated that ENSPRYNG\TM\
was not commercially available until August 24, 2020 because the
applicant had to wait for final approval for printing and labeling as
well as customs and importation. The recommended loading dosage of
ENSPRYNG\TM\ for the first three administrations is 120 mg by
subcutaneous injection at Weeks 0, 2, and 4, followed by a maintenance
dosage of 120 mg every four weeks. The applicant submitted a request
for an ICD-10-PCS code to uniquely identify the administration of
ENSPRYNG\TM\ beginning FY 2022 and was granted approval for the
following code effective October 1, 2021: XW01397 (Introduction of
satralizumab-mwge into subcutaneous tissue, percutaneous approach, new
technology Group 7).
---------------------------------------------------------------------------
\191\ US Department of Health and Human Services. FDA Approves
Treatment for Rare Disease Affecting Optic Nerves, Spinal Cord.
https://www.fda.gov/news-events/press-announcements/fda-approves-treatment-rare-disease-affecting-optic-nerves-spinal-cord. Accessed
September 10, 2020.
\192\ Genentech, USA Inc. FDA Approves Genentech's Enspryng for
Neuromyelitis Optica Spectrum Disorder. https://www.gene.com/media/press-releases/14873/2020-08-14/fda-approves-genentechs-enspryng-for-neu. Accessed September 10, 2020.
---------------------------------------------------------------------------
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 stated
that there are limited treatment guidelines available for NMOSD with
the most recent US guidelines published in 2012. These US NMOSD
treatment guidelines exclusively recommend off-label drugs:
Azathioprine, with or without prednisone; mycophenolate mofetil, with
or without prednisone; rituximab; or prednisone alone.\193\ The
applicant stated that there are presently two other FDA-approved
therapies for patients with AQP4-IgG positive NMOSD: SOLIRIS[supreg]
(eculizumab),\194\ which was approved in 2019, and UPLIZNA[supreg]
(inebilizumab-cdon), which was approved in 2020.\195\
---------------------------------------------------------------------------
\193\ Kimbrough DJ, Fujihara K, Jacob A, et al. Treatment of
Neuromyelitis Optica: Review And Recommendations. Mult Scler Relat
Disord. 2012;1(4):180-187. doi:10.1016/j.msard.2012.06.002.
\194\ SOLIRIS (eculizumab) [prescribing information]. Boston,
MA: Alexion Pharmaceuticals, Inc.; 2019.
\195\ UPLIZNA (inebilizumab) [prescribing information].
Gaithersburg, MD: Viela Bio, Inc.; 2020.
---------------------------------------------------------------------------
With regard to the first criterion, whether a product uses the same
or similar mechanism of action to achieve a therapeutic outcome, the
application stated that ENSPRYNG\TM\ is an interleukin-6 (IL-6)
receptor antagonist indicated for the treatment of NMOSD in adult
patients who are AQP4-IgG positive.\196\ According to the applicant,
ENSPRYNG\TM\ targets soluble and membrane-bound IL-6 receptors to
inhibit IL-6 signaling and subsequently disrupt downstream inflammatory
effects that contribute to the pathophysiology of NMOSD; \197\
ENSPRYNG\TM\ dissociates from the IL-6 receptor at an acidic pH within
endosomes and is recycled to circulation, prolonging the plasma half-
life of the drug.\198\
---------------------------------------------------------------------------
\196\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
\197\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
\198\ Igawa T, Ishii S, Tachibana T, et al. Antibody Recycling
By Engineered Ph-Dependent Antigen Binding Improves The Duration of
Antigen Neutralization. Nat Biotechnol. 2010;28(11):1203-1207.
doi:10.1038/nbt.1691. Heo Y. Satralizumab: First Approval. Drugs
2020;80(14)1477-1482. doi:10.1007/s40265-020-01380-2.
---------------------------------------------------------------------------
The applicant next identified other drugs used to treat NMOSD and
their corresponding mechanisms of action. According to the applicant,
these current treatments include: SOLIRIS[supreg], for which a precise
mechanism of action is unknown but is presumed to involve inhibition of
AQP4-IgG-induced terminal complement C5b-9 deposition; \199\
UPLIZNA[supreg], for which a precise mechanism of action is unknown but
is presumed to involve binding to CD19, a surface antigen present on
pre-B and mature B cells; \200\ azathioprine, for which a precise
mechanism of action is unknown; \201\ Rituxan, which targets CD20
antigen on B cells and leads to profound B cell depletion, principally
over an antibody-dependent cell cytotoxicity mechanism; \202\
mycophenolate mofetil, which is an immunosuppressive and an inhibitor
of inosine monophosphate dehydrogenase and therefore of the guanosine
nucleotide synthesis pathway upon which T and B cells depend; \203\ and
prednisone, which is a synthetic adrenocortical steroid drug with
predominately corticosteroid properties.\204\ The applicant concluded
that none of these current drugs are characterized by their binding and
blocking of soluble and membrane-bound IL-6 receptors to inhibit IL-6
signaling. Therefore, the applicant believes ENSPRYNG\TM\ has a unique
and distinct mechanism of action.
---------------------------------------------------------------------------
\199\ SOLIRIS (eculizumab) [prescribing information]. Boston,
MA: Alexion Pharmaceuticals, Inc.; 2019.
\200\ UPLIZNA (inebilizumab) [prescribing information].
Gaithersburg, MD: Viela Bio, Inc.; 2020.
\201\ IMURAN (azathioprine) [prescribing information]. Roswell,
GA: Sebela Pharmaceuticals Inc.; 2018.
\202\ RITUXAN (rituximab) [prescribing information]. South San
Francisco, CA: Genentech, Inc.; 2019.
\203\ Allison AC, Eugui EM. Mycophenolate Mofetil And Its
Mechanisms of Action. Immunopharmacology 2000;47(2-3)85-118.
doi:10.1016/s0162-3109(00)00188-0.
\204\ RAYOS (prednisone) [prescribing information]. Lake Forest,
IL: Horizon Therapeutics USA, Inc.; 2019.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or different MS-DRG, the applicant acknowledged that
ENSPRYNG\TM\ may be assigned to the same MS-DRG when compared to
existing technology. Per the applicant, cases representing patients who
may be eligible for treatment with ENSPRYNG\TM\ map to MS-DRGs 058,
059, and 060.
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 the use of ENSPRYNG\TM\ may not involve the treatment of
the same or similar patient population when compared with an existing
technology because: (1) Current technologies such as SOLIRIS[supreg]
may be contraindicated in patients with unresolved serious Neisseria
meningitidis infections; and (2) SOLIRIS[supreg] and UPLIZNA[supreg]
are administered as IV infusions which not all patients may be willing
to receive.
In summary, the applicant asserted ENSPRYNG\TM\ meets the newness
criterion because it is the only treatment for NMOSD that works
specifically by suppressing IL-6 signaling, and because it may not
involve the treatment of the same or similar patient population as
existing technology.
In the proposed rule (86 FR 25253), we noted that the applicant
stated that the use of ENSPRYNG\TM\ may not involve treatment of the
same or similar patient population when compared to SOLIRIS[supreg]
with regard to the treatment of patients with unresolved serious
Neisseria meningitidis infection and with regard to the treatment of
patients unwilling to receive an IV infusion. However, we questioned if
UPLIZNA[supreg] may also be a treatment option for patients with
meningococcal disease. We further questioned whether patients who are
unwilling to receive an IV infusion would constitute a new patient
[[Page 45021]]
population for NMOSD. We invited public comment on whether ENSPRYNG\TM\
involves the treatment of the same or similar patient population when
compared to existing technologies.
We invited public comments on whether ENSPRYNG\TM\ is substantially
similar to other technologies and whether ENSPRYNG\TM\ meets the
newness criterion.
Comment: We received a public comment regarding the newness
criterion. The commenter stated that ENSPRYNG\TM\ is not substantially
similar to UPLIZNA[supreg]. The commenter explained that
UPLIZNA[supreg] and ENSPRYNG\TM\ have different mechanisms of action.
The commenter stated that while ENSPRYNG\TM\'s mechanism of action
involves the binding and blocking of soluble and membrane-bound IL-6
receptors to inhibit IL-6 signaling, UPLIZNA[supreg]'s mechanism of
action involves binding to CD19, a cell surface antigen present on pre-
B and mature B lymphocytes, and results in antibody-dependent, cell-
mediated B cell depletion. The commenter also explained that
UPLIZNA[supreg] and ENSPRYNG\TM\ are not substantially similar because
UPLIZNA[supreg] is the only NMOSD treatment that is administered twice
per year, after two initial start-up doses. The commenter stated that
the maintenance dose schedule of twice per year, following the initial
start-up doses, presents an important benefit for NMOSD patients
wishing to receive treatment once every six months and for patients who
do not wish to or are unable to self-administer injections. Finally,
the commenter responded to CMS' request for information on whether
UPLIZNA[supreg] is a treatment option for NMOSD patients with
meningococcal disease. The commenter stated that UPLIZNA[supreg] is not
contraindicated in patients with unresolved serious Neisseria
meningitidis infections and clarified that this was not a serious
adverse event reported during the Phase 3 clinical trials. The
commenter concluded that based on the different mechanisms of action,
routes of administration, and recommended dosing schedules for
maintenance treatment, UPLIZNA[supreg] and ENSPRYNG\TM\ are not
substantially similar.
The applicant also submitted a comment addressing concerns raised
by CMS in the proposed rule regarding whether ENSPRYNG\TM\ meets the
newness criterion. In response to our concerns that UPLIZNA[supreg] may
also be a treatment option for patients with meningococcal disease, the
applicant stated that UPLIZNA[supreg] may or may not be an option for
NMOSD patients with meningococcal disease. However, the applicant
pointed out that although UPLIZNA[supreg] is not specifically
contraindicated in patients with meningococcal disease, its prescribing
information warns prescribers about PML, which has been observed in
patients treated with other B-cell-depleting antibodies and other
therapies that affect immune competence, like UPLIZNA[supreg]. In
response to our concerns regarding whether patients who are unwilling
to receive an IV infusion constitute a new patient population for
NMOSD, the applicant stated that ENSPRYNG\TM\ is the only FDA-approved
option for NMOSD patients that are unwilling or unable to receive
infusions, perhaps due to difficulties associated with their venous
access.
Response: We appreciate the commenters' input. Based on the
comments received and the information submitted as part of the FY 2022
new technology add-on payment application for ENSPRYNG\TM\, as
discussed in the proposed rule (86 FR 25070 through 25790) and in this
final rule, we concur with the comments received that ENSPRYNG\TM\ has
a unique mechanism of action when compared to existing technologies
because the other technologies are not characterized by their binding
and blocking of soluble and membrane-bound IL-6 receptors to inhibit
IL-6 signaling, as ENSPRYNGTM's mechanism of action does
and, therefore, we believe that ENSPRYNGTM is not
substantially similar to existing treatment options. However, we note
that we disagree with the applicant that ENSPRYNGTM does not
involve the treatment of the same or similar patient population as
existing technologies for two reasons. As the first commenter stated,
UPLIZNA[supreg], another treatment for NMOSD, is not contraindicated in
patients with unresolved serious Neisseria meningitidis infections, and
therefore, may also be a treatment option for patients with
meningococcal disease. In addition, the applicant noted that existing
technologies are administered via IV infusion, which not all patients
may be willing or able to receive. We do not agree that patients who
are unwilling to receive an IV infusion constitute a new patient
population for NMOSD. Additionally, although IV infusion may be
difficult to administer for some patients, we are not aware of cases
where it is impossible.
Therefore, we believe ENSPRYNG\TM\ is not substantially similar to
existing treatment options and meets the newness criterion. We consider
the beginning of the newness period to commence when ENSPRYNG\TM\
became commercially available, on August 24, 2020.
With regard to the cost criterion, the applicant provided two cost
analyses, with the first being an update of the analysis used in FY
2021 by the applicant for SOLIRIS[supreg], which is also indicated for
NMOSD, and the second which is specific to ENSPRYNG[supreg].
Under the first analysis, the applicant searched the FY 2019 MedPAR
database for cases reporting ICD-10-CM code G36.0 in the primary and/or
admitting position, which resulted in 583 cases. The applicant imputed
one case where an MS-DRG had a case volume lower than 11, resulting in
556 cases mapping to 30 MS-DRGs. The applicant stated that it
restricted the analysis to MS-DRGs 058, 059, and 060, which accounted
for 92.1% of all cases identified. The applicant also excluded cases
that were not included in the FY 2021 Proposed Rule Impact File from
this analysis, resulting in a final case count of 466 cases mapping to
three MS-DRGs. Using a CCR of 0.343 (national other services average
CCR), the applicant then removed all charges in the drug cost center,
all charges in the blood cost center, and an additional $12,000 of cost
for plasma exchange procedural costs for cases with non-zero charges in
the blood cost center, for charges for related and prior technologies.
The applicant applied an inflation factor of 13.1%, which per the
applicant is the outlier charge inflation factor used in the FY 2021
IPPS/LTCH PPS final rule, to update the standardized charges from FY
2019 to FY 2021. We note that the applicant appears to have used the FY
2021 IPPS/LTCH PPS proposed rule inflation factor rather than the 2-
year inflation factor from the FY 2021 IPPS/LTCH PPS final rule of 13.2
percent (85 FR 59038), which would have increased the inflated charges.
Finally, the applicant added charges for the technology by multiplying
the cost of ENSPRYNG\TM\, based on an average of 1.22 doses per
patient, by the inverse of the national average drug CCR of 0.187 from
the FY 2021 IPPS/LTCH PPS final rule (85 FR 58601). The applicant
calculated a final inflated average case-weighted standardized charge
per case of $150,154, which exceeds the case-weighted threshold of
$47,813.
For the second analysis, the applicant used the same sample of
cases (466) from the first analysis, as identified in the FY 2019
MedPAR database with the ICD-10-CM code G36.0 and with the same sample
restrictions. In this analysis, the applicant did not remove
[[Page 45022]]
charges for related or prior technologies because, per the applicant,
ENSPRYNG\TM\ is anticipated to neither replace plasma exchange nor be
used as a monotherapy in all patients. The applicant standardized and
inflated the charges, as well as added charges for ENSPRYNG\TM\ using
the same methodology as the first analysis, described previously. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $175,021, which exceeded the case-
weighted threshold of $47,813. The applicant asserted that ENSPRYNG\TM\
meets the cost criterion based on these analyses.
Based on the information provided by the applicant, we stated that
it was uncertain to us why the national other services average CCR was
used to inflate costs to charges in the first analysis when the
applicant indicated that it removed charges from the drugs cost center
and blood cost center. We sought public comment on whether this or
another CCR, such as a CCR for drugs or blood and blood products, would
be more appropriate. Furthermore, in the event that a MS-DRG has fewer
than 11 cases, we stated that the applicant should impute a minimum
case number of 11.
We invited public comments on whether ENSPRYNG\TM\ meets the cost
criterion, including whether the use of another CCR would substantially
alter the results of the applicant's analysis.
Comment: The applicant submitted a comment addressing the concerns
raised by CMS in the proposed rule regarding whether ENSPRYNG\TM\ meets
the cost criterion. The applicant reiterated that CMS was provided with
two cost analyses in its original application: An updated version of
the analysis used in FY 2021 by the new technology add-on payment
applicant for SOLIRIS[supreg] and a second analysis that was the
applicant's original work and aligned more closely with how
ENSPRYNG\TM\ would be used. The applicant first noted the following
updates to both analyses per CMS' feedback: (1) Imputing a minimum case
number of 11 and (2) using the 2-year inflation factor from the FY 2021
IPPS/LTCH PPS final rule of 13.2 percent. The applicant then addressed
CMS' concern regarding the appropriateness of the CCR used to inflate
cost to charges in these analyses. With respect to the first analysis,
the applicant indicated that CMS accepted the use of the ``other
services'' national average cost-to-charge ratio for SOLIRIS[supreg]
and that its use in the first scenario is therefore appropriate. The
applicant noted that while a different CCR (such as the CCR for drugs
or blood and blood products, as suggested by CMS) might be more
appropriate, it provided CMS with the first analysis for contextual
purposes only and did not want to comment on the validity of the cost
analysis for SOLIRIS[supreg]. With respect to the second analysis, the
applicant maintained that since ENSPRYNGTM is not
anticipated to replace plasma exchange or be used as a monotherapy in
all patients, there are no charges to remove. Per the applicant, the
issue of which CCR is more appropriate to use when removing charges is
therefore moot, and did not apply to the second analysis.
After following the methodology described previously with the
exception of the imputed case value of 11 and updated inflation factor,
the applicant presented the results of the revised cost analyses by MS-
DRG.
[GRAPHIC] [TIFF OMITTED] TR13AU21.173
[[Page 45023]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.174
The applicant stated that, under both revised analyses, the average
case-weighted standardized charge per case exceeded the revised case-
weighted threshold and therefore ENSPRYNG\TM\ meets the cost criterion.
Response: We thank the applicant for submitting its comments
addressing the concerns we raised in the FY 2022 IPPS/LTCH PPS proposed
rule (86 FR 25070 through 25104), including with respect to the use of
the ``other services'' CCR, and its submission of a revised cost
analysis. Based on the information provided by the applicant, because
the final inflated average case-weighted standardized charge per case
exceeded the case-weighted threshold of amount in both scenarios, we
agree with the applicant that ENSPRYNG\TM\ meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that ENSPRYNG\TM\ represents a substantial clinical
improvement in the following ways: (1) It significantly improves
clinical outcomes relative to services or technologies previously
available for the treatment of NMOSD in adult patients who are AQP4-IgG
positive; (2) these improvements are not accompanied by serious safety
concerns; (3) ENSPRYNG\TM\ is the only FDA-approved treatment for NMOSD
that is subcutaneously administered; \205\ and (4) the totality of
circumstances demonstrates ENSPRYNG\TM\, relative to technologies
previously available, substantially improves the treatment of Medicare
beneficiaries. The applicant submitted two recent studies to support
their claims of substantial clinical improvement over existing
technologies.
---------------------------------------------------------------------------
\205\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
---------------------------------------------------------------------------
The SAkuraStar (NCT02073279) \206\ study was a Phase 3, double-
blind, placebo-controlled, parallel-group trial at 44 investigational
sites in 13 countries to assess the safety and efficacy of ENSPRYNG\TM\
monotherapy in patients with NMOSD. 95 (57%) of 168 screened
participants aged 18-74 years with AQP4-IgG positive or negative NMOSD
met the inclusion criteria and were randomly assigned (2:1) to
treatment with ENSPRYNG\TM\ 120mg (n = 63) or visually matched placebo
(n = 32). Inclusion criteria included participants who had experienced
at least one documented NMOSD attack or relapse in the previous 12
months and had a score of 6.5 or less on the Expanded Disability Status
Scale, while exclusion criteria included clinical relapse 30 days or
fewer before baseline. The primary endpoint was time to the first
protocol-defined relapse, based on the intention-to-treat (ITT)
population (AQP4-IgG positive and negative) (n=95), and analyzed with
stratification for two randomization factors (previous therapy for
prevention of attacks and nature of the most recent attack). Treatment
in both arms was given subcutaneously at weeks 0, 2, 4, and every 4
weeks thereafter. The double-blind phase was due to last until 44
protocol-defined relapses occurred or 1.5 years after random assignment
of the last patient enrolled, whichever occurred first. Participants
could enter an open-label phase after the occurrence of a protocol-
defined relapse or at the end of the double-blind phase. Protocol-
defined relapses occurred in 19 (30%) patients receiving satralizumab
and 16 (50%) receiving placebo (hazard ratio 0.45, 95% CI 0.23-0.89; p
= 0.018). 473.9 adverse events per 100 patient-years occurred in the
satralizumab group and 495.2 per 100 patient-years in the placebo
group. The authors noted that the incidence of serious adverse events
and adverse events leading to withdrawal was similar between groups.
---------------------------------------------------------------------------
\206\ Traboulsee A, Greenberg BM, Bennett JL, et al. Safety And
Efficacy of Satralizumab Monotherapy In Neuromyelitis Optica
Spectrum Disorder: A Randomised, Double-Blind, Multicentre, Placebo-
Controlled Phase 3 Trial. Lancet Neurol. 2020;19(5):402-412.
doi:10.1016/S1474-4422(20)30078-8.
---------------------------------------------------------------------------
According to the applicant, this study demonstrated that the time
to the first relapse was significantly longer in ENSPRYNG\TM\ treated
patients compared with patients who received a placebo (risk reduction,
55%; hazard ratio, 0.45 (95% CI 0.23, 0.89); p = 0.0184). In the AQP4-
IgG positive population, there was a 74% risk reduction and a hazard
ratio of 0.26 (95% CI 0.11, 0.63; p = 0.0014). The results in the
subgroup of AQP4-IgG negative patients were not statistically
significant.207 208 The annualized relapse
[[Page 45024]]
rate for AQP4-IgG positive patients was 0.1 (95% CI, 0.05-0.2) in the
ENSPRYNG\TM\ group and 0.5 (95% CI, 0.3-0.9) in the placebo group.\209\
The proportion of relapse-free AQP4-IgG positive patients at week 96
was 77% in the ENSPRYNG\TM\ group and 41% in the placebo group.\210\
According to the applicant, the study concluded that ENSPRYNG\TM\
monotherapy reduced the rate of NMOSD relapse compared with placebo in
the overall trial population and had a favorable safety profile.
---------------------------------------------------------------------------
\207\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
Traboulsee A, et al. Efficacy of satralizumab monotherapy in
prespecified subgroups of SAkuraStar, a phase 3 study in patients
with neuromyelitis optica spectrum disorder. Oral Presentation at:
Annual Americas Committee for Treatment and Research in Multiple
Sclerosis (ACTRIMS) Forum; West Palm Beach, FL, USA; February 27-29,
2020.
\208\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
Traboulsee A, et al. Efficacy of satralizumab monotherapy in
prespecified subgroups of SAkuraStar, a phase 3 study in patients
with neuromyelitis optica spectrum disorder. Oral Presentation at:
Annual Americas Committee for Treatment and Research in Multiple
Sclerosis (ACTRIMS) Forum; West Palm Beach, FL, USA; February 27-29,
2020.
\209\ Traboulsee A, et al. Efficacy of satralizumab monotherapy
in prespecified subgroups of SAkuraStar, a phase 3 study in patients
with neuromyelitis optica spectrum disorder. Oral Presentation at:
Annual Americas Committee for Treatment and Research in Multiple
Sclerosis (ACTRIMS) Forum; West Palm Beach, FL, USA; February 27-29,
2020.
\210\ Traboulsee A, Greenberg BM, Bennett JL, et al. Safety And
Efficacy of Satralizumab Monotherapy In Neuromyelitis Optica
Spectrum Disorder: A Randomised, Double-Blind, Multicentre, Placebo-
Controlled Phase 3 Trial. Lancet Neurol. 2020;19(5):402-412.
doi:10.1016/S1474-4422(20)30078-8.
---------------------------------------------------------------------------
In the second Phase 3, randomized, double-blind, placebo-controlled
study submitted by the applicant, the SAkuraSky (NCT02028884) \211\
trial, 83 patients with NMOSD who were seropositive or seronegative for
AQP4-IgG were randomly assigned (1:1) to receive either 120 mg of
satralizumab (n=41) or placebo (n=42) administered subcutaneously at
weeks 0, 2, and 4 and every 4 weeks thereafter, in addition to stable
IST. The primary end point was the first protocol-defined relapse in a
time-to-event analysis. Key secondary end points were the change from
baseline to week 24 in the visual-analogue scale (VAS) pain score
(range, 0 to 100, with higher scores indicating more pain) and the
Functional Assessment of Chronic Illness Therapy-Fatigue (FACIT-F)
score (range, 0 to 52, with lower scores indicating more fatigue).
Safety was also assessed.
---------------------------------------------------------------------------
\211\ U.S. Department of Health and Human Services. Active Study
[verbar] Neuromyelitis Optica Spectrum Disorder. https://clinicaltrials.gov/ct2/results?cond=&term=NCT02028884&cntry=&state=&city=&dist=. Accessed
August 14, 2020.
---------------------------------------------------------------------------
The results of the SAkuraSky trial demonstrated that the median
treatment duration with satralizumab in the double-blind period was
107.4 weeks. Relapse occurred in 8 patients (20%) receiving
satralizumab and in 18 (43%) receiving placebo (hazard ratio, 0.38; 95%
confidence interval [CI], 0.16 to 0.88). Multiple imputations for
censored data (including patients who discontinued the trial, received
rescue therapy, had a change in baseline treatment, or were continuing
in the trial at the data-cutoff date) resulted in hazard ratios ranging
from 0.34 to 0.44 (with corresponding P values of 0.01 to 0.04). Among
the 55 AQP4-IgG-seropositive patients, relapse occurred in 11% of those
in the satralizumab group and in 43% of those in the placebo group
(hazard ratio, 0.21; 95% CI, 0.06 to 0.75); among 28 AQP4-IgG-
seronegative patients, relapse occurred in 36% and 43%, respectively
(hazard ratio, 0.66; 95% CI, 0.20 to 2.24). The between-group
difference in the change in the mean VAS pain score was 4.08 (95% CI, -
8.44 to 16.61); the between-group difference in the change in the mean
FACIT-F score was -3.10 (95% CI, -8.38 to 2.18). The rates of serious
adverse events and infections did not differ between groups.
In support of the applicant's claim that ENSPRYNG\TM\ significantly
improves clinical outcomes relative to services or technologies
previously available for the treatment of NMOSD in adult patients who
are AQP4-IgG positive, the applicant stated that patients treated with
ENSPRYNG\TM\ plus IST exhibited a significantly longer time to first
relapse when compared to placebo. This also included a risk reduction
of 62% in patients treated with ENSPRYNG\TM\ plus IST when compared
with patients who received a placebo plus IST and a 79% risk reduction
in the AQP4-IgG positive population. Results in the AQP4-IgG negative
patient subgroup were not statistically significant.\212\ The
proportion of relapse free AQP4-IgG positive patients at week 96 was
92% in ENSPRYNG\TM\ plus IST group and 53% in the placebo plus IST
group.\213\
---------------------------------------------------------------------------
\212\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
\213\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
---------------------------------------------------------------------------
According to the applicant's second claim, substantial improvements
in clinical efficacy are not accompanied by serious concerns. In the
SAkuraSky trial, 90% of patients in the ENSPRYNG\TM\ plus IST group had
at least one adverse event compared to 95% in the placebo plus IST
group.\214\ The safety profile of ENSPRYNG\TM\ in the OST period was
consistent with the double-blind period. There were no deaths or
anaphylactic reactions, rates of AEs and serious AEs did not increase
with longer exposure to ENSPRYNG\TM\; and the most frequently reported
AEs in the OST period were consistent with the double-blind
period.\215\
---------------------------------------------------------------------------
\214\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
\215\ Greenberg B, Seze JD, Fox E. et al. Safety of satralizumab
in neuromyelitis optica spectrum disorder (NMOSD): Results from the
open-label extension periods of SAkuraSky and SAkuraStar
Presentation at: Americas Committee for treatment and research in
Multiple Sclerosis (ACTRIMS); September 2020; Virtual
---------------------------------------------------------------------------
The applicant's third claim concerns the flexibility provided to
patients by the option to self-administer ENSPRYNG\TM\. According to
the applicant, ENSPRYNG\TM\ is the only FDA-approved treatment for
NMOSD that is administered subcutaneously.\216\ Once treatment is
initiated during inpatient hospital admission, upon discharge and
having received adequate training on how to perform the injection, an
adult patient/caregiver may administer all subsequent doses of
ENSPRYNG\TM\ at home if the treating physician determines that it is
appropriate and the adult patient/caregiver can perform the injection
technique. According to the applicant, self-administration provides the
patient the option to continue the therapy initiated in the hospital
while in the convenience of their own home, with reduced disruption to
daily life. The applicant stated that additionally, the option to self-
administer provides flexibility to patients, as they can bring their
medication with them while traveling without having to worry if there
is an infusion site nearby. The applicant claims this may potentially
reduce the rate of hospital readmissions.
---------------------------------------------------------------------------
\216\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
---------------------------------------------------------------------------
In their fourth claim, the applicant stated the totality of
circumstances otherwise demonstrate that ENSPRYNG\TM\, relative to
technologies previously available, substantially improves the treatment
of Medicare beneficiaries. The applicant asserted that a cross trial
comparison between ENSPRYNG\TM\ and SOLIRIS[supreg] (approved for new
technology add-on payment in FY 2021) cannot be made due to differences
in trial design and study population. However, the applicant noted the
following distinctions between ENSPRYNG\TM\ and SOLIRIS[supreg] and
their clinical trials. Per the applicant, the first distinction is that
in the registrational study for SOLIRIS[supreg], a higher proportion of
patients receiving SOLIRIS[supreg] than those receiving a placebo
discontinued their participation in the clinical trial (17% vs
6%).\217\
[[Page 45025]]
During the double-blind period of SAkuraSky trial, however, a total of
three patients (7%) in the ENSPRYNG\TM\ group and 10 patients (24%) in
the placebo group discontinued the trial agent.\218\ The applicant
stated that discontinuation of SOLIRIS[supreg] may be associated with
relapse and hospitalization. The second distinction made by the
applicant is that the prescribing information for ENSPRYNG\TM\ \219\
does not bear a black-box warning, in contrast to that of
SOLIRIS[supreg].\220\ The third distinction is that patients must be
vaccinated against Neisseria meningitidis before receiving
SOLIRIS[supreg] \221\ and no such requirement applies to
ENSPRYNGTM.\222\ The fourth and final distinction made by
the applicant highlights duration of treatment. In the SAkuraSky trial,
the mean period of treatment in the double-blind period was 94.1 72.6 weeks in the ENSPRYNGTM group and 66.0 61.4 weeks in the placebo group.\223\ However, the median trial
durations were shorter in the SOLIRIS[supreg] trial, at 90.93 and 43.14
weeks (minimum-maximum, 6.4-211.1 and 8.0-208.6) for the
SOLIRIS[supreg] and placebo groups, respectively.\224\
---------------------------------------------------------------------------
\217\ Pittock SJ, Berthele A, Fujihara K, et al. Eculizumab in
Aquaporin-4-Positive Neuromyelitis Optica Spectrum Disorder. N.
Engl. J. Med. 2019;381(7)614-625. doi:10.1056/nejmoa1900866.
\218\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
\219\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
\220\ SOLIRIS (eculizumab) [prescribing information]. Boston,
MA: Alexion Pharmaceuticals, Inc.; 2019.
\221\ SOLIRIS (eculizumab) [prescribing information]. Boston,
MA: Alexion Pharmaceuticals, Inc.; 2019.
\222\ ENSPRYNG (satralizumab) [prescribing information]. South
San Francisco, CA: Genentech USA, Inc.; 2020.
\223\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
\224\ Pittock SJ, Berthele A, Fujihara K, et al. Eculizumab in
Aquaporin-4-Positive Neuromyelitis Optica Spectrum Disorder. N.
Engl. J. Med. 2019;381(7)614-625. doi:10.1056/nejmoa1900866.
---------------------------------------------------------------------------
In connection with the applicant's fourth claim to support
substantial clinical improvement, the applicant stated that both the
SAkuraStar \225\ and SAkuraSky \226\ clinical trials included
comparator arms. In SAkuraStar, an exclusion criterion was IST use,
whereas in SAkuraSky, patients were permitted to continue baseline
treatment with a stable dose of the IST agents in addition to the trial
drug. This allowed the efficacy of ENSPRYNGTM to be assessed
both in patients who were receiving one of the IST agents for their
NMOSD and in the others who were receiving nothing at all. The
applicant stated that in contrast, SOLIRIS[supreg] was tested only in a
single Phase 3 clinical trial where the primary end point was the first
adjudicated relapse in the population of patients taking stable-dose
IST and either SOLIRIS[supreg] or placebo; the efficacy of
SOLIRIS[supreg] monotherapy was a sub analysis,\227\ and
UPLIZNA[supreg] was tested only in a single Phase 3 clinical trial as a
monotherapy with only a 28-week randomized, controlled period.\228\
According to the applicant, ENSPRYNGTM has received approval
by regulatory authorities in Japan,\229\ Canada, and Switzerland \230\
for the treatment of both adults and adolescents (12-17 years of age)
with NMOSD. The applicant asserted that patients in the
ENSPRYNGTM clinical trials likely are representative of
Medicare patients despite their mean ages (45.3 years for the
ENSPRYNGTM arm of SAkuraStar \231\ and 40.8 years for the
ENSPRYNGTM arm of SAkuraSky \232\) being less than 65, as
NMOSD is so severe that patients may qualify for disability accompanied
by Medicare benefits regardless of their age.\233\ The applicant
explained that a severe onset attack causing increased disability is
reported to occur in 45% of patients with NMOSD \234\ and that 52.4% of
US-based NMOSD patients report severe problems with mobility,\235\
which is consistent with definitions of disability used by the Social
Security Administration (SSA).\236\ Per the applicant, SSA maintains a
list of impairments considered severe enough to prevent gainful
activity. Though NMOSD is not listed, multiple sclerosis (MS) is,\237\
and the two conditions are frequently confused due to similarities
between clinical presentations.\238\ According to the applicant, the
SSA is open to allowing people to qualify for disability by showing
their condition is as severe as one that is on the list.\239\
---------------------------------------------------------------------------
\225\ Traboulsee A, Greenberg BM, Bennett JL, et al. Safety And
Efficacy of Satralizumab Monotherapy In Neuromyelitis Optica
Spectrum Disorder: A Randomised, Double-Blind, Multicentre, Placebo-
Controlled Phase 3 Trial. Lancet Neurol. 2020;19(5):402-412.
doi:10.1016/S1474-4422(20)30078-8.
\226\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019; 381(22)2114-2124. doi:10.1056/nejmoa1901747.
\227\ Pittock SJ, Berthele A, Fujihara K, et al. Eculizumab in
Aquaporin-4-Positive Neuromyelitis Optica Spectrum Disorder. N.
Engl. J. Med. 2019;381(7)614-625. doi:10.1056/nejmoa1900866.
\228\ Cree BAC, Bennett JL, Kim HJ, et al. Inebilizumab for the
treatment of neuromyelitis optica spectrum disorder (N-MOmentum): a
double-blind, randomised placebo-controlled phase \2/3\ trial.
Lancet 2019;394(10206)1352-1363. doi:10.1016/s0140-6736(19)31817-3.
\229\ F. Hoffmann-La Roche Ltd. Roche's ENSPRYNG (satralizumab)
Approved In Japan For Adults And Children With Neuromyelitis Optica
Spectrum Disorder. https://www.roche.com/media/releases/med-cor-2020-06-29.htm. Accessed August 14, 2020.
\230\ Heo Y. Satralizumab: First Approval. Drugs
2020;80(14)1477-1482. doi:10.1007/s40265-020-01380-2.
\231\ Traboulsee A, Greenberg BM, Bennett JL, et al. Safety And
Efficacy of Satralizumab Monotherapy In Neuromyelitis Optica
Spectrum Disorder: A Randomised, Double-Blind, Multicentre, Placebo-
Controlled Phase 3 Trial. Lancet Neurol. 2020;19(5):402-412.
doi:10.1016/S1474-4422(20)30078-8.
\232\ Yamamura T, Kleiter I, Fujihara K, et al. Trial of
Satralizumab in Neuromyelitis Optica Spectrum Disorder. N. Engl. J.
Med. 2019;381(22)2114-2124. doi:10.1056/nejmoa1901747.
\233\ Social Security Administration. Medicare Information.
https://www.ssa.gov/disabilityresearch/wi/medicare.htm. Accessed
September 10, 2020.
\234\ Kim S, Mealy MA, Levy M, et al. Racial differences in
neuromyelitis optica spectrum disorder. Neurology 2018;91(22)e2089-
e2099. doi:10.1212/wnl.0000000000006574.
\235\ Mealy MA, Boscoe A, Caro J, et al. Assessment of Patients
with Neuromyelitis Optica Spectrum Disorder Using the EQ-5D. Int. J.
MS Care 2018; 21(3)129-134. doi:10.7224/1537-2073.2017-076.
\236\ Social Security Administration. How You Qualify. https://www.ssa.gov/benefits/disability/qualify.html. Accessed October 2,
2020.
\237\ Social Security Administration. Disability Evaluation
Under Social Security. https://www.ssa.gov/disability/professionals/bluebook/11.00-Neurological-Adult.htm#11_09. Accessed September 10,
2020.
\238\ Etemadifar M, Nasr Z, Khalili B, Taherioun M, Vosoughi R.
Epidemiology of Neuromyelitis Optica In The World: A Systematic
Review And Meta-Analysis. Mult Scler Int. 2015;2015:174720.
doi:10.1155/2015/174720.
\239\ Social Security Administration. How You Qualify. https://www.ssa.gov/benefits/disability/qualify.html. Accessed October 2,
2020.
---------------------------------------------------------------------------
After reviewing the information submitted by the applicant as part
of its FY 2022 new technology add-on payment application for
ENSPRYNGTM, we noted that while the applicant provided data
comparing ENSPRYNGTM to placebo with or without IST, the
applicant did not provide data to demonstrate improved outcomes over
existing FDA approved treatments for NMOSD. While the applicant stated
reasons why a comparison could not be made, we stated that additional
information would help inform our assessment of whether
ENSPRYNGTM demonstrates a significant clinical improvement
over existing technologies for outcomes such as time to first relapse
and annual relapse rate. In addition, we stated that while we
understand that there may be potential benefits related to the self-
administrative delivery of ENSPRYNGTM, we questioned if the
benefits are related only to the outpatient administration of the
medication and whether they would demonstrate improved clinical
outcomes that represent a substantial clinical improvement in the
inpatient setting. We invited public comments on
[[Page 45026]]
whether ENSPRYNGTM meets the substantial clinical
improvement criterion.
Comment: We received several comments in support of the new
technology add-on payment application for ENSPRYNG\TM\ urging the
approval of this application to ensure that Medicare beneficiaries with
NMOSD will have timely access to appropriate treatment in the inpatient
setting for this devastating, rare, autoimmune disease. The commenters
highlighted the risk of relapse associated with NMOSD, and the current
practice of using ongoing treatment with medications that suppress the
immune system to prevent relapse from happening. The commenters
explained that approval of the new technology add-on payment for
ENSPRYNG\TM\ would minimize the risk of future relapses and potential
hospital readmissions by allowing patients to start on a safe and
effective maintenance treatment while admitted in the inpatient
setting. The commenters referenced the SAkuraStar and SAkuraSky
studies, summarized here and in the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25254 through 25256), as evidence that ENSPRYNG\TM\ is a safe
and effective treatment for NMOSD.
Response: We thank the commenters for sharing their perspective on
the new technology add-on payment application for ENSPRYNG\TM\ and have
taken these comments into consideration in our determination of
substantial clinical improvement, which is discussed later in this
section.
Comment: The applicant submitted a comment in response to the
concerns raised by CMS in the proposed rule regarding whether
ENSPRYNG\TM\ meets the substantial clinical improvement criterion (86
FR 25256). With regard to our concern that the applicant did not submit
data to demonstrate improved outcomes over existing FDA approved
treatments for NMOSD, the applicant commented that off-label (including
IST) therapies are the most appropriate comparator for CMS to use when
evaluating whether or not ENSPRYNG\TM\ is a substantial clinical
improvement because neither SOLIRIS[supreg] nor UPLIZNA[supreg] are
generally available to inpatient Medicare beneficiaries. The applicant
explained that because SOLIRIS[supreg] and UPLIZNA[supreg] did not have
claims in the Statistical Analytical File for CY 2020, the drugs were
unavailable in the inpatient setting, and therefore ENSPRYNG\TM\ should
not be compared against them for evidence of substantial clinical
improvement.
The applicant also commented that ENSPRYNG\TM\ represents a
substantial clinical improvement over existing technologies because it
is the only FDA-approved treatment for at least two subsets of NMOSD
patients who are ineligible for SOLIRIS[supreg] and UPLIZNA[supreg]:
Patients who are not currently vaccinated against Neisseria
meningitidis and patients at a higher risk of PML. The applicant stated
that ENSPRYNG\TM\ is the only FDA-approved treatment for NMOSD that
specifically addresses important components of NMOSD pathophysiology
without eliminating targeted components of the immune system. The
applicant explained that SOLIRIS[supreg] is contraindicated in patients
who are not currently vaccinated against Neisseria meningitidis.
Although the vaccination reduces the risk of meningococcal infection,
the applicant explained that the SOLIRIS[supreg] label states that
``life-threatening and fatal meningococcal infections have occurred in
patients treated with SOLIRIS[supreg].'' The applicant also argued that
UPLIZNA[supreg]'s mechanism of action in targeting B cells may impact
cellular reconstitution and long-term humoral memory, which cause
potential safety risks including hypogammaglobulinemia and enhanced
risk of infections like PML, a viral infection of the brain caused by
the JC virus.\240\ The applicant cited two technologies that CMS
approved for new technology add-on payment technologies, GORE[supreg]
TAG[supreg] (70 FR 47356 through 47359) and CardioWest \TM\ Temporary
Total Artificial Heart System (73 FR 48555 through 48557), as further
support that offering treatment options for patients otherwise
ineligible for currently available treatments constitutes substantial
clinical improvement.
---------------------------------------------------------------------------
\240\ Papadopoulos, MC et al. Treatment of neuromyelitis optica:
state-of-the-art and emerging therapies. Nat Rev Neurol 2014;10:493-
506.
---------------------------------------------------------------------------
The applicant also commented in response to our concerns in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25256) regarding whether the
benefits of ENSPRYNG\TM\ are related only to the outpatient
administration of the medication and our concern on whether those
benefits would demonstrate improved clinical outcomes that represent a
substantial clinical improvement in the inpatient setting. The
applicant commented that the benefits associated with the self-
administration of ENSPRYNG\TM\ are realized in both the inpatient and
outpatient settings, and therefore demonstrate improved clinical
outcomes in the inpatient setting. First, the applicant stated that the
benefits associated with the self-administration of ENSPRYNG\TM\ in the
outpatient setting directly confer benefits in the inpatient setting.
As an example, the applicant stated that self-administration of
ENSPRYNG\TM\ in the outpatient setting allows patients flexibility to
bring their medication with them when they travel without ensuring an
infusion site is near their destination. The applicant also explained
that due to the severity of NMOSD and its propensity to cause patients
experiencing a relapse to be hospitalized, and the clinically-proven
ability of ENSPRYNG\TM\ to reduce the incidence of relapse compared to
off-label IST treatments, its outpatient use may reduce
hospitalizations. Second, the applicant stated that ENSPRYNG\TM\ is the
only FDA-approved option in the inpatient setting for patients that are
unwilling or unable (perhaps due to difficulties associated with their
venous access) to receive IV infusions. Third, the applicant pointed
out that CMS has approved several technologies for the new technology
add-on payment that are used in both the inpatient and outpatient
settings, including DIFICIDTM (77 FR 53358), STELARA[supreg]
(82 FR 38129), CABLIVI[supreg] (84 FR 42208), BALVERSATM (84
FR 42242), ERLEADATM (84 FR 42247), XOSPATA[supreg] (84 FR
42260), XENLETA (85 FR 58732), TECENTRIQ[supreg] (85 FR 58684), and
IMFINZI[supreg] (85 FR 58684).
The applicant commented that CMS's past approval decisions on new
technology add-on payments and commentary support the approval of
ENSPRYNG\TM\'s application and stated that CMS appears to be taking a
new policy position regarding how an applicant demonstrates substantial
clinical improvement. The applicant states that at least one new
technology add-on payment applicant, SPRAVATO[supreg], has been
approved for new technology add-on payment based on that technology's
assertions of improved safety versus other existing treatment options.
The applicant also cited six technologies approved for new technology
add-on payment that the applicant believes did not submit studies in a
manner conducive to a demonstration of improved outcomes over existing
FDA-approved treatments or studies with any improved outcomes at all:
GIAPREZATM (83 FR 41342), IMFINZI[supreg] (85 FR 58684),
ZEMDRITM (83 FR 41334), BALVERSATM (84 FR 42242),
JAKAFITM (84 FR 422732), and BLINCYTOTM (80 FR
49451).
Response: We thank the applicant for its comment in response to our
concerns and providing additional information for us to consider. After
further review, we continue to have concerns as to
[[Page 45027]]
whether ENSPRYNG\TM\ meets the substantial clinical improvement
criterion to be approved for new technology add-on payments.
Specifically, the applicant did not provide data to demonstrate
improved outcomes over existing FDA approved treatments for NMOSD. The
applicant commented that the lack of utilization, as evidenced by the
absence of claims for SOLIRIS[supreg] and UPLIZNA[supreg] in the CY
2020 SAF, suggests that the drugs are unavailable in the inpatient
setting, and are therefore not the appropriate comparators for
ENSPRYNG\TM\. We disagree. Both SOLIRIS[supreg] and UPLIZNA[supreg] are
covered by Medicare, on the market, and, are therefore available for
Medicare beneficiaries in the inpatient setting. It appears that the
applicant is speculating with regard to the availability of the
existing technologies. Therefore, whether there were Medicare claims in
the CY 2020 SAF for SOLIRIS[supreg] and UPLIZNA[supreg] is not relevant
to whether these drugs are an appropriate comparator for the purposes
of substantial clinical improvement. We further disagree with the
applicant that the lack of claims in the CY 2020 SAF data calls into
question the degree of clinical improvement with which they are
associated. We note that SOLIRIS[supreg] demonstrated substantial
clinical improvement in their FY 2021 new technology application based
on clinical data. We make substantial clinical improvement
determinations based on the criteria at Sec. 412.87(b), and not based
on the utilization of a technology within the claims data. In addition,
while the applicant states that the manufacturer for SPRAVATO asserted
without providing supporting data that electroconvulsive therapy (ECT)
had limited availability and nevertherless was awarded new technology
add-on payments without providing a comparison to that comparator (84
FR 42247 through 42256), we note that we concluded that ECT was not an
appropriate comparator because of poor side effects and the clinical
challenges and difficulties arising from treatment with ECT which
contributed to the limited availability. In this case, we believe that
SOLIRIS[supreg] and UPLIZNA[supreg] do not have limited availability,
for the reasons noted previously.
While the commenter is correct that CMS has determined that prior
technologies, including GORE TAG[supreg] (70 FR 47356 through 47359)
and CardioWest \TM\ (73 FR 48555 through 48557), represented a
substantial clinical improvement because they offer a treatment option
for patients otherwise ineligible for currently available treatments,
we cannot conclude based on the information provided that ENSPRYNG\TM\
offers a treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments. We disagree with the
applicant's assertion that individuals who are not currently vaccinated
against Neisseria meningitidis and patients at a higher risk of PML
constitute individual patient populations that are unresponsive to, or
ineligible for, currently available treatments. First, vaccinations
against Neisseria meningitidis are safe and effective, recommended by
the CDC,\241\ and are required for SOLIRIS[supreg] treatment.
Individuals that are not vaccinated against Neisseria meningitidis are
not considered a separate patient population because eligibility can be
easily attained via a widely available vaccine and are also able to
receive treatment with UPLIZNA[supreg] which does not require a vaccine
as noted previously in this section. Second, a patient that is at a
higher risk of PML is not ineligible for UPLIZNA[supreg], as the
applicant stated, because patients at risk are not contraindicated from
using UPLIZNA[supreg], and therefore we conclude that having a higher
risk of developing PML does not create a population of patients that
are ineligible for UPLIZNA[supreg]. As described earlier in this
section, we also disagree that patients unwilling or unable to receive
an IV infusion constitute a new population. We note that patients with
acute NMOSD in the inpatient setting will require IV access for
treatment (that is, for IV corticosteroids, plasmapheresis, and/or
IST), so we believe that inpatients with NMOSD would not be unwilling
or unable to receive further IV therapies. For these reasons, unlike
GORE TAG[supreg] and CardioWestTM which demonstrated
treatment of patients with an unmet need, ENSPRYNG[supreg] does not
meet this criterion. Please refer to (70 FR 47356 through 47359) and
(73 FR 48555 through 48557) for a full discussion of how these
determinations were made.
---------------------------------------------------------------------------
\241\ CDC, ``Meningococcal: Who Needs to Be Vaccinated?''
https://www.cdc.gov/vaccines/vpd/mening/hcp/who-vaccinate-hcp.html,
last updated: July 26, 2019.
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With regard to the applicant's assertion that the self-
administration of ENSPRYNG[supreg] realizes benefits in the inpatient
and outpatient settings, we agree that subcutaneous drugs offer
additional flexibility over infusions. The applicant claims that this
flexibility may potentially reduce the rate of hospital readmissions,
but the applicant did not provide any data to support a reduction of
hospitalizations or other outcomes related to the form of drug
administration as compared to existing treatments. The applicant listed
examples of outcomes that can support a determination of substantial
clinical improvement from the regulation text at Sec. 412.87 such as
an improvement in quality of life and greater medication adherence or
compliance, stating that these are not restricted to demonstration of
benefits in the inpatient setting; however, the applicant did not
demonstrate that ENSPRYNG[supreg] confers these benefits. While we have
granted new technology add-on payments to technologies that are given
in both the inpatient and outpatient settings, we note that these
technologies demonstrated substantial clinical improvement by
demonstrating outcomes superior to the standard of care. Please see a
full discussion of how these determinations were made at 77 FR 53350
through 53358, 82 FR 38125 through 38129, 84 FR 42201 through 42208, 84
FR 42237 through 42242, 84 FR 42242 through 42247, 84 FR 42256 through
42260, and 85 FR 58672 through 58684.
Finally, we disagree that we are taking a new policy position with
regard to how an applicant demonstrates substantial clinical
improvement. With all applications, from the time the application is
submitted until the final rule, we make a concerted effort to gather
all of the information necessary to make an informed decision with
regard to substantial clinical improvement. We rigorously review each
application with our medical officers and clinical staff to determine
whether a technology represents a substantial clinical improvement over
existing technologies. We provide concerns in the proposed rule for
each technology to ensure transparency with regard to our review, and
applicants have the opportunity to address these concerns prior to the
final rule in the comment period. With regard to the applicant's
reference to other new technology add-on payment applications that were
previously approved to demonstrate why ENSPRYNG\TM\ should be approved,
we note that every application is evaluated on its own data and merits
to determine whether it meets the new technology add-on payment
criterion for substantial clinical improvement. In listing examples of
various previously approved technologies, it appeared that the
applicant did not consider the differences between applications, as
well as the variations in currently
[[Page 45028]]
available technologies an applicant is compared against for purposes of
showing substantial clinical improvement. For example, the applicant
cited IMFINZI[supreg] as an example of a new technology add-on payment
approval that, per the applicant, did not submit studies in a manner
conducive to a demonstration of improved outcomes over existing FDA-
approved treatments or studies with any improved outcomes at all.
IMFINZI[supreg] was approved for FY 2021 new technology add-on payment
after CMS concluded that it met the criteria, including demonstrating a
substantial clinical improvement over existing technologies by being
one of the first two treatments (the second being TECENTRIQ[supreg], of
which the applicant is also the manufacturer) to show improved overall
survival in the treatment of patients with extensive-stage small cell
lung cancer (ES-SCLC) in more than 20 years (85 FR 58672 through
58684). CMS reached this conclusion after reviewing data submitted by
both IMFINZI[supreg] and TECENTRIQ[supreg] in their applications and
during the comment period, including data that showed a sustained
overall survival (OS) benefit in combination with SOC chemotherapy as
compared to SOC chemotherapy+placebo. CMS did not require the two new
treatments to demonstrate superiority over each other as they were
determined to be substantially similar. Per our policy, because the
applications were submitted for review in the same year, and because we
believed they were substantially similar to each other, we considered
both sets of clinical data in making a determination, and we did not
believe that it would be possible to choose one set of data over
another set of data in an objective manner. Accordingly, CMS disagrees
with the applicant's claim that CMS approved IMFINZI[supreg] without a
finding of substantial clinical improvement over existing technologies.
After review of the information submitted by the applicant as part
of its FY 2022 new technology add-on payment application for
ENSPRYNG\TM\ and consideration of the comments received, for the
reasons discussed in the proposed rule and in this final rule, we are
unable to determine that ENSPRYNG\TM\ meets the substantial clinical
improvement criterion, and therefore we are not approving new
technology add-on payments for ENSPRYNG\TM\ for FY 2022.
g. ABECMA[supreg] (idecabtagene vicleucel)
Celgene Corporation, a wholly owned subsidiary of Bristol-Myers
Squibb (BMS), submitted an application for new technology add-on
payment for ABECMA[supreg] for FY 2022. ABECMA[supreg] is a B-cell
maturation antigen (BCMA)-directed genetically modified autologous
chimeric antigen receptor (CAR) T-cell immunotherapy for the treatment
of adult patients with relapsed or refractory (RR) multiple myeloma
(MM) (RRMM) who have received at least four prior therapies including
an immunomodulatory agent (IMiD), a proteasome inhibitor (PI), and an
anti-CD38 antibody (for example, triple-class-exposed). ABECMA[supreg]
is expected to be a 5th line plus (5L+) treatment.
Multiple myeloma (MM) is typically characterized by the neoplastic
proliferation of plasma cells producing a monoclonal immunoglobulin.
The plasma cells proliferate in the bone marrow and can result in
extensive skeletal destruction with osteolytic lesions, osteopenia,
and/or pathologic fractures. The diagnosis of MM is often suspected
because of one (or more) of the following clinical presentations:
Bone pain with lytic lesions discovered on routine skeletal
films or other imaging modalities
An increased total serum protein concentration and/or the
presence of a monoclonal protein in the urine or serum
Systemic signs or symptoms suggestive of malignancy, such as
unexplained anemia
Hypercalcemia, which is either symptomatic or discovered
incidentally
Acute renal failure with a bland urinalysis or rarely
nephrotic syndrome due to concurrent immunoglobulin light chain (AL)
amyloidosis
It is important to distinguish MM both from other causes of these
clinical presentations and from other plasma cell dyscrasias for the
purposes of prognosis and treatment.\242\ Data from the US
Surveillance, Epidemiology, and End Results (SEER) registry estimate
32,000 new cases of MM and 13,000 deaths from MM annually in the US.
This correlates with an annual incidence of approximately 7 per 100,000
men and women per year. MM is largely a disease of older adults. The
median age at diagnosis is 65 to 74 years. MM is also slightly more
frequent in men than in women (approximately 1.4:1). MM is associated
with substantial morbidity and mortality \243\ and approximately 25% of
patients have a median survival of 2 years or less.\244\
---------------------------------------------------------------------------
\242\ Laubauch, J.P. (2021). Multiple myeloma: Clinical
features, laboratory manifestations, and diagnosis. UptoDate.
Available from https://www.uptodate.com/contents/multiple-myeloma-
clinical-features-laboratory-manifestations-and-
diagnosis?search=multiple%20myeloma&source=search_result&selectedTitl
e=1~150&usage_type=default&display_rank=1.
\243\ R?owan AJ, Allen C, Barac A, et al. Global Burden of
Multiple Myeloma: A Systematic Analysis for the Global Burden of
Disease Study 2016. JAMA Oncol. 2018;4(9):1221-1227. doi:10.1001/
jamaoncol.2018.2128.
\244\ Biran, N., Jagannath, S., Risk Stratification in Multiple
Myeloma, Part 1: Characterization of High-Risk Disease 2013.
Clinical Adv in Hematology & Oncology 11(8); 489-503.
---------------------------------------------------------------------------
With respect to the newness criterion, ABECMA[supreg] received FDA
approval on March 26, 2021, and is indicated for the treatment of adult
patients with relapsed or refractory multiple myeloma after four or
more prior lines of therapy, including an immunomodulatory agent, a
proteasome inhibitor, and an anti-CD38 monoclonal antibody. A single
dose of ABECMA[supreg] contains a cell suspension of 300 to 460 x 106
CAR T-cells.
The applicant submitted a request for unique ICD-10-PCS codes that
describe the administration of ABECMA[supreg] at the September 2020
Coordination and Maintenance Committee meeting. The following codes
were approved to describe procedures involving the administration of
ABECMA[supreg]: XW033K7 (Introduction of idecabtagene vicleucel
immunotherapy into peripheral vein, percutaneous approach, new
technology group 7) and XW043K7 (Introduction of idecabtagene vicleucel
immunotherapy into central vein, percutaneous approach, new technology
group 7). These codes will be effective starting October 1, 2021.
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 respect to whether a product uses the same or a similar
mechanism of action when compared to an existing technology to achieve
a therapeutic outcome, the applicant asserted that ABECMA[supreg] does
not use the same or similar mechanism of action as other therapies
approved to treat 4L+ RRMM or CAR T-cell therapies approved to treat
different diseases. According to the applicant, with regard to its
mechanism of action, ABECMA[supreg] is a chimeric antigen receptor
(CAR)-positive T cell therapy targeting B-cell maturation antigen
(BCMA), which is expressed on the surface of normal and malignant
plasma cells. The CAR construct includes an anti-BCMA scFv-targeting
domain for antigen specificity, a transmembrane domain, a CD3-zeta T
[[Page 45029]]
cell activation domain, and a 4-1BB costimulatory domain. Antigen-
specific activation of ABECMA[supreg] results in CAR-positive T cell
proliferation, cytokine secretion, and subsequent cytolytic killing of
BCMA-expressing cells.
According to the applicant, with respect to the non-CAR T-cell
therapies to treat 4L+ RRMM, specifically Xpovio[supreg], Blenrep, and
chemotherapy, ABECMA[supreg]'s mechanism of action is different because
it is a CAR T-cell therapy. The applicant stated that the mechanism of
action for Xpovio[supreg] is reversible inhibition of nuclear export of
tumor suppressor proteins (TSPs), growth regulators, and mRNAs of
oncogenic proteins by blocking exportin 1 (XPO1). XPO1 inhibition by
Xpovio[supreg] leads to accumulation of TSPs in the nucleus, reductions
in several oncoproteins, such as c[hyphen]myc (a ``master regulator''
which controls many aspects of cellular growth regulation and cellular
metabolism) and cyclin D1, cell cycle arrest, and apoptosis of cancer
cells. The applicant stated that Blenrep's mechanism of action is cell
destruction via microtubule inhibition, where the microtubule inhibitor
is conjugated to a BCMA-specific antibody (antibody-drug conjugate).
The applicant further stated that the mechanism of action for
chemotherapy regimens generally is disruption of normal processes
required for cell survival, such as deoxyribonucleic acid (DNA)
replication and protein synthesis or degradation.
With respect to the mechanism of action of other currently FDA
approved CAR T-cell therapies, according to the applicant, there are no
other FDA approved CAR T-cell therapies that are indicated for
treatment of RRMM with the same or similar mechanism of action as
ABECMA[supreg]. The applicant stated that CAR T-cell therapies employ a
unique mechanism of action which modifies the patient's own T-cell to
express a chimeric antigen receptor (CAR) that programs T-cells to
destroy cells that express a specific target. In the case of
ABECMA[supreg], this target is BCMA, which is a protein that is highly
expressed on the surface of MM cells making it an ideal target for the
treatment of MM. The applicant asserted that the key feature that
distinguishes ABECMA[supreg] from CD-19 directed CAR T-cell therapies
is the BCMA targeting domain. According to the applicant,
ABECMA[supreg]'s BCMA targeting domain means that ABECMA[supreg] has a
completely different mechanism of action from other currently FDA
approved CAR T-cell therapies. In its application, the applicant
asserted that since there are currently no FDA approved anti-BCMA CAR
T-cell therapies, if approved, ABECMA[supreg] is the first CAR T-cell
therapy approved for the treatment of RRMM and the only approved CAR T-
cell therapy with a BCMA targeting domain which makes it unique as
compared to other currently approved FDA therapies used to treat RRMM.
With regard to whether a product is assigned to the same DRG when
compared to an existing technology, the applicant stated that it
expects that cases involving the administration ABECMA[supreg] will be
assigned to the same MS-DRG, MS-DRG 018 (Chimeric Antigen Receptor
(CAR) T-cell Immunotherapy), as other CAR T-cell therapies.
With regard to 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 asserted that, if FDA approved, ABECMA[supreg] will be the
first and only anti-BCMA CAR T-cell therapy available to treat RRMM.
The applicant further asserted that ABECMA[supreg] would be indicated
for a broader population than other currently FDA-approved available
therapies, specifically multiple myeloma patients having received four
prior therapies.
In summary, according to the applicant, because ABECMA[supreg] has
a unique mechanism of action when compared to other currently FDA
approved treatments for RRMM, and does not involve the treatment of the
same or similar type of disease (RRMM) or the same or similar patient
population (triple-class-exposed adult patients with RRMM), the
technology is not substantially similar to an existing technology and
therefore meets the newness criterion. However, we questioned whether
ABECMA[supreg]'s mechanism of action may be similar to that of
ciltacabtagene autoleucel, another CAR T-cell therapy for which an
application for new technology add-on payments was submitted for FY
2022 as discussed in the proposed rule. Both ABECMA[supreg] and
ciltacabtagene autoleucel seem to be intended for similar patient
populations; multiple myeloma patients with three or more prior
therapies, and would involve the treatment of the same conditions;
adult patients with relapsed or refractory multiple myeloma.
We indicated that we were interested in information on how these
two technologies may differ from each other with respect to the
substantial similarity criteria and newness criterion, to inform our
analysis of whether ABECMA[supreg] and ciltacabtagne autoleucel, if
approved by July 1, 2021, are substantially similar to each other and
therefore should be considered as a single application for purposes of
new technology add-on payments.
We invited public comments on whether ABECMA[supreg] is
substantially similar to an existing technology and whether it meets
the newness criterion.
Comment: A few commenters encouraged CMS to consider assigning new
technology add-on payments for new CAR T-cell therapies including
idecabtagene vicleucel to ensure patient access.
Another commenter disagreed with CMS that ABECMA[supreg] would not
be considered ``new'' for purposes of new technology add-on payment.
The commenter supported that this product is different from the
currently approved products treating patients with multiple myeloma and
therefore supported that ABECMA[supreg] receive new technology add-on
payment status.
Response: We appreciate the input from the commenters and the
information they have highlighted, and we have taken these comments
into consideration in our final decision, which is discussed later in
this section.
Comment: In response to CMS' concerns for the substantial
similarity criterion, the applicant submitted a comment. The applicant
asserted that ABECMA[supreg] is currently the only FDA approved CAR T-
cell therapy for the treatment of adult patients with RRMM after four
or more prior lines of therapy and the only CAR T-cell therapy approved
for the treatment of multiple myeloma. The applicant stated that unlike
other therapies approved to treat 5L+ RRMM, ABECMA[supreg] modifies the
patient's own T-cell to express a CAR that programs T-cells to kill
cells that express a specific target, the BCMA. According to the
applicant, all other approved CAR T-cell therapies today target the
CD19 cell surface protein and are approved for the treatment of
specific types of Non-Hodgkins Lymphoma (NHL).\245\ The applicant
asserted that ABECMA[supreg] does not involve the treatment of the same
or similar type of disease or the same or similar patient population
when compared to existing technology because ABECMA[supreg] is the only
CAR T-cell therapy available for the treatment of patients with RRMM.
The applicant stated that the other treatments used in this space
utilize different technologies, including small molecule inhibitors of
[[Page 45030]]
cellular processes (XPOVIO[supreg]) or antibody drug conjugates
(BLENREP).\246\
---------------------------------------------------------------------------
\245\ Nair, R. and J. Westin, CAR T cells. Adv Exp Med Biol,
2020. 1244: p. 215-233.
\246\ Chari, A., et al., Oral Selinexor-Dexamethasone for
Triple-Class Refractory Multiple Myeloma. N Engl J Med, 2019.
381(8): p. 727-738; Lonial, S., et al., Belantamab mafodotin for
relapsed or refractory multiple myeloma (DREAMM-2): A two-arm,
randomised, open-label, phase 2 study. Lancet Oncol, 2020. 21(2): p.
207-221.
---------------------------------------------------------------------------
In regard to CMS' concern whether ABECMA[supreg] and ciltacabtagne
autoleucel are similar, the applicant commented that ciltacabtagene
autoleucel is not yet FDA approved and is unlikely to be FDA approved
by July 1, 2021, as its FDA Prescription Drug User Fee Act target
action date has been set for November 29, 2021.\247\ The applicant
stated that CMS should evaluate ABECMA[supreg]'s new technology add-on
payment application on its own and should grant new technology add-on
payment status effective October 1, 2021, in order to ensure Medicare
beneficiary access.
---------------------------------------------------------------------------
\247\ ``U.S. Food and Drug Administration Grants BCMA CAR-T
Cilta-cel Priority Review for the Treatment for Relapsed/Refractory
Multiple Myeloma.'' Legend Biotech Corporation, May 26, 2021. Press
release.
---------------------------------------------------------------------------
Response: After consideration of the public comments we received
and information submitted by the applicant in its application, we agree
with the applicant that ABECMA[supreg] is not used to treat the same or
similar type of disease (for the treatment of adult patients with
relapsed or refractory multiple myeloma after four or more prior lines
of therapy including an immunomodulatory agent, a proteasome inhibitor,
and an anti-CD38 monoclonal antibody) or a similar patient population
as currently available treatment options, and that ABECMA[supreg] does
not use the same or similar mechanism of action as other technologies
used for the treatment of the indication stated previously.
Furthermore, as previously noted, the applicant for ciltacabtagene
autoleucel withdrew its application prior to the issuance of this FY
2022 IPPS/LTCH PPS final rule, and we further note that the technology
as not yet been FDA approved as of the time of the development of this
final rule. We believe that the ABECMA[supreg] has a new mechanism of
action as it is the only CAR T-cell therapy available for the treatment
of adult patients with relapsed or refractory multiple myeloma after
four or more prior lines of therapy including an immunomodulatory
agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody
and, therefore, we believe that ABECMA[supreg] is not substantially
similar to existing technologies and meets the newness criterion. We
consider the beginning of the newness period to commence on the first
date ABECMA[supreg] received FDA approval, March 26, 2021.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR correction notice (December 1, 2020) file to identify
potential cases representing patients who may be eligible for treatment
using ABECMA[supreg]. In its analysis, the applicant identified a
primary cohort to assess whether this therapy met the cost criterion.
The following ICD-10-CM diagnosis codes were used to identify claims
involving multiple myeloma procedures.
[GRAPHIC] [TIFF OMITTED] TR13AU21.175
The applicant chose to limit its analysis to MS-DRG 016 (Autologous
Bone Marrow Transplant W CC/MCC or T-Cell Immunotherapy, MS-DRG 840
(Lymphoma & Non-Acute Leukemia W MCC) and MS-DRG 841 (Lymphoma & Non-
Acute Leukemia W CC). The claim search conducted by the applicant
resulted in 1,955 claims mapped to MS-DRG 016, MS-DRG 840 and MS-DRG
841 using the FY 2019 MedPAR. The applicant determined an average
unstandardized case weighted charge per case of $1,237,393. The
applicant used the MS-DRG-018 New Technology Threshold for FY 2022 from
the FY 2021 IPPS/LTCH PPS final rule.
The applicant removed all charges in the drug cost center for the
prior technology because, according to the applicant, it is not
possible to differentiate between different drugs on inpatient claims.
The applicant added that this is likely an overestimate of the charges
that would be replaced by the use of ABECMA[supreg]. The applicant then
standardized the charges using the FY 2019 final rule impact file.
Next, the applicant applied the 2-year inflation factor used in the FY
2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges
(1.13218). To calculate the charges for the new technology, the
applicant used a national average CCR for the CAR T-cell therapies of
0.295. To determine this alternative CCR for CAR T-cell therapies, the
applicant referred to the FY 2021 IPPS/LTCH PPS final rule AOR/BOR file
and calculated an alternative markup percentage by dividing the AOR
drug charges within DRG 018 by the number of cases to determine a per
case drug charge. The applicant then divided the drug charges per case
by $373,000, the acquisition cost of YESCARTA and KYMRIAH. The
applicant calculated a final inflated average case-weighted
standardized charge per case of $1,329,540, which exceeded the average
case-weighted threshold amount of $1,251,127 by $78,413. The applicant
stated that because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the therapy meets the cost criterion.
As noted in previous discussions, the submitted costs for CAR T-
cell therapies vary widely due to differences in provider billing and
charging practices for this therapy. Therefore, with regard to the use
of this data for purposes of calculating a CAR T-cell CCR, we stated in
the proposed rule that we were uncertain how representative this data
is for use in the applicant's cost analyses given the potential for
variability.
We stated that we continued to be interested in public comments
regarding the eligibility of CAR T-cell technologies for new technology
add-on payments when assigned to MS-DRG 018. As we have noted in prior
rulemaking with regard to the CAR T-cell therapies (83 FR 41172 and 85
FR 58603 through 58608), if a new MS-DRG were to be created, then
consistent with section 1886(d)(5)(K)(ix) of the Act,
[[Page 45031]]
there may no longer be a need for a new technology add-on payment under
section 1886(d)(5)(K)(ii)(III) of the Act.
We invited public comment on whether ABECMA[supreg] meets the cost
criterion.
Comment: We received a comment from MEDPAC which addressed the cost
criterion in general as it relates to CAR T-cell therapies. Please
refer to the response in the BREYANZI[supreg] application in section
II.F.X.c. of the preamble of this final rule for detailed discussion of
this issue.
Comment: We received multiple comments in response to our concern
for CAR T-cell therapy, the MS-DRG 018 assignment, and new technology
add-on payment eligibility.
Response: For a complete discussion of these comments and our
response, please see the BREYANZI[supreg] application in section
II.F.X.c. of the preamble of this final rule.
Comment: A few commenters suggested that CMS should establish a new
technology add-on payment pathway specific to gene therapies similar to
that of the QIDP and breakthrough device designation. These commenters
suggested that these new pathways will provide streamlined
opportunities for novel therapies to receive new technology add-on
payment under the IPPS. Some commenters stated that CMS should create a
category such as Regenerative Medicine Advanced Therapy (RMAT)
designation to meet the newness and substantial clinical improvement
new technology add-on payment criteria.
Response: We did not propose to add a new pathway to the new
technology add-on payment evaluation process. We believe this comment
is outside the scope of this rule.
Comment: In response to CMS' concerns, the applicant submitted
similar comments to those submitted by the applicant for
BREYANZI[supreg]. As discussed previously, the applicant stated in its
comment that CAR T-cell therapies that meet the cost and other criteria
for new technology add-on payment status should continue to be eligible
for new technology add-on payment status notwithstanding the creation
of MS-DRG 018. The applicant stated that there is still a need for new
technology add-on payment status for new CAR T-cell therapies, like
ABECMA[supreg], to ensure patient access. Further, the applicant stated
while the payment amount for MS-DRG 018 is certainly more aligned with
CAR T-cell therapy costs generally, ABECMA[supreg] exceeds the cost
threshold for MS-DRG 018, meaning that the reimbursement rate for MS-
DRG 018 is not adequate for ABECMA[supreg]. The applicant asserted that
per CMS, this is precisely the type of scenario that the new technology
add-on payment is intended to address.
In responses to CMS' concerns regarding the cost criterion and the
variability of provider billing and charging practices for CAR T-cell
therapies (86 FR 25258), the applicant stated they considered the
variability of CAR T-cell charging practices when developing its cost
analyses and presented options that were intended to address this
variability by using more conservative assumptions than have typically
been the case for other new technology add-on payment applications. The
applicant stated that most new technology add-on payment applications
use the national average CCR for the cost center for which the new
technology belongs is used to inflate the acquisition cost for the new
technology to charges. The applicant added that in the case of a drug
or biological, this would mean that the inverse of the national average
CCR for drugs would be used to convert the WAC of ABECMA[supreg] to
charges. The applicant stated that using the pharmacy CCR in the
prescribed manner would result in charges that would potentially
overstate actual hospital charging practices for CAR T-cell therapies.
Furthermore, the applicant noted that numerous studies on charge
compression have shown that hospital charging practices tend to result
in higher markup percentages for lower cost drugs and lower markup
percentages for higher cost drugs. The applicant added that given that
the WAC for ABECMA[supreg] is well above the average of drugs overall,
they were concerned that using the inverse of the national average drug
CCR might overstate what hospitals would typically charge for
ABECMA[supreg] on inpatient claims. Therefore, the applicant calculated
a CAR T-cell specific CCR based solely on the total drug charges for
CAR T-cell claims.
The applicant stated that to calculate the CAR T-cell CCR, they
took the total drugs charges for cases in MS-DRG 018 from the FY 2021
IPPS/LTCH PPS final rule After Outliers Removed/Before Outliers Removed
(AOR/BOR) file ($183,433,947.58). Next, the applicant divided that
amount by the number of cases (145) to determine an average drug charge
per case ($1,265,061.70). The applicant then divided that amount by
$373,000, the acquisition cost of YESCARTA[supreg] and KYMRIAH[supreg].
This value represents the average mark-up percentage hospitals used to
convert the cost of CAR T-cell therapy to charges on claims in FY 2019.
The applicant converted this mark-up percentage to a CCR by dividing 1
by the percentage (1/3.39 = 0.295).
Ultimately, the applicant stated that it recognizes CMS's concern
that hospitals vary in their CAR T-cell charging practices but states
their method for calculating a CAR T-cell specific CCR is meant to
address this exact concern. The applicant asserted that by focusing
solely on CAR T-cell claims, they are able to capture the range of
charging practices in hospitals that used a CAR T-cell therapy in a
non-clinical trial case in 2019. Furthermore, the applicant stated that
in addition to addressing the concerns about variability in hospital
charging practices, the CAR T-cell CCR is also a more conservative
assumption to use in the cost threshold analysis because it inflates
CAR T-cell costs to charges at a lower percentage (339%) than if the
inverse of the national average drug CCR is used (535%).
Response: We appreciate the information provided by the applicant
in their comment in regard to their calculation of a CAR T-cell CCR. As
we stated in section E.2.b. of this rule, we continue to believe that
it is premature to make structural changes to the IPPS at this time to
pay for CAR T-cell therapies (78 FR 58453). As we gain more experience
paying for these therapies under the IPPS, we may consider these
comments to inform future rulemaking. However, we appreciate the
thoughtfulness used by the applicant to provide as clear as possible a
description of CAR T-cell therapy cost calculations. We appreciate the
usage of multiple cost analyses, such as varying the CCR used to
inflate cost to charges, which potentially allowed for a more
conservative markup.
After consideration of the public comments we received and based on
the information included in the applicant's new technology add-on
payment application, we believe that the ABECMA[supreg] system meets
the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that it believes that ABECMA[supreg] represents a
substantial clinical improvement over existing technologies because:
(1) The totality of the circumstances regarding ABECMA[supreg]'s
clinical efficacy, safety, and data make clear that ABECMA[supreg]
substantially improves, relative to services or technologies currently
available, the treatment of Medicare beneficiaries with RRMM; (2)
ABECMA[supreg] has superior effectiveness compared to existing
therapies; (3) ABECMA[supreg] fills an unmet need as demonstrated by
the patient population in its registrational study,
[[Page 45032]]
which is reflective of real-world RRMM patients and 4) ABECMA[supreg]
improves quality of life for patients with RRMM.
In support of its assertion that the totality of the circumstances
regarding ABECMA[supreg]'s clinical efficacy, safety, and data make
clear that ABECMA[supreg] substantially improves, relative to services
or technologies currently available, the treatment of Medicare
beneficiaries with RRMM, the applicant cited results from the KarMMA
study, a single-arm, open-label, phase 2 trial of ABECMA[supreg]. The
primary outcome measure for the KarMMA study was overall response rate
(ORR). Secondary endpoints were; complete response rate (CRR) (key
secondary; null hypothesis <=10%), safety, duration of response (DOR),
progression-free survival (PFS), overall survival (OS),
pharmacokinetics (PK), minimum residual disease (MRD), quality of life
(QOL) and health economics and outcomes research (HEOR). The study
enrolled 140 patients and 128 received treatment. Patients were treated
at target dose between 150 and 450 x 10\6\ CAR T-cells. Treated
patients had received three or more prior lines of therapy including an
immunomodulatory drug (IMiD), a proteasome inhibitor (PI), and an anti-
CD38 antibody. All patients were refractory to the last regimen (94%
were refractory to anti-CD38 and 84% were refractory to triple
therapy). Efficacy results showed an ORR of 50% for patients (n=4)
receiving the target ABECMA[supreg] dose of 150 x 10\6\; 68.6% for
patients (n=70) receiving the target dose of 300 x 10\6\; 81.5% for
patients (n=54) receiving the target dose of 450 x 10\6\. The overall
ORR for all patients (n=128) who received ABECMA[supreg] was 73.4%.
The applicant asserts that in the KarMMA study, patients who
received ABECMA[supreg] achieved numerically superior response rates,
duration of response, and overall survival compared with outcomes seen
for alternative therapies (belantamab-mafodotin and selinexor) in other
trials.248 249 250 251 252 253 Response rates, according to
the applicant, were also high even in patients refractory to five
therapies (defined as 2 IMiD agents, 2 PIs, and 1 anti-CD38 antibody),
reflecting the novel mechanism of action, according to the applicant.
The applicant asserts that compared with anti-CD-19 CAR T-cell
therapies, the adverse event profile revealed low rates of grade 3+ CRS
(5%) and neurotoxicity (NT) (3%).\254\ According to the applicant,
these safety results confirm that ABECMA[supreg] has the potential to
offer a meaningful benefit to Medicare beneficiaries. The applicant
also asserts that ABECMA[supreg] has been demonstrated to be effective
and with a manageable safety profile for patients with a high-unmet
need (older age, aggressive disease). The applicant asserts that the
results from the pivotal KarMMa study confirm the clinical benefit of
ABECMA[supreg] in a heavily pre-treated RRMM patient population.
---------------------------------------------------------------------------
\248\ Munshi NC, Anderson, Jr LD, Shah N, et al. Idecabtagene
vicleucel (ide-cel; bb2121), a BCMA-targeted CAR T-cell therapy, in
patients with relapsed and refractory multiple myeloma (RRMM):
Initial KarMMa results. J Clin Oncol. 2020;38(15_suppl):8503-8503.
doi:10.1200/JCO.2020.38.15_suppl.8503.
\249\ Rodriguez-Otero P, Weisel K, Davies F, et al. Matching-
adjusted indirect comparisons of efficacy outcomes for idecabtagene
vicleucel from the KARMMA study vs selinexor plus dexamethasone
(STORM part 2) and belantamab mafodotin (DREAMM-2). In: European
Hematology Association. ; 2020.
\250\ Jagannath S, Lin Y, Goldschmidt H, et al. KarMMa-RW: A
study of real-world treatment patterns in heavily pretreated
patients with relapsed and refractory multiple myeloma (RRMM) and
comparison of outcomes to KarMMa. J Clin Oncol.
2020;38(15_suppl):8525-8525. doi:10.1200/jco.2020.38.15_suppl.8525.
\251\ Raje N, Berdeja J, Lin Y, et al. Anti-BCMA CAR T-cell
therapy bb2121 in relapsed or refractory multiple myeloma. N Engl J
Med. 2019;380(18):1726-1737. doi:10.1056/NEJMoa1817226.
\252\ Lonial S, Lee HC, Badros A, et al. Belantamab mafodotin
for relapsed or refractory multiple myeloma (DREAMM-2): A two-arm,
randomised, open-label, phase 2 study. Lancet Oncol. 2020;21(2):207-
221. doi:10.1016/S1470-2045(19)30788-0.
\253\ Chari A, Vogl DT, Gavriatopoulou M, et al. Oral Selinexor-
Dexamethasone for Triple-Class Refractory Multiple Myeloma. N Engl J
Med. 2019;381(8):727-738. doi:10.1056/nejmoa1903455.
\254\ Munshi NC, Anderson, Jr LD, Shah N, et al. Idecabtagene
vicleucel (ide-cel; bb2121), a BCMA-targeted CAR T-cell therapy, in
patients with relapsed and refractory multiple myeloma (RRMM):
Initial KarMMa results. J Clin Oncol. 2020;38(15_suppl):8503-8503.
---------------------------------------------------------------------------
We noted in the proposed rule that in contrast with anti-CD-19 CAR
T-cell therapies (for leukemia or lymphoma) where a high fraction of
responders remained in remission even after 5 years, ABECMA[supreg]
does not appear to result in long-term remission. In the KarMMA study,
among responding patients, over 75% relapsed by 20 months, with no
plateauing of the response curve.\255\
---------------------------------------------------------------------------
\255\ Ibid.
---------------------------------------------------------------------------
To support its assertion that ABECMA[supreg] has superior
effectiveness compared to existing therapies, the applicant provided
results from the KarMMa-RW study,\256\ a single-arm, open-label, phase
2 trial, examining real-world treatment patterns in heavily pretreated
patients with RRMM. The study also provides a comparison against
outcomes in the KarMMa study. The KarMMa-RW study was conducted to
assess treatment patterns in real-world RRMM patients with
characteristics similar to the KarMMa population and to compare
outcomes with currently available therapies in this synthetic cohort vs
ABECMA[supreg] therapy in the KarMMa study. The primary endpoint of the
KarMMA-RW study was overall response rate (ORR). Secondary endpoints of
the study were complete response rate (CRR), very good partial response
(VGPR) rate, progression free survival (PFS) and overall survival (OS).
Subgroup analyses by age, sex, double-class refractory (IMiD agents and
PIs) and number of prior anti-myeloma regimens per year (<=1 per year
or >1) were conducted to compare ORR and PFS between the KarMMa cohort
and eligible RRMM cohort. Since complete response assessment requires a
bone marrow biopsy evaluation, per International Myeloma Working Group
(IMWG) uniform response criteria for multiple myeloma, when data to
assess a complete response were not available in eligible RRMM cohort,
analyses were summarized for VGPR or better (>=VGPR) to avoid
underestimating the response in the eligible RRMM cohort.
---------------------------------------------------------------------------
\256\ Jagannath S, Lin Y, Goldschmidt H, et al. KarMMa-RW: A
study of real-world treatment patterns in heavily pretreated
patients with relapsed and refractory multiple myeloma (RRMM) and
comparison of outcomes to KarMMa. J Clin Oncol.
2020;38(15_suppl):8525-8525.
---------------------------------------------------------------------------
Of 1,949 real-world RRMM patients, 1,171 were refractory to their
last treatment regimen at baseline. Patients who had exposure to any
BCMA-directed therapy or gene-modified therapy were excluded. Of the
1,171 patients in the refractory RRMM cohort, 528 received the next
line of therapy; 643 patients were excluded due to no new treatment due
to death (n = 441) and no new treatment due to no follow-up (n = 202).
Of the remaining 528 patients, 190 triple class exposed patients were
selected as the eligible RRMM cohort based on the KarMMa eligibility
criteria. The ORR in the KarMMa and eligible RRMM cohorts was 76% and
32% ( p = <0.0001), respectively. The VGPR in the KarMMa and eligible
RRMM cohorts was 57% and 14% (p = <0.0001), respectively.
A matched-paired analysis was conducted and ORR was adjusted for
matching. Results from the matched-paired analysis were consistent with
the primary analysis: the ORR for the matched KarMMa cohort (n=76-80)
and matched eligible RRMM (n=76-80) was 72% and 29% (p = <0.0001),
respectively. According to the applicant, PFS was significantly
improved in KarMMa vs the eligible RRMM cohort; median PFS was 11.3
months and 3.5 months in the KarMMa and Eligible
[[Page 45033]]
RRMM cohorts, respectively (p = <0.0001). Median follow-up was 11.3
months (KarMMa) and 10.2 months (eligible RRMM cohort) at data cutoff.
According to the applicant, OS was significantly improved in KarMMa vs
the eligible RRMM cohort. OR was 18.2 months for the KarMMa cohort
(across all target doses from 150-450 x 10\6\ CAR T-cells) and 14.7
months for the eligible RRMM cohort. The estimated 12-month probability
of surviving was 80% in the KarMMa cohort and 56% in the eligible RRMM
cohort. Median follow-up was 12.0 months (KarMMa) and 15.0 months
(eligible RRMM cohort) among surviving patients at data cutoff.
The applicant asserts that the results from the KarMMa-RW study
confirm that there is no clear standard of care for RRMM patients who
received at least 3 prior therapies, including IMiD agents, PIs, and
anti-CD38 antibodies. Patients in the eligible RRMM cohort received 94
different treatment regimens as next-line therapy and according to the
applicant, outcomes were sub-optimal with currently available therapies
in the real-world RRMM patients. The applicant asserts that
significantly improved outcomes were demonstrated with ABECMA[supreg]
treatment in the KarMMa cohort vs the similar real-world population
(eligible RRMM cohort). The applicant noted that the real world myeloma
patient population is older (MM incidence is known to increase with
age, with over 60 percent of all new cases occurring in adults aged
65+years).\257\ The applicant asserts that results were consistent
across subgroups including patients aged >= 65 years.
---------------------------------------------------------------------------
\257\ Cancer Stat Facts: Myeloma, NCI SEER, https://seer.cancer.gov/statfacts/html/mulmy.html (last visited October. 7,
2020).
---------------------------------------------------------------------------
The applicant also provided a comparison of the efficacy of
ABECMA[supreg] and Xpovio[supreg] from the STORM study and Blenrep from
the DREAMM-2 study. STORM is a prospective, multicenter phase 2 study
of Xpovio[supreg] and dexamethasone in patients with RRMM (n = 122) in
the 4L+ setting. The STORM trial served as the basis for regulatory
approval in the US and demonstrated the clinical efficacy and safety of
Xpovio[supreg]. The ORR was 26% for patients in the STORM study vs 73%
for patients treated with ABECMA[supreg] in the KarMMa study, CR was 1%
for patients in the STORM study vs 33% for patients treated with
ABECMA[supreg] in the KarMMa study, medium duration of response (mDOR)
was 4.4 months for patients in the STORM study vs 10.7 months for
patients treated with ABECMA[supreg] in the KarMMa study, and PFS was
3.7 months for patients in the STORM study vs 8.8 months for patients
treated with ABECMA[supreg] in the KarMMa study. The DREAMM-2 study is
a prospective, multicenter Phase 2 study of Blenrep in patients with
RRMM (n = 122) in the 4L+ setting. The ORR was 31% for patients in the
DREAMM-2 study vs 73% for patients treated with ABECMA[supreg] in the
KarMMa study, CR was 3% for patients in the DREAMM-2 study vs 33% for
patients treated with ABECMA[supreg] in the KarMMa study, medium
duration of response (mDOR) was not reached in the Blenrep group
whereas it was 10.7 months for patients treated with ABECMA[supreg] in
the KarMMa study, and PFS was 2.9 months for patients in the DREAMM-2
study vs 8.8 months for patients treated with ABECMA[supreg] in the
KarMMa study.
Because ABECMA[supreg] showed improved ORR, CR, medDOR and PFS when
compared to Xpovio[supreg] and Blenrep, the applicant asserts that
ABECMA[supreg] provides a substantial clinical improvement over these
existing therapies.
To support that ABECMA[supreg] fills an unmet need as demonstrated
by the patient population in its registrational study, the Phase 2
KarMMa study, the applicant asserted that in addition to showing deep
and durable responses and a manageable safety profile in heavily
pretreated, highly refractory RRMM patients in the context of
controlled clinical studies, comparisons of outcomes in real world
patients (that is, patients not enrolled in clinical trials) support
the assertion that ABECMA[supreg] offers significantly improved
outcomes for RRMM compared with currently available therapies. The
applicant asserted that when compared to myeloma patients generally
included in clinical studies, the real world myeloma patient population
is older (MM incidence is known to increase with age, with over 60
percent of all new cases occurring in adults aged
65years)\258\ and sicker (due to the high proportion of elderly
patients in this population, those with MM commonly also have
additional comorbidities associated with increased age, including
conditions such as osteoporosis, arthritis, diabetes, additional
malignancies, cardiovascular disease, and renal dysfunction, amongst
others).\259\ The applicant provided an abstract from the MAMMOTH
study, a noninterventional, retrospective cohort analysis conducted to
assess outcomes in patients after they become refractory to anti-CD38
monoclonal antibodies, including a subset of patients who were triple-
class-exposed. Patients in STORM (analyzing Xpovio[supreg] plus
dexamethasone) had an ORR of 32.8% versus 25% for patients receiving
conventional care in MAMMOTH (p=0.078) and STORM patients had better OS
than patients in MAMMOTH (median 10.4 vs 6.9 months) (p=0.043). The
applicant asserts that these results highlight a high unmet need in a
patient population refractory to anti-CD38 monoclonal antibody,
including a subset of triple-class exposed patients.
---------------------------------------------------------------------------
\258\ Cancer Stat Facts: Myeloma, NCI SEER, https://seer.cancer.gov/statfacts/html/mulmy.html (last visited Oct. 7,
2020).
\259\ Hari P et al. The impact of age and comorbidities on
practice patterns and outcomes in patients with relapsed/refractory
multiple myeloma in the era of novel therapies. Journal of Geriatric
Oncology. 2018;9(2):138-144 (Hari, 2018).
---------------------------------------------------------------------------
To support the assertion that ABECMA[supreg] improves quality of
life for patients with RRMM, the applicant referenced ABECMA[supreg]'s
impact on Health-related quality of life (HRQoL) as assessed in the
KarMMa study as a secondary endpoint. HRQoL was assessed using the
European Organization for Research and Treatment of Cancer (EORTC)
Quality of Life C30 Questionnaire (QLQ-C30) and the EORTC Multiple
Myeloma Module (MY20). The QLQ-C30 consists of 30 questions addressing
5 functional domain scales, 3 symptom scales, a Global health/QoL
scale, and 6 single item measures.\260\ The QLQ-MY20 consists of 20
questions addressing 4 myeloma-specific HRQoL domains (disease
symptoms, side effects of treatment, future perspectives, and body
image). Primary subscales of interest were QLQ-C30 Fatigue, Pain,
Physical Functioning, Cognitive Functioning, and Global Health/QoL
subscales and QLQ-MY20 Symptom and Side Effects subscales. Subscales
were preselected based on their relevance to this patient population.
The data are based on a minimum of 10 months post-infusion. Median
follow-up durations at the target dose levels of 150, 300, and 450 x
10\6\ CAR T-cells were 17.8, 13.9, and 9.7 months, respectively. Of 140
patients enrolled in KarMMa, 128 received ABECMA[supreg], of whom 121
(94.5%) and 120 (93.8%) were evaluable for HRQoL by QLQ-C30 and QLQ-
MY20, respectively. At baseline, ABECMA[supreg]-treated patients had
less favorable scores for all QLQ-C30 domains of interest (fatigue,
pain, Global Health/QoL, physical functioning and cognitive
functioning) than the general population. From baseline at multiple
[[Page 45034]]
time points through month 9 post-infusion, the applicant asserts that
clinically meaningful improvements were observed in QLQ-C30 Fatigue,
Pain, Physical Functioning, and Global Health subscale scores relative
to baseline, as the mean score from baseline showed improvement in all
domains. The applicant asserts that these results support that
ABECMA[supreg] provides meaningful improvements in HRQoL and self-
reported symptoms associated with heavily pretreated RRMM and
demonstrate that ABECMA[supreg] provides meaningful improvement in both
global function and symptoms related to MM.
---------------------------------------------------------------------------
\260\ Helena Maes & Michel Delforge (2015) Optimizing quality of
life in multiple myeloma patients: current options, challenges and
recommendations, Expert Review of Hematology, 8:3, 355-366, DOI:
10.1586/17474086.2015.1021772
---------------------------------------------------------------------------
After reviewing the information submitted by the applicant as part
of its FY 2022 new technology add-on payment application for
ABECMA[supreg], we stated in the proposed rule that we questioned
whether, due to the lack of randomization, there is sufficient evidence
to establish the efficacy of ABECMA[supreg] compared with current
alternatives. We stated that it is unknown whether the superior
outcomes for ABECMA[supreg] in the KarMMA study, which we stated has
not been peer-reviewed, were due to more effective therapy or other
factors, such as differences in patient population or treating
oncologist. We also noted that the applicant chose to use ORR data as a
measure of substantial clinical improvement rather than the more
clinically relevant and available OS data.
We invited public comment on whether ABECMA[supreg] meets the
substantial clinical improvement criterion.
Comment: In response to CMS' concerns regarding the substantial
clinical improvement criterion, the applicant submitted a comment
stating that ABECMA[supreg] is a substantial clinical improvement over
existing technologies because: (1) The totality of the circumstances
regarding ABECMA[supreg]'s clinical efficacy, safety, and data make
clear that ABECMA[supreg] substantially improves, relative to services
or technologies currently available, the treatment of Medicare
beneficiaries with RRMM; (2) ABECMA[supreg] has superior effectiveness
compared to existing therapies; (3) ABECMA[supreg] fills an unmet need
as demonstrated by the patient population in its registrational study,
which is reflective of real-world RRMM patients, and (4) ABECMA[supreg]
improves quality of life for patients with RRMM.
The applicant stated that it is essential for CMS to recognize that
multiple myeloma is a different disease from NHL, where CD-19 CAR T
directed therapies are approved.\261\ The applicant added multiple
myeloma is a disease characterized by persistence of residual disease
and multiple periods of remission and relapse, with cure not generally
achieved by conventional therapies.\262\ The applicant added that only
long-term follow-up data will definitively show if a plateau in
survival occurs after BCMA directed CAR T-cell treatment and that the
KarMMA study presented data after a median follow up of 13.3 months.
---------------------------------------------------------------------------
\261\ Nair, R. and J. Westin, CAR T cells. Adv Exp Med Biol,
2020. 1244: 215-233.
\262\ Kumar, S.K., et al., Multiple myeloma. Nat Rev Dis
Primers, 2017. 3: 17046; Rajkumar, S.V. and S. Kumar, Multiple
Myeloma: Diagnosis and Treatment. Mayo Clin Proc, 2016. 91(1): 101-
19.
---------------------------------------------------------------------------
The applicant stated that they believe it is not appropriate to
compare outcomes between different CAR T-cell therapies approved and
studied in patients with completely different diseases where the most
appropriate comparison is between treatments indicated for the same
patient population and disease. According to the applicant, the updated
results, after a median follow up of 24.8 months, from the pivotal
KarMMa study demonstrated outcomes remained consistent with those
initially reported.\263\ The applicant stated that the CR/sCR rate
remained 33% across all doses studied with an estimated median PFS was
8.6 months for all patients and 12.2 months for patients treated at the
450 x 106 dose; for the 33% of patients on the KarMMa study who had a
CR/sCR, the median duration of response increased to 20.2 months.\264\
---------------------------------------------------------------------------
\263\ Larry D. Anderson, J., Nikhil C. Munshi, Nina Shah, Sundar
Jagannath, Jesus G. Berdeja, Sagar Lonial, Noopur S. Raje, David S.
Siegel, Yi Lin, Albert Oriol, Philippe Moreau, Ibrahim Yakoub-Agha,
Michel Delforge, Fabio Petrocca, Payal Patel, Liping Huang, Timothy
B. Campbell, Kristen Hege, Jes[uacute]s F. San-Miguel, Idecabtagene
vicleucel (ide-cel, bb2121), a BCMA-directed CAR T cell therapy, in
relapsed and refractory multiple myeloma: Updated KarMMa results.
ASCO 2021 Conference Proceedings, 2021: 8016.
\264\ Munshi, N.C., et al., Idecabtagene Vicleucel in Relapsed
and Refractory Multiple Myeloma. New England Journal of Medicine,
2021. 384(8): p. 705-716.
---------------------------------------------------------------------------
The applicant disagreed with CMS's concerns surrounding the lack of
randomization, peer-review status, and use of ORR as a measure of
substantial clinical improvement. The applicant states that the results
from the KarMMa study, which supported the FDA approval of
ABECMA[supreg], were published February 2021 in the New England Journal
of Medicine.\265\
---------------------------------------------------------------------------
\265\ Munshi, N.C., et al., Idecabtagene Vicleucel in Relapsed
and Refractory Multiple Myeloma. New England Journal of Medicine,
2021. 384(8): p. 705-716.
---------------------------------------------------------------------------
The applicant stated that the KarMMa study, while using ORR as a
primary endpoint, also demonstrated improvements in complete response
(CR) rate, duration of response, PFS and OS compared with conventional
therapies. The applicant stated that two analyses compared patients
enrolled in the KarMMa clinical study to similar patients treated with
conventional therapy enrolled on other observational studies: MAMMOTH
266 267 in which a matched adjusted indirect comparison
(MAIC) demonstrated that ABECMA[supreg] offers statistically
significant, clinically meaningful improvements in ORR, OS, and PFS
when compared with conventional care and regimens, and KarMMa-RW in
which the median progression free survival was observed to be higher in
the KarMMa group at 11.3 versus 3.5 months in the similar RW cohort and
overall survival 18.2 versus 14.7 months, respectively.
---------------------------------------------------------------------------
\266\ Gandhi, U.H., et al., Outcomes of patients with multiple
myeloma refractory to CD38-targeted monoclonal antibody therapy.
Leukemia, 2019. 33(9): 2266-2275.
\267\ Shah, N., et al., A Matching-Adjusted Indirect Comparison
of Efficacy Outcomes for Idecabtagene Vicleucel (ide-cel, bb2121), a
BCMA-Directed CAR T Cell Therapy Versus Conventional Care in Triple-
Class-Exposed Relapsed and Refractory Multiple Myeloma. Blood, 2020.
136 (Supplement 1): 6-7.
---------------------------------------------------------------------------
The applicant concluded that the totality of the clinical efficacy
and safety data from the prescribing information demonstrates that
ABECMA[supreg] has equal or better efficacy and a better safety profile
than existing therapeutic alternatives in a broad RRMM patient
population, including patients aged 65+ years. Based on an updated
analysis of overall survival for patients, the applicant asserts that
after a median follow up of 24.8 months, 51% of patients remain alive
two years after treatment with ABECMA[supreg] with an estimated median
OS of 24.8 months.\268\ According to the applicant, median survival
expectation with conventional therapies in this heavily pre-treated
patient population (median 6 (3-16) prior lines), 94% refractory to
anti-CD38 antibody, 84% refractory to all three of the main classes of
antimyeloma drugs) is estimated at 9.3 months.\269\ Therefore
[[Page 45035]]
the applicant asserted ABECMA[supreg] is clearly a substantial clinical
improvement over alternative therapies for patients with RRMM after
four or more prior lines of therapy.
---------------------------------------------------------------------------
\268\ Larry D. Anderson, J., Nikhil C. Munshi, Nina Shah, Sundar
Jagannath, Jesus G. Berdeja, Sagar Lonial, Noopur S. Raje, David S.
Siegel, Yi Lin, Albert Oriol, Philippe Moreau, Ibrahim Yakoub-Agha,
Michel Delforge, Fabio Petrocca, Payal Patel, Liping Huang, Timothy
B. Campbell, Kristen Hege, Jes[uacute]s F. San-Miguel, Idecabtagene
vicleucel (ide-cel, bb2121), a BCMA-directed CAR T cell therapy, in
relapsed and refractory multiple myeloma: Updated KarMMa results.
ASCO 2021 Conference Proceedings, 2021: 8016.
\269\ Larry D. Anderson, J., Nikhil C. Munshi, Nina Shah, Sundar
Jagannath, Jesus G. Berdeja, Sagar Lonial, Noopur S. Raje, David S.
Siegel, Yi Lin, Albert Oriol, Philippe Moreau, Ibrahim Yakoub-Agha,
Michel Delforge, Fabio Petrocca, Payal Patel, Liping Huang, Timothy
B. Campbell, Kristen Hege, Jes[uacute]s F. San-Miguel, Idecabtagene
vicleucel (ide-cel, bb2121), a BCMA-directed CAR T cell therapy, in
relapsed and refractory multiple myeloma: Updated KarMMa results.
ASCO 2021 Conference Proceedings, 2021: 8016; Gandhi, U.H., et al.,
Outcomes of patients with multiple myeloma refractory to CD38-
targeted monoclonal antibody therapy. Leukemia, 2019. 33(9): 2266-
2275.
---------------------------------------------------------------------------
Response: We appreciate the information provided by the applicant
in their public comment. Based on the additional information received,
we agree that ABECMA[supreg] represents a substantial clinical
improvement over existing technologies for the treatment of adult
patients with relapsed or refractory multiple myeloma after four or
more prior lines of therapy, including an immunomodulatory agent, a
proteasome inhibitor, and an anti-CD38 monoclonal antibody. We believe
that the updated analysis information provided by the applicant
demonstrated statistically significant and clinically meaningful
improvements in ORR, OS, and PFS for patients treated with
ABECMA[supreg]. We also agree with the applicant that ABECMA[supreg]
fills an unmet need in the 4L+ treatment of RRMM as it offers a
treatment option for patients unresponsive to currently available
therapies.
After consideration of the public comments we received and the
information included in the applicant's new technology add-on payment
application, we have determined that ABECMA[supreg] meets the criteria
for approval of the new technology add-on payment. Therefore, we are
approving new technology add-on payments for this technology for FY
2022. Cases involving the use of ABECMA[supreg] that are eligible for
new technology add-on payments will be identified by procedure codes
XW033K7 (Introduction of idecabtagene vicleucel immunotherapy into
peripheral vein, percutaneous approach, new technology group 7) or
XW043K7 (Introduction of idecabtagene vicleucel immunotherapy into
central vein, percutaneous approach, new technology group 7).
In its application, the applicant estimated that the cost of
ABECMA[supreg] is $419,500.00 per patient. Under Sec. 412.88(a)(2), 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
ABECMA[supreg] is $272,675.00 for FY 2022.
h. INDIGO Aspiration System With Lightning Aspiration Tubing
Penumbra, Inc. submitted an application for the INDIGO[supreg]
Aspiration System with Lightning Tubing (``INDIGO[supreg] with
Lightning'') for FY 2022. Per the applicant, INDIGO[supreg] with
Lightning is a mechanical thrombectomy aspiration system used in the
treatment of pulmonary embolism, deep vein thrombosis and peripheral
arterial thromboembolism that optimizes thrombus removal by
differentiating between thrombus and blood.
According to the applicant, INDIGO[supreg] with Lightning performs
clot detection and removal via smart technology which enables the
physician to determine when the catheter is in thrombus and when it is
in patent flow resulting in blood loss reduction through intermittent
aspiration mechanical thrombectomy. The applicant stated that
INDIGO[supreg] with Lightning is used for the removal of fresh, soft
emboli and thrombi from vessels of the peripheral arterial and venous
systems, and for the treatment of pulmonary embolism. The applicant
stated that the INDIGO[supreg] with Lightning is composed of a
mechanical thrombectomy aspiration pump (known as the Penumbra Engine)
that is packaged with INDIGO[supreg] CAT12 (12 French) and CAT8 (8
French) catheters as well as Lightning, a clot detection/blood loss
reduction technology embedded in the Penumbra Engine pump and tubing.
Arterial thromboembolism can result in acute limb ischemia (ALI)
which requires emergent treatment. Venous thromboembolism is a
condition which includes both deep vein thrombosis (DVT) and pulmonary
embolism (PE) and occurs in 1 to 2 individuals per 1000 per year and is
predominantly a disease of older age.\270\ The 2020 American Society of
Hematology guidelines for venous thromboembolism include
recommendations for the treatment of patients with both pulmonary
embolism and deep vein thrombosis, and recommended treatments include
home care, systemic pharmacological thrombolysis, and procedural
care.\271\
---------------------------------------------------------------------------
\270\ Heit, John A. ``Epidemiology of venous thromboembolism.''
Nature reviews. Cardiology vol. 12,8 (2015): 464-74. doi:10.1038/
nrcardio.2015.83.
\271\ Thomas L. Ortel, Ignacio Neumann, Walter Ageno, Rebecca
Beyth, Nathan P. Clark, Adam Cuker, Barbara A. Hutten, Michael R.
Jaff, Veena Manja, Sam Schulman, Caitlin Thurston, Suresh Vedantham,
Peter Verhamme, Daniel M. Witt, Ivan D. Florez, Ariel Izcovich,
Robby Nieuwlaat, Stephanie Ross, Holger J. Sch[uuml]nemann, Wojtek
Wiercioch, Yuan Zhang, Yuqing Zhang; American Society of Hematology
2020 guidelines for management of venous thromboembolism: Treatment
of deep vein thrombosis and pulmonary embolism. Blood Adv 2020; 4
(19): 4693-4738. doi: https://doi.org/10.1182/bloodadvances.2020001830.
---------------------------------------------------------------------------
Procedural care may include open procedures as well as catheter-
directed thrombolysis and percutaneous mechanical thrombectomy.\272\ In
catheter-directed thrombolysis, a thrombolytic agent is infused
intravascularly adjacent to the clot burden through a percutaneous
transcatheter.\273\ In percutaneous mechanical thrombectomy, the
thrombus is lysed or removed mechanically. The therapies may be used
separately or in conjunction with one another.\274\
---------------------------------------------------------------------------
\272\ Karthikesalingam A, Young EL, Hinchliffe RJ, Loftus IM,
Thompson MM, Holt PJ. A systematic review of percutaneous mechanical
thrombectomy in the treatment of deep venous thrombosis. Eur J Vasc
Endovasc Surg. 2011 Apr;41(4):554-65. doi: 10.1016/
j.ejvs.2011.01.010. Epub 2011 Feb 1. PMID: 21288745.
\273\ Brown KN, Devarapally SR, Lee L, et al. Catheter Directed
Thrombolysis Of Pulmonary Embolism. [Updated 2020 Apr 10]. In:
StatPearls [internet]. Treasure Island (FL): StatPearls Publishing;
2020 Jan. https://www.ncbi.nlm.nih.gov/books/NBK536918/.
\274\ Karthikesalingam A, Young EL, Hinchliffe RJ, Loftus IM,
Thompson MM, Holt PJ. A systematic review of percutaneous mechanical
thrombectomy in the treatment of deep venous thrombosis. Eur J Vasc
Endovasc Surg. 2011 Apr;41(4):554-65. doi: 10.1016/
j.ejvs.2011.01.010. Epub 2011 Feb 1. PMID: 21288745.
---------------------------------------------------------------------------
The applicant stated that mechanical thrombectomy may be performed
with a variety of devices. These methods include aspiration
thrombectomy, rheolytic thrombectomy, and fragmentation
thrombectomy.\275\
---------------------------------------------------------------------------
\275\ Haude, M. Mechanical thrombectomy catheter systems.
Interventional Cardiology 2007;2(1):58-60.
---------------------------------------------------------------------------
The applicant stated that INDIGO[supreg] with Lightning differs
from other mechanical thrombectomy devices on the basis of the use of a
mechanical pump to generate a vacuum for aspiration and ``intelligent
aspiration'' which differentiates clots and patient blood flow, thereby
limiting blood loss. The applicant states that other endovascular
mechanical thrombectomy devices do not provide aspiration using a
vacuum. According to the applicant, the Lightning tubing performs clot
detection using a proprietary algorithm. According to the applicant,
once this ``smart technology'' detects free-flowing blood, it indicates
patent flow to the physician and begins intermittent aspiration
resulting in less blood loss during the procedure.
The applicant submitted a request for a unique ICD-10-PCS code to
identify the technology and was granted
[[Page 45036]]
approval for the following procedure codes effective October 1, 2021:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.176
INDIGO[supreg] with Lightning is a system with multiple components
which have been reviewed by FDA both separately and as part of an
overall system which includes catheters, tubing, and a vacuum pump. For
the catheter portion of the system, INDIGO[supreg] aspiration catheter
12 (12 French) and separator 12 received FDA 510(k) clearance on May
28, 2020 for the removal of fresh, soft emboli and thrombi from vessels
of the peripheral arterial and venous systems under FDA submission
number K192981. The applicant stated that they submitted an application
for FDA 510(k) clearance for that same technology (with a predicate
which received clearance mentioned previously under submission number
K192981) for indication of pulmonary embolism under FDA submission
number K202821 for which clearance was completed on November 18, 2020.
The INDIGO[supreg] aspiration catheter 12 and separator 12 received FDA
510(k) clearance for the peripheral arterial and venous system on the
basis of similarity to an earlier version of the same catheter and
separator, which itself received FDA 510(k) clearance on May 26, 2015
under FDA 510(k) number K142870 as part of the Penumbra Embolectomy
System for the same indication. We note that the overall system
received a second 510(k) clearance on December 20, 2019 under FDA
510(k) number K192833 for the added indication of PE.
With respect to the newness criterion for the tubing, the Lightning
tubing received FDA 510(k) authorization for the removal of fresh, soft
emboli and thrombi from vessels of the peripheral arterial and venous
systems on March 13, 2020 under FDA 510(k) number K193244. The same
tubing received
[[Page 45037]]
FDA 510(k) authorization for pulmonary embolism on April 22, 2020 under
FDA 510(k) number K200771, which was granted based on substantial
similarity to the same manufacturer's device. The predicate device for
the peripheral arterial and venous system was an earlier version of the
tubing without Lighting which itself received FDA 510(k) authorization
on May 3, 2018 under FDA 510(k) number K180939.
With respect to the newness criterion for the vacuum pump, the
Penumbra Engine Pump and Canister received FDA 510(k) clearance for use
in the peripheral arterial and venous systems (PAVS) on March 8, 2018
under FDA 510(k) number K180105. The following table summarizes the FDA
approval information listed in this section.
[GRAPHIC] [TIFF OMITTED] TR13AU21.177
BILLING CODE 4120-01-C
The applicant has applied for new technology add-on payments for
INDIGO[supreg] with Lightning when used for the treatment of venous
thromboembolism, arterial thromboembolism, and pulmonary
thromboembolism.
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 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 to achieve a therapeutic outcome, the
applicant stated that INDIGO[supreg] with Lightning does not use the
same or a similar mechanism of action when compared to an existing
technology to achieve a therapeutic outcome. The applicant described
differences between INDIGO[supreg] with Lightning and existing
technologies based on the use of a mechanical pump to generate a vacuum
for aspiration and the Lightning tubing, which the applicant stated
limits blood loss and indicates clot versus patent flow. For pulmonary
embolism and the peripheral system, the applicant identified Inari
Flowtriever as an existing technology and noted that any aspiration
provided using this system is provided via syringe as opposed to a
vacuum pump. For the peripheral system, the applicant also identified
Inari Flowtriever as using the same syringe method of aspiration. The
applicant also identified two additional aspiration thrombectomy
catheters, Angiojet[supreg] and Angiovac[supreg], used in the
peripheral system and suggested that Angiojet[supreg] also uses a
syringe for aspiration and that Angiovac[supreg] utilizes an
extracorporeal bypass circuit that is created outside the body
consisting of an outflow line, a centrifugal pump, a filter and an
inflow line.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that services
provided using this device would be captured under MS-DRGs 163-165 and
270-272. MS-DRGs 163-165 address major chest procedures and MS-DRGs
270-272 address other major cardiovascular procedures.
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 when compared to an
existing technology, the applicant did not address this criterion
directly in the application, but stated that the new use of the
INDIGO[supreg] System with Lighting is for the most recent FDA
indication (April 2020) in PE. The applicant further stated that PE is
not the same disease as arterial and venous thromboembolism; the
patient populations may overlap, but are not identical.
We noted the following concerns in the proposed rule (86 FR 25262
through 25263) regarding whether the technology meets the substantial
similarity criteria and whether it should be considered new. While the
applicant discussed the differences between INDIGO[supreg] with
Lighting and products made by other manufacturers, the applicant did
not provide enough information regarding how INDIGO[supreg] with
Lightning differs in its components from the existing aspiration
thrombectomy catheters on the market to determine whether the
technology uses a unique mechanism of action. We questioned whether the
mechanism of action of the pump is different than that of the existing
aspiration thrombectomy systems that also use a pump rather than a
syringe, and how the mechanism of action of the separator, which is
part of the catheter portion of the device, is different from that of
existing thrombectomy systems that deploy a
[[Page 45038]]
device through the lumen of the catheter to break up the thrombus. We
also noted that it was unclear what mechanism of action is used within
the ``smart technology'' and how it may differ from other products
which are intended to similarly reduce blood loss during the procedure.
It was unclear if the ``smart technology'' resides within the pump,
which was cleared by FDA 510(k) on March 8, 2018, or within the tubing,
which was most recently cleared by FDA 510(k) on April 22, 2020. We
noted that while the applicant did not directly address the third
criterion within the application, based on the clinical uses of the
device described in the application, we believed the INDIGO[supreg]
with Lightning is intended for a patient population that is similar to
the patient population treated by existing thrombectomy devices,
including patients who receive percutaneous interventions for PE and
peripheral arterial thromboembolism.
We noted that the predicate device for the vacuum pump, the
Penumbra Engine Pump and Canister, received FDA 510(k) clearance for
use in the peripheral arterial and venous systems on March 8, 2018
under FDA 510(k) number K180105 and therefore appears to no longer be
considered new. We further noted that the catheter and tubing, as
described in the 510(k) applications, appear to only have minor
differences from their predicate devices such as length of tubing and
shelf life, as opposed to elements that would affect the mechanism of
action. If we determine that the catheter and tubing are substantially
similar to the predicate devices cleared under FDA 510(k) numbers
K142870 (May 26, 2015) and K180939 (May 3, 2018), respectively, the
newness date of the INDIGO[supreg] with Lightning would correspond to
the dates listed and therefore may no longer be considered new. We also
noted that it is unclear whether the components of the system may be
substantially similar to the overall system and whether the applicable
newness date for each indication would therefore be the date of the
overall system clearance for each indication, specifically May 26, 2015
for peripheral arterial and venous systems and December 20, 2019 for
pulmonary embolism.
We invited public comment on whether INDIGO[supreg] with Lightning
is substantially similar to other technologies and whether
INDIGO[supreg] with Lightning meets the newness criterion.
Comment: Several commenters asserted that INDIGO[supreg] with
Lightning was substantially similar to other technologies and did not
meet the qualifications for newness. These commenters suggested that
the mechanism of action for INDIGO[supreg] with Lightning is identical
to both previous versions of the same device (INDIGO[supreg] without
Lightning) and other similar devices on the market. Specifically, a
commenter identified the following examples of vacuum-based mechanical
thrombectomy systems: Angiodynamics AngioVac System, the Philips
QuickClear Mechanical Thrombectomy System, the Walk Vascular JETi
Peripheral Thrombectomy System, and the Inari FlowTriever System. This
commenter asserted that while INDIGO[supreg] with Lightning may be
unique in using a pump to create a vacuum, other devices create a
vacuum and the method of creating the vacuum is not relevant and does
not represent a new mechanism of action. On the subject of the
automated intermittent aspiration, some commenters noted that the same
action can be completed using manual methods on the versions of
INDIGO[supreg] without Lightning, such as by manually compressing the
tubing to halt and restart suction, so that the automation does not
represent a unique mechanism of action.
Response: We thank the commenters for their input on the mechanism
of action of INDIGO[supreg] with Lightning and have taken these
comments into consideration in our evaluation of the newness criterion,
which is discussed later in this section.
Comment: The applicant submitted a letter stating that
INDIGO[supreg] with Lightning meets the newness criterion. The
applicant provided clarification regarding the INDIGO[supreg] with
Lightning device and stated that the system is composed of two
components: The engine that generates the vacuum (and can be used for
multiple patients) which is a capital expense, and the Lightning
device, tubing, catheter, and valve which are supplied together as a
set and are single-use. The applicant stated that the Lightning device
is the element of the system which is the subject of this application
for new technology. The applicant also responded to our concern
regarding when the device was cleared by the FDA, because we noted
different dates of clearance for the pump and the tubing. The applicant
asserted that because the Lightning device was an element of the
tubing, it was cleared by the FDA for different indications on March
13, 2020 (K193244) and April 22, 2020 (K200771). The applicant noted
the INDIGO[supreg] device that was cleared by the FDA on May 26, 2015,
was not relevant to the new technology application because it did not
include the Lightning device.
In response to our question whether the ``smart technology''
resided in the pump or within the tubing, the applicant stated that the
``smart technology'' is contained in a standalone Lightning device,
which is used once per patient and placed on top of the engine. The
standalone Lightning device contains a computer, sensors, and a valve.
The applicant asserted that the INDIGO[supreg] with Lightning
represented a unique mechanism of action that involves an integrated,
computer-run, proprietary, smart algorithm which allows for the removal
of a blood clot while limiting blood loss. Per the applicant, the
device itself controls the opening and closing of the valve which is
distinct from manual operation. The applicant highlighted a number of
competitor products and suggested that none of them have a systemic
method to differentiate blood from a clot.
In response to our concerns regarding how the mechanism of action
of the separator differs from other existing thrombectomy systems, the
applicant stated that the separator is not distinct from other
technologies but was not integral to the consideration of newness for
the device.
One additional commenter noted support for INDIGO[supreg] with
Lightning meeting the requirements for a novel mechanism of action,
stating that no other competitive system uses a vacuum pump with
automatic flow limitation.
Response: We appreciate the commenter's input. We also thank the
applicant for the additional information and for their comment
regarding the newness criterion, including the clarification that the
Lightning technology is the subject of this application. We agree with
the applicant and commenter that this technology represents a new
mechanism of action due to the way in which sensors and smart
technology control the opening and closing of the valve allowing
automated intermittent aspiration, as distinct from individual users'
ability to manually compress the tubing, as described by a commenter.
We agree that based on the clarification on the nature of the Lightning
technology and how it integrates into the overall INDIGO[supreg]
system, that the appropriate FDA clearances to consider are those for
the Lightning technology for the indications of PAVS and PE, March 13,
2020 and April 22, 2020 respectively.
After consideration of the public comments we received and
information submitted by the applicant as part of its FY 2022 new
technology add-on payment application for INDIGO[supreg] with
Lightning, we believe that INDIGO[supreg]
[[Page 45039]]
with Lightning has a unique mechanism of action in the treatment of
patients for pulmonary embolism, deep vein thrombosis and peripheral
arterial thromboembolism. Therefore, we believe that INDIGO[supreg]
with Lightning is not substantially similar to existing treatment
options and meets the newness criterion with the newness period
beginning on March 13, 2020 for PAVS and April 22, 2020 for PE, the
date on which the technology was cleared by FDA for each indication.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR claims data file with the FY 2019 Final Rule with
Correction Notice IPPS Impact File to identify potential cases
representing patients who may be eligible for treatment using the
INDIGO[supreg] System. The applicant identified claims with any one of
the following ICD-10-PCS codes for percutaneous mechanical
thrombectomy:
BILLING CODE 4120-01-P
[[Page 45040]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.178
[[Page 45041]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.179
BILLING CODE 4120-01-C
In its analysis, the applicant identified a primary cohort to
assess whether this therapy met the cost criterion. The previously
listed ICD-10-PCS procedure codes were used to identify claims
involving percutaneous procedures. The claim search conducted by the
applicant resulted in 15,580 claims mapping to six MS-DRGs: 270 (Other
Major Cardiovascular Procedures with MCC), 271 (Other Major
Cardiovascular Procedures with CC), 272 (Other Major Cardiovascular
Procedures without CC/MCC), 163 (Major Chest Procedures with MCC), 164
(Major Chest Procedures with CC), and 165 (Major Chest Procedures
without CC/MCC).
The applicant determined an average unstandardized case weighted
charge per case of $126,211.
The applicant did not remove charges for prior technology. The
applicant stated that no prior technology is being replaced. The
applicant then standardized the charges using the FY 2019 Final Rule
with Correction Notice Impact File. Next, the applicant applied the 2-
year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to
calculate outlier threshold charges (1.13218). To calculate the charges
for the new technology, the applicant used what it stated was the
national average CCR for the Supplies and Equipment cost center of
0.299 from the FY 2021 IPPS final rule. However, we noted that the
actual value for this cost center for FY 2021 was 0.297. The applicant
calculated a final inflated average case-weighted standardized charge
per case of $180,036, which exceeded the
[[Page 45042]]
average case-weighted threshold amount of $126,211 by $53,825. The
applicant stated that because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the therapy meets the cost criterion.
We invited public comment on whether INDIGO[supreg] with Lightning
meets the cost criterion.
Comment: We received a public comment from the applicant on whether
the INDIGO[supreg] Aspiration System with Lightning Aspiration Tubing
meets the cost criterion. The applicant noted that CMS stated in the
proposed rule that they did not remove charges for prior technology (86
FR 25265). The applicant clarified that in their cost analysis they did
remove charges of $11,505 per case for existing technology based on a
calculation of using the current price of $3,440 and dividing it by the
FY 2019 national cost-to-charge ratio for supplies and equipment of
0.299 to determine charges for the existing technology. The applicant
stated that they applied the national cost-to-charge ratio for supplies
and equipment of 0.299 to the known cost of existing equipment because
the claims data are from the FY 2019 MedPAR claims data file. The
applicant believes this would have been the charges applied for the
existing technology in 2019 and was therefore the most appropriate
cost-to-charge ratio to use. The applicant further commented that they
think it is important to note that in performing the cost calculation,
they used the national average cost-to-charge ratio for the Supplies
and Equipment cost center of 0.297 from the FY 2021 IPPS final rule.
The applicant further commented that their application notes that they
then added the weighted average charge for the new technology of
$22,596 to the charges. The weighted average charge for the new
technology (comprised of the catheter(s) and Lightning Device) is
$6,711, which was divided by 0.297 to arrive at a charge of $22,596.
The applicant noted that the appropriate charges for the existing
technology were removed prior to standardizing the charges and the
charges for the new technology were applied using the appropriate cost-
to-charge ratio. The applicant stated that since the final inflated
average case-weighted standardized charge per case of $180,036 exceeds
the average case-weighted threshold amount of $126,211 that the
INDIGO[supreg] System meets the cost criterion.
Response: We thank the applicant for their comment regarding the
INDIGO[supreg] system meeting the cost criterion. Based on the
information submitted by the applicant as part of its FY 2022 new
technology add-on payment application, as discussed in the proposed
rule (86 FR 25261 through 25266) and previously summarized and the
comment received, we agree that the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount as previously stated. Therefore, the
INDIGO[supreg] System meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the INDIGO[supreg] with Lightning represents a
substantial clinical improvement over existing technologies because it
results in lower rates of aspirated blood loss during the procedure,
low major bleeding event rate, reduces blood loss, reduces ICU stays,
and reduces procedure time. The applicant also suggested that the
technology allows for revascularization without thrombolytics and no
recurrence of pulmonary embolism after 30 days.
To support its application, the applicant submitted a reference to
the EXTRACT-PE prospective, single-arm study across 22 sites comparing
the use of INDIGO[supreg] without Lightning to systemic thrombolysis in
119 patients with PE who had not been previously treated with anti-
thrombolytics or an adjunctive device within 48 hours. The applicant
stated that this study was completed under FDA Investigational Device
Exception (IDE) G170064. The applicant claimed that the EXTRACT-PE
study showed the INDIGO[supreg] without Lightning led to a significant
mean reduction of 0.43 in right ventricle/left ventricle (RV/LV) ratio
(a measure associated with poor clinical outcomes when greater than 1)
that corresponded to a 27.3 percent reduction at 48 hours after
intervention. They also cited a low major adverse event composite rate
of 1.7 percent within 48 hours, device usage of only 37 minutes and
median ICU length of stay of 1 day. According to the applicant, rates
of cardiac injury, pulmonary vascular injury, clinical deterioration,
major bleeding, and device-related death at 48 hours were 0%, 1.7%,
1.7%, 1.7%, and 0.8%, respectively.
The applicant cited a poster of an unpublished retrospective case
review study by Hastings \276\ of 18 patients with DVT treated with
INDIGO[supreg] followed by anticoagulation. Primary technical success
(defined as restoration of blood flow with minimal residual thrombus
(<10%) without the need for a second session of treatment) was achieved
in 15 patients. Three patients required adjunctive methods for
successful clearance of thrombus, undergoing two sessions of treatment.
Two patients had recurrence of DVT following single-session treatment,
both of whom were asymptomatic at time of diagnosis.
---------------------------------------------------------------------------
\276\ Hastings, L.H., Perkowski, P.E. Single Session
Percutaneous Mechanical Aspiration Thrombectomy for Symptomatic
Proximal Deep Vein Thrombosis. Poster.
---------------------------------------------------------------------------
The applicant cited the PRISM study,\277\ a single-arm,
multicenter, retrospective analysis of 79 patients with arterial
occlusion from 2018, to provide evidence that use of INDIGO[supreg]
with Lightning has a low major bleeding event rate, can result in
revascularization without thrombolytics, and causes no clinically
significant distal embolization. The applicant also stated that the
interim results of the INDIAN study, a prospective trial using
INDIGO[supreg] without Lightning to treat patients with ALI showed no
device-related adverse events or major bleeding complications.\278\
---------------------------------------------------------------------------
\277\ Saxon, R.R., Benenati, J.F., Teigen, C., Adams, G.K.,
Sewall, L.E., and Trialists, P. (2018). Utility of a power
aspiration-based extraction technique as an initial and secondary
approach in the treatment of peripheral arterial thromboembolism:
Results of the multicenter prism trial. J Vasc Interv Radiol. 29(1):
p. 92-100.
\278\ Donato, et al. Acute Lower Limb Malperfusion--(INDIAN)
Registry: Protocol (as presented at VEITHsymposium 2019).
---------------------------------------------------------------------------
The applicant asserted that an unpublished laboratory bench test
using water found that the 20.3 mL/sec average flow rate of catheter
with Lightning generates 18-fold reduction in blood loss when compared
to the use of the same catheter and Penumbra engine pump without the
Lightning technology. The applicant asserted that a bench test showed
that the Penumbra aspiration pump demonstrates continuous pressure, as
evidenced by a sustained -29 inHg (inches of Mercury) through 60
seconds versus a 60-ml syringe which starts at -27 Hg and drops to 0 in
Hg within 18 seconds.
The applicant also asserted that an abstract of a single-center
retrospective case-control trial of 38 patients by Muck, P., et al.
comparing two versions of INDIGO[supreg] catheters (12F and 8F) showed
that median blood loss was 250mL in the larger Lightning 12F arm (n=9,
larger catheter) and 375mL in the 8F arm without Lightning (n=27,
smaller catheter). Technical success (defined as greater than 70
percent thrombus reduction) was achieved in 77 percent of patients in
the Lightning 12F arm compared to 18.5 percent in the 8F arm without
Lightning. The applicant also asserted that this study showed that
[[Page 45043]]
none (0/9) of the patients in the INDIGO[supreg] with Lightning group
required post-procedure transfusion, whereas 18.5 percent (5/27) of the
INDIGO[supreg] without Lightning group required post-procedure
transfusion.
In the proposed rule (86 FR 25265 through 25266), we noted the
following concerns in regard to the substantial improvement criterion.
Specifically, in its application, the applicant did not explicitly
state what the comparator was for each of its claims in support of
substantial clinical improvement; for example, whether INDIGO[supreg]
is being compared to systemic thrombolysis, percutaneous catheter
directed thrombolysis, or other aspiration thrombectomy catheters. We
stated that comparing INDIGO[supreg] to a medical treatment modality
may not be appropriate since percutaneous interventions for PE and DVT
have different clinical indications, risks, and benefits compared to
medical or surgical interventions.
We also noted that the applicant relies mostly on studies of
INDIGO[supreg] without Lightning to substantiate its claims regarding
INDIGO[supreg] with Lightning. Of all the studies provided by the
applicant, only one small, unpublished study of DVT patients by Muck,
P., et al. includes patients treated with INDIGO[supreg] with Lightning
(which has the intelligent aspiration) versus earlier versions of the
applicant's device. We stated that the applicant did not demonstrate
superior outcomes using INDIGO[supreg] with Lightning compared to
INDIGO[supreg] without Lightning.
We noted that outcomes for INDIGO[supreg] for the rates of
pulmonary vascular injury at 48 hours, clinical deterioration, major
bleeding and device-related deaths were stated by the applicant as low
compared to systemic thrombolysis, but were not compared to outcomes
for existing aspiration thrombectomy devices which may be a more
appropriate comparator. We further noted that in the poster study, all
patients were maintained on anticoagulation following thrombectomy with
INDIGO[supreg], so it is difficult to assess the DVT recurrence rate
(using INDIGO[supreg] alone) to support the claim that INDIGO[supreg]
can be used with patients with high risk of bleeding.
We also noted that suction generated through a vacuum may not be
superior to other mechanisms of generating negative pressure used in
other existing aspiration catheters. A study comparing suction forces
and vacuum pressure of Penumbra pump to a 60-mL syringe and pumps
manufactured by several other manufacturers showed that all catheters
transmit similar vacuum pressure regardless of pump or 60-mL
syringe.\279\
---------------------------------------------------------------------------
\279\ Froehler, M.T. (2017). Comparison of vacuum pressures and
forces generated by different catheters and pumps for aspiration
thrombectomy in acute ischemic stroke. Interventional neurology,
6(3-4), 199-206.
---------------------------------------------------------------------------
Finally, we questioned whether there is enough evidence to support
that ``intelligent aspiration'' associated with INDIGO with Lightning
provides a substantial clinical improvement over existing aspiration
catheters from INDIGO[supreg] and existing devices where the aspiration
is controlled manually. No direct comparison of blood loss between
INDIGO[supreg] with Lightning catheter and existing aspiration
thrombectomy devices from other manufacturers was provided,
specifically catheters that reduce blood loss by returning the
aspirated blood back to the patient. The unpublished bench test
included with the application may have demonstrated a reduction in
average volume of water aspirated using the INDIGO[supreg] Catheter
with Lightning fully functional compared to the INDIGO[supreg] catheter
with Lightning deactivated (valve pin fixed to the open position).
However, this study was not designed to compare blood loss during a
thrombectomy procedure between aspiration controlled by a human versus
by the Lightning ``intelligent aspiration.''
We invited public comment on whether INDIGO[supreg] with Lightning
meets the substantial clinical improvement criterion.
Comment: Several commenters stated that they did not believe that
INDIGO[supreg] with Lightning met the requirements for substantial
clinical improvement. Some comments stated in general that their
clinical experience with other competing mechanical thrombectomy
products was superior. Other commenters noted that there was no
published data to suggest that INDIGO[supreg] with Lightning offered
improved outcomes over competitive products. Some commenters discussed
personal experience with INDIGO[supreg] with Lightning and discussed
concerns including a tendency for the catheter to be clogged with
thrombus requiring removal and cleaning, which results in additional
blood loss. A commenter noted their experience with many other products
and asserted that blood loss was much higher using INDIGO[supreg] with
Lightning. This same commenter stated that there was some difficulty in
achieving good clearance of thrombus using INDIGO[supreg] with
Lightning. A commenter reviewed the clinical evidence submitted by the
applicant and asserted that no patients were treated with
INDIGO[supreg] with Lightning in the studies demonstrating arterial or
venous thromboembolism clinical evidence because the studies took place
prior to the availability of the technology. The commenter also noted
that the unpublished laboratory bench test which was submitted by the
applicant used water as opposed to blood to demonstrate effectiveness.
This same commenter asserted that only a single study of INDIGO[supreg]
with Lightning was used to demonstrate clinical evidence and that it
was an unpublished abstract which included nine patients with DVT. The
same commenter then summarized a study of a competitive product, the
Inari ClotTriever, stating that a multi-center study of DVT patients
showed a median blood loss of 50ml.\280\ The same commenter summarized
a multi-center study of pulmonary embolism patients treated with
another competitive product, the Inari FlowTriever, that showed a
median blood loss of 250ml.\281\ This commenter asserted that this
evidence was both more robust due to the larger number of patients and
demonstrated reduced blood loss when compared to evidence presented for
INDIGO[supreg] with Lightning.
---------------------------------------------------------------------------
\280\ Prospective data from first 250 DVT patients enrolled
across 24 study site in the ClotTriever Outcomes Registry as
presented at 2021 New Cardiovascular Horizons Annual Conference.
\281\ Prospective data from first 230 PE patients enrolled in
the FlowTriever All-Comer Registry for Patient Safety and
Hemodynamics as presented at the 2020 American Heart Association and
the 2020 Transcatheter Cardiovascular Therapeutics Conference.
---------------------------------------------------------------------------
Response: We appreciate the commenters providing their personal
experience with the device as well as their comments on the evidence
that the applicant included provided and have taken these comments into
consideration in our determination of substantial clinical improvement,
which is discussed later in this section.
Comment: The applicant submitted a comment in response to our
concerns regarding whether INDIGO[supreg] with Lightning meets the
substantial clinical improvement criterion.
In response to the concern that the comparator for the submitted
studies was unclear, the applicant stated that, in general, other
aspiration thrombectomy systems are the appropriate comparators in the
consideration of substantial clinical improvement for INDIGO[supreg]
with Lightning. The applicant provided a table which indicated the
comparators that were used in studies that were part of the application
as well as one new study that was provided with the
[[Page 45044]]
comment submission, summarized in the table below.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.180
[[Page 45045]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.181
BILLING CODE 4120-01-C
With regard to our concern that the application relied mostly on
studies of INDIGO[supreg] without Lightning, the applicant described a
recent presentation in May 2021 \288\ which compared the use of
INDIGO[supreg] without Lightning to INDIGO[supreg] with Lightning. The
applicant stated that the use of the intelligent aspiration associated
with the Lightning device was associated with higher rates of technical
success, less blood loss, and no need for blood transfusion when
compared to continuous aspiration. With respect to technical success,
the new submitted study reported that thrombus reduction of >70% or
better was significantly higher in the Lightning group. The applicant
further noted that 80% of patients in the Lightning group achieved
thrombus reduction of >70% compared to only 20% of patients in the
control group. With respect to blood loss, the investigators found a
significant reduction in blood loss when using the Lightning Device
(250mL versus 275mL blood loss, p=0.0044). They also noted that none of
the patients in the Lightning group required a post-procedure
transfusion whereas 16.7% of the patients without Lightning did.
---------------------------------------------------------------------------
\282\ EXTRACT-PE: A Prospective, Multicenter Trial to Evaluate
the Safety and Efficacy of the Indigo[supreg] Aspiration System in
Acute Pulmonary Embolism--as presented at VIVA 2019; Saxon, R.R.,
Benenati, J.F., Teigen, C., Adams, G.K., Sewall, L.E., and
Trialists, P. (2018). Utility of a power aspiration-based extraction
technique as an initial and secondary approach in the treatment of
peripheral arterial thromboembolism: Results of the multicenter
prism trial. J Vasc Interv Radiol. 29(1): p. 92-100.
\283\ EXTRACT-PE: A Prospective, Multicenter Trial to Evaluate
the Safety and Efficacy of the Indigo[supreg] Aspiration System in
Acute Pulmonary Embolism--as presented at VIVA 2019; Saxon, R.R.,
Benenati, J.F., Teigen, C., Adams, G.K., Sewall, L.E., and
Trialists, P. (2018). Utility of a power aspiration-based extraction
technique as an initial and secondary approach in the treatment of
peripheral arterial thromboembolism: Results of the multicenter
prism trial. J Vasc Interv Radiol. 29(1): p. 92-100.
\284\ EXTRACT-PE: A Prospective, Multicenter Trial to Evaluate
the Safety and Efficacy of the Indigo[supreg] Aspiration System in
Acute Pulmonary Embolism--as presented at VIVA 2019; Saxon, R.R.,
Benenati, J.F., Teigen, C., Adams, G.K., Sewall, L.E., and
Trialists, P. (2018). Utility of a power aspiration-based extraction
technique as an initial and secondary approach in the treatment of
peripheral arterial thromboembolism: Results of the multicenter
prism trial. J Vasc Interv Radiol. 29(1): p. 92-100.
\285\ Muck, P., et al. Aspiration Thrombectomy with and without
Intelligent Aspiration for Lower Extremity Acute Deep Vein
Thrombosis, Poster, presented at International Symposium on
Endovascular Therapy (May 9-11, 2021).
\286\ EXTRACT-PE: A Prospective, Multicenter Trial to Evaluate
the Safety and Efficacy of the Indigo[supreg] Aspiration System in
Acute Pulmonary Embolism--as presented at VIVA 2019; Muck, P., et
al. SCVS Abstract; Hastings, L.H., Perkowski, P.E, Single Session
Percutaneous Mechanical Aspiration Thrombectomy for Symptomatic
Proximal Deep Vein Thrombosis Poster.
\287\ Meyer et al (Apr. 2014). Fibrinolysis for Patients with
Intermediate-Risk Pulmonary Embolism. N Engl J Med. 10;370(15):1402-
11); Tu et al (May 2019). A Prospective, Single-Arm, Multicenter
Trial of Catheter-Directed Mechanical Thrombectomy for Intermediate-
Risk Acute Pulmonary Embolism: The FLARE Study. JACC Cardiovasc
Interv. 13;12(9):859-869; EXTRACT-PE: A Prospective, Multicenter
Trial to Evaluate the Safety and Efficacy of the Indigo[supreg]
Aspiration System in Acute Pulmonary Embolism--as presented at VIVA
2019; Hastings, L.H., Perkowski, P.E, Single Session Percutaneous
Mechanical Aspiration Thrombectomy for Symptomatic Proximal Deep
Vein Thrombosis Poster.
\288\ Muck, P., et al. Aspiration Thrombectomy with and without
Intelligent Aspiration for Lower Extremity Acute Deep Vein
Thrombosis, Poster, presented at International Symposium on
Endovascular Therapy (May 9-11, 2021).
---------------------------------------------------------------------------
With regard to our concern that it was difficult to assess the DVT
recurrence rate (using the INDIGO[supreg] System alone) to support the
claim that the INDIGO[supreg] System can be used with patients with
high risk of bleeding because in the poster study submitted with the
application, all patients were
[[Page 45046]]
maintained on anticoagulation following thrombectomy with the
INDIGO[supreg] System, the applicant asserted that anticoagulation for
DVT is standard practice regardless of risk for bleeding. Thus, in
order to isolate the outcomes associated with INDIGO[supreg], the
applicant stated it was necessary to maintain DVT patients on
anticoagulation, as it is the standard of care.
With regard to our concern about whether suction generated through
a vacuum (as in the case of the INDIGO[supreg] System) is superior to
other mechanisms of generating negative pressure used in other existing
aspiration catheters, the applicant noted that they do not believe the
suction associated with the INDIGO[supreg] System, which is related to
the Penumbra Engine, is relevant to the new technology add-on payment
application because it is the Lightning device that is the component of
import with respect to substantial clinical improvement, but noted
their belief that the suction generated by the Penumbra engine is
superior to other methods of generating a vacuum.
Several other commenters noted their support for INDIGO[supreg]
with Lightning demonstrating substantial clinical improvement. Some of
these commenters did not offer specific points of comparison but spoke
to their personal clinical experience with the device. Other commenters
pointed to the ability of INDIGO[supreg] with Lightning to reduce blood
loss, increase the likelihood of completing treatment in a single
session and reduce the required use of thrombolytics.
Response: We appreciate the comments and the additional data from
the applicant received for INDIGO[supreg] with Lightning and have taken
them into consideration in making our determination. We believe the
applicant was able to address our concern regarding the continuation of
anticoagulation for DVT. We also appreciate the clarification from the
applicant regarding our concern that the Penumbra engine is not part of
its application for new technology add-on payments, thereby resolving
our concern with regard to the superiority of the vacuum suction.
However, after review of all the data received to date, we continue to
have concerns regarding the substantial clinical improvement criterion
as noted in the FY 2022 IPPS/LTCH PPS proposed rule. Specifically, we
remain concerned that the applicant primarily used data from studies
that utilized INDIGO[supreg] without Lightning in their attempt to
demonstrate superior outcomes using INDIGO[supreg] with Lightning which
is the subject of this application. While the applicant provided an
additional May 2021 presentation that compared INDIGO[supreg] with
Lightning to INDIGO[supreg] without Lightning, we do not believe it is
appropriate to consider INDIGO[supreg] without Lighting as a proxy for
other existing mechanical thrombectomy devices as stated by the
applicant. We note that multiple comments suggest that other mechanical
thrombectomy devices may be superior to the comparator device of
INDIGO[supreg] without Lightning, and the applicant did not provide
data comparing INDIGO[supreg] with Lightning to any existing device
(other than INDIGO[supreg] without Lightning) to demonstrate improved
outcomes. For these reasons, we do not have sufficient evidence to
support that INDIGO[supreg] with Lightning provides a substantial
clinical improvement over existing aspiration catheters including
INDIGO[supreg] and existing devices where the aspiration is controlled
manually.
After consideration of all the information from the applicant, as
well as the comments we received, we are unable to determine that
INDIGO[supreg] with Lightning represents a substantial clinical
improvement over existing technologies, and we are not approving new
technology add-on payments for INDIGO[supreg] with Lightning for FY
2022.
i. Olumiant[supreg] (baricitinib)
Eli Lilly and Company submitted an application for new technology
add-on payments for Olumiant[supreg] (baricitinib) for FY 2022.
Olumiant[supreg] is a Janus kinase (JAK) 1 and 2 inhibitor used in
combination with remdesivir as a treatment option for coronavirus
disease 2019 (COVID-19), a respiratory disease caused by severe acute
respiratory syndrome coronavirus 2 (SARS-CoV-2). Olumiant[supreg] has
not yet received marketing approval from FDA to treat COVID-19, but has
received an emergency use authorization (EUA) by the FDA.
Olumiant[supreg] has been previously approved by FDA for the treatment
of adult patients with moderately to severely active rheumatoid
arthritis, who have had inadequate response to one or more tumor
necrosis factor (TNF) antagonist therapies.\289\
---------------------------------------------------------------------------
\289\ Olumiant (baricitinib) [package insert]. US Food and Drug
Administration. Available at https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/207924s002lbl.pdf. Revised July 8, 2020.
Accessed October 8, 2020.
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The applicant stated that patients diagnosed with COVID-19 are at
an elevated risk for excess morbidity and mortality due to the
underlying SARS-CoV-2 infection and subsequent cytokine activation. The
applicant stated that the cause of respiratory failure in COVID-19 is a
hyperinflammatory state characterized by upregulation of multiple
cytokines and that Olumiant[supreg] may be a viable treatment in
patients with COVID-19 requiring supplemental oxygen, invasive
mechanical ventilation, or extracorporeal membrane oxygenation (ECMO)
because of its anti-inflammatory activity and ability to reverse
dysregulated inflammatory markers in patients with COVID-19.\290\ The
applicant noted treatment with baricitinib 4 mg resulted in reduced
plasma levels of the cytokine IL-6 in hospitalized patients with COVID-
19, a finding that was replicated after being observed in patients with
rheumatoid arthritis.291 292 293 The applicant also claimed
that Olumiant[supreg] potentially has anti-viral activity in inhibiting
SARS-CoV-2 from entering and infecting lung cells due to its affinity
for adaptor-associated kinase-1 (AAK1).\294\ The applicant noted that
there are ongoing studies to evaluate the impact of the antiviral host
activity of Olumiant[supreg].
---------------------------------------------------------------------------
\290\ McInnes IB, Byers NL, Higgs RE, et al. Comparison of
baricitinib, upadacitinib, and tofacitinib mediated regulation of
cytokine signaling in human leukocyte subpopulations. Arthritis Res
Ther. 2019;21(1):183. https://doi.org/10.1186/s13075-019-1964-1.
\291\ Bronte V, Ugel S, Tinazzi E, et al. Baricitinib restrains
the immune dysregulation in severe COVID-19 patients [published
online August 18, 2020]. J Clin Invest. https://doi.org/10.1172/JCI141772.
\292\ Sims JT, Krishnan V, Chang CY, et al. Characterization of
the cytokine storm reflects hyperinflammatory endothelial
dysfunction in COVID-19 [published online September 10, 2020]. J
Allergy Clin Immunol. https://doi.org/10.1016/j.jaci.2020.08.031.
\293\ Stebbing J, Krishnan V, de Bono S, et al; Sacco
Baricitinib Study Group. Mechanism of baricitinib supports
artificial intelligence-predicted testing in COVID-19 patients. EMBO
Mol Med. 2020;12(8):e12697. https://doi.org/10.15252/emmm.202012697.
\294\ Richardson P, Griffin I, Tucker C, Smith D, Oechsle O,
Phelan A, Rawling M, Savory E, Stebbing J. Baricitinib as potential
treatment for 2019-nCoV acute respiratory disease. Lancet. 2020 Feb
15;395(10223):e30-e31. doi: 10.1016/S0140-6736(20)30304-4. Epub 2020
Feb 4. Erratum in: Lancet. 2020 Jun 20;395(10241):1906. PMID:
32032529; PMCID: PMC7137985.
---------------------------------------------------------------------------
With respect to the newness criterion, Olumiant[supreg] received
Emergency Use Authorization (EUA) from FDA on November 19, 2020 for the
emergency use of Olumiant[supreg], indicated for use in combination
with remdesivir for the treatment of suspected or laboratory confirmed
COVID-19 in certain hospitalized patients requiring supplemental
oxygen, invasive mechanical ventilation, or extracorporeal membrane
oxygenation (ECMO). The applicant stated that it intends to submit a
supplemental new drug application (sNDA) for Olumiant[supreg].
[[Page 45047]]
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
revised 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. We stated that new
technologies that have not received FDA approval do not meet the
newness criterion. In addition, we stated we do not believe it is
appropriate for CMS to determine whether a medical service or
technology represents a substantial clinical improvement over existing
technologies before the FDA makes a determination as to whether the
medical service or technology is safe and effective. For these reasons,
we first determine whether a new technology meets the newness
criterion, and only if so, do we make a determination as to whether the
technology meets the cost threshold and represents a substantial
clinical improvement over existing medical services or technologies. We
also finalized at 42 CFR 412.87(c) (subsequently redesignated as Sec.
412.87(e)) 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.
In the FY 2021 IPPS/LTCH PPS final rule, to more precisely describe
the various types of FDA approvals, clearances, licensures, and
classifications that we consider under our new technology add-on
payment policy, we finalized a technical clarification to Sec.
412.87(e)(2) to indicate that new technologies must receive FDA
marketing authorization (for example, pre-market approval (PMA); 510(k)
clearance; the granting of a De Novo classification request; approval
of a New Drug Application (NDA); or Biologics License Application (BLA)
licensure) by July 1 of the year prior to the beginning of the fiscal
year for which the application is being considered. As noted in the FY
2021 IPPS/LTCH PPS final rule, this technical clarification did not
change our longstanding policy for evaluating whether a technology is
eligible for new technology add-on payment for a given fiscal year, and
we continue to consider FDA marketing authorization as representing
that a product has received FDA approval or clearance for purposes of
eligibility for the new technology add-on payment under Sec.
412.87(e)(2) (85 FR 58742).
An EUA by the FDA allows a product to be used for emergency use,
but under our longstanding policy, we believe it would not be
considered an FDA marketing authorization for the purpose of new
technology add-on payments, as a product that is available only through
an EUA is not considered to have FDA approval or clearance. Therefore,
under the current regulations at 42 CFR 412.87(e)(2) and consistent
with our longstanding policy of not considering eligibility for new
technology add-on payments prior to a product receiving FDA approval or
clearance, we believe a product available only through an EUA would not
be eligible for new technology add-on payments.
We also refer the reader to our comment solicitation in section
II.F.7. of the preamble of the proposed rule regarding how data
reflecting the costs of a product with an EUA, which may become
available upon authorization of the product for emergency use (but
prior to FDA approval or clearance), should be considered for purposes
of the 2-year to 3-year period of newness for new technology add-on
payments for a product with or expected to receive an EUA, including
whether the newness period should begin with the date of the EUA. With
respect to Olumiant[supreg], we specifically requested comment on
whether the newness period for this technology would begin on November
19, 2020, the date of its EUA, when the product became available on the
market. We summarize comments related to this comment solicitation and
provide our responses as well as our finalized policy in section XXX of
this final rule.
In response to the COVID-19 public health emergency (PHE), we
established the New COVID-19 Treatments Add-on Payment (NCTAP) under
the IPPS for COVID-19 cases that meet certain criteria (85 FR 71155).
We believe that as drugs and biological products become available and
are authorized for emergency use or approved by FDA for the treatment
of COVID-19 in the inpatient setting, it is appropriate to increase the
current IPPS payment amounts to mitigate any potential financial
disincentives for hospitals to provide new COVID-19 treatments during
the PHE. Therefore, effective for discharges occurring on or after
November 2, 2020 and until the end of the PHE for COVID-19, we
established the NCTAP to pay hospitals the lesser of (1) 65 percent of
the operating outlier threshold for the claim or (2) 65 percent of the
amount by which the costs of the case exceed the standard DRG payment,
including the adjustment to the relative weight under section 3710 of
the Coronavirus Aid, Relief, and Economic Security (CARES) Act, for
certain cases that include the use of a drug or biological product
currently authorized for emergency use or approved for treating COVID-
19.\295\ Qualifying inpatient cases involving the use of
Olumiant[supreg], in combination with VEKLURY[supreg], are currently
eligible for NCTAP beginning November 19, 2020, the date
Olumiant[supreg] received EUA, through the end of the PHE.
---------------------------------------------------------------------------
\295\ Additional Policy and Regulatory Revisions in Response to
the COVID-19 Public Health Emergency, 85 FR 71142, 71155 (November
6, 2020). https://www.govinfo.gov/content/pkg/FR-2020-11-06/pdf/2020-24332.pdf.; For more information on NCTAP, refer to CMS'
provider toolkit at https://www.cms.gov/medicare/covid-19/new-covid-19-treatments-add-payment-nctap.
---------------------------------------------------------------------------
We stated in the proposed rule that we anticipated that there might
be inpatient cases of COVID-19, beyond the end of the PHE, for which
payment based on the assigned MS-DRG may not adequately reflect the
additional cost of new COVID-19 treatments. In order to continue to
mitigate potential financial disincentives for hospitals to provide new
treatments, and to minimize any potential payment disruption
immediately following the end of the PHE, we stated that we believe
that the NCTAP should remain available for cases involving eligible
treatments, including Olumiant[supreg], in combination with
VEKLURY[supreg], for the remainder of the fiscal year in which the PHE
ends (for example, until September 30, 2022). We refer the reader to
our proposal in section II.F.8. of the preamble of the proposed rule to
extend the NCTAP through the end of the fiscal year in which the PHE
ends for certain products and discontinue the NCTAP for products
approved for new technology add-on payments in FY 2022. We also refer
the reader to section XXX of the preamble of this final rule, where we
discuss our finalized policy to extend the NCTAP through the end of the
fiscal year in which the PHE ends for all eligible products.
The applicant indicated that Olumiant[supreg] could be reported
using the ICD-10-PCS codes 3E0DXGC (Introduction of other therapeutic
substance into mouth and pharynx, external approach) or 3E0G7GC
(Introduction of other therapeutic substance into upper GI, via natural
or artificial opening) but stated that these codes do not uniquely
identify the administration of Olumiant[supreg]. We noted that ICD-10-
PCS codes XW0DXF5 (Introduction of other new technology therapeutic
substance into mouth and pharynx, external approach, new technology
group 5) and 3E0H7GC (Introduction of other therapeutic substance into
lower G.I. via natural or artificial opening) could also be used to
report use of Olumiant[supreg]. We noted that as of January 1, 2021,
Olumiant[supreg] is
[[Page 45048]]
uniquely identified by ICD-10-PCS codes XW0DXM6 (Introduction of
baricitinib into mouth and pharynx, external approach, new technology
group 6), XW0G7M6 (Introduction of baricitinib into upper GI, via
natural or artificial opening, new technology group 6), and XW0H7M6
(Introduction of baricitinib into lower GI, via natural or artificial
opening, new technology group 6).
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 not be considered ``new''
for purposes of new technology add-on payments.
With respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
according to the applicant, Olumiant[supreg] does not use the same or a
similar mechanism of action when compared to an existing technology to
achieve a therapeutic outcome, as there are no JAK inhibitor therapies
that have received an EUA or an approval from FDA to treat COVID-19.
The applicant notes that currently there is one therapy approved by
FDA to treat COVID-19 in hospital inpatients, remdesivir, and one
therapy, besides Olumiant[supreg], that has received EUA for the
treatment of COVID-19, convalescent plasma.\296\ The applicant claims
that the mechanism of action for both of these treatments differs from
Olumiant[supreg], which works as a JAK inhibitor.
---------------------------------------------------------------------------
\296\ The Federal Drug and Food Administration. Emergency Use
Authorizations: Drug and Biological Products. 2020. https://www.fda.gov/emergency-preparedness-andresponse/mcm-legal-regulatory-and-policy-framework/emergency-useauthorization#coviddrugs.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that there are
no JAK inhibitor therapies that have received an EUA or an approval
from FDA for the treatment of patients with COVID-19 and that
Olumiant[supreg] could therefore 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, according to the
applicant, Olumiant[supreg] represents a potential new treatment option
for adult and pediatric patients 2 years or older with suspected or
laboratory-confirmed COVID-19 requiring supplemental oxygen, invasive
mechanical ventilation, or extracorporeal membrane oxygenation (ECMO).
The applicant also stated that COVID-19 is an entirely distinct disease
from those caused by other coronaviruses including severe acute
respiratory syndrome (SARS) and the Middle East respiratory syndrome
coronavirus (MERS-CoV).
In summary, the applicant asserted that Olumiant[supreg] is not
substantially similar to other available therapies because, as a JAK
inhibitor, it has a unique mechanism of action; there are no other
products assigned to the same MS-DRG; and it treats a different patient
population and disease--COVID-19. However, we stated in the proposed
rule that although there may not be any other JAK inhibitors for the
treatment of COVID-19 assigned to the same MS-DRG as Olumiant[supreg],
Olumiant[supreg] may map to the same MS-DRG as other existing COVID-19
treatments. We also noted that Olumiant[supreg] involves the treatment
of the same patient population and disease as other treatments for
COVID-19, as Olumiant[supreg] is given to the same patients as
remdesivir due to the EUA indication.
As discussed in section II.F.7 of the preamble of the proposed
rule, we requested comment regarding how data reflecting the costs of a
product with an EUA, which may become available upon authorization of
the product for emergency use (but prior to FDA approval or clearance),
should be considered for purposes of the 2-year to 3-year period of
newness for new technology add-on payments for a product with or
expected to receive an EUA, including whether the newness period should
begin with the date of the EUA. We also specifically requested comment
on whether the newness period for Olumiant[supreg] would begin on
November 19, 2020, the date of its EUA, when the product became
available on the market. We summarize comments related to this comment
solicitation and provide our responses as well as our finalized policy
in section XXX of this final rule.
As previously discussed, under the regulations at 42 CFR
412.87(e)(2) and consistent with our longstanding policy of not
considering eligibility for new technology add-on payments prior to a
product receiving FDA approval or clearance, we believe a product
available only through an EUA would not be eligible for new technology
add-on payments.
We invited public comment on whether Olumiant[supreg] meets the
newness criterion.
Comment: In response to CMS' statement in the proposed rule that an
EUA would not be considered FDA marketing authorization for the purpose
of new technology add-on payments, as a product that is available only
through an EUA is not considered to have FDA approval or clearance, and
therefore a product available only through an EUA would not be eligible
for new technology add-on payments, the applicant submitted a comment.
The applicant stated their belief that market authorization, not
approval, is the criterion for new technology add-on payment
eligibility and that an EUA is a formal FDA authorization to market.
Further, the applicant stated that if an EUA was sufficient for CMS to
authorize payment enhancements on COVID treatments under NCTAP, the
same EUA should suffice for the new technology add-on payment's
marketing authorization requirement and that in the case of COVID
therapies, CMS should harmonize its payment policies to ensure
consistency and prevent lapses in reimbursement that could lead to
access barriers for patients. The applicant requested that CMS
reconsider its stated position and acknowledge that an active EUA
issued by the FDA for a COVID-19 treatment prior to July 1, 2021 is an
appropriate form of authorization for the purposes of meeting the FY
2022 new technology add-on payment eligibility requirements.
Response: We thank the applicant for their comment. With regard to
the applicant's statement that market authorization, not approval, is
the criterion for new technology add-on payment eligibility, as we
noted in the proposed rule, we revised our regulations at Sec. 412.87
in the FY 2009 IPPS final rule (73 FR 48561 through 48563) to codify
our longstanding practice of how CMS evaluates the eligibility criteria
for new technology add-on payment applications. We specifically stated
that new technologies that have not received FDA approval do not meet
the newness criterion. More recently, in the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58742), we finalized a technical clarification to the
language of Sec. 412.87 to more precisely describe the various types
of FDA approvals, clearances, licensures, and classifications that we
consider under our new technology add-on payment policy. As we stated
at that time, this technical clarification did not change or modify the
policy set forth in existing Sec. 412.87(e)(2). We explained that
under our current policy, in evaluating whether a technology is
eligible for new technology add-on payment for a given fiscal year, we
consider whether the technology has received marketing
[[Page 45049]]
authorization by July 1 (such as Premarket Approval (PMA); 510(k)
clearance; the granting of a De Novo classification request; or
approval of a New Drug Application (NDA)). Accordingly, and consistent
with our longstanding practice, we continue to consider FDA marketing
authorization as representing that a product has received FDA approval
or clearance for purposes of eligibility for the new technology add-on
payment under Sec. 412.87(e)(2).
In the FDA's press release regarding its issuance of an EUA for
OlumiantTM, it states that ``[t]he issuance of an EUA is
different than an FDA approval.'' \297\ To determine whether to issue
an EUA, FDA ``evaluates the totality of available scientific evidence
and carefully balances any known or potential risks with any known or
potential benefits of the product for use during an emergency.'' This
standard is different from the standard that FDA uses to evaluate
whether to approve a drug. Therefore, we continue to believe that, for
the purposes of new technology add-on payments, a product that is only
available through an EUA is not considered to have FDA approval or
clearance and therefore is not considered eligible for new technology
add-on payments.
---------------------------------------------------------------------------
\297\ U.S. Food and Drug Administration. (2020, November 19).
Coronavirus (COVID-19) Update: FDA Authorizes Drug Combination for
Treatment of COVID-19. U.S. Food and Drug Administration. https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-drug-combination-treatment-covid-19.
---------------------------------------------------------------------------
In response to the applicant's comment that an EUA should suffice
for the new technology add-on payment's marketing authorization
requirement because an EUA was sufficient for CMS to authorize payment
enhancements for COVID-19 treatments under NCTAP, we note that there
are distinct eligibility criteria for new technology add-on payment as
compared to NCTAP. As noted previously, historically, CMS has stated
that for the purposes of new technology add-on payments, that new
technologies that have not received FDA approval do not meet the
newness criterion. In addition to the newness criterion, there is a
substantial clinical improvement criterion to qualify for new
technology add-on payments that is not required for NCTAP. We have
previously stated (73 FR 48561 through 48563) that we do not believe it
is appropriate for CMS to determine whether a medical service or
technology represents a substantial clinical improvement over existing
technologies before the FDA makes a determination as to whether the
medical service or technology is safe and effective. For these reasons,
we first determine whether a new technology meets the newness
criterion, and only if so, do we make a determination as to whether the
technology meets the cost threshold and represents a substantial
clinical improvement over existing medical services or technologies. As
stated by FDA in their November 19, 2020 news release announcing the
issuance of the EUA for Olumiant[supreg], ``the safety and
effectiveness of this investigational therapy for use in the treatment
of COVID-19 continues to be evaluated.'' \298\ Therefore, while we
believe that the FDA's issuance of an EUA for Olumiant[supreg] is
sufficient to support NCTAP eligibility to ensure that providers are
not disincentivized to provide this treatment to patients with COVID-
19, we do not believe that it would be appropriate for us to make a
determination whether Olumiant provides a substantial clinical
improvement over existing technologies for the purposes of new
technology add-on payments.
---------------------------------------------------------------------------
\298\ Ibid.
---------------------------------------------------------------------------
In response to the applicant's comment that CMS should harmonize
its payment policies to ensure consistency and prevent lapses in
reimbursement that could lead to access barriers for patients, we do
not believe that our position that an EUA is not considered an FDA
marketing authorization for the purpose of new technology add-on
payments will lead to patient access issues. As discussed in section
XXX of this final rule, we are finalizing our proposal to extend the
NCTAP through the end of the fiscal year in which the PHE ends for all
eligible products. This means that qualifying inpatient cases involving
the use of Olumiant[supreg], in combination with VEKLURY[supreg], will
continue to be eligible for NCTAP through the end of the fiscal year in
which the PHE ends. Additionally, as stated in the IPPS/LTCH PPS
proposed rule (86 FR 25395), if a product with an EUA receives FDA
approval by July 1, 2022, it would be eligible for consideration of new
technology add-on payments beginning FY 2023, and new technology add-on
payments, if approved, would begin on October 1, 2022 (the beginning of
FY 2023).
We refer the readers to section XXX of this final rule for a
discussion of the comment solicitation including a summary of the
comments received.
As stated previously, Olumiant[supreg] has an EUA and is indicated
for use in combination with remdesivir for the treatment of suspected
or laboratory confirmed COVID-19 in certain hospitalized patients
requiring supplemental oxygen, invasive mechanical ventilation, or
extracorporeal membrane oxygenation (ECMO). However, because
Olumiant[supreg] did not receive FDA clearance or approval by July 1,
2021 for this indication, it is not eligible for consideration for new
technology add-on payments for FY 2022 and therefore and we are not
approving new technology add-on payments for Olumiant[supreg] for FY
2022. We note that we received public comments from the applicant
regarding the substantial clinical improvement criterion. However,
because Olumiant[supreg] is ineligible for consideration for new
technology add-on payments for FY 2022 because it did not receive FDA
clearance or approval by July 1, 2021, we are not summarizing nor
responding to public comments regarding the substantial clinical
improvement or cost criteria for this application in this final rule.
Under our finalized policy as discussed in section XXX of this final
rule, qualifying inpatient cases involving the use of Olumiant[supreg],
in combination with VEKLURY[supreg], are currently eligible for NCTAP
beginning November 19, 2020, the date Olumiant[supreg] received EUA,
through the end of the fiscal year in which the PHE ends.
j. Pure-Vu[supreg] System
Motus GI holdings, Inc. submitted an application for new technology
add-on payments for the Pure-Vu[supreg] System for FY 2022. The Pure-
Vu[supreg] System is an FDA cleared system designed to connect to
currently marketed colonoscopes to provide high intensity, intra-
procedural cleansing of the colon during a colonoscopy. According to
the applicant, the Pure-Vu[supreg] System is indicated for use in
patients requiring therapeutic or diagnostic colonoscopies where the
bowel has not been adequately prepared. The applicant asserted that the
Pure-Vu[supreg] System would be used in situations such as a lower
gastrointestinal bleed (LGIB), as LGIB does not allow for adequate
bowel preparation.
The applicant asserted that the Pure-Vu[supreg] System device helps
to avoid aborted and delayed colonoscopy procedures due to poor
visualization of the colon mucosa by creating a unique High Intensity,
Pulsed Vortex Irrigation Jet that consists of a mixture of air and
water to break-up fecal matter, blood clots, and other debris, and
scrub the walls of the colon while simultaneously removing the debris
through two suction channels. The applicant stated that the suction
channels have a sensor
[[Page 45050]]
to detect the formation of a clog in the channels, triggering the
system to automatically purge and then revert to suction mode once the
channel is clear. According to the applicant, this combination of the
agitation of the fluid in the colon via the pulsed vortex irrigation
and simultaneous removal of the debris allows the physician to
visualize the colon and achieve a successful colonoscopy or other
advanced procedure through the colonoscope even if the patient is not
properly prepped and has debris either blocking the ability to navigate
the colon or covering the colon wall obscuring the mucosa and any
pathology that may be present. The applicant asserted that the constant
volume suction pumps do not cause the colon to collapse, which allows
the physician to continue to navigate the colon while cleansing and
avoids the need to constantly insufflate the colon, which may be
required with other colonoscopy irrigation systems.
The applicant stated that the Pure-Vu[supreg] System is comprised
of a workstation that controls the function of the system, a disposable
oversleeve that is mounted on a colonoscope and inserted into the
patient, and a disposable connector with tubing (umbilical tubing with
main connector) that provides the interface between the workstation,
the oversleeve, and off the shelf waste containers.
The applicant explained that the workstation has two main
functions: Cleansing via irrigation and evacuation, and acting as the
user interface of the system. The applicant explained that the
irrigation into the colon is achieved by an electrical pump that
supplies pressurized gas (air) and a peristaltic pump that supplies the
liquid (water or saline). According to the applicant, the pressurized
gas and liquid flow through the ``main connector'' and are mixed upon
entry into the umbilical tubing that connects to the oversleeve. The
applicant explained that the gas pressure and flow are controlled via
regulators and the flow is adjusted up or down depending on the
cleansing mode selected. The applicant stated that a foot pedal
connected to the user interface activates the main functions of the
system so that the user's hands are free to perform the colonoscope
procedure in a standard fashion.
The applicant stated that the evacuation mode (also referred to as
suction) removes fecal matter and fluids out of the colon. The
applicant noted that the evacuation function is active during cleansing
so that fluid is inserted and removed from the colon simultaneously.
The applicant explained that the evacuation pumps are designed in a
manner that prevents the colon from collapsing when suctioning, which
facilitates the ability to simultaneously irrigate and evacuate the
colon. According to the applicant, during evacuation, the system
continuously monitors the pressure in the evacuation channels of the
oversleeve and if the pressure drops below pre-set limits the pumps
will automatically reverse the flow. The applicant explained that the
clog sensor triggers the system to automatically purge the material out
of the channel and back into the colon where it can be further
emulsified by the Pulsed Vortex Irrigation Jet, and then automatically
reverts back into evacuation mode once the channel is cleared. The
applicant stated that the evacuation (suction) that drains fecal matter
and fluids out of the colon is generated by peristaltic pumps that can
rotate in both directions, either to evacuate fluids and fecal matter
from the colon through the evacuation tubes and into a waste container,
or while in the reverse direction, to purge the evacuation tubes. The
applicant claimed the suction created by this type of pump creates a
constant volume draw of material from the colon and therefore prevents
the colon from collapsing rapidly. According to the applicant, purging
of evacuation tubes may be activated in two ways: The purging cycle is
automatically activated when low pressure is noted by the evacuation-
line sensor (it is also activated for the first 0.5 seconds when
evacuation is activated to make sure the line is clear from the start);
or a manual purge may be activated by the user by pushing the ``manual
purge'' button on the foot pedal. The applicant claimed the pressure-
sensing channel is kept patent by using an air perfusion mechanism
where an electrical pump is used to perfuse air through the main
connector and into the oversleeve, while the sensor located in the
workstation calculates the pressure via sensing of the channel.
The applicant explained the Pure-Vu[supreg] System is loaded over a
colonoscope and that the colonoscope with the Pure-Vu[supreg]
oversleeve is advanced through the colon in the same manner as a
standard colonoscopy. The applicant stated that the body of the
oversleeve consists of inner and outer sleeves with tubes intended for
providing fluid path for the cleansing irrigation (2X), the evacuation
of fluids (2X), the evacuation sensor (1X) and that the flexible head
is at the distal end of the oversleeve and is designed to align with
the colonoscope's distal end in a consistent orientation. The applicant
explained that the distal cleansing and evacuation head contains the
irrigation ports, evacuation openings, and a sensing port. According to
the applicant, the system gives the physician the control to cleanse
the colon as needed based on visual feedback from the colonoscope to
make sure they have an unobstructed view of the colon mucosa to detect
and treat any pathology. The applicant noted that since the Pure-
Vu[supreg] System does not interfere with the working channel of the
colonoscope, the physician is able to perform all diagnostic or
therapeutic interventions in a standard fashion with an unobstructed
field of view.
According to the applicant, multiple studies have shown that
inadequate bowel visualization leads to missed pathology, delayed
diagnosis, extended hospital stay, and in some cases, additional
therapy being administered, especially in the acute LGIB population,
which is the most common indication for inpatients that require
colonoscopy.299 300 Unknown abdominal pain, infection, and
foreign body removal were also cited by the applicant as being common
indications for an inpatient colonoscopy.
---------------------------------------------------------------------------
\299\ Garber A, Sarvepalli S, Burke CA, Bhatt A, Ibrahim M,
McMichael J, et al. Modifiable Factors Associated with Quality of
Bowel Preparation Among Hospitalized Patients Undergoing
Colonoscopy. J Hosp Med. 2019;14(5):278-83.
\300\ Yadlapati R, Johnston ER, Gregory DL, Ciolino JD, Cooper
A, Keswani RN. Predictors of Inadequate Inpatient Colonoscopy
Preparation and Its Association with Hospital Length of Stay and
Costs. Dig Dis Sci. 2015;60(11):3482-90.
---------------------------------------------------------------------------
The applicant explained that when a patient with LGIB is admitted
to the hospital, they are stabilized and then started on bowel
preparation for the colonoscopy procedure. The applicant claimed that
the patient typically is placed on a liquid-only diet while consuming
4-6 liters of polyethylene glycol (PEG) based solution until the rectal
effluent is clear. If the rectal effluent is not clear, additional
bowel preparation is prescribed. The applicant stated that for severe
LGIB cases, a patient is prescribed to consume a rapid purge of 1 liter
every 30-45 minutes with a total volume of 4-14 liters, which could
lead to purgative intolerance or vomiting. The applicant claimed that
even in situations where bowel preparation has been completed, and
clear rectal effluent while on a clear liquid diet has been confirmed,
there are no guarantees that a patient's bowel is clean for a
successful colonoscopy. The applicant submitted data from a study by
the Cleveland Clinic showing 51 percent of 8,819 patients observed over
a 4-year period were inadequately
[[Page 45051]]
prepared for colonoscopies, leading to one extra day in the hospital
compared to patients that were adequately prepared.\301\ The applicant
cited another study, by Northwestern University, demonstrating an
association between inadequate bowel preparation and increased length
of stay (LOS) in hospitals, with inadequately prepared patients staying
two more days than adequately prepared patients on average.\302\ The
applicant claimed additional time spent in hospitals increases the
patient's exposure to risks of hospital-acquired infections. The
applicant claimed this risk is especially impactful to patients who are
admitted for LGIB, which is seen at a higher prevalence in the elderly
population.303 304 The applicant stated in the elderly
population, continuous bowel preparation also poses increased risk due
to their higher comorbidities and potential for electrolyte imbalances
such as hyperphosphatemia, hypocalcemia, and hypokalemia.\305\
---------------------------------------------------------------------------
\301\ Garber A, Sarvepalli S, Burke CA, Bhatt A, Ibrahim M,
McMichael J, et al. Modifiable Factors Associated with Quality of
Bowel Preparation Among Hospitalized Patients Undergoing
Colonoscopy. J Hosp Med. 2019;14(5):278-83.
\302\ Yadlapati R, Johnston ER, Gregory DL, Ciolino JD, Cooper
A, Keswani RN. Predictors of Inadequate Inpatient Colonoscopy
Preparation and Its Association with Hospital Length of Stay and
Costs. Dig Dis Sci. 2015;60(11):3482-90.
\303\ Parra-Blanco A, Ruiz A, Alvarez-Lobos M, Amoros A, Gana
JC, Ibanez P, et al. Achieving the best bowel preparation for
colonoscopy. World J Gastroenterol. 2014;20(47):17709-26.
\304\ Hauck K, Zhao X. How dangerous is a day in hospital? A
model of adverse events and length of stay for medical inpatients.
Med Care. 2011;49(12):1068-75.
\305\ Parra-Blanco A, Ruiz A, Alvarez-Lobos M, Amoros A, Gana
JC, Ibanez P, et al. Achieving the best bowel preparation for
colonoscopy. World J Gastroenterol. 2014;20(47):17709-26.
---------------------------------------------------------------------------
The applicant cited a practical guide authored by Kim B., et al.,
to assert that poor visualization of the colon mucosa has a direct
effect on the ability to detect the presence of a GI bleed or the
aftermath stigmata and administer treatment successfully.\306\ The
applicant used the Boston Bowel Preparation Scale (BBPS), developed by
Lai E. et al.,\307\ as a reliable method to measure bowel preparation.
The applicant stated that the scale is a range (0-9) of dirtiest to
cleanest for the whole colon and 0 to 3 for each of the 3 segments of
the colon; the right colon (including the cecum and ascending colon),
the transverse colon (including the hepatic and splenic flexures), and
the left colon (including the descending colon, sigmoid colon, and
rectum). Therefore, the maximum BBPS score for a perfectly clean colon
without any residual liquid is nine and the minimum BBPS score for an
unprepared colon is zero. The points are assigned as follows: zero =
Unprepared colon segment with mucosa not seen due to solid stool that
cannot be cleared; one = Portion of mucosa of the colon segment seen,
but other areas of the colon segment not well seen due to staining,
residual stool and/or opaque liquid; two = Minor amount of residual
staining, small fragments of stool and/or opaque liquid, but mucosa of
colon segment seen well; three = Entire mucosa of colon segment seen
well with no residual staining, small fragments of stool or opaque
liquid.
---------------------------------------------------------------------------
\306\ Kim BS, Li BT, Engel A, et al. Diagnosis of
gastrointestinal bleeding: A practical guide for clinicians. World J
Gastrointest Pathophysiol. 2014;5(4):467-478.doi: 10.4291/
wjgp.v5.i4.467.
\307\ Lai EJ, Calderwood AH, Doros G, Fix OK, Jacobson BC. The
Boston Bowel Preparation Scale: A valid and reliable instrument for
colonoscopy-oriented research. Gastrointestinal Endoscopy.
2009;69(3):620-625
---------------------------------------------------------------------------
The applicant stated that evidence-based guidelines and clinical
reviews in high impact biomedical journals recommend colonoscopy as the
preferred initial modality for the diagnosis and treatment of acute
lower gastrointestinal bleeding.308 309 The applicant stated
that colonoscopy has been less frequently utilized than might otherwise
be indicated because it suffers from the significant disadvantage of
requiring the need for a large volume bowel preparation.\310\ The
applicant states that even with a bowel preparation, poor visualization
often occurs because of a poorly prepared colon. Based on these
assertions, the applicant inferred that colonoscopy for acute lower
gastrointestinal bleeding would be much more utilized and lead to more
diagnoses and interventions with intraprocedural bowel preparation,
which puts the control of the visualization (cleanliness) of the colon
mucosa in the hands of the endoscopist. The applicant further stated it
is important to appreciate that alternatives to colonoscopy, including
angiography and vascular embolization treatments to create hemostasis,
have risks of ischemic vascular injury, retroperitoneal bleeding and
acute renal injury.\311\ The applicant stated that aside from the
colonoscopy, other modalities such as tagged red blood cell scans,
computed tomography (CT) angiograms, and mesenteric angiographies all
require an active source of bleed in order to achieve a successful
diagnostic yield. The applicant claimed that even when diagnosis is
achieved using these modalities, a colonoscopy may still be ordered to
treat the source of the bleed via epinephrine injections and clipping
and thermal therapies, to prevent potential surgical interventions.
---------------------------------------------------------------------------
\308\ Strate LL, Gralnek IM. ACG Clinical Guideline: Management
of Patients With Acute Lower Gastrointestinal Bleeding. Am J
Gastroenterol. 2016 Apr;111(4):459-74. doi: 10.1038/ajg.2016.41.
Epub 2016 Mar 1. Erratum in: Am J Gastroenterol. 2016
May;111(5):755. PMID: 26925883; PMCID: PMC5099081.
\309\ Gralnek IM, Neeman Z, Strate LL. Acute Lower
Gastrointestinal Bleeding. N Engl J Med. 2017 Mar 16;376(11):1054-
1063. doi: 10.1056/NEJMcp1603455. PMID: 28296600.
\310\ Carney BW, Khatri G, Shenoy-Bhangle AS. The role of
imaging in gastrointestinal bleed. Cardiovasc Diagn Ther. 2019
Aug;9(Suppl 1):S88-S96. doi: 10.21037/cdt.2018.12.07. PMID:
31559156; PMCID: PMC6732104.
\311\ Ibid.
---------------------------------------------------------------------------
With respect to the newness criterion, the Pure-Vu[supreg] System
first received FDA 510(k) clearance on September 22, 2016 under 510(k)
number K60015. Per the applicant, this initial device was very
cumbersome to set up and required direct support from the company and
therefore was not viable for a small company with limited resources to
market the device. The applicant noted that the initial device could
have been sold starting on January 27, 2017 when the first device came
off the manufacturing line. Per the applicant, the device was allocated
for clinical evaluations but 10 institutions throughout the country
purchased the device outside of a clinical study, primarily to allow
physicians to try the product prior to committing to a clinical trial.
The applicant further noted that minor modifications were made to the
Pure-Vu System in additional 510(k) clearances dated December 12, 2017
and June 21, 2018. The current marketed Pure-Vu System was then granted
510(k) clearance on June 6, 2019 under 510(k) number K191220. Per the
applicant, this clearance changed the entire set-up of the device,
redesigned the user interface, and reduced the size, among other
changes. According to the applicant, this updated version was
commercially available as of September 19, 2019.
The applicant submitted a request for approval for a unique ICD-10-
PCS code for the use of the Pure-Vu[supreg] System technology and was
granted approval for the following procedure code effective October 1,
2021: XDPH8K7 (Irrigation of lower GI using intraoperative single-use
oversleeve, via natural or artificial opening endoscopic, new
technology group 7).
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 respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant
[[Page 45052]]
asserted that the Pure-Vu[supreg] System has a different mechanism of
action than existing technologies due to its ability to break up and
remove a high volume of debris from the colon and dislodge adherent
films from the colon wall in a safe manner that cannot be achieved with
irrigation done through the working channel of a colonoscope. The
applicant also asserted that due to the controlled simultaneous removal
of the debris and fluid by the evacuation pumps in the system, the
Pure-Vu[supreg] System eliminates the likelihood of creating a fluid
load in the colon, which cannot be achieved with any other device on
the market. The applicant further asserted a differing mechanism of
action via the ability to sense and automatically clear a blockage
versus manual suction through the working channel of a colonoscope,
which can clog quickly if there is any appreciable debris. Lastly, the
applicant explained that the Pure-Vu[supreg] System is an oversleeve
device that allows use of the working channel of the colonoscope to be
open and allows therapy to be administered in tandem with cleansing,
unlike existing technologies on the market.
The applicant noted that the ClearPath system, a colonoscopy system
by the company Easy Glide, received FDA clearance, but according to the
applicant, was never fully brought to the US market. ClearPath was
listed as the predicate device for the initial version of the Pure-Vu
System[supreg] approved on September 22, 2016 (FDA 510(K) number
K160015), in which both devices are described as able to irrigate and
suction at any time during the procedure without any tools needing to
be removed from the colonoscope working channel.\312\ The applicant
claimed that this system did not have the High Intensity Pulsed Vortex
Irrigation Jet and controlled suction capabilities with the sensing and
auto purge technology that is critical to get the desired clinical
outcome.
---------------------------------------------------------------------------
\312\ FDA. 2016, September. Pure Vu System 510(k) premarket
notification. Deparment of Health and Human Services. Accessed at
https://www.accessdata.fda.gov/cdrh_docs/pdf16/K160015.pdf.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that the Pure-
Vu System is assigned to the same MS-DRGs as existing technologies. The
applicant lists 21 MS-DRGs as being applicable, with MS-DRG 378
(gastrointestinal hemorrhage with complication or comorbidity (CC))
accounting for 37.1 percent of cases, and MS-DRG 377 (gastrointestinal
hemorrhage with major complication or comorbidity (MCC)) accounting for
18.9 percent of total cases.
With respect to the third criterion, whether the new use of
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 the Pure-Vu
System[supreg] does involve treatment of the same or similar type of
disease and patient population as existing technology.
In the proposed rule, after reviewing the information submitted by
the applicant, we noted that we were unclear whether the Pure-
Vu[supreg] System's mechanism of action is similar to that of the
version of the product that received initial 510(k) clearance that was
approved on September 22, 2016 or other versions of the system. In
addition, with regard to the previous versions of Pure-Vu[supreg], we
were unsure if the limited availability noted by the applicant would
allow the technology to be considered commercially available. We were
also unclear what the applicant meants regarding the ClearPath system
being not fully brought to the U.S. market. We stated that if the
ClearPath system and/or earlier versions of the Pure-Vu[supreg] System
were considered to be available on the U.S. market, then we are
concerned that the current version of Pure-Vu[supreg] would no longer
be considered new, as we believe it may be substantially similar to
ClearPath and/or earlier versions of the Pure-Vu[supreg] System because
they also allow for irrigation and suction of the colon without
utilizing the working channel. We stated that if the current version of
Pure-Vu is substantially similar to ClearPath and/or previous versions,
then it appeared that the current Pure-Vu system may no longer be
within the newness period. We further noted that though the applicant
states the Pure-Vu[supreg] System features a high intensity pulsed
vortex irrigation jet and controlled suction capabilities with sensing
and auto purge technology, the Pure-Vu[supreg] System irrigates the
colon using water and gas like other existing irrigation methods. We
were therefore uncertain as to whether these features of the Pure-
Vu[supreg] System result in a new mechanism of action. We invited
public comment on whether the Pure-Vu[supreg] System has a new
mechanism of action compared to these predicate devices.
We invited public comments on whether the Pure-Vu[supreg] System is
substantially similar to existing technologies and whether it meets the
newness criterion.
Comment: The applicant submitted a letter that stated the Pure-
Vu[supreg] System meets the newness criterion. The applicant provided
clarifying information regarding the mechanisms of action of the Pure-
Vu[supreg] System compared to its predicate device, the ClearPath
system. The applicant stated that the predicate device, ClearPath,
allowed for much higher fluid flow rates to raise irrigation pressure,
whereas the Pure-Vu[supreg] System can mix gas into the fluid to create
the pulsatile action of the irrigation jet with a lower fluid load in
the colon. Additionally, the applicant stated that the Pure-Vu[supreg]
System has the ability to simultaneously irrigate and suction fluid and
debris, whereas the ClearPath system was only able to do one or the
other, similar to a colonoscope. The applicant further stated that the
Pure-Vu[supreg] System maintains a built-in suction system that uses a
constant volume suction pump and autopurge functions that do not cause
the colon to collapse, whereas the suction in the ClearPath system was
the same as that of using the working channel of a colonoscope, which
tends to collapse the lumen of the colon and, therefore, requires the
endoscopist to continually insufflate the colon to provide patency and
visualization. Finally, the applicant stated that the irrigation and
suction in the Pure-Vu[supreg] System are self-contained (without need
to plug into wall suction), whereas the ClearPath system needed to
connect to the wall suction in the hospital room. The applicant stated
that the flexibility of the Pure-Vu[supreg] System is beneficial in
performing cases in the ICU where availability of vacuum ports can be
problematic.
The applicant also addressed market availability by stating that
early versions of the Pure-Vu[supreg] System after the original 510(k)
in September 2016 were only sold on a limited basis as part of a beta
launch to allow potential investigators to evaluate the Gen 1 Pure-
Vu[supreg] System to determine if they would be interested in
participating in clinical trials. The applicant stated that after
initial feedback was received for the Gen 1 Pure-Vu[supreg] System, the
company decided to not make the product available to the market until
the system was redesigned. The applicant reiterated that the commercial
version (Gen 2) was subsequently FDA cleared in June 2019 and became
commercially available in September 2019.
Response: We appreciate the additional information from the
applicant on whether the product meets the newness criterion. After
consideration of the information submitted by the applicant in their
[[Page 45053]]
comment and as part of its FY 2022 new technology add-on payment
application for the Pure-Vu[supreg] System, we agree that the Pure-
Vu[supreg] System has a new mechanism of action as compared to the
ClearPath system and traditional colonoscopes because of the Pure-
Vu[supreg] System's oversleeve design, which enable use of irrigation
and suction while leaving the working channel available for therapeutic
interventions, as well as the ability to simultaneously irrigate and
suction fluid and debris. We note that the applicant did not respond to
our concern with regard to whether the Pure-Vu System has a new
mechanism of action as compared to the predicate version and therefore
we believe the two versions are substantially similar as they both
allow for simultaneous irrigation and suction of the colon without
utilizing the working channel. Based on further information from the
applicant regarding the market availability of the predicate version,
it appears that the predicate Gen 1 version of the Pure-Vu System
cleared in 2016 was available for sale on a limited basis. The
applicant maintains that it was not on the market. Therefore, without
additional information, we are unsure with regard to the appropriate
date on which the newness period should begin and whether it is new for
FY 2022. However, based on the information from the applicant, it
appears that the predicate Gen 1 version of the Pure-Vu System cleared
in 2016 was available for sale on a limited basis. The applicant
maintains that it was not on the market. Therefore, without additional
information, we are unsure with regard to the appropriate date on which
the newness period should begin and whether it is new for FY 2022.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR claims data file with the FY 2019 Final Rule with
Correction Notice IPPS Impact File to identify potential cases
representing patients who may be eligible for treatment using the Pure-
Vu[supreg] System. The applicant identified claims that reported an
ICD-10-CM diagnosis code of ICD-10-CM Z12.11 (Encounter for screening
for malignant neoplasm of colon), K92.2 (Gastrointestinal hemorrhage,
unspecified), D50.0 (Iron deficiency anemia secondary to blood loss
(chronic)), and C18*._\313\ (malignant neoplasm of colon). The ICD-10-
PCS procedure codes listed in following table were used to identify
claims involving colonoscopy procedures.
---------------------------------------------------------------------------
\313\ Fourth character is required to describe specific location
of neoplasm.
[GRAPHIC] [TIFF OMITTED] TR13AU21.182
The claim search conducted by the applicant resulted in 163,236
claims mapping to 633 MS-DRGs. The applicant stated that MS-DRGs 377
(G.I. Hemorrhage W MCC), 378 (G.I. Hemorrhage W CC), and 379 (G.I.
Hemorrhage W/O CC/MCC) were the most common MS-DRGs to which cases
reporting the listed ICD-10-PCS codes were assigned. The applicant
stated that the large number of DRGs to which these cases were assigned
suggests that patients were admitted to the hospital for a wide variety
of reasons, but during the course of their hospital stay the patients
received a colonoscopy. According to the applicant, since GI bleeding
is among the most common reasons for a patient needing an urgent
colonoscopy, MS-DRGs 377-379 would be expected to be the most common
MS-DRGs to which cases involving the Pure-Vu technology would be
assigned. Lastly, the applicant did not have any data available to
suggest any specific reasons why potential patients who would be
eligible for the Pure-Vu technology would map to specific MS-DRGs
identified based on the claims search, such as MS-DRG 291 (Heart
Failure and Stroke).
The applicant determined an average unstandardized case weighted
charge per case of $63,265.
The applicant did not remove charges for prior technology. The
applicant stated that no prior technology is being replaced. The
applicant then standardized the charges using the FY 2019 Final Rule
with Correction Notice Impact File. Next, the applicant applied the 2-
year inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to
calculate outlier threshold charges (1.13218). To calculate the charges
for the new technology, the applicant used the national average CCR for
the Supplies and Equipment cost center of 0.297 from the FY 2021 Final
IPPS rule. The applicant calculated a final inflated average case-
weighted standardized charge per case of $93,914, which exceeded the
average case-weighted threshold amount of $63,265 by $30,649. The
applicant stated that because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the therapy meets the cost criterion.
After reviewing the information submitted by the applicant as part
of its FY 2022 new technology add-on payment application for the Pure-
Vu[supreg] System, we noted that the MS-DRGs used in the cost analysis
were not limited to those describing conditions likely to require a
colonoscopy. For example, the applicant included cases
[[Page 45054]]
assigned to MS-DRG 291 (Heart Failure and Shock with MCC). When
included in the cost analysis, the assumption made is that all 1,948
cases for heart failure also had a colonoscopy performed where the
technology could have potentially been utilized. We questioned whether
all cases identified by the applicant appropriately represent potential
cases eligible for the Pure-Vu[supreg] System. We invited public
comment on whether the Pure-Vu[supreg] System meets the cost criterion.
Comment: The applicant, submitted a comment in response to concerns
on whether the Pure-Vu System[supreg] meets the cost criterion.
Regarding whether all cases identified by the applicant in its original
cost criterion analysis appropriately represent potential cases
eligible for treatment with the Pure-Vu[supreg] System, the applicant
noted that not every MS-DRG included in the cost analysis was
necessarily gastrointestinal in nature. The applicant explained that
this is because patients may be admitted to the hospital for a variety
of diagnoses, any of which may eventually lead to colonoscopy. For
instance, although not all cases assigned to MS-DRG 291 (Heart Failure
and Shock with MCC) would require a colonoscopy, some cases did and
were thus included in the applicant's original analysis.
To respond to CMS concerns about the clinical coherence of the
selected MS-DRGs, the applicant submitted a revised cost criterion
analysis that pared down the number of MS-DRGs to only the top 12 in
terms of case volume. The applicant identified 106,770 cases across
these twelve MS-DRGs. The applicant stated that, according to the ICD-
10 data, although all of these cases would have received a colonoscopy
during their hospital stay, only a small portion would have met the
clinical criteria for needing the Pure-Vu[supreg] System. The applicant
asserted that the revised analysis includes a more clinically coherent
set of MS-DRGS with 9 of 12 specifically labeled for gastrointestinal
use. The applicant stated that while MS-DRGs 871, 812, and 811 are not
specific to gastrointestinal diagnoses, they encompass conditions that
commonly lead to GI bleeds and the need for colonoscopy and are
therefore, appropriate to include in this analysis. The applicant noted
that the Pure-Vu[supreg] System continues to exceed the case-weighted
threshold when the MS-DRGs included in the analysis are pared down,
albeit by a smaller margin than in the original analysis.
Response: We thank the commenter for its input and its submission
of the revised cost criterion analysis. After review of the comments
received and information submitted by the applicant for FY 2022 new
technology add-on payments, we agree that the Pure-Vu[supreg] System
meets the cost criterion as the final inflated case-weighted
standardized charge per case exceeded the case-weighted threshold under
the revised analysis including only the top 12 MS-DRGs by volume. We
believe the cases identified by the applicant using the top 12 MS-DRG's
by volume more appropriately represents potential cases eligible for
the Pure-Vu[supreg] System than all the cases in the MS-DRGs used in
their initial cost analysis.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the Pure-Vu[supreg] System offers the ability
to achieve rapid beneficial resolution of the disease process treatment
by achieving rapid and full visualization of the colon, which will
improve diagnostic yield and the effectiveness of treatment of diseases
of the bowel. The applicant claimed that due to the Pure-Vu[supreg]
System's ability to cleanse the colon during the colonoscopy procedure
in conjunction with a standard bowel preparation, or with an enema (to
allow entry into the rectum) and without any purgative based
preparation, the technology allows for earlier intervention. The
applicant stated that in the case of an LGIB, this will reduce bleeding
by achieving more rapid hemostasis and reduce the overall length of
stay in the hospital for a portion of this population. The applicant
also asserted the technology reduces the subsequent diagnostic and, in
some instances, therapeutic interventions by minimizing aborted and
early repeat procedures due to poor visualization caused by inadequate
preparation. The applicant stated that the system can provide cleansing
and removal of fecal matter, blood and other debris while maintaining
the visibility of the colonoscope's camera and availability of the
working channel to apply critical therapies.
In support of its claims, the applicant submitted a self-sponsored,
U.S.-based, multicenter, prospective, single arm study in the inpatient
setting, analyzing 94 patients, 65 of which (68 percent) had a GI
bleed.\314\ Of the 94 patients (41 percent females/59 percent males),
the mean age was 62 years. According to the applicant, the study's
primary endpoint was the rate of improved bowel cleansing level from
baseline to after use of the Pure-Vu[supreg] System per colon segment
using the Boston Bowel Preparation Scale (BBPS). The BBPS score was
recorded for each colorectal segment (left colon, transverse colon, and
right colon segments) both prior to (baseline) and after colon
cleansing with the Pure-Vu[supreg] System. An adequate cleansing level
was a priori defined as a BBPS >=2 in all evaluated colon segments. The
study found that in 79 of the 94 patients (84 percent), the physician
was able to successfully diagnose or rule out a GI bleed in the colon
per the patients' colonoscopy indication using only the Pure-Vu[supreg]
System. The analysis showed statistically significant visualization
improvement in each colon segment after Pure-Vu[supreg] use with a mean
BBPS score in the descending colon, sigmoid, and rectum of 1.74 pre-
Pure-Vu[supreg] use and 2.89 post-Pure-Vu[supreg] use (P<0.001); in the
transverse colon of 1.74 pre-Pure-Vu[supreg] use and 2.91 post Pure-
Vu[supreg] use (P<0.001); and the ascending colon and cecum of 1.50
pre-Pure-Vu[supreg] use and 2.86 post Pure-Vu[supreg] use (P<0.001).
The study found only 2 percent of cases where the diagnosis could not
be achieved due to inadequate preparation. Overall, the 84 (89.4
percent) patients that received the Pure-Vu[supreg] System within the
study improved BBPS scores from 38 percent (95 percent CI 28, 49) to 96
percent (95 percent CI 90, 99) in segments evaluated. The study noted
one procedure related perforation which required surgical repair, and
the patient was discharged 48 hours post operatively and recovered
fully.
---------------------------------------------------------------------------
\314\ Helmut Neumann ML, Tim Zimmermann, Gabriel Lang, Jason B.
Samarasena, Seth A. Gross, Bhaumik Brahmbhatt, Haleh Pazwash,
Vladimir Kushnir. Evaluation of bowel cleansing efficacy in
hospitalized patient population using the pure-vu system.
Gastrointestinal Endoscopy. 2019;89(6).
---------------------------------------------------------------------------
The applicant also provided three outpatient clinical studies to
demonstrate the Pure-Vu[supreg] System's capability to convert patients
to adequate preparation where preparation was previously inadequate,
and the visualization was poor based on the BBPS. In the first study,
Perez J., et al. conducted an outpatient prospective pilot study using
the Pure-Vu[supreg] System.\315\ The study observed 50 patients with
poorly prepared colons undergoing colonoscopy at two outpatient
clinical sites in Spain and Israel, respectively. The applicant claimed
study patients underwent a reduced bowel preparation consisting of the
following: No dried fruits, seeds, or nuts starting 2 days before the
colonoscopy, a clear liquid diet starting 18 to 24 hours before
colonoscopy, and
[[Page 45055]]
a split dose of 20mg oral bisacodyl. The study found the number of
patients with an adequate cleansing level (BBPS >=2 in each colon
segment) increased significantly from 31 percent (15/49) prior to use
of the Pure-Vu System (baseline) to 98 percent (48/49) after use of the
Pure-Vu[supreg] System (P<0.001), with no serious adverse events
reported.
---------------------------------------------------------------------------
\315\ Perez Jimenez J, Diego Bermudez L, Gralnek IM, Martin
Herrera L, Libes M. An Intraprocedural Endoscopic Cleansing Device
for Achieving Adequate Colon Preparation in Poorly Prepped Patients.
J Clin Gastroenterol. 2019;53(7):530-4.
---------------------------------------------------------------------------
In the second study provided by the applicant, van Keulen, et al.
also conducted a single-arm, prospective study on 47 patients with a
median age of 61 years in the outpatient setting in the Netherlands
using the Pure-Vu[supreg] System.\316\ Within the study, cecal
intubation was achieved in 46/47 patients. This multicenter feasibility
study found that the Pure-Vu[supreg] System significantly improved the
proportion of patients with adequate bowel cleansing from 19.1 percent
prior to the use of the Pure-Vu[supreg] System to 97.9 percent after
its use (P<0.001) and median BBPS score (from 3.0 [IQR 0.0-5.0] to 9.0
[IQR 8.0-9.0]).
---------------------------------------------------------------------------
\316\ Van Keulen KE, Neumann H, Schattenberg JM, Van Esch AAJ,
Kievit W, Spaander MCW, Siersema PD. A novel device for
intracolonoscopy cleansing of inadequately prepared colonoscopy
patients: a feasibility study. Endoscopy. 2019 Jan;51(1):85-92. doi:
10.1055/a-0632-1927. Epub 2018 Jul 11.
---------------------------------------------------------------------------
In the third study provided by the applicant that directly
evaluated the Pure-Vu[supreg] System in a clinical setting, Bertiger
G., et al. performed a United States-based single center, prospective,
outpatient study investigating regimes of reduced outpatient bowel
preparations, which included low doses of over-the-counter laxatives,
and eliminating the typical 24 hour clear liquid diet restriction,
which was replaced by a low residue diet the day before the procedure.
In this study, 46 of a possible 49 patients received a colonoscopy, 8
of which took the over-the-counter laxative (``MiraLAX arm''), 21
patients ingested two doses of 7.5oz Magnesium Citrate (MgC) each taken
with 19.5oz of clear liquid (``Mag Citrate 15oz arm''), and 18 patients
ingested 2 doses of 5oz MgC taken with 16oz of clear liquid (``Mag
Citrate 10oz arm''). Of the 46 subjects, 59 percent were males and
there was a mean age of 619.48 years. The study found that
each of the 3 study arms revealed significant differences in BBPS score
between the baseline preparation and post-cleansing via Pure-Vu. All
the preparation regimens resulted in inadequately prepped colons.
Comparing the mean BBPS rating for both pre- and post- Pure-Vu[supreg]
use, the MiraLAX arm was inferior (P <0.05) to both Mag Citrate arms.
For the MiraLAX arm, the mean BBPS Score improved from 1.50 to 8.63.
For the Mag Citrate 15oz arm, the mean BBPS score improved from 3.62 to
8.95. For the Mag Citrate 10oz arm, the mean BBPS Score improved from
4.76 to 9.0.
In addition to the retrospective studies provided, the applicant
also submitted three case studies to highlight the various clinical
presentations of LGIB with the use of the Pure-Vu[supreg] System. In
the first case, the applicant presented a 71-year-old woman with
multiple episodes of bloody bowel movements and low hemoglobin levels
for 2 days after a screening colonoscopy where 8 polyps were removed.
The applicant stated that the patient underwent a successful
colonoscopy using Pure-Vu without standard inpatient bowel preparation
within 5 hours, and in addition to expediting the colonoscopy, four
significant post-polypectomy ulcers were found and clipped by allowing
the physician to cleanse the area and place the clips simultaneously.
The applicant claimed that since the Pure-Vu[supreg] System does not
impact the use of the endoscope's working channel, the physician was
able to cleanse the area as needed during the intervention to allow
precise placement of the clips applied to achieve hemostasis and the
patient was discharged that same day.
The applicant submitted another case example where a 52-year-old
male was admitted from the emergency department to the ICU due to
significant GI bleeding, hemorrhagic shock, and acute kidney injury
(AKI) six days after a colonoscopy where nine polyps were removed,
including two polyps greater than 2 cm. The applicant stated that
angiographic control of the bleeding was not considered due to AKI with
rising creatinine, and bedside colonoscopy was immediately performed
with the Pure-Vu[supreg] System without any bowel prep. Per the
applicant, the physician was able to visualize the entire colon to
confirm all sources of bleeding and place two clips to obtain
hemostasis, and the patient was downgraded out of the ICU that day and
discharged from the hospital the following day.
In the third case study submitted by the applicant, a 64-year-old
male was admitted to the ICU with one day of bright red blood per
rectum (BRBPR) along with a complex set of disorders including but not
limited to alcohol use disorder, heart failure with reduced ejection
fraction of 30 percent, and multidrug resistant tuberculosis. The Pure-
Vu[supreg] System was used to attempt to definitively identify the
bleeding source in the ICU. The applicant stated that although no
active sites of bleeding were seen, red blood was found in the entire
colon, and the patient was transferred out of the ICU 2 days later and
discharged 3 days after transfer to the floor. The applicant claimed
that while the patient's bleeding had stopped by the time the colon was
examined, the ability to directly visualize the entire colon using the
Pure-Vu[supreg] System helped avoid a third CT angiography during this
hospitalization and helped the physicians to confirm that prior coil
embolization had not resulted in focal colonic ischemia. The applicant
asserted that this case showed that the Pure-Vu[supreg] System can be
used with minimal preparation, enabling rapid investigation of LGIB in
a very complex patient. The applicant concluded that these case studies
demonstrate that a change in patient management occurs when the option
of the Pure-Vu[supreg] System is available, especially when there is an
urgent or severe GI bleed, where circumstances where other procedures
(such as CT angiography) are insufficient and the option to perform the
colonoscopy sooner is preferred.
After reviewing the information submitted by the applicant as part
of its FY 2022 new technology add-on payment application for the Pure-
Vu[supreg] System, we had stated the following concerns in the proposed
rule (86 FR 25304). While the studies provided in support of the Pure-
Vu[supreg] System measure improvement of bowel preparation using the
BBPS, the applicant did not provide data indicating that the improved
BBPS directly leads to improved clinical outcomes (for example,
reduction of blood loss in LGIB or reduction of missed polyps) based on
use of the Pure-Vu[supreg] System. Additionally, we noted that the
applicant has not provided any studies comparing the efficacy of the
Pure-Vu[supreg] System to other existing methods or products for
irrigation in support of its claims that the product is superior at
removing debris from the colon while simultaneously preventing the
colon from collapsing, allowing use of the working channel, or
improving outcomes. Furthermore, we noted that many of the provided
studies were based on small sample sizes, which may affect the quality
and reliability of the data provided in support of the technology. In
addition, we noted that the methodology described in the provided
studies often involved time to adequately prepare the colon and
included outpatient planned procedures, which may not reflect the
emergent situations that the applicant states the Pure-Vu[supreg]
System is intended to address in the inpatient setting. We
[[Page 45056]]
also noted that the Helmut, et al. study noted one procedure related
perforation which required surgical repair and we invited public
comments regarding the concern of procedure related perforation.
We invited public comments on whether the Pure-Vu[supreg] System
meets the substantial clinical improvement criterion.
Comment: Several commenters provided specific examples of
individual instances where the use of the Pure-Vu[supreg] System was
beneficial for a particular patient, including some patients with
unique challenges that the commenters stated could not have been
addressed without the use of the Pure-Vu[supreg] System. A commenter,
offering support, claimed the Pure-Vu[supreg] System can help shorten
hospital stays and maximize access to their hospital's endoscopy unit
and cited cost as a limiting factor for the Pure-Vu[supreg] System's
continued use. A commenter, offering support, did not consider Pure-
Vu[supreg] as a panacea for all poor bowel preparations and did not
think it was an alternative to appropriate bowel cleansing in most
patients but did think it can be a great addition and a useful tool in
every endoscopy suite and that it provides clear clinical improvement
in the appropriate patients.
Response: We appreciate all of the comments received related to the
Pure-Vu[supreg] System and have taken them into consideration in making
our determination of substantial clinical improvement.
Comment: The applicant submitted comments in response to CMS's
concerns in the FY 2022 IPPS/LTCH PPS proposed rule regarding whether
the Pure-Vu[supreg] System meets the substantial clinical improvement
criterion. The applicant reiterated previously shared data from a study
by the Cleveland Clinic showing 51 percent of 8,819 patients observed
over a 4-year period were inadequately prepared for colonoscopies,
leading to one extra day in the hospital compared to patients that were
adequately prepared.\317\
---------------------------------------------------------------------------
\317\ Garber A, Sarvepalli S, Burke CA, Bhatt A, Ibrahim M,
McMichael J, et al. Modifiable Factors Associated with Quality of
Bowel Preparation Among Hospitalized Patients Undergoing
Colonoscopy. J Hosp Med. 2019;14(5):278-83.
---------------------------------------------------------------------------
The applicant also presented a recently published study of 94
patients that analyzed the ability of the Pure-Vu[supreg] System to
improve visualization of the colon mucosa for hospitalized patients
undergoing colonoscopy.\318\ The study demonstrated improvement in BBPS
between a baseline for the patients prior to cleansing with the Pure-
Vu[supreg] System and following the cleansing, with 38% of patients
showing adequate colon cleansing level before the use of Pure-
Vu[supreg] and 96% following the use of Pure-Vu[supreg]. The applicant
also provided information on the Pure-Vu[supreg] System's performance
within individual segments of the colon from this same study.
---------------------------------------------------------------------------
\318\ 2 Neumann H, Latorre M, Zimmerman T, Lang G, Samarasena J,
Gross S, Brahmbhatt B, Pazwash H, Kushnir V. A multicenter,
prospective, inpatient feasibility study to evaluate the use of an
intra-colonoscopy cleansing device to optimize colon preparation in
hospitalized patients: the REDUCE study. BMC Gastroenterol. 2021 May
22;21(1):232.
---------------------------------------------------------------------------
In response to our concern that while the evidence presented
demonstrated improvement in BBPS but did not provide data indicating
that improved BBPS directly leads to improved clinical outcomes, the
applicant provided a study demonstrating the correlation between the
ability to visualize the mucosa and the ability to detect important
pathology. The study generally demonstrated a linear increasing trend
in advanced adenoma detection rates with improvement in BBPS.\319\
Lastly, the applicant submitted a modeling study indicating that the
Pure-Vu[supreg] System can generate cost savings to health systems on a
per patient basis if used in the colorectal cancer screening and
surveillance population.
---------------------------------------------------------------------------
\319\ Jain D, Momeni M, Krishnaiah M, Anand S, Singhal S.
Importance of reporting segmental bowel preparation scores during
colonoscopy in clinical practice. World J Gastroenterol. 2015 Apr
7;21(13):3994-9. doi:10.3748/wjg.v21.i13.3994. PMID: 25852286;
PMCID: PMC4385548.
---------------------------------------------------------------------------
Response: We thank the applicant for their comment and appreciate
the additional data submitted to address our concerns. After review of
all the data received to date, we continue to have concerns regarding
the substantial clinical improvement criterion as noted in the FY 2022
IPPS/LTCH PPS proposed rule. Specifically, we remain concerned that the
studies provided in support of the Pure-Vu[supreg] System measure
improvement of bowel preparation using the BBPS but do not provide data
indicating that the improved BBPS directly leads to improved clinical
outcomes. In addition, the studies did not demonstrate outcomes in the
emergent situations for which the Pure-Vu[supreg] System is intended to
address. While an additional study provided by the applicant in their
comment indicated a general link between improved BBPS and advanced
adenoma detection rates, we note that the study occurred in patients
undergoing screening colonoscopy, and did not include the use of Pure-
Vu. We also remain concerned about the lack of studies comparing the
Pure-Vu[supreg] System to other existing methods or products for
irrigation in support of its claims that the product is superior at
removing debris from the colon while simultaneously preventing the
colon from collapsing, allowing use of the working channel, or
improving outcomes.
After consideration of all the information from the applicant, as
well as the comments we received, we are unable to determine that the
Pure-Vu[supreg] System represents a substantial clinical improvement
over existing technologies, and we are not approving new technology
add-on payments for the Pure-Vu[supreg] System for FY 2022.
k. Rapid ASPECTS
iSchemaView (which is in the process of a name change to RapidAI)
submitted an application for new technology add-on payments for Rapid
ASPECTS for FY 2022. According to the applicant, Rapid ASPECTS is a
computer-aided diagnosis (CADx) software device used to assist the
clinician in the assessment and characterization of brain tissue
abnormalities using computed tomography (CT) image data. The applicant
asserted that the software automatically registers images and segments
and analyzes ASPECTS Regions of Interest (ROIs). According to the
applicant, Rapid ASPECTS extracts image data for the ROI(s) to provide
analysis and computer analytics based on morphological characteristics.
The applicant stated that the imaging features are then synthesized by
an artificial intelligence algorithm into a single ASPECT Score.
The applicant stated Rapid ASPECTS is indicated for evaluation of
patients presenting for diagnostic imaging workup with known Middle
Cerebral Artery (MCA) or Internal Carotid Artery (ICA) occlusion, for
evaluation of extent of disease. The applicant stated that extent of
disease refers to the number of ASPECTS regions affected, which is
reflected in the total score.
According to the applicant, the Rapid ASPECTS device provides
information that may be useful in the characterization of early
ischemic brain tissue injury during image interpretation (within 6
hours). The applicant stated Rapid ASPECTS provides a comparative
analysis to the ASPECTS standard of care radiologist assessment using
the ASPECTS atlas definitions and atlas display including highlighted
ROIs and numerical scoring. The applicant stated that Rapid ASPECTS is
not intended for primary interpretation of CT images; it is used to
assist physician evaluation.
[[Page 45057]]
The applicant asserted Rapid ASPECTS has been validated in patients
with known MCA or ICA occlusion prior to ASPECT scoring.
According to the applicant, when patients with a suspected stroke
arrive at an emergency department, they are rapidly triaged to the CT
scanner for a non-contrast CT (NCCT) and CT angiography (CTA). The
applicant stated that CTA directly images large vessel occlusions and
the NCCT can exclude brain hemorrhage and identify early signs of brain
infarction. The applicant asserted that automated large vessel
occlusion (LVO) detection software is now used at many sites to quickly
identify LVOs on CTA and provide physicians with early notification
that an LVO has been identified. The applicant stated that following
identification of an LVO, the next imaging evaluation required is for a
physician, typically a radiologist or neuroradiologist, to determine
the ASPECT score by taking a close look at the NCCT for evidence of
early infarct signs. The applicant stated that patients with an ASPECT
score between 6 and 10 who meet clinical criteria for thrombectomy
should receive thrombectomy as soon as possible, if treatment can occur
within 6 hours of symptoms onset. The applicant asserted that for
patients who present beyond 6 hours, a CT perfusion or MRI scan are
required to identify which patients are eligible for thrombectomy.
The applicant stated approximately 800,000 primary (first-time) or
secondary (recurrent) strokes occur each year in the U.S., with the
majority being primary strokes (roughly 600,000). Of these strokes,
approximately 87% are ischemic infarctions, 10% are primary
hemorrhages, and 3% are subarachnoid hemorrhage.\320\ According to the
applicant, the incidence of stroke rapidly increases with age, doubling
for each decade after age 55. The applicant asserted that among adults
ages 35 to 44, the incidence of stroke is 30 to 120 in 100,000 per
year, and for those ages 65 to 74, the incidence is 670 to 970 in
100,000 per year. Therefore, according to the applicant, the primary
burden of stroke affects the Medicare-age population. The applicant
stated the most disabling strokes are those due to large vessel
occlusions (LVOs), and treatment of these strokes has the largest
therapeutic benefits.\321\
---------------------------------------------------------------------------
\320\ Ovbiagele B, et al. Stroke Epidemiology: Advancing Our
Understanding of Disease Mechanism and Therapy Neurotherapeutics.
(2011) 8:319-329.
\321\ Ovbiagele B, et al. Stroke Epidemiology: Advancing Our
Understanding of Disease Mechanism and Therapy Neurotherapeutics.
(2011) 8:319-329.
---------------------------------------------------------------------------
The applicant stated that Rapid ASPECTS received FDA 510(k)
clearance as a CADx software device on June 26, 2020 and provided a
date of first installation of September 1, 2020. The applicant
described Rapid ASPECTS as a machine learning-based automated software
for assessment of ASPECTS. The applicant asserted that Rapid ASPECTS
remains the only cleared ASPECTS software and the only stroke imaging
software to receive a CADx clearance by the FDA. The legally marketed
predicate device that Rapid ASPECTS is substantially equivalent to, per
FDA, is QuantX,\322\ which was granted De Novo authorization on July
19, 2017. QuantX is a CADx software device used to assist radiologists
in the assessment and characterization of breast abnormalities using
magnetic resonance (MR) image data and is indicated for evaluation of
patients presenting for high-risk screening, diagnostic imaging workup,
or evaluation of extent of known disease.\323\
---------------------------------------------------------------------------
\322\ Rapid ASPECTS 510(k) clearance letter from FDA: https://www.accessdata.fda.gov/cdrh_docs/pdf20/K200760.pdf.
\323\ QuantX De Novo decision summary from FDA: https://www.accessdata.fda.gov/cdrh_docs/reviews/DEN170022.pdf.
---------------------------------------------------------------------------
We note the applicant submitted a request for approval of a unique
ICD-10-PCS procedure code to identify use of the technology and was
granted approval for the following procedure code effective October 1,
2021: XXE0X07 (Measurement of intracranial vascular activity, computer-
aided assessment, new technology group 7). According to the applicant,
this new ICD-10-PCS code would be reported in addition to the non-
contrast CT using the appropriate code as listed in current coding
systems.
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 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 Rapid ASPECTS uses a new mechanism of action
(machine learning) to assess CT scans and synthesize a single ASPECT
score when compared to existing options which are limited to clinical
assessment by a human reader. According to the applicant, this software
remains the only FDA-cleared ASPECTS software and the only stroke
imaging software to receive a CADx clearance by the FDA. The applicant
asserted Rapid ASPECTS is fully automated and produces a score for each
of the 10 ASPECTS regions, as well as a total score in approximately 2
minutes.
With regard to the second criterion, whether the technology is
assigned to the same or a different MS-DRG, the applicant stated that
cases involving Rapid ASPECTS would be assigned to the same MS-DRGs as
cases involving patients confirmed with an eligible LVO by a positive
CTA. According to the applicant, in these cases, the traditional
clinical pathway requires a physician to determine the ASPECT score
through an imaging evaluation. The applicant noted that Rapid ASPECTS
may result in patients being assigned to a different MS-DRG depending
on whether or not a mechanical thrombectomy is performed as a result of
the Rapid ASPECTS results.
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
asserted Rapid ASPECTS addresses the current stroke population.
In summary, the applicant believes that Rapid ASPECTS is not
substantially similar to other currently available therapies because
Rapid ASPECTS uses a new mechanism of action (machine learning) to
assess CT scans and synthesize a single ASPECT score. We stated in the
proposed rule that we are unclear as to whether machine learning to
assess CT scans and synthesize a single ASPECT score would represent a
unique mechanism of action, or how the mechanism of action by which
Rapid ASPECTS assesses stroke imaging is distinct from other automated
stroke imaging analysis tools, or the traditional hospital workflow.
We stated that we continue to be interested in public comments
regarding issues related to determining newness for technologies that
use AI, an algorithm or software, as discussed in the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58628). Specifically, we are interested in public
comment on how these technologies, including devices classified as
radiological computer aided triage and notification software and
radiological computer-assisted diagnostic software, may be considered
for the purpose of identifying a unique mechanism of action; how
updates to AI, an algorithm or software would affect an already
approved technology or a competing technology; whether software changes
for an already approved technology could be
[[Page 45058]]
considered a new mechanism of action, and whether an improved algorithm
by competing technologies would represent a unique mechanism of action
if the outcome is the same as an already approved AI new technology.
We invited public comments on whether Rapid ASPECTS is
substantially similar to existing technologies, including specifically
with respect to the mechanism of action, and whether it meets the
newness criterion.
Comment: The applicant submitted comments responding to CMS's
concerns regarding newness as indicated in the proposed rule. With
respect to our concern as to whether machine learning to assess CT
scans and synthesize a single ASPECT score would represent a unique
mechanism of action, or how the mechanism of action by which Rapid
ASPECTS assesses stroke imaging is distinct from other automated stroke
imaging analysis tools, or the traditional hospital workflow, the
applicant stated that it used the framework for AI/ML that is
differentiated within the FDA product codes for diagnostic imaging
products. Per the applicant, these codes reflect the mechanism of
action and also how products may be interpreted in terms of performance
both against a reference standard and in informing the clinician.
The applicant stated that ContaCT/Viz LVO was classified as (CADt)
Computer Aided Triage and Notification as a mechanism of action. Per
the applicant, products in this category have limitations in what the
software may do; specifically, that it is limited to determining and
notifying the end user of suspicion of a disease state. In contrast,
more advanced implementations of AI/ML require the establishment of
clinical utility which shows the device not only performs to
specifications but provides some value in the clinical setting
regarding the lesion under investigation. Per the applicant, Rapid
ASPECTS is classified as CADe/x, which provides the added information
of a standard of care score which goes beyond triage and notification
to inform the end user regarding treatment decisions. Specifically,
Rapid ASPECTS provides information to help determine if the patient is
a candidate for treatment of the LVO or not, while the previously
approved ContaCT only informs the end user of a suspicion but not the
severity or extent of the disease. Furthermore, the applicant stated
that Rapid ASPECTS normalizes the decision-making ability of physicians
with different levels of expertise. The applicant emphasizes that Rapid
ASPECTS allows the typical reader to perform at the level of an expert
reader and that it is the only stroke related software product that has
been cleared with the advanced CADe/x designation, both of which are
novel features. It is also the only automated software for ASPECT score
assessment that has been cleared by FDA with any designation.
The applicant also concurred with other commenters in stating that
AI, an algorithm, or software should be evaluated for newness in the
same way as CMS evaluates any other medical device applying for new
technology add-on payment. That is, the commenters stated that human
intelligence and human processes are not FDA approved or cleared
technologies and should not be used as a comparator to evaluate whether
Rapid ASPECTS, or any technology, meets the definition of newness. A
commenter also noted that each of the AI technologies that applied for
new technology add-on payments for FY 2022 are distinctly different in
that the technologies focus on different patient populations and/or
would be assigned to different MS-DRGs. This commenter stated, along
with the applicant, that Rapid ASPECTS is different from other
technologies in that it uses machine learning to evaluate head CT scans
and develops a single ASPECTS score in patients with suspected stroke.
A commenter noted how updates to an AI, an algorithm or software
would affect an already approved technology or a competing technology.
This commenter noted a phenomenon known as ``model drift,'' which can
occur over time due to changes in healthcare workflows, practices,
populations, and data. The commenter explained that when this occurs,
the underlying algorithm does not automatically change and adapt to the
new inputs, but its output predictions can become less accurate over
time. The commenter further noted that model drift can be detected
using the same statistical analyses that rigorously tested the
algorithm's initial training data inputs and output predictions to
ensure that they are free of statistically significant variances or
biases. The commenter stated that if the AI/Machine Learning model or
the algorithms that comprise the model change over time, they ideally
should be subjected to this extensive statistical testing regimen that
occurred before its original deployment, and developers should gauge
the nature and extent of any model drift that occurs and make slight
modifications if possible that would allow for its continued use in
clinical care.
Response: We thank the applicant for its input. After consideration
of the comments received and information submitted by the applicant, at
this time and given our ongoing consideration of assessing newness for
technology that use AI, an algorithm or software, we agree that Rapid
ASPECTS does not use the same or a similar mechanism of action to
achieve a therapeutic outcome when compared to existing treatment
because it provides information, and specifically a standard of care
score that characterizes the severity and extent of an LVO, to inform
the end user of treatment decisions. Therefore, we believe that Rapid
ASPECTS is not substantially similar to an existing technology and
meets the newness criterion.
We also thank the commenters for their input on determining newness
for technologies that use AI, an algorithm or software, including the
applicant's distinctions between devices classified as computer-aided
triage and notification software (CADt) and computer-aided detection or
diagnosis software (CADe/x), as discussed in the proposed rule. We will
continue consider how these technologies may be used to identify a
unique mechanism of action; how updates to AI, an algorithm or software
would affect an already approved technology or a competing technology;
whether software changes for an already approved technology could be
considered a new mechanism of action, and whether an improved algorithm
by competing technologies would represent a unique mechanism of action
if the outcome is the same as an already approved AI new technology, as
we gain more experience in this area.
With respect to the cost criterion, the applicant provided three
analyses: (1) A baseline analysis containing all cases reporting one of
the targeted ICD-10-CM codes below as the principal diagnosis code for
cerebral infarction that map to one of the applicant's targeted MS-
DRGs; (2) an analysis limited to MS-DRGs with a case volume over 100;
and (3) an analysis limited to MS-DRGs 023, 062, 064, 065, and 066,
which per the applicant would reflect 80 percent of all stays. For the
baseline analysis, the applicant first extracted all inpatient stays
from the CY 2018 Limited Data Set Standard Analytic File (LDS SAF) that
contained a principal ICD-10-CM diagnosis code for cerebral infarction.
The applicant used the following ICD-10-CM diagnosis codes.
BILLING CODE 4120-01-P
[[Page 45059]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.183
[[Page 45060]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.184
The applicant then removed cases for hospitals that are not paid
under the IPPS. The applicant also removed inpatient stays and their
assigned MS-DRGs from its analysis where the assigned MS-DRG met any of
the following conditions: (1) The MS-DRG is for a part of the body not
related to the head; (2) the MS-DRG is a psychiatric MS-DRG, alcohol-
related MS-DRG, or a catchall MS-DRG; (3) the MS-DRG has a very small
number of cases; or (4) the MS-DRG is unlikely to involve an LVO. The
applicant identified 66,990 cases mapping to 27 MS-DRGs, as listed in
the following table, in descending order by volume:
[[Page 45061]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.185
BILLING CODE 4120-01-C
The applicant then standardized the charges and applied the 2-year
charge inflation factor of 13.2 percent used to adjust the outlier
threshold determination (85 FR 59039). The applicant did not remove
charges for prior technology, as the applicant believes Rapid ASPECTS
does not eliminate or replace any prior technology or services. The
applicant also noted that it did not remove charges related to the
prior technology, as the applicant believes Rapid ASPECTS does not
reduce costs during the inpatient stay.
The applicant then added charges for the technology. The applicant
stated that it estimated the cost per case of Rapid ASPECTS using
historical
[[Page 45062]]
utilization data gathered from its Rapid CTA module. The applicant
anticipates Rapid ASPECTS will be used in the same hospital sites as
Rapid CTA, which also provides the applicant with a baseline number of
Medicare and non-Medicare patients who were identified with a suspected
LVO. The applicant estimated that approximately 20.5 percent of all
patients who received a RAPID CTA scan qualified as inpatients eligible
for a Rapid ASPECTS scan. The applicant divided the total number of
qualified Medicare and non-Medicare inpatients by the total number of
subscriber hospitals to arrive at an average number of inpatients
eligible to be scanned with Rapid ASPECTS per subscriber hospital per
year. The applicant then took the estimated average sales price per
annual contract of Rapid ASPECTS per hospital and divided it across the
estimated annual number of Rapid ASPECTS inpatients per site to
estimate the average cost per case per subscriber hospital. Finally,
the applicant divided the average cost per case by the national average
CCR for radiology of 0.136 (85 FR 58601).
The applicant calculated a case-weighted threshold amount of
$76,398 and a final inflated average case-weighted standardized charge
per case of $90,097. Based on this analysis, the applicant asserted
that Rapid ASPECTS meets the cost criterion because the final inflated
average case-weighted standardized charge per case exceeds the case-
weighted threshold amount. The applicant submitted two additional
scenarios to demonstrate that the technology meets the cost criterion
using the same methodology described but with limits on the cases. The
first scenario limited the analysis to MS-DRGs with at least 100 cases.
This resulted in a case-weighted threshold of $76,457 and a final
inflated average case weighted standardized charge per case of $90,172.
The second scenario limited the analysis to MS-DRGs 023, 062, 064, 065,
and 066, which per the applicant reflect 80 percent of all stays. This
second alternative method resulted in a case-weighted threshold of
$67,890 and a final inflated average case-weighted standardized charge
per case of $77,614. Across all three analyses, the applicant
maintained that the technology meets the cost criterion because the
final inflated average case-weighted standardized charge per case
exceeds the average case-weighted threshold amount.
We noted the following concerns in the proposed rule regarding the
cost analysis for Rapid ASPECTS. The applicant stated it removed from
its analysis those cases and their assigned MS-DRG where the assigned
MS-DRG was for a body part that is not the head; however, the list of
MS-DRGs the applicant presented included MS-DRGs 37 (Extracranial
Procedures w/MCC) and 38 (Extracranial Procedures w/CC), which by
definition describe procedures outside of the head. We stated that we
would like to understand why these MS-DRGs and their assigned cases
were included in the baseline analysis. We stated that we would also
like to understand the time period of the claims the applicant selected
from the CY 2018 SAF, as this could have implications for the inflation
factor used to update charges if the applicant selected claims from FY
2018 as opposed to FY 2019.
We stated that the applicant appears to have used a single list
price of Rapid ASPECTS per hospital with a cost per patient that can
vary based on the volume of cases. We noted that the cost per patient
varies based on the utilization of the technology by the hospitals. The
cost per patient could be skewed by the small number of hospitals
utilizing the technology and their low case volumes. It is possible, if
hospitals with large patient populations adopt Rapid ASPECTS, the cost
per patient would be significantly lower.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58630), we stated
our understanding that there are unique circumstances to determining a
cost per case for a technology that utilizes a subscription for its
cost. We stated our intent to continue to consider the issues relating
to the calculation of the cost per unit of technologies sold on a
subscription basis as we gain more experience in this area. We stated
that we continue to welcome comments from the public as to the
appropriate method to determine a cost per case for such technologies,
including comments on whether the cost per case should be estimated
based on subscriber hospital data as described previously, and if so,
whether the cost analysis should be updated based on the most recent
subscriber data for each year for which the technology may be eligible
for the new technology add-on payment.
We invited public comment on whether Rapid ASPECTS meets the cost
criterion.
Comment: The applicant submitted comments addressing our concerns
regarding whether Rapid ASPECTS meets the cost criterion. With respect
to our inquiry regarding why cases assigned to MS-DRGs 37 (Extracranial
Procedures w/MCC) and 38 (Extracranial Procedures w/CC) were included
in the baseline, the applicant explained that it may be possible that
some cases are assigned to those MS-DRGs after a full accounting of
their diagnosis and reason for inpatient stay. The applicant provided
the example of a blocked carotid artery delivering blood to the brain,
which can be a cause of stroke. The applicant suggested that because
the blockage occurred outside of the brain, these cases could be
assigned to MS-DRG 37 or 38.
The applicant also provided an additional scenario for the cost
threshold analysis that excluded MS-DRGs 37 and 38. The applicant re-
ran its analysis with 2018 calendar year data to exclude MS-DRGs 37 and
38 and found that Rapid ASPECTS continues to satisfy the NTAP new
technology add-on payment cost criterion, as seen below.
[[Page 45063]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.186
BILLING CODE 4120-01-C
With respect to our inquiry regarding the time period of the claims
the applicant selected for the CY 2018 SAF, the applicant stated that
it used all relevant discharges during the 2018 calendar year (January
1st 2018--December 31st 2018). The applicant explained that for
standardizing charges it used information specific to each hospital for
the applicable fiscal year. The applicant explained that for claims
with discharge dates from January 1st 2018 through September 30th 2018,
it used cost-to-charge ratios, IME, DSH, wage-index, GAF, and COLA
information specific to each hospital for FY 2018. The applicant
further explained that, for claims with discharge dates from October
1st 2018 through December 31st 2018, it used cost-to-charge ratios,
IME, DSH, wage-index, GAF, and COLA information specific to each
hospital for FY 2019. The applicant also noted that, to maintain a
conservative approach, it used an inflation factor of 13.22% for all
discharges in the 2018 calendar year, even though it would be
reasonable to use a higher inflation factor for claims with a discharge
date prior to October 1st 2018.
With respect to our concern that the cost per patient for Rapid
ASPECTS can vary based on the volume of cases, and that the applicant's
cost per case may be skewed by the small number of hospitals utilizing
the technology and their low case volumes, the applicant stated that
although the cost per patient for Rapid ASPECTS may be lower for
hospitals with high utilization of the technology, it will also be
higher for hospitals with lower utilization. The applicant also stated
that Rapid ASPECTS can help save lives, and that it is important to
ensure that hospitals have equitable access to this technology to
conform to current AHA guidelines and address an unmet need. The
applicant's comments agreed with other commenters that responded to our
request for comments regarding technologies sold on a subscription
basis and whether the cost per case should be estimated based on
subscriber hospital data, and if so, whether the cost analysis should
be updated based on the most recent subscriber data for each year for
which the technology may be eligible for the new technology add-on
payment. Most commenters agreed that in determining the cost per case
for technologies seeking new technology add-on payment that utilize a
subscription model, we should limit our analysis to subscriber
hospitals and update the cost analysis on an annual basis. A commenter
noted that alternative methodologies involving estimating the number of
patients who would be eligible to receive treatment utilizing a
technology sold on a subscription basis would be likely to result in a
payment amount that does not adequately reflect the estimated average
cost of such service or technology as required by the statute. The
commenter believes that given the direct impact of utilization changes
on cost per case when using a subscription model, it is reasonable for
CMS to annually update the payment amount using the most recent
subscriber utilization data.
Response: We thank the commenter for its input. We appreciate the
[[Page 45064]]
explanation behind the inclusion of MS-DRG 37 and 38 in the applicant's
original cost analysis and understand that stroke cases may be assigned
to extracranial MS-DRGs after a full accounting of the patient's
diagnosis and reason for inpatient stay. We also appreciate the
additional information pertaining to the time period of the data used
in the applicant's cost analysis submitted with its FY 2022 new
technology add-on payment application and agree with the alignment of
cost-to-charge ratios, IME, DSH, wage-index, GAF, and COLA information
specific to each hospital with the respective fiscal year in which the
discharge date falls. We agree with the applicant that, under the
scenarios presented in its original application and in response to the
FY 2022 IPPS/LTCH PPS proposed rule, the final inflated case-weighted
standardized charge per case exceeded the case-weighted threshold and
Rapid ASPECTS meets the cost criterion.
We also appreciate the applicant's comments relating to calculation
of the cost per unit of technologies sold on a subscription basis. CMS
will continue to consider the issues relating to calculation of the
cost per unit of technologies sold on a subscription basis, including
the merits of calculating the cost per case across all IPPS hospitals
versus limiting the cost per case analysis to current users and whether
the cost analysis should be updated based on the most recent subscriber
data for each year for which the technology may be eligible for the new
technology add-on payment, as we gain more experience in this area.
With respect to the substantial clinical improvement criterion, the
applicant asserted Rapid ASPECTS represents a substantial clinical
improvement over existing technologies because it improves diagnostic
decisions by improving accuracy of ASPECT scoring. The applicant also
asserted it improves diagnostic decisions by reducing inter-rater
variability of ASPECT scoring. The applicant also asserted it
represents a substantial clinical improvement by improving treatment
decisions and by improving time to treatment.
According to the applicant, the first stroke treatment, tissue
plasminogen activator (tPA), was first approved in the United States
for intravenous administration to patients with acute stroke in 1996,
and a study demonstrating successful catheter-directed intra-arterial
infusion of a thrombolytic agent for this indication was first
published in 1999.\324\ The applicant asserted that the first positive
randomized controlled studies using modern mechanical thrombectomy
devices for LVO stroke were published in 2015 and support combined
treatment with tPA and catheter-based thrombectomy as the most
effective treatment approach for patients who can be treated within six
hours of symptom onset.\325\ According to the applicant, following the
publication of these trials, the American Heart Association (AHA) and
American Stroke Association (ASA) released new guidelines in 2016, 2018
and 2019 that all specified the following Level 1A recommendation:
---------------------------------------------------------------------------
\324\ Furlan A, Higashida R, et al. Intra[hyphen]arterial
prourokinase for acute ischemic stroke: The PROACT II study: A
randomized controlled trial: Prolyse in Acute Cerebral
Thromboembolism. JAMA. 1999;282:2003-2011.
\325\ Goyal M, Menon BK, et al. for the HERMES collaborators.
Endovascular thrombectomy after large[hyphen]vessel ischaemic
stroke: A meta[hyphen]analysis of individual patient data from five
randomised trials. Lancet 2016; 387: 1723-31.
---------------------------------------------------------------------------
Patients should receive mechanical thrombectomy with a stent
retriever if they meet all the following criteria:
Pre-stroke modified Rankin Score (mRS) score of 0 to 1.
Causative occlusion of the internal carotid artery (ICA)
or middle cerebral artery (MCA) segment 1 (M1).
Age >=18 years.
NIH Stroke Scale (NIHSS) score of >=6.
Alberta stroke program early CT score (ASPECTS) of >=6.
Treatment can be initiated (groin puncture) within 6 hours
of symptom onset.\326\
---------------------------------------------------------------------------
\326\ Powers WJ, Rabinstein A, Ackerson T, et al. Guidelines for
the Early Management of Patients With Acute Ischemic Stroke: 2019
Update to the 2018 Guidelines for the Early Management of Acute
Ischemic Stroke: A Guideline for Healthcare Professionals From the
American Heart Association/American Stroke Association. Stroke.
2019;50:e344-e418.
---------------------------------------------------------------------------
According to the applicant, the previously recommended guidelines
from the AHA/ASA have been widely accepted and outline the key
requirements that are still used today to select early window (less
than 6 hours) candidates for thrombectomy. The applicant asserted the
imaging requirements (the second and the fifth criterion) require that
patients be screened for an LVO with CTA and then once an LVO in the
ICA or MCA is discovered, the ASPECTS score must be assessed to verify
that it is 6 or higher. According to the applicant, the ASPECTS score
is an assessment of the CT scan in a stroke patient to determine if
there is evidence of irreversible injury in ten different brain
regions. The applicant stated that patients who have more than five
regions that are already irreversibly injured are not candidates for
thrombectomy.
According to the applicant, it is well validated in the stroke
literature that faster treatment leads to better outcomes. The
applicant stated that compared with the best medical therapy alone, in
the first five positive LVO endovascular thrombectomy trials that were
published in the New England Journal of Medicine and subsequently
summarized in a pooled analysis by the HERMES group, thrombectomy was
associated with improved outcomes when procedure start (arterial
puncture) could be performed within the first 7.3 hours after symptom
onset among patients meeting the brain imaging entry criteria for
inclusion in these randomized trials.\327\ The applicant asserted that
within this period, functional outcomes were better the sooner after
symptom onset that endovascular reperfusion was achieved, emphasizing
the importance of programs to enhance patient awareness, out-of-
hospital care, and in-hospital management to shorten symptom onset-to-
treatment times. The applicant asserted that the magnitude of the
association between time to treatment and outcome is clinically
meaningful. According to the applicant, in patients with acute ischemic
stroke due to LVO, among every 1000 patients achieving substantial
endovascular reperfusion, for every 15-minutes faster emergency
department door-to-reperfusion time, an estimated 39 patients would
have a less-disabled outcome at 3 months, including 25 more who would
achieve functional independence (mRS 0-2).\328\ The applicant stated
that in addition to faster time from emergency department door to
reperfusion, faster time from brain imaging to reperfusion was
associated with better 3-month functional outcomes.\329\
---------------------------------------------------------------------------
\327\ Goyal M, Menon BK, et al. for the HERMES collaborators.
Endovascular thrombectomy after large[hyphen]vessel ischaemic
stroke: A meta[hyphen]analysis of individual patient data from five
randomised trials. Lancet 2016; 387: 1723-31.
\328\ Goyal M, Menon BK, et al for the HERMES collaborators.
Endovascular thrombectomy after large[hyphen]vessel ischaemic
stroke: A meta[hyphen]analysis of individual patient data from five
randomised trials. Lancet 2016; 387: 1723-31.
\329\ Ibid. Goyal M, Menon BK, et al for the HERMES
collaborators. Endovascular thrombectomy after large[hyphen]vessel
ischaemic stroke: A meta[hyphen]analysis of individual patient data
from five randomised trials. Lancet 2016; 387: 1723-31.
---------------------------------------------------------------------------
According to the applicant, the interpretation of early infarct
signs in CT first became clinically important following the FDA
approval of tPA for stroke treatment in 1996 because it was shown that
the response to tPA could be
[[Page 45065]]
predicted based on the degree of early brain injury that could be
visualized on the CT scan. The applicant asserted it was clear that
intravenous tPA could be harmful in patients with advanced early
infarct signs because they had a high risk of intracranial hemorrhage.
The applicant stated, however, only rough qualitative estimates of the
degree of early infarct signs were performed. The applicant asserted
stroke clinicians generally felt believed it to be safe to give tPA if
the early infarct signs were confined to less than one-third of the
middle cerebral artery territory.\330\
---------------------------------------------------------------------------
\330\ von Kummer R, Allen KL, Holle R, et al. Acute stroke:
Usefulness of early CT findings before thrombolytic therapy.
Radiology 1997; 205:327-33.
---------------------------------------------------------------------------
According to the applicant, beginning in the 2000s, a more detailed
and quantitative analysis of early infarct signs was proposed: The
Alberta Stroke Program Early CT score (ASPECTS).\331\ The applicant
stated this score requires the evaluation of 10 pre-defined MCA
vascular territories. The applicant asserted these individual regions
are assessed for focal hypoattenuation of the cortex and in the basal
ganglia, reduction of gray and white matter differentiation, and the
loss of the insular ribbon sign. According to the applicant, ASPECTS is
calculated by subtracting 1 point for each involved region; scores less
than 6 typically signify patients with an irreversible large
hemispheric infarction.\332\
---------------------------------------------------------------------------
\331\ Barber PA, Demchuk AM, et al. Validity and reliability of
a quantitative computed tomography score in predicting outcome of
hyperacute stroke before thrombolytic therapy. ASPECTS Study Group.
Alberta Stroke Programme Early CT Score. Lancet. 2000 May
13;355(9216):1670[hyphen]4.
\332\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
---------------------------------------------------------------------------
According to the applicant, the ASPECTS evaluation became
clinically essential in 2015 after mechanical thrombectomy was found to
be effective for treatment of patients with a large vessel occlusion
within the 6-hour time frame.333 334 The applicant stated
that some of the large randomized controlled trials that ultimately led
to the establishment of thrombectomy as a standard procedure required
an ASPECTS greater than or equal to 6 for inclusion. According to the
applicant, the MR CLEAN trial, which enrolled patients with lower
ASPECT scores than the other four trials, reported the smallest overall
treatment effect and in particular, patients with an ASPECT score less
than 5 did not show benefit with an adjusted odds ratio close to
1.0.\335\ The applicant asserted that for these reasons, an ASPECTS
evaluation is required in most national and international thrombectomy
guidelines. The applicant stated most guidelines, including the AHA/ASA
guidelines discussed previously, require an ASPECT score greater than
or equal to six 6 for a patient to qualify for thrombectomy in the
early treatment window.\336\
---------------------------------------------------------------------------
\333\ Goyal M, Menon BK, et al for the HERMES collaborators.
Endovascular thrombectomy after large[hyphen]vessel ischaemic
stroke: A meta[hyphen]analysis of individual patient data from five
randomised trials. Lancet 2016; 387: 1723-31.
\334\ Powers WJ, Rabinstein A, Ackerson T, et al. Guidelines for
the Early Management of Patients With Acute Ischemic Stroke: 2019
Update to the 2018 Guidelines for the Early Management of Acute
Ischemic Stroke A Guideline for Healthcare Professionals From the
American Heart Association/American Stroke Association. Stroke.
2019;50:e344-e418.
\335\ Berkhemer OA, Fransen PS, et al; MR CLEAN Investigators. A
randomized trial of intraarterial treatment for acute ischemic
stroke. N Engl J Med. 2015;372:11-20.
\336\ Powers WJ, Rabinstein A, Ackerson T, et al. Guidelines for
the Early Management of Patients With Acute Ischemic Stroke: 2019
Update to the 2018 Guidelines for the Early Management of Acute
Ischemic Stroke A Guideline for Healthcare Professionals From the
American Heart Association/American Stroke Association. Stroke.
2019;50:e344-e418.
---------------------------------------------------------------------------
The applicant asserted ASPECT score determination is challenging
because early infarct signs are often very subtle and challenging to
interpret correctly. According to the applicant, there is often
disagreement between experts on the exact score and sometimes these
disagreements preclude a definite answer regarding if the patient
qualifies for thrombectomy or not. The applicant asserted these
interpretation challenges are manifested by limited inter-rater
agreement, even among experts.337 338 339 The applicant
cited the DEFUSE 2 study in which two expert readers graded ischemic
change on NCCT using the ASPECT score. The applicant asserted that
full-scale agreement (measured by the intraclass correlation
coefficient) for CT-ASPECTS was only moderate at 0.579.\340\ According
to the applicant, these inter-rater differences can have important
clinical implications, as discussed further. The applicant asserted
that many physicians who evaluate acute stroke patients are not
confident that they can accurately determine an ASPECT score, and
oftentimes there are significant delays before a radiologist reads the
scan. The applicant stated current AHA/ASA guidelines recommend a CT
scan be performed within 25 minutes of Emergency Department arrival and
the radiologist interpretation of the scan occur within 45 minutes of
arrival.\341\ According to the applicant, based on these guidelines,
radiologists have about 20 minutes to read the scan, however, many
hospitals, especially community and primary stroke centers, do not meet
these guidelines. The applicant asserted Medicare data indicate that
only 72% of patients meet these guidelines. The applicant stated that
automated software, such as Rapid ICH, Rapid LVO and Rapid ASPECTS can
assess CT and CTA findings (both to rule out hemorrhage, confirm an LVO
and to assess early signs of infarction with ASPECTS) within minutes.
---------------------------------------------------------------------------
\337\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
\338\ Kobkitsuksakul C, Tritanon O, Suraratdecha V.
Interobserver agreement between senior radiology resident,
neuroradiology fellow, and experienced neuroradiologist in the
rating of Alberta Stroke Program Early Computed Tomography Score
(ASPECTS). Diagn Interv Radiol. 2018.
\339\ McTaggart RA, Jovin TG, Lansberg MG, et al. Alberta stroke
program early computed tomographic scoring performance in a series
of patients undergoing computed tomography and MRI: Reader
agreement, modality agreement, and outcome prediction. Stroke. 2015
Feb;46(2):407-12.
\340\ McTaggart RA, Jovin TG, Lansberg MG, et al. Alberta stroke
program early computed tomographic scoring performance in a series
of patients undergoing computed tomography and MRI: Reader
agreement, modality agreement, and outcome prediction. Stroke 2015
Feb;46(2):407-12.
\341\ AHA/ASA. Target: Stroke Campaign Manual, published 2010.
http://www.strokeassociation.org/idc/groups/heart-public/@wcm/@hcm/@gwtg/documents/downloadable/ucm_308277.pdf.
---------------------------------------------------------------------------
According to the applicant, the limited inter-rater agreement for
traditional ASPECT scoring can lead to triaging ineligible patients to
thrombectomy or failing to treat eligible patients. The applicant cited
a study in which four experienced readers rated ASPECT scores in
patients who presented with LVO and severe strokes. The applicant
stated the inter-rater agreement between these raters was poor with an
interclass correlation of 0.32.\342\ According to the applicant, the
range of agreement for individual raters with the gold standard
assessment of the score (obtained with a concurrent MRI) for
identifying patients with a score less than six 6 ranged from 35% to
94%. The applicant asserted this study demonstrates there can be
substantial disagreement between physicians regarding if a patient is
eligible for thrombectomy based on their assessment of the ASPECT
score, which can lead to eligible patients not receiving this highly
effective therapy, as well as the performance of unnecessary
procedures.
---------------------------------------------------------------------------
\342\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients with Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
---------------------------------------------------------------------------
The applicant asserted that particularly the Medicare population
might be at risk and impacted by these
[[Page 45066]]
limitations as the majority of LVOs occur in the Medicare population.
The applicant stated that the average age of patients in the HERMES
pooled analysis of thrombectomy studies was 68 years.\343\ Therefore,
according to the applicant, inaccuracy of traditional ASPECT scoring
translates into a substantial percentage of Medicare patients having
erroneous triage decisions made regarding their eligibility for
thrombectomy, which it asserted can result in unnecessary procedures
and increased Medicare costs, as well as increased disability in
eligible patients who are not treated because of inaccurate ASPECT
scoring.
---------------------------------------------------------------------------
\343\ Goyal M, Menon BK, et al for the HERMES collaborators.
Endovascular thrombectomy after large[hyphen]vessel ischaemic
stroke: A meta[hyphen]analysis of individual patient data from five
randomised trials. Lancet 2016; 387: 1723-31.
---------------------------------------------------------------------------
As stated previously, the applicant asserted Rapid ASPECTS
represents a substantial clinical improvement over existing
technologies because it improves diagnostic decisions by improving
accuracy of ASPECT scoring. The applicant presented three retrospective
cohort studies (two peer-reviewed and one under review) to support the
claim that diagnostic decisions made by clinicians would have been
improved with use of Rapid ASPECTS. According to the applicant, two of
the studies showed that the automated Rapid ASPECTS score is
significantly more accurate than the scores obtained by experienced
clinicians.344 345
---------------------------------------------------------------------------
\344\ Maegerlein C, Fischer J, M[ouml]nch S, MD et al. Automated
Calculation of the Alberta Stroke Program Early CT Score:
Feasibility and Reliability. Radiology 2019; 291:141-148.
\345\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
---------------------------------------------------------------------------
The applicant submitted a retrospective cohort study which compared
ASPECT scoring of CT images from patients with MCA occlusion (n=100)
between Rapid ASPECTS software and two expert neuroradiologist reads.
According to the applicant, Rapid ASPECTS showed a substantial
agreement (k=0.78) when imaging took place more than 1 hour after
symptom onset, which increased to high agreement (k=0.92) for imaging
occurring after 4 hours. The applicant asserted that the
neuroradiologist raters did not achieve comparable results to the
software until the time interval of greater than 4 hours (k=0.83 and
k=0.76). In this study, experts developed the reference consensus score
and then, after 6 weeks, the same two neuroradiologists again
determined ASPECTS by using only the baseline CT. The experts had
moderate agreement with the consensus score (k=0.57 and k=0.57) while
Rapid ASPECTS had better agreement (k=0.9). There was minimal agreement
across experts and software in the timeframe of less than 1 hour
between symptom onset and imaging, but better software agreement when
the time was between 1 and 4 hours. There was agreement across experts
for imaging occurring after 4 hours. According to the applicant, this
study showed that in acute stroke of the MCA, Rapid ASPECTS had better
agreement than that of human readers with a predefined consensus
score.\346\
---------------------------------------------------------------------------
\346\ Maegerlein C, Fischer J, M[ouml]nch S, MD et al. Automated
Calculation of the Alberta Stroke Program Early CT Score:
Feasibility and Reliability. Radiology 2019; 291:141-148.
---------------------------------------------------------------------------
The applicant submitted another retrospective cohort study to
compare Rapid ASPECTS, as well as the mean score from four experienced
readers, with a diffusion-weighted magnetic resonance imaging (DW-MRI)
ASPECTS obtained following the baseline CT in patients (n=65) with
large hemispheric infarcts.\347\ DW-MRI is sensitive in the detection
of small and early infarcts. Small infarcts might not appear on CT
scans for days. The AHA/ASA guidelines state that DW-MRI can be useful
for selecting candidates for mechanical thrombectomy between 6 and 24
hours after the patient was last known well (that is, the time at which
the patient was known to be without signs and symptoms of the current
stroke).\348\
---------------------------------------------------------------------------
\347\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
\348\ Powers WJ, Rabinstein A, Ackerson T, et al. Guidelines for
the Early Management of Patients With Acute Ischemic Stroke: 2019
Update to the 2018 Guidelines for the Early Management of Acute
Ischemic Stroke A Guideline for Healthcare Professionals From the
American Heart Association/American Stroke Association. Stroke.
2019;50:e344-e418.
---------------------------------------------------------------------------
According to the applicant, Rapid ASPECTS' automated score had a
higher level of agreement with the mean of the DW-MRI ASPECTS, both for
the full scale and for the dichotomized scale of either <6 or >=6 which
is the difference for treatment/no treatment (difference in intraclass
correlation coefficient, p<0.001). The applicant stated that the mean
DW-MRI ASPECT score was <6 in 63/65 (97%) of the cases; of these, RAPID
ASPECTS agreed with the DW-MRI score in 46/63 (73%) of the cases (95%
confidence interval [CI] 60-83%) vs. 35/63 56% of the cases (95% CI 44-
69%) for the median score of the two experienced readers (p=0.027). The
range of agreement for individual clinician CT ASPECTS with the median
DW-MRI score for identifying patients with a score <6 was 35% to 94%.
According to the applicant, this study demonstrated the accuracy for
determining which patients have an ASPECTS <6 (which would exclude them
from thrombectomy) was significantly higher with the software.\349\
---------------------------------------------------------------------------
\349\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
---------------------------------------------------------------------------
The applicant submitted an additional retrospective cohort study
under review for publication which compared physicians' (two expert
neuroradiologists and six typical readers) ability to read ASPECTS in
patients with an LVO (n=50; 10 regions in each patients' scan for a
total of 500 individual regions) within 6 hours of symptom onset when
assisted by Rapid ASPECTS, compared with their unassisted score. The
applicant stated that the average ASPECT score of three additional
experienced neuroradiologists who were provided access to a follow-up
MRI was used as the reference standard. The applicant asserted that
when typical readers read the scan in conjunction with the Rapid
ASPECTS software, their agreement with the expert reads improved from
72% to 78% (p< 0.0001, test of proportions). According to the
applicant, Rapid ASPECTS alone achieved correlations for total ASPECT
scores that were similar to the three experienced neuroradiologist
readers who had access to a follow-up MRI scan to help enhance the
quality of their reads. The applicant asserted the results from this
study showed that the aid of Rapid ASPECTS can significantly improve
typical readers' scores and that the automated scores generated by
Rapid ASPECTS are interchangeable with the scores generated by expert
neuroradiologists.\350\
---------------------------------------------------------------------------
\350\ Delio PR, Wong ML, Tsai JP, et al. Assistance from
Automated ASPECTS Software Improves Reader Performance (under review
2020).
---------------------------------------------------------------------------
As stated previously, the applicant asserted Rapid ASPECTS
represents a substantial clinical improvement over existing
technologies because it improves diagnostic decisions by reducing
inter-rater variability of ASPECT scoring. To support this claim the
applicant submitted the study performed by iSchemaView and analyzed by
an independent statistician that led to the FDA clearance of Rapid
ASPECTS. According to the applicant, acute CT scans in patients with
LVO (n=50) were read by eight readers both with and without Rapid
ASPECTS. The
[[Page 45067]]
applicant asserted that the standard deviation of ASPECT scores ranged
from 0.35 to 4.5 without assistance as compared to 0.46 to 4.7 with
assistance. The applicant stated that the median standard deviation
dropped from 2.2 to 1.4 when assistance was used to read the scans.
According to the applicant, a t-test to evaluate the hypothesis of
equal standard deviations supported a significant difference in
standard deviations (p=0.0002), and non-parametric tests arrived at the
same conclusion (p <0.0001 for a Wilcoxon Rank Sum Test).\351\
---------------------------------------------------------------------------
\351\ Copeland K. Variability of ASPECT Scores Internal Analysis
iSchemaView of data submitted to U.S. Food and Drug Administration
(FDA) Center for Devices and Radiological Health, 2020a.
---------------------------------------------------------------------------
As stated previously, the applicant asserted Rapid ASPECTS
represents a substantial clinical improvement by improving treatment
decisions and by improving time to treatment. The applicant asserted
that in the study performed by iSchemaView of the acute CT scans in
patients with LVO (n=50) which were read by eight readers both with and
without Rapid ASPECTS, a Receiver Operating Characteristic (ROC)
analysis demonstrated significant improvement in typical readers'
ability to identify patients who have a score of 6 to 10 if they read
the scan in conjunction with the automated score. According to the
applicant, the area under the curve (AUC) improved from 0.78 without
Rapid ASPECTS to 0.85 with Rapid ASPECTS (p=0.0049). The applicant
asserted that of the 400 treatment assessments (50 scans * 8 readers)
in this study, 7% were changed from an incorrect assessment to a
correct assessment when the scan was read in conjunction with the
automated score compared with traditional scoring, a statistically
significant difference.\352\
---------------------------------------------------------------------------
\352\ Copeland K. Treat/No Treat Analysis, Internal Analysis
iSchemaView of data submitted to U.S. Food and Drug Administration
(FDA) Center for Devices and Radiological Health, 2020.
---------------------------------------------------------------------------
The applicant cited three retrospective studies that, according to
the applicant, have shown treatment decisions made by experienced
clinicians would have been improved with the use of Rapid
ASPECTS.353 354 355 As stated previously, the applicant
asserted that one study showed that agreement regarding whether a
patient had a treatment-eligible score based on a concurrent MRI scan
interpreted by two experts was significantly higher for the Rapid
ASPECTS score than for experienced clinicians.\356\ According to the
applicant, Rapid ASPECTS has also been shown to improve the reads of a
typical CT scan reader to become as accurate as a neuroradiologist
read.\357\ The applicant asserted that since radiologists are not
immediately available at the time when many LVO patients present, and
obtaining a read from a neuroradiologist often takes even longer, the
time to determine an ASPECT score will be substantially improved with
the software, leading to faster treatment times which have been shown
to reduce disability. According to the applicant, Rapid ASPECTS
provides an opportunity to impact the current selection and allocation
pathway for stroke care.
---------------------------------------------------------------------------
\353\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
\354\ Delio PR, Wong ML, Tsai JP, et al. Assistance from
Automated ASPECTS Software Improves Reader Performance (under review
2020).
\355\ Maegerlein C, Fischer J, M[ouml]nch S, MD et al. Automated
Calculation of the Alberta Stroke Program Early CT Score:
Feasibility and Reliability. Radiology 2019; 291:141-148.
\356\ Albers GW, MD, Wald MJ, Mlynash M, et al. Automated
Calculation of Alberta Stroke Program Early CT Score Validation in
Patients With Large Hemispheric Infarct. Stroke. 2019;50:3277-3279.
\357\ Delio PR, Wong ML, Tsai JP, et al. Assistance from
Automated ASPECTS Software Improves Reader Performance (under review
2020).
---------------------------------------------------------------------------
After reviewing the information submitted by the applicant, we had
the following questions regarding whether Rapid ASPECTS meets the
substantial clinical improvement criterion.
In the studies provided by the applicant, the reference ASPECT
score to which Rapid ASPECTS was compared was generally derived from a
mean value of the ASPECT scores rated from a small sample of expert
radiologists. We noted that the radiologists used to identify the
reference to which Rapid ASPECTS was compared may not be representative
of radiologists in the United States. We were also unclear whether a
mean ASPECT score, identified from radiologists whom the applicant
describes as having low levels of agreement, is representative of a
meaningful value as it does not represent the score of any particular
radiologist. We further questioned whether individuals participating in
these studies may have altered their behavior in a substantive way by
interacting with computer-generated ratings, which would complicate
study findings.
We further noted that the correlation between the ASPECT scoring of
expert and Rapid ASPECTS is the primary outcome in many of the articles
provided. Though this information may be important and informative, we
stated it is not clear that a high correlation between expert and Rapid
ASPECTS scoring is necessarily indicative of substantial clinical
improvement. Furthermore, whether these providers agree with the
technology does not determine whether they are correct, and it could be
the case that both AI and radiologists agree on an incorrect score.
We noted that the applicant stated that inter-rater disagreement
with ASPECT scores leads to erroneous triage and treatment of Medicare
patients. We stated it was unclear how the applicant determined that
disagreement between scores translates into inappropriate treatment, or
necessarily shows that the scoring class (<6 vs >=6) was inaccurate.
The applicant also asserted that many physicians who evaluate acute
stroke patients are not confident that they can accurately determine an
ASPECT score, but it did not provide evidence to support this claim.
Additionally, we observed that the studies provided did not demonstrate
improvements in clinical outcomes such as disability, mortality, or
length of stay; rather, improved outcomes were inferred by relying on
the assumption that faster treatment results in better outcomes.
Without measuring the impact of the technology on treatment outcomes,
we stated we are uncertain whether Rapid ASPECTS represents a
substantial clinical improvement.
Lastly, we noted that the applicant submitted the AHA/ASA
guidelines and a review of stroke literature as support for clinical
improvement. It is unclear how the guidelines support a finding of
substantial clinical improvement for Rapid ASPECTS because the
guidelines are for the current standard of care. Additionally, the
applicant did not provide evidence to support its assertion that
hospitals are not meeting the AHA/ASA guideline that radiologists read
the CT scan of acute ischemic stroke patients within 20 minutes. The
stroke literature review identified the inter-rater differences among
ASPECT scoring, but did not demonstrate that inter-rater disagreements
have led to triaging ineligible patients to thrombectomy or failing to
treat eligible patients in clinical practice. We stated it is unclear
how the literature on inter-rater reliability for ASPECT scoring would
demonstrate a substantial clinical improvement in how Rapid ASPECTS
supports improved triaging of stroke care. The applicant's stroke
literature review also identified that faster treatment leads to better
outcomes. While this supports the urgency of stroke care, we were
unsure how it demonstrates a substantial clinical improvement in how
Rapid ASPECTS supports the urgency of stroke care.
[[Page 45068]]
We invited public comments on whether Rapid ASPECTS meets the
substantial clinical improvement criterion.
Comment: The applicant submitted comments in response to CMS'
concerns regarding substantial clinical improvement as indicated in the
proposed rule. With respect to our concern about sample representation,
the applicant stated that two of the studies that were provided, GAMES-
RP and Delio et al., used expert readers from the United
States.358 359 The applicant stated that these two studies
included a total of 6 different experts and that the results for Rapid
ASPECTS seen in the U.S. studies were similar to the benefits seen in
the studies conducted outside of the United States.
---------------------------------------------------------------------------
\358\ Delio PR, Wong ML, Tsai JP, et al. Assistance from
Automated ASPECTS Software Improves Reader Performance (under review
2020).
\359\ Sheth KN, Elm JJ, Beslow LA, Sze GK, Kimberly WT, et al.
Glyburide Advantage in Malignant Edema and Stroke (GAMES-RP) Trial:
Rationale and design. Neurocrit Care. 2016; 24: 132-139.
---------------------------------------------------------------------------
With respect to our concern that individuals participating in these
studies may have altered their behavior in a substantive way by
interacting with computer-generated ratings, the applicant asserted
that the expert radiologists who determined the gold standard scores
read the cases blinded to the computer-generated ratings, so that there
is no possibility that the software influenced these reads. The
applicant further stated that the exception to this was the Delio, et
al study, where the gold standard was determined independent of the
software by three expert neuroradiologists, followed by six ``typical
readers'' judging the cases with and without the technology to
determine if the assist from Rapid ASPECTS led to reader improvement.
The applicant also noted that this study design was endorsed by FDA.
Per the applicant, the readers in the first reading session saw the
case without Rapid outputs half the time, while during the other half
they saw the cases with the Rapid software to assist their read. In a
subsequent session, the readers saw the same cases again in reverse:
Cases that read without Rapid in the first session were read with Rapid
and vice versa. The applicant maintained that the study demonstrated
reader improvement with the software assist.
The applicant also commented in response to our concern that the
high correlation between the ASPECT scoring of expert and Rapid
ASPECTS, which was the primary outcome in many of the articles the
applicant provided, demonstrates the accuracy of the technology and is
not necessarily indicative of substantial clinical improvement. The
applicant maintained that this correlation was not the primary outcome
in most studies, citing the example of the GAMES study where the
accuracy of the software based on the MRI finding was used as a gold
standard.\360\ In addition, the applicant cited the Delio, et al and
Munich study studies where the gold standard for the primary analysis
was the consensus read of multiple experts that was enhanced with the
follow-up MRI. The applicant agreed with CMS that both the AI and
radiologist could be incorrect, hence why the MRI was used in the GAMES
study as the gold standard and in Delio, et al and Munich, the expert
radiologists received additional data in the form of a follow-up MRI
scan to improve their accuracy. The applicant pointed out that in the
prospective study reported by Mansour, et al the door-to-needle time
for the standard of care group was 52.3 +/- 16 minutes versus 36.8 +/-
11 minutes (p=0.001) in the Rapid ASPECTS patients which resulted in a
14-minute reduction in the door-to-treatment time. The applicant
further noted there was also a significantly increased likelihood of
functional independence and fewer hemorrhagic complications in patients
treated with reperfusion therapy in the Rapid ASPECTS group (p<0.001).
---------------------------------------------------------------------------
\360\ Id.
---------------------------------------------------------------------------
With respect to our request for more information concerning how
inter-rater disagreement with ASPECT scores translates into erroneous
triage and treatment of Medicare patients, as well as how inter-rater
reliability for ASPECT scoring demonstrates that Rapid ASPECTS supports
improved triaging of stroke care, the applicant presented a two-fold
argument. The applicant first noted that because appropriate treatment
depends on an accurate ASPECT score, Rapid ASPECTS can avoid sending a
patient to thrombectomy who has an ASPECT score that does not qualify
or failing to treat a patient who does qualify for the procedure. The
applicant pointed to the cases cited in its application where one
radiologist believed that the score was less than six and the other
reader believed that the score was greater than 6. Because only one of
these readers can be correct, in these cases the incorrect reader may
recommend the wrong treatment decision. By improving the accuracy of
the score, the software can avoid these cases of over- or under-
treatment. The applicant also pointed to examples of cases where the
typical reader's score disagreed with the gold standard score regarding
if the patient had a qualifying score of greater than or equal to six,
and that in 93 percent of these cases the Rapid ASPECTS score agreed
with the gold standard score. Therefore, the applicant argued that a
treatment decision based on Rapid ASPECTS would be in line with the
more accurate gold standard score and differ from the typical reader's
score.
To further bolster their argument, the applicant reiterated that
the method for obtaining a ``more accurate'' baseline ASPECT score
using the data provided by a follow-up MRI has been accepted by
Radiology, Stroke, and the Journal of Stroke and Cerebrovascular
Disease as representing a more accurate score. The applicant pointed
out that an MRI scan is much more sensitive than a CT for determining
the extent of early brain injury; therefore, the use of a follow-up MRI
scan can help increase the accuracy of the baseline ASPECTS read. The
applicant acknowledged that while the ASPECTS reader does not have the
advantage of knowing what the MRI will eventually show, it is well
accepted that having information about the final size of a stroke can
make it easier to identify subtle signs of a stroke on the baseline
scan. The applicant pointed to the Munich study, GAMES ASPECT study,
and Delio et al, which all used a combined baseline CT and follow-up
MRI scan as the gold standard and where the Rapid ASPECTS software was
demonstrated to be more accurate based on this gold standard than the
typical reader.
With respect to our observation that the applicant did not provide
evidence to support the claim that many physicians who evaluate acute
stroke patients are not confident that they can accurately determine an
ASPECT score, the applicant clarified that readers who do not perform
well, or read ASPECTS less frequently would have lower confidence, and
that the key point is not confidence but rather the accuracy of their
scoring. The applicant noted multiple publications showing that non-
neuroradiologists and less experienced readers are less accurate than
experienced neuroradiologists when performing ASPECTS scoring, such as
the Delio et al study where the scores of the neurologists and ER
physician were considerably less accurate than the two
neuroradiologists.\361\ In this same study, the scores of the
neurologists and ER physician were as accurate as the two
neuroradiologists during a Rapid
[[Page 45069]]
ASPECTS assisted read and using the gold standard score as the
reference. The applicant referred CMS to two additional studies, where
a better correlation between the expert consensus and the readers was
documented for more experienced readers compared with less experienced
readers.362 363
---------------------------------------------------------------------------
\361\ Delio PR, Wong ML, Tsai JP, et al. Assistance from
Automated ASPECTS Software Improves Reader Performance (under review
2020).
\362\ Kobkitsuksakul C, Tritanon O, Suraratdecha V.
Interobserver agreement between senior radiology resident,
neuroradiology fellow, and experienced neuroradiologist in the
rating of Alberta Stroke Program Early Computed Tomography Score
(ASPECTS). Diagn Interv Radiol. 2018.
\363\ Culbertson CJ, Christensen S, Mlynash M, et al. Tilt-
Corrected Region Boundaries May Enhance the Alberta Stroke Program
Early Computed Tomography Score for Less Experienced Raters. J
Stroke Cerebrovasc Dis. 2020 Jul;29(7):104820.
---------------------------------------------------------------------------
With respect to our concern that the studies provided did not
demonstrate improvements in clinical outcomes such as disability,
mortality, and length of stay, the applicant again pointed to the
prospective study reported by Mansour, et al where the door-to-needle
time for the standard care group was 52.3 +/- 16 minutes vs. 36.8 +/-
11 minutes (p=0.001) in the Rapid ASPECTS patients which resulted in a
14-minute reduction in the door-to-treatment time. The applicant
reiterated that there was also a significantly increased likelihood of
functional independence and fewer hemorrhagic complications in patients
treated with reperfusion therapy in the Rapid ASPECTS group (p <
0.001). The applicant then presented new data from the United States
showing that time to treatment with thrombectomy was reduced following
introduction of Rapid ASPECTS. Per the applicant, the study was
performed at two comprehensive centers and one primary stroke center
and observed a substantial reduction of approximately 35 minutes in the
time from ER arrival to when the MDs were provided with an assessment
of the non-contrast CT scan results for patients with suspected stroke.
During the SOC phase of the study (pre-ASPECTS) the median time for the
radiology read to be performed was 46 minutes vs 9.5 minutes for the
treating MDs to receive the Rapid ASPECTS report in the post-ASPECTS
phase. Furthermore, the radiologists were able to read the CT scan 6
minutes faster when they had the Rapid interpretation available. In
addition, although only a limited number of patients received
thrombectomy during the study period, there were compelling trends
toward lower mortality and a higher rate of functional recovery at 90
days in the post-ASPECTS phase. Per the applicant, these data
demonstrate that the Rapid ASPECTS software provides diagnostic data on
suspected stroke patients considerably faster than SOC and provides
evidence that earlier access to this diagnostic data improves stroke
outcomes.
With respect to our request for clarity on how the AHA/ASA
guidelines for the current standard of care support a finding of
substantial clinical improvement for Rapid ASPECTS, the applicant
stated that these guidelines require an ASPECT score of 6 or higher for
the patient to receive thrombectomy in the 6-hour treatment window, and
that they therefore assume that an accurate ASPECT score can be
calculated and used to make an appropriate treatment decision. The
applicant stated that the accuracy of the ASPECT score can be improved
with the Rapid ASPECTS software, especially for less experienced
readers, and that in addition there is clear evidence that the ASPECTS
score can be generated more quickly with the assistance of the
software, especially in hospitals that do not have immediate access to
expert neuroradiologists. Regarding the lack of evidence to support the
assertion that hospitals are not meeting the AHA/ASA guideline that
radiologists read the CT of acute ischemic stroke patients within 20
minutes, the applicant pointed out that current Medicare guidelines
state that the radiologist interpretation of the scan should occur
within 45 minutes of arrival, and that they included Medicare data
indicated that only 72 percent of patients meet these guidelines.
The applicant commented in response to CMS' numerous concerns
regarding the relevance of the stroke literature review provided in its
application. Regarding the literature on inter-rater reliability for
ASPECT scoring and how it demonstrates a substantial clinical
improvement in how Rapid ASPECTS supports improved triaging of stroke
care, the applicant pointed to the three retrospective studies showing
that an incorrect ASPECT score was chosen by a typical clinical reader
approximately seven percent of the time based on the gold standard
determined in each study, and that this leads to either an unnecessary
procedure or an eligible patient not being treated with thrombectomy.
The applicant emphasized that unnecessary procedures are costly and
that thrombectomy is associated with a small risk of serious
complications. The applicant stated that patients who are not treated
with thrombectomy because the ASPECTS score is erroneously low will
miss out on the substantial benefits of thrombectomy which include
shorter length of stay, faster recovery time, improvement in activities
of daily living, and improved quality of life. Regarding our
uncertainty over how the applicant's literature review, which supports
the urgency of stroke care, also demonstrates a substantial clinical
improvement in how Rapid ASPECTS supports the urgency of stroke care,
the applicant maintained that Rapid ASPECTS is highly likely to provide
diagnostic information to treating physicians much faster than the
current standard of care. Per the applicant, the Rapid ASPECTS score is
generated and made available to treating physicians within two and a
half minutes after the CT scan is completed whereas current AHA
guidelines recommend that a radiologist reads the CT scan within 20
minutes, a metric that is often not met. The applicant pointed to a
recent study from Johns Hopkins where use of the Rapid mobile app (app)
for detection of large vessel occlusion (data presented to MDs about
2.5 minutes after the scan is completed) resulted in a 33 min reduction
in door to groin thrombectomy times (P=0.02), and 37 min reduction in
door to recanalization time (P=0.02) when compared with patients
treated pre-app. The applicant also noted that the National Institutes
of Health Stroke Scale (NIHSS) 24 hours after procedure and at
discharge were significantly lower in the post-app group (P=0.03).\364\
The applicant pointed to the new data that they cited in response to
our concern that the studies provided did not demonstrate improvements
in clinical outcomes, which show that time to treatment with
thrombectomy was reduced following introduction of Rapid ASPECTS;
specifically, that there was a 35-minute reduction in the time from ER
arrival to when the MDs were provided with an assessment of the non-
contrast CT scan results for patients with suspected stroke, the
radiologists were able to read the CT scan 6 minutes faster when they
had the Rapid interpretation available, and although only a limited
number of patients received thrombectomy during the study period, the
applicant observed compelling trends toward lower mortality and a
higher rate of functional recovery at 90 days in the post-ASPECTS
phase.
---------------------------------------------------------------------------
\364\ Al-Kawaz M, Primiani C, Urrutia V, Hui F. Impact of
RapidAI mobile application on treatment times in patients with large
vessel occlusion. J NeuroIntervent Surg 2021;0:1-4.
---------------------------------------------------------------------------
The applicant then commented in response to our concerns regarding
the additional data submitted in response to questions received at the
New Technology Town Hall Meeting held in December 2020. With respect to
our concerns about the generalizability of Mansour et al, given the
small, non-
[[Page 45070]]
randomized sample generated from a single hospital in Egypt, the
applicant acknowledged that there are indeed limitations to the study,
and that it occurred outside of the United States. With respect to our
concern regarding one patient in the retrospective study for whom the
Rapid ASPECTS-generated score and agreement read differed, suggesting
that the tPA treatment the patient received was not appropriate, the
applicant noted that an ASPECTS score of less than six is a
contraindication to thrombectomy but is not a contraindication to tPA.
The applicant provided new data from the United States to supplement
this data, which show that time to treatment with thrombectomy was
reduced following introduction of Rapid ASPECTS. The applicant also
provided the Johns Hopkins study summarized previously showing
treatment times and improved outcomes.
Other commenters cited their clinical experience using Rapid
ASPECTS and echoed the applicant's comments regarding the importance of
early intervention in stroke care. These commenters stated that, for
patients with acute ischemic stroke with large vessel occlusions, these
benefits from mechanical thrombectomy are time dependent. The
commenters expressed their support of new technology add-on payments
for Rapid ASPECTS, stating that incorporating technologies such as
Rapid ASPECTS reduces the time to interpret the imaging studies needed
to make treatment decisions, thus saving lives and reducing disability.
Response: We appreciate the commenters' input and the additional
data from the applicant to address our concerns. However, after review
of all the data received to date, we continue to have concerns related
to the substantial clinical improvement criterion as noted in the FY
2022 IPPS/LTCH PPS proposed rule. Specifically, it remains unclear
whether the use of Rapid ASPECTS significantly improves clinical
outcomes for PE patients as compared to currently available treatments
as the applicant did not measure the impact of the technology on
outcome measures such as mortality, length of stay, and disability.
This is in contrast to the data presented in response to CMS' concerns
regarding Viz.ai's ContaCT, which demonstrated not only reduced time to
notification but also an improved 5-day NIH Stroke Score (NIHSS) and
lower Modified Rankin Score (mRS) post-ContaCT implementation among
patients presenting to a primary stroke system who subsequently
underwent mechanical thrombectomy. While the applicant has demonstrated
that Rapid ASPECTS reduces time to notification, it has not shown that
improved outcomes resulting from faster treatment are necessarily due
to Rapid ASPECTS, as there are many variables in the hospital workflow
that may influence management of the patient and time savings. We note
that the Johns Hopkins study did not evaluate Rapid ASPECTS but rather
the Rapid Mobile App for the detection of LVO. We also note that
current Medicare guidelines, which state that the radiologist
interpretation of the scan should occur within 45 minutes of arrival,
do not apply to Rapid ASPECTS. The guidelines state that the CT should
be read within 45 minutes of arrival in order to diagnose a stroke
whereas Rapid ASPECTS is indicated for use in stroke patients only
after the diagnosis has been made.
Therefore, after consideration of the public comments we received
and based on the information stated previously, we are unable to
determine that Rapid ASPECTS represents a substantial clinical
improvement over existing technologies, and we are not approving new
technology add-on payments for Rapid ASPECTS for FY 2022.
l. Steripath[supreg] Micro\TM\ Blood Collection System
Magnolia Medical Technologies, Inc. submitted an application for
new technology add-on payments for the Steripath[supreg] Micro\TM\
Blood Collection System, which is also referred to as the
Steripath[supreg] Micro\TM\ Initial Specimen Diversion Device
(ISDD[supreg]), for FY 2022. The applicant described the
Steripath[supreg] Micro\TM\ ISDD[supreg] (``Steripath Micro'') as a
proprietary and patent-protected single-use, disposable device, which
is indicated for use in the collection of blood cultures by nurses,
phlebotomists, and technicians in emergency departments and inpatient
units in acute care hospitals to reduce blood culture contamination and
false positive diagnostic test results for sepsis. According to the
applicant, Steripath[supreg] Micro\TM\ ISDD[supreg], along with the
Steripath and Steripath[supreg] Gen2, are part of a product portfolio
utilizing their Steripath[supreg] ISSD[supreg] technology.
The applicant explained that the Steripath[supreg] Micro\TM\
ISDD[supreg] uses a syringe-driven (or blood culture bottle-driven)
architecture that uses negative pressure to flip a proprietary internal
bladder, which, in turn, creates gentle negative pressure to divert and
sequester the initial 0.6 to 0.9 mL of blood, the portion known to most
likely contain contaminants. According to the applicant, once diversion
is complete, the user presses a side button to isolate the diverted
blood. The applicant further explained that once the blood is isolated,
a second independent blood flow pathway is opened to collect the blood
specimen into the syringe (or blood culture bottle) for blood culture
testing.
The applicant stated that the design and development of the
Steripath[supreg] Micro\TM\ ISDD[supreg] was inspired by patients who
present with symptoms concerning for sepsis and who are hypotensive
(low blood pressure) and hypovolemic (low blood volume), have difficult
intravenous access (DIVA), or are small in stature with lower blood
volume. According to the applicant, clinicians typically utilize a
syringe technique to collect blood from this patient population to
enable management of negative pressure (attempting to avoid vein
collapse) while improving the opportunity to collect a sufficient
volume of blood to culture, which the applicant stated is a critical
determinant of blood culture sensitivity (that is, avoiding false
negative results). The applicant claimed that this patient population
is generally ineligible for existing ISDD[supreg] technologies due to
risk of vein collapse. According to the applicant, the negative
pressure created by Steripath[supreg] Micro\TM\ ISDD[supreg]'s bladder-
driven mechanism is designed to achieve initial specimen diversion
while avoiding collapsing of the veins (losing venous access) of this
patient population. The applicant stated that the Steripath[supreg]
Micro\TM\ ISDD[supreg] is available with a preassembled sterile
integrated syringe for syringe-driven diversion and blood culture
sample collection, and components of the system may be used for
infusion following sample collection after disconnection of the
ISDD[supreg].
According to the applicant, blood culture is the gold standard
diagnostic test for bloodstream infections, including septicemia. The
applicant explained that blood cultures are drawn from patients
displaying symptoms of a potential bloodstream infection with results
guiding therapeutic decisions and influencing outcomes for patients for
their duration in acute care. The applicant stated that the standard of
care is to collect two separate blood cultures, each consisting of two
blood culture bottles containing aerobic or anaerobic medium. The
applicant further noted that the major automated microbial blood
culture detection systems (BACTEC and BacT/ALERT) recommend 8-10 mL of
blood in each of the aerobic and anaerobic bottles--up to 40 mL total
distributed across all four bottles.
[[Page 45071]]
The applicant stated that despite the critical role blood culture
plays in providing diagnoses, an estimated 20 percent to over 50
percent of all positive blood culture results for sepsis are suspected
to be false positive due to blood culture contamination, as explained
in greater detail below.\365\ The applicant stated that blood culture
contamination creates clinical confusion which leads to a risk of
inappropriate antibiotic therapy,366 367 368 369 extended
length of stay of an average of 2.0 to 2.4 days,370 371
Clostridium difficile (CDI) infection,372 373 multidrug
resistance organism (MDRO) infections, Acute Kidney Injury (AKI),\374\
hospital-acquired infection (HAI) or hospital-acquired condition
(HAC),\375\ false-positive Central Line-Associated Blood Stream
Infection (CLABSI) treatment, false positives reported to National
Healthcare Safety Network (NHSN)/CMS (thus biasing the data), and
additional lab and/or other diagnostic testing.\376\
---------------------------------------------------------------------------
\365\ Snyder S, et al. Effectiveness of practices to reduce
blood culture contamination: A Laboratory Medicine Best Practices
systematic review and meta-analysis. Clinical Biochemistry. 2012;
45(0):999-1011.
\366\ Rupp M, et al. Reduction in Blood Culture Contamination
Through Use of Initial Specimen Diversion Device. Clinical
Infectious Diseases. 2017; 65(2):201-205.
\367\ Bell M, et al. Effectiveness of a novel specimen
collection system in reducing blood culture contamination rates.
Journal of Emergency Nursing 44.6 (2018): 570-575.
\368\ Doern G, et al. A Comprehensive Update on the Problem of
Blood Culture Contamination and a Discussion of Methods for
Addressing the Problem. Clinical Microbiology Reviews. 2020;
33:e00009-19.
\369\ Chang D, et al. Impact of blood culture diversion device
on molecular pathogen identification on vancomycin use. Poster
presented at: Society for Healthcare Epidemiology of America (2017).
\370\ Skoglund E et al. Estimated Clinical and Economic Impact
through Use of a Novel Blood Collection Device To Reduce Blood
Culture Contamination in the Emergency Department: A Cost-Benefit
Analysis. 2019; 57:e01015-18.
\371\ Geisler B, et al. Model to evaluate the impact of
hospital-based interventions targeting false-positive blood cultures
oneconomic and clinical outcomes. Journal of Hospital Infection.
2019; 102:438-444.
\372\ Ibid. Geisler B, et al. Model to evaluate the impact of
hospital-based interventions targeting false-positive blood cultures
oneconomic and clinical outcomes. Journal of Hospital Infection.
2019; 102:438-444.
\373\ Doern G, et al. A Comprehensive Update on the Problem of
Blood Culture Contamination and a Discussion of Methods for
Addressing the Problem. Clinical Microbiology Reviews. 2020;
33:e00009-19.
\374\ Khalili H, et al. ``Antibiotics induced acute kidney
injury: Incidence, risk factors, onset time and outcome.'' Acta
Medica Iranica (2013): 51(12): 871-878.
\375\ Doern G, et al. A Comprehensive Update on the Problem of
Blood Culture Contamination and a Discussion of Methods for
Addressing the Problem. Clinical Microbiology Reviews. 2020;
33:e00009-19.
\376\ Ibid. Doern G, et al. A Comprehensive Update on the
Problem of Blood Culture Contamination and a Discussion of Methods
for Addressing the Problem. Clinical Microbiology Reviews. 2020;
33:e00009-19.
---------------------------------------------------------------------------
The applicant explained that the detection of bacteremia is of
particular concern for Medicare beneficiaries, given that the mean age
for United States patients afflicted with sepsis in 2014 was 66.5, with
sepsis present in 35 percent of all United States hospitalizations that
resulted in death.\377\
---------------------------------------------------------------------------
\377\ Rhee C, et al. Incidence and Trends of Sepsis in US
Hospitals Using Clinical vs Claims Data, 2009-2014. JAMA. 2017;
318:1241-1249.
---------------------------------------------------------------------------
With regard to the newness criterion, the Steripath[supreg]
Micro\TM\ ISDD[supreg] is a Class II medical device that received
510(k) clearance from the FDA on October 8, 2020. The 510(k) clearance
was based on substantial equivalence to an earlier version of the
device, Steripath[supreg] Gen2, which received 510(k) clearance on
February 28, 2020. According to the applicant, the Steripath[supreg]
ISDD[supreg] product portfolio, including the Steripath[supreg]
Micro\TM\ ISDD[supreg], is the only FDA 510(k)-cleared family of
devices indicated to reduce blood culture contamination.\378\ According
to the applicant, a supplemental Special 510(k) submission and
clearance is anticipated for an additional configuration of the
Steripath[supreg] Micro\TM\ ISDD[supreg] device that incorporates a
butterfly safety venipuncture needle.
---------------------------------------------------------------------------
\378\ Bell, Mary, et al. Effectiveness of a novel specimen
collection system in reducing blood culture contamination rates.
Journal of Emergency Nursing 44.6 (2018): 570-575.
---------------------------------------------------------------------------
The applicant submitted a request for a new ICD-10-PCS procedure
code and was granted approval for the following procedure code
effective October 1, 2021: XXE5XR7 (Measurement of infection,
mechanical initial specimen diversion technique using active negative
pressure, new technology group 7).
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 not be considered ``new''
for purposes of new technology add-on payments.
According to the applicant, diversion techniques use the same basic
principle to reduce blood culture contamination by sequestering blood
most likely to contain dislodged skin fragments and/or flora. With
regard to the first criterion, whether a product uses the same or
similar mechanism of action to achieve a therapeutic outcome, the
applicant discussed current/alternative treatments to avoid blood
contamination, but states that manual diversion, passive diversion, and
the Steripath[supreg] Gen2 device are not comparable alternatives to
Steripath[supreg] Micro\TM\.
According to the applicant, manual diversion, which involves the
phlebotomist or other medical professional first collecting blood into
a waste tube and then manually switching to a sample collection tube,
is not a replacement for Steripath[supreg] Micro\TM\ ISDD[supreg]
because manual diversion inherently entails additional opportunities
for human error through touch contamination and process variation,
without the ability to manage and ensure healthcare worker compliance.
The applicant further explained that manual diversion techniques
introduce, at a minimum, one additional surface (waste tube top), which
must either be sterilized (or carefully handled if pre-packaged
sterile) to avoid cross contamination through the inoculation needle.
The applicant noted that if the inoculation needle is contaminated in
this manner, both blood culture bottles can become contaminated, which
can be interpreted (inaccurately) as a true positive through laboratory
testing. The applicant explained that Steripath[supreg] Micro\TM\
ISDD[supreg] is a closed system to prevent opportunities for touch
contamination beyond conventional methods of blood culture sample
acquisition. The applicant further explained that since
Steripath[supreg] Micro\TM\ ISDD[supreg] is a pre-assembled and
packaged sterile kit that does not require manual connections, it
avoids touch-point contamination and prevents the need for additional
time, focus, and manual diversion procedural compliance from the
operator.
The applicant stated that the Kurin product, a competitor diversion
device that uses passive diversion (or relying on the patient's blood
pressure), is not a comparable alternative to Steripath[supreg]
Micro\TM\ ISDD[supreg] as it is not FDA-cleared to reduce blood-culture
contamination. The applicant claimed that passive diversion, because of
its limitations, is integrated into the Kurin product to redirect 0.15
mL of blood. The applicant stated that passive devices are susceptible
to bypassing diversion when the culture bottle is inoculated before
diversion is complete, and that this limitation is not present within
the Steripath[supreg] MicroTM ISDD[supreg] architecture. The
applicant asserted that the Steripath[supreg] Micro\TM\ ISDD[supreg]
uses a novel syringe-driven (or blood culture bottle-driven) negative
pressure to flip an internal bladder which, in turn, creates gentle
negative pressure to divert and
[[Page 45072]]
sequester the initial 0.6 to 0.9 mL of blood.
The applicant further stated that the Steripath[supreg] Gen2
ISDD[supreg] is not a comparable product to Steripath[supreg] Micro\TM\
ISDD[supreg], as it uses greater negative pressure to divert an initial
1.5-2.0 mL of blood for the adult patient population. According to the
applicant, the Steripath[supreg] MicroTM ISDD[supreg]
platform leverages ISDD[supreg] technology but is smaller, easier-to-
use, and employs a novel proprietary diversion bladder technology to
address patients who are hypotensive and hypovolemic, have difficult
intravenous access, or are small in stature with lower blood volume.
Specifically, the applicant explained that the Steripath[supreg]
Micro\TM\ ISDD[supreg] uses syringe-driven (or blood culture bottle-
driven) negative pressure to flip an internal bladder which in turn
creates gentle negative pressure to effectively and consistently divert
and sequester the initial 0.6 to 0.9 mL of blood, the portion known to
most likely contain contaminants, with this patient population. The
applicant asserts this differentiates the Steripath[supreg] Micro\TM\
from the Steripath[supreg] Gen2. The applicant further explained that
once diversion is complete, the user presses a button to isolate the
diverted blood and, automatically, a second independent blood flow
pathway opens to collect the blood specimen into the syringe (or blood
culture bottle) for culture.
With respect to the second criterion, whether the technology is
assigned to the same or a different MS-DRG, the applicant did not
indicate whether the Steripath[supreg] Micro\TM\ ISDD[supreg] would be
assigned to the same MS-DRGs as cases representing patients who receive
diagnostic information from competing technologies or traditional blood
collection methods.
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 the Steripath[supreg] Micro\TM\ ISDD[supreg] was
fundamentally designed to address a specific and broader patient
population than any other technology that is currently available and
FDA 510(k) cleared to prevent blood culture contamination. The
applicant explained that in a certain subset of `hard-stick' (low blood
volume, hypovolemic and hypotensive) patients, blood culture using
passive diversion or the Steripath[supreg] Gen2 ISDD[supreg] is not
possible. According to the applicant, Steripath[supreg]
MicroTM is the first ISDD designed specifically to address
the unmet needs of the low blood volume, hypovolemic and hypotensive,
`hard-stick' patient populations (many requiring integrated sterile
syringe collection) that is FDA 510(k) cleared indicated to reduce
blood culture contamination.
In the proposed rule (86 FR 25316), we noted the following concerns
regarding whether the technology meets the substantial similarity
criteria and whether it should be considered new. Although we
understand that the Steripath[supreg] Micro\TM\ ISDD[supreg] version
may divert less blood volume and utilize less negative pressure than
the Steripath[supreg] Gen2 ISDD[supreg], we noted that both devices
utilize negative pressure and, according to the applicant, leveraged
Magnolia Medical Technologies' foundational ISDD[supreg] technology,
and it is unclear whether this represents a new mechanism of action. We
further noted that the applicant also appears to consider the devices
as similar, as they exclusively rely on studies conducted using the
Steripath[supreg] Gen2 ISDD[supreg] to demonstrate substantial clinical
improvement. We stated that we believe that the newness date for
Steripath[supreg] Micro\TM\ ISDD[supreg] would begin on February 28,
2020, the date on which the predicate device received 510(k) clearance.
We also noted that the applicant claimed that the Steripath[supreg]
ISDD[supreg] product portfolio, including the Steripath[supreg]
MicroTM ISDD[supreg], is the only FDA 510(k)-cleared family
of devices indicated to reduce blood culture contamination and we
invited public comment on whether there are other FDA-cleared products
designed to reduce blood culture contamination.
We invited public comments on whether the Steripath[supreg]
Micro\TM\ ISDD[supreg] is substantially similar to other technologies
and whether the Steripath[supreg] Micro\TM\ ISDD[supreg] meets the
newness criterion.
Comment: The applicant submitted a letter asserting that
Steripath[supreg] Micro\TM\ ISDD[supreg] meets the newness criterion.
In response to our concern regarding whether the Steripath[supreg]
Micro\TM\ ISDD[supreg] difference constituted a new mechanism of
action, the applicant stated that the reduced diversion volume, the
lower average peak negative pressure of Steripath[supreg] Micro\TM\
ISDD[supreg] compared to Steripath[supreg] Gen2 ISDD[supreg], and the
pre-assembled integrated syringe configuration allowing for precise
end-user control of the negative pressure constitute a new mechanism of
action. The applicant stated that these features allow the
Steripath[supreg] Micro\TM\ ISDD[supreg] to offer the same clinical
benefits of the Steripath[supreg] Gen2 ISDD[supreg] to the DIVA,
hypovolemic, hypotensive, and small-in-stature populations. The
applicant also stated that initial feedback from commercial users of
the Steripath[supreg] Micro\TM\ ISDD[supreg] is overwhelmingly
positive, noting ease of use and utility for patients with fragile
veins and vasculature. The applicant stated that clinical use data and
end-user feedback to date shows that the novel mechanism of action is
meeting the needs of the previously unserved DIVA population; however,
the applicant did not provide data to support this claim. The applicant
also stated that Steripath[supreg] Micro\TM\ ISDD[supreg] enables an
equitable standard of care for sepsis testing accuracy and prevention
of misdiagnosis for an expanded Medicare-eligible patient population.
In response to our concern regarding the applicant's reliance of on
clinical data from the Steripath[supreg] Gen2 ISDD[supreg] indicating
that the two devices may be substantially similar, the applicant stated
that reliance on a predicate device's supporting clinical literature is
not one of the newness criteria. The applicant stated that the unique
mechanism of action of Steripath[supreg] Micro\TM\ ISDD[supreg] and the
new target population differentiate the two devices. The
Steripath[supreg] Micro\TM\ ISDD[supreg] was FDA cleared on October 8,
2020. The applicant stated, however, that the commercial launch date
was March 31, 2021, and should function as the newness date.
A few commenters stated that the Steripath[supreg] Micro\TM\
ISDD[supreg] is needed for the DIVA population. These commenters
generally noted the efficacy of the Steripath[supreg] Gen2
ISDD[supreg], but stated that it may not be appropriate for use in the
DIVA population, and welcome the arrival of the Steripath[supreg]
Micro\TM\ ISDD[supreg].
Response: We thank the commenters for their perspective on the
mechanism of action and potential benefits of Steripath[supreg]
Micro\TM\ ISDD[supreg] to the DIVA population and have taken them under
into consideration. We also appreciate the information provided by the
applicant regarding the newness criterion. However, after consideration
of the information provided, we continue to believe that the mechanism
of action is substantially similar to that of its predicate device,
Steripath[supreg] Gen2 ISDD[supreg]. While the applicant provides
information that differentiates the Steripath[supreg]
MicroTM ISDD[supreg] from the Steripath[supreg] Gen2
ISDD[supreg], we do not believe that these differences rise to the
level of a new mechanism of action. We believe that the differences of
reduced diversion volume, lower average peak negative pressure, and the
pre-assembled integrated syringe configuration allowing for precise
end-user control of the negative pressure are iterative updates. The
two devices still
[[Page 45073]]
work using the same mechanism of action, which is sequestration of the
initial flash of blood during blood collection to remove skin flora and
or other contaminants. We also continue to believe that the DIVA
population may already be served by the Steripath[supreg] Gen2 product
since the Magnolia Medical Steripath[supreg] Gen2 website states so
directly.379 380 Lastly, we believe cases involving
Steripath[supreg] MicroTM ISDD[supreg] would be assigned to
the same MS-DRGs as cases involving Steripath[supreg] Gen2
ISDD[supreg].
---------------------------------------------------------------------------
\379\ Magnolia Medical Launches New Steripath Gen2 with
Integrated Syringe. Magnolia Medical Technologies. (July 8, 2020)
https://magnolia-medical.com/press-releases/steripath-gen2-with-integrated-syringe/.
\380\ Steripath[supreg] Gen2 Initial Specimen Diversion Device.
Magnolia Medical Technologies. (n.d.) https://magnolia-medical.com/steripath/gen2/.
---------------------------------------------------------------------------
After consideration of all the information from the applicant, as
well as the comments we received, we believe that the Steripath[supreg]
MicroTM ISDD[supreg] is substantially similar to the
Steripath Gen2 ISDD[supreg]. Since the Steripath[supreg] Gen2 received
marketing authorization on February 28, 2020, we therefore consider the
newness date for the Steripath MicroTM ISDD[supreg] to begin
on February 28, 2020.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR FR claims data file with the FY 2019 Final Rule IPPS Impact
File to identify potential cases representing patients who may be
eligible for treatment using Steripath[supreg] Micro\TM\ ISDD[supreg].
The applicant used 37 Infection ICD-10-CM Diagnosis Codes and 15
Sepsis ICD-10-CM Diagnosis codes to identify patients who could
potentially benefit from the Steripath[supreg] Micro\TM\ ISDD[supreg]
during an inpatient stay. These ICD-10-CM codes are provided in the
following table:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.187
[[Page 45074]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.188
[GRAPHIC] [TIFF OMITTED] TR13AU21.189
BILLING CODE 4120-01-C
In its analysis, the applicant identified a primary cohort to
assess whether this therapy met the cost criterion. The applicant
stated that clinical literature suggests the DIVA population represents
anywhere from 17 percent to 59 percent of all patients that present as
symptomatic for sepsis and require blood
cultures.381 382 383 The applicant added that the literature
did not provide any additional information on the distribution of the
DIVA population within the larger infection/sepsis population. To
account for this, the applicant randomly selected 33% of claims that
included one of the ICD-10 codes listed previously in one of the first
two diagnosis code positions on the claim to include in the cost
analysis.
---------------------------------------------------------------------------
\381\ Sou, V., et al. A clinical pathway for the management of
difficult venous access. BMC Nursing 16, 64 (2017).
\382\ Armenteros-Yeguas V., et al. Prevalence of difficult
venous access and associated risk factors in highly complex
hospitalized patients. J Clin Nurs. 2017;26(23-24):4267-4275.
\383\ Van Loon, FH, et al. Development of the A-DIVA Scale: A
Clinical Predictive Scale to Identify Difficult Intravenous Access
in Adult Patients Based on Clinical Observations. Medicine. 2016
Apr;95(16)e3428.
---------------------------------------------------------------------------
The applicant removed MS-DRGs describing kidney and urinary tract
infections and renal failure because these cases are not likely to
benefit from use of the Steripath[supreg] MicroTM
ISDD[supreg]. The applicant stated that these diagnoses rely on
technologies not relevant to Steripath[supreg] MicroTM
ISDD[supreg], such as urine cultures and blood cultures specific to
urea and creatinine. Lastly the applicant excluded cases in MS-DRGs
that accounted for less than 1% of the total cases in the identified
sample.
The claim search conducted by the applicant resulted in 295,790
claims mapping to six MS-DRGs: 871 (Septicemia or severe sepsis w/o mv
>96 hours w mcc), 872 (Septicemia or severe sepsis w/o mv >96 hours w/o
mcc), 853 (Infectious & parasitic diseases w O.R. procedure w mcc), 870
(Septicemia or severe sepsis w mv >96 hours or peripheral
extracorporeal membrane oxygenation (ECMO)), 854 (Infectious &
parasitic diseases w O.R. procedure w cc), and 177 (Respiratory
infections & inflammations w mcc). The applicant determined an average
unstandardized case weighted charge per case of $69,973.
The applicant stated that studies show blood culture contamination
(BCC) increases length of stay (LOS) and leads to unnecessary
antimicrobial therapy and/or hospital-acquired conditions. The
applicant stated that a retrospective analysis involving hospitalized
patients with septicemia-compatible symptoms found that avoiding BCC
would decrease costs by $6,463, including $4,818 in savings for
inpatient care. 53 percent of savings were attributed to reduced LOS
and 26 percent to reduced antibiotic use.\384\ The applicant stated
that to account for these savings, they removed $2,500 by inflating
costs to charges using the national average cost-to-charge ratio (CCR)
for routine days and $2,300 by inflating costs to charges using the
pharmacy national average CCR. Because the previous study cited did not
describe where non-LOS related inpatient savings arose, the applicant
assumed that the savings arose from reduced drug use and therefore the
pharmacy national average CCR was used.
---------------------------------------------------------------------------
\384\ Geisler, BP, et al. Model to evaluate the impact of
hospital-based interventions targeting false-positive blood cultures
on economical and clinical outcomes. J Hosp Infect. 2019
Aug;102(4):438-444.
---------------------------------------------------------------------------
Because, according to the applicant, savings accrue in around 3% of
cases where the Steripath[supreg] MicroTM ISDD[supreg] is
used, the applicant applied three percent of the savings described
previously to every case in the sample population. The applicant stated
that removing the $4,800 in cost savings from 3 percent of the cases is
mathematically the same as removing 3 percent of the cost savings from
all cases. The applicant then standardized the charges using the FY
2019 Final Rule Impact File. Next, the applicant applied the 2-year
inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to
calculate outlier threshold charges (1.13218). To calculate the charges
for the technology, the applicant used the national average CCR for the
Supplies and Equipment cost center of 0.297 from the FY 2021 Final IPPS
rule. The applicant calculated a final inflated
[[Page 45075]]
average case-weighted standardized charge per case of $76,796, which
exceeded the average case-weighted threshold amount of $69,973 by
$6,824. The applicant stated that because the final inflated average
case-weighted standardized charge per case exceeded the average case-
weighted threshold amount, the therapy meets the cost criterion.
Based on the information provided by the applicant, we noted the
following concerns with regard to the cost criterion in the proposed
rule. In its analysis, the applicant stated it randomly selected 33% of
claims that included one of the ICD-10 codes listed previously in one
of the first two diagnosis code positions on the claim to include in
the cost analysis. Implicit in this decision to randomly select a
subsample is the belief that Steripath[supreg] Micro\TM\ ISDD[supreg]
cases are randomly distributed across all cases identified. If
performed properly, the intent of random sampling from a population is
to identify a smaller group of cases which remains representative or
similar to the greater population. An added effect of proper random
sampling is that the sample often has less variance than the population
from which it was drawn. We stated that we are therefore concerned that
random sampling may be inappropriate in this situation if the potential
cases are not similarly randomly distributed. Furthermore, if it is
true that a subset of cases would be more representive of cases
eligible for use of the Steripath[supreg] Micro\TM\ ISDD[supreg], it
may be more likely that those cases will be distributed based on
certain characteristics, not randomly distributed. We sought public
comment on whether the random sample used by the applicant would
appropriately identify the cases eligible for the use of Steripath.
In its cost analysis, the applicant stated that, in order to
account for savings from the use of Steripath[supreg] Micro\TM\
ISDD[supreg], it removed $2,500 by inflating costs to charges using the
national average cost-to-charge ratio (CCR) for routine days and $2,300
by inflating costs to charges using the pharmacy national average CCR.
We stated in the proposed rule that from a methodological standpoint,
we are not certain that the data from which savings were calculated are
generalizable to the broader Medicare population's experience if
Steripath[supreg] MicroTM Blood Collection System is used.
Specifically, we were not certain that the patient population and the
resulting conclusions from the aforementioned study \385\ adequately
generalize to the Medicare population.
Lastly, the applicant stated that because savings accrue in around
three percent of cases where the Steripath[supreg] Micro\TM\
ISDD[supreg] is used, the applicant applied three percent of the
savings described previously to every case in its sample population. We
stated we were unclear whether the three percent of cases which
experienced savings in the one study provided by the applicant is
adequately representative of the Medicare population. We were not
certain that three percent of a sample experiencing some level of
savings is the same as all cases experiencing three percent savings.
Therefore, we were not certain that it is appropriate to apply three
percent of savings across all cases in the applicant's cost analysis.
As with the reduction in charges discussed previously, while the
applicant's approach provides a more conservative estimate for purposes
of the cost criterion, we questioned whether it accurately reflects the
experiences of providers and Medicare beneficiaries.
We invited public comment on whether Steripath[supreg] Micro\TM\
ISDD[supreg] meets the cost criterion.
Comment: A commenter, the applicant, submitted comments in response
to our concerns on whether Steripath[supreg] MicroTM
ISDD[supreg] meets the cost criterion. With respect to our concern
regarding the random sampling used by the applicant and whether it
appropriately identified the cases eligible for the use of
Steripath[supreg] MicroTM ISDD[supreg], the applicant
pointed to clinical literature suggesting that the DIVA population
represents approximately 17 to 59 percent of all patients that present
symptomatic for sepsis and require blood cultures. The applicant
further explained that it did not have evidence that patients who are
eligible for Steripath[supreg] MicroTM ISDD[supreg] would
match any particular profile that could be identified through claims
data. For instance, the applicant did not have any evidence to suggest
that patients in the DIVA population have more or less costly inpatient
stays. Accordingly, in its original analysis, the applicant randomly
selected 33 percent of claims from its full sample that included one of
the ICD-10 codes listed in its application in one of the first two
diagnosis code positions. The applicant acknowledged that selecting
claims is an imperfect process that requires assumptions to be made in
the absence of clear selection criteria, and in response to CMS'
concern reran its analysis using the full sample cases, which resulted
in a final inflated case-weighted standardized charge per case that
exceeded the case weighted threshold. Thus, the applicant maintained
that Steripath[supreg] MicroTM ISDD[supreg] meets the cost
criterion.
With respect to our concern that the savings calculated may not be
generalizable to the broader Medicare population, the applicant pointed
to a retrospective analysis involving hospitalized patients with
septicemia-compatible symptoms. The applicant stated that this analysis
found that avoiding blood culture contamination would decrease costs by
$6,463, including $4,818 in savings for inpatient care, 53 percent of
which were attributed to reduced length of stay and 26 percent to
reduced antibiotic use. The applicant removed $2,500 by inflating costs
to charges using the national average cost-to-charge ratio for routine
days and $2,300 by inflating costs to charges using the pharmacy
national average cost to charge ratio. The applicant recognized that
accounting for anticipated savings is an imperfect process that
requires assumptions be made on the best available evidence, and that
given the absence of more detailed demographic data, CMS is correct in
its uncertainty on whether the experiences of the 270 true-negative and
false-negative patients included in the data from which savings were
calculated can be adequately generalized to the Medicare population.
However, the applicant pointed to a 2011 study published by the
National Center for Health Statistics which found that rates of
hospitalizations for septicemia or sepsis were significantly higher for
those aged 65 and over than for those under age 65. Moreover, the
applicant noted that, according to this study, the septicemia or sepsis
hospitalization rate for those aged 85 and over was about 30 times the
rate for those under age 65 and was more than four times higher than
the rate for the 65-75 age group. Additionally, the study found that
two-thirds of patients hospitalized for septicemia or sepsis in 2008
were aged 65 and over and had Medicare as their payer. The applicant
concluded that while it cannot definitively say that the patient
population in the study evaluating cost savings from use of Steripath
is generalizable to the Medicare population, it is reasonable to assume
that some portion of the patient population accounted for in the study
would be representative of the Medicare population based on the high
incidence of septicemia and sepsis among Medicare beneficiaries.
Finally, in response to our concern that the three percent of the
applicant's sample population experience some level of savings is not
the same as all cases in the sample experiencing three
[[Page 45076]]
percent savings, the applicant reran its cost analysis to randomly
select three percent of cases from its full sample population and
removed savings for those three percent of cases only. The applicant
used the same methodology described previously to account for these
savings. After randomly selecting three percent of cases from the full
sample population and applying the anticipated savings from use of
Steripath[supreg] MicroTM ISDD[supreg], the applicant found
that the final inflated case-weighted standardized charge per case
exceeded the case-weighted threshold and that Steripath[supreg]
MicroTM ISDD[supreg] meets the cost criterion.
Response: We thank the commenter for the additional information
provided, including its supplementary cost analyses. After
consideration of the comments received and the cost analyses provided
by the appliant, we agree that the final inflated case-weighted
standardized charge per case for Steripath[supreg] MicroTM
ISDD[supreg] exceeds the case-weighted threshold and that
Steripath[supreg] MicroTM ISDD[supreg] meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that the Steripath[supreg] Micro\TM\ ISDD[supreg]
represents a substantial clinical improvement over existing technology.
The applicant stated that data from studies show that Steripath
Micro\TM\ ISDD[supreg] offers the ability to reduce blood collection
contamination with skin flora and asserted that it improves clinical
outcomes relative to services or technologies previously available as
demonstrated by reducing clinically significant adverse events (that
is, a decrease in inappropriate antibiotic use and a decrease in
inappropriate hospitalizations).
The applicant submitted with its application 17 Steripath[supreg]
ISDD[supreg] technology-specific studies, including 5 peer-reviewed
studies published in scientific journals, that it stated support the
contamination rate reduction with Steripath[supreg] Gen2 ISDD [supreg]
of 73.6 percent to 100 percent, with resulting sustained contamination
rates of 0.97 percent to 0.0 percent, which the applicant stated is
below the 3.0 percent gold standard benchmark rate for blood culture
contamination.\386\
---------------------------------------------------------------------------
\386\ Zimmerman, F. et al. ``Reducing blood culture
contamination using an initial specimen diversion device.'' American
Journal of Infection Control 47.7 (2019): 822-826.
---------------------------------------------------------------------------
The applicant submitted a retrospective controlled study by Bell M,
et al.\387\ that showed that investigators seeking to lower the blood
culture contamination rate at four different Lee Health (a healthcare
system in Florida) emergency departments found that Steripath[supreg]
Gen2 ISDD[supreg] implementation reduced their blood culture
contamination rate by 83.0 percent when compared to conventional
methods of sample acquisition, (that is without diversion). The Lee
Health emergency departments compared contamination rates obtained
using Steripath[supreg] Gen2 ISDD[supreg] device as the standard of
care from May 2016 through November 2016 to conventional methods which
were collected from October 2015 through November 2016. The applicant
stated that these findings support their claim that Steripath[supreg]
ISDD[supreg] reduces the risk of blood culture contamination.
---------------------------------------------------------------------------
\387\ Bell M, et al. Effectiveness of a novel specimen
collection system in reducing blood culture contamination rates.
Journal of Emergency Nursing 44.6 (2018): 570-575.
---------------------------------------------------------------------------
The applicant submitted the Bauman, K, poster,\388\ where
investigators seeking to lower the blood culture contamination rate at
the Inova Fairfax Medical Center found that Steripath[supreg] Gen2
implementation reduced their blood culture contamination rate by 81.5%
when compared to conventional methods of sample acquisition. The trial
use of Steripath[supreg] Gen2 lasted for one year, and results were
compared to conventional methods for the year preceding the trial.
According to the applicant, findings support the claim that
Steripath[supreg] reduces the risk of blood culture contamination,
while historical patient data from this hospital supported the claim
that the lower contamination rate Steripath[supreg] enables will
translate into a reduced patient length of stay of one day per avoided
false positive event.
---------------------------------------------------------------------------
\388\ Bauman, K. ``Don't Stick Me Again! Reducing Blood Culture
Contamination'' Poster presented at: Emergency Nursing Annual
Conference
---------------------------------------------------------------------------
The applicant submitted the Blakeney J, et al.\389\ poster, a
prospective controlled study comparing the use of Steripath[supreg]
ISDD[supreg] to standard collection methods and the effect on blood
culture contamination rates. Over a 16-week period, participants' blood
was collected using both the Steripath[supreg] and conventional
methods, with each being recorded. Per the applicant, outcomes showed
that Steripath[supreg] ISDD[supreg] implementation reduced Beebe
Healthcare's blood culture contamination rate by 74.6 percent when
compared to conventional methods of sample acquisition. The applicant
stated that the findings support the claim that Steripath[supreg]
ISDD[supreg] reduces the risk of blood culture contamination.
---------------------------------------------------------------------------
\389\ Blakeney J, et al. ``Reduction of Blood Culture
Contamination Using Initial Specimen Diversion Device''Poster
presented at: American Society for Microbiology Annual Meeting
(2018).
---------------------------------------------------------------------------
The applicant submitted the Church K, et al.\390\ prospective
controlled study, which showed that investigators at the Medical
University of South Carolina emergency department found that
Steripath[supreg] Gen2 ISDD[supreg] implementation reduced their blood
culture contamination rate by 73.6 percent when compared to
conventional methods of sample acquisition. In this 20-month study,
nurses were given autonomy to decide if a patient would be best served
by the Steripath[supreg] Gen2 device or conventional methods, with
choices being recorded. The uptake rate of the Steripath[supreg] Gen2
device was 66%, with exclusions being uncooperative patients and
difficult to stick patients.
---------------------------------------------------------------------------
\390\ Church K, et al. ``Novel Blood Culture Collection Device
Reduces False-Positive Blood Cultures, Saves Costs, and Increases
Accuracy of Bloodstream Infection Diagnosis'' Poster presented at:
IHI National Forum (2017).
---------------------------------------------------------------------------
The applicant submitted the Gauld L, et al.\391\ study, an eight
month long prospective controlled study which showed that investigators
seeking to lower the blood culture contamination rate at the Medical
University of South Carolina emergency department found that
Steripath[supreg] Gen2 ISDD[supreg] implementation reduced their blood
culture contamination rate by 86.3 percent when compared to
conventional methods of sample acquisition.
---------------------------------------------------------------------------
\391\ Gauld L, et al. ``Reducing the laboratory cost of false-
positive blood cultures in the adult emergency department.'' Poster
presented at: IHI National Forum on Quality Improvement in
Healthcare (2016).
---------------------------------------------------------------------------
The applicant submitted a poster, Lanteri C, et al.,\392\ with
preliminary data and a paper, Huss, J, et al.,\393\ that includes all
of the poster data with additional data gathered. This prospective
controlled study at Brooke Army Medical Center showed that
Steripath[supreg] Gen2 ISDD[supreg] implementation reduced blood
culture contamination rate by 91.7 percent from September 2015 through
January 2016, and 89.7 percent from September 2015 through March 2016
when compared to conventional methods of sample acquisition.
---------------------------------------------------------------------------
\392\ Lanteri C, et al. ``Reduction of Blood Culture
Contaminations in the Emergency Department.'' Poster presented at:
Department of Defense Healthcare Quality and Safety Awards (2016).
\393\ Huss, Jody L, et al. ``Reducing Blood Culture
Contamination with the Steripath[supreg] Blood Collection Kit.''
Uniformed Services University, 2016
---------------------------------------------------------------------------
The applicant submitted the Rupp M, et al.\394\ paper, which is a
12-month,
[[Page 45077]]
single center, prospective, controlled, open label trial. Investigators
at the University of Nebraska Medical Center emergency department
seeking to gauge the efficacy of the Steripath[supreg] Gen2
ISDD[supreg] without confounding variables conducted a matched-set
controlled study and found that Steripath[supreg] implementation
reduced their blood culture contamination rate by 87.6 percent when
compared to conventional methods of sample acquisition.
---------------------------------------------------------------------------
\394\ Rupp M, et al. ``Reduction in blood culture contamination
through use of initial specimen diversion device.'' Clinical
Infectious Diseases 65.2 (2017): 201-205.
---------------------------------------------------------------------------
The applicant submitted the Stonecypher K, et al.\395\ 8 week pilot
study, which showed that investigators at the Michael E. DeBakey VA
Medical Center emergency department found that Steripath[supreg] Gen2
ISDD[supreg] implementation reduced their blood culture contamination
rate by 83.1 percent when compared to conventional methods of sample
acquisition.
---------------------------------------------------------------------------
\395\ Stonecypher K, et al. ``ER Pilot Leads to Hospital-wide
Implementation of Blood Culture Device'' Poster presented at:
Emergency Nurses Association Annual Conference (2018)
---------------------------------------------------------------------------
The applicant submitted the Tompkins L, et al.\396\ abstract, which
showed that investigators seeking to lower the blood culture
contamination rate at Stanford Health Care found that Steripath[supreg]
Gen2 ISDD[supreg] implementation reduced their blood culture
contamination rate by 100 percent over a 4-month period when compared
to conventional methods of sample acquisition. According to the
applicant, full results are anticipated but not presently published.
---------------------------------------------------------------------------
\396\ Tompkins L, et al. ``Eliminating Blood Culture
Contamination with an Initial-Specimen Diversion Device'' Abstract
presented at: IDWeek (2020).
---------------------------------------------------------------------------
The applicant submitted the Tongma C, et al.\397\ prospective
controlled study, which showed that investigators seeking to lower the
blood culture contamination rate at Rush University Medical Center
emergency department found that Steripath[supreg] Gen2 ISDD[supreg]
implementation reduced their blood culture contamination rate by 87.0
percent when compared to conventional methods of sample acquisition.
The 6-month study was split into an initial 3 months of usual care and
a subsequent 3 months using the Steripath[supreg] Gen2 ISDD[supreg].
---------------------------------------------------------------------------
\397\ Tongma C, et al. ``Significant Reduction of Blood Culture
Contamination in the Emergency Department (ED) Using the
Steripath[supreg] Blood Diversion Device.'' Poster presented:
Infectious Diseases Society of America IDWeek Conference, Fall
(2017).
---------------------------------------------------------------------------
The applicant provided the following studies to support secondary
claims of substantial clinical improvement:
The applicant submitted the Buchta C, et al.\398\ animal (pig)
model study, in which investigators hypothesized that despite proper
skin antiseptic use, contamination may occur because flora from deeper
regions (such as pores) are not effectively eliminated. The applicant
stated that results confirmed the hypothesis that cannula may cause
tissue fragments to be punched in the process of blood sample
acquisition, supporting the mechanism by which Steripath[supreg] Gen2
ISDD[supreg] primarily addresses blood culture contamination (that is,
diversion).
---------------------------------------------------------------------------
\398\ Buchta C, et al. Skin plugs in phlebotomy puncture for
blood donation. Wiener klinische Wochenschrift 117.4 (2005): 141-
144.
---------------------------------------------------------------------------
The applicant submitted the Rhee C, et al.\399\ retrospective
cohort study, which featured adult patients admitted to 409 academic,
community, and Federal hospitals from 2009-2014. Investigators sought
to estimate national sepsis incidence and trends, concluding that
sepsis was present in 6 percent of adult hospitalizations and 35
percent of hospitalizations resulting in death. According to the
applicant, this helps put into context the role of Steripath[supreg]
ISDD[supreg] in improving the efficacy of the primary tool used to
guide therapy for bloodstream infections: Blood culture.
---------------------------------------------------------------------------
\399\ Rhee C, et al. Incidence and trends of sepsis in US
hospitals using clinical vs claims data, 2009-2014. JAMA 318.13
(2017): 1241-1249.
---------------------------------------------------------------------------
The applicant submitted the Zimmerman F, et al.\400\ paper (a
randomized clinical trial) and the Binkhamis K and Forward K \401\
paper (a prospective controlled study), which demonstrated that manual
diversion reduced blood culture contamination rate by 60.0 percent and
28.2 percent, respectively, when compared to conventional methods of
sample acquisition.
---------------------------------------------------------------------------
\400\ Zimmerman F, et al. Modification of blood test draw order
to reduce blood culture contamination: A randomized clinical trial.
Clinical Infectious Diseases 71.5 (2020): 1215-1220.
\401\ Binkhamis K and Forward K. Effect of the initial specimen
diversion technique on blood culture contamination rates. Journal of
Clinical Microbiology 52.3 (2014): 980-981.
---------------------------------------------------------------------------
The applicant also submitted the Patton R and Schmitt T \402\
prospective controlled study, which showed that investigators seeking
to trial manual diversion of 1 mL to lower the blood culture
contamination rate at the Northwest Hospital and Medical Center
Emergency Department found that manual diversion reduced their blood
culture contamination rate by 43.8 percent when compared to
conventional methods of sample acquisition. The applicant further
stated that the findings additionally support the volume of diversion
utilized by Steripath[supreg] Micro\TM\ ISDD[supreg].
---------------------------------------------------------------------------
\402\ Patton R and Schmitt T. Innovation for reducing blood
culture contamination: Initial specimen diversion technique. Journal
of Clinical Microbiology 48.12 (2010): 4501-4503.
---------------------------------------------------------------------------
The applicant also submitted the Syed S, et al.\403\
preintervention and postintervention study, which showed that
investigators at the AMITA Health Saint Francis Hospital Emergency
Department found that manual diversion reduced their blood culture
contamination rate by 30.9 percent when compared to conventional
methods of sample acquisition.
---------------------------------------------------------------------------
\403\ Syed S, et al. Diversion Principle Reduces Skin Flora
Contamination Rates in a Community Hospital. Archives of Pathology &
Laboratory Medicine 144.2 (2020): 215-220.
---------------------------------------------------------------------------
According to the applicant, the findings from these four studies
support the claim that manual diversion reduces the risk of blood
culture contamination relative to conventional methods of sample
acquisition. We note that these studies discussed manual diversion and
not Steripath[supreg] Micro\TM\ or other diversion devices.
The applicant submitted the Alahmadi Y, et al.\404\ study, which is
a retrospective case-control study that showed that false positive
blood cultures were associated with an average 5.4 day increase in
patient length of stay and average increases of more than $7,500 in
total charges to a healthcare system. The applicant also submitted the
Bates D, et al.,\405\ which is a prospective controlled study that
showed false positive blood cultures were associated with an average of
a 4.5 day increase in patient length of stay and average increases of
more than $4,000 in total charges to a healthcare system. According to
the applicant, investigators also noted that contaminants were
independently correlated with a 39 percent increase in antibiotic
charges.
---------------------------------------------------------------------------
\404\ Alahmadi Y, et al. Clinical and economic impact of
contaminated blood cultures within the hospital setting. Journal of
Hospital Infection 77.3 (2011): 233-236.
\405\ Bates D, et al. Contaminant blood cultures and resource
utilization: The true consequences of false-positive results. JAMA
265.3 (1991): 365-369.
---------------------------------------------------------------------------
The applicant provided a study to support its claim that the
Steripath[supreg] ISDD[supreg] reduces the average length of stay for
patients requiring blood culture, thereby lowering their risk of
hospital-acquired infections (HAI) and conditions (HAC). The applicant
explained that the Skoglund E, et al.\406\ decision tree health care
economic model paper showed that investigators found that overall, each
false positive blood culture was on average associated
[[Page 45078]]
with 2 day increases in patient length of stay and an average increase
of more than $4,500 in total charges to a healthcare system. According
to the applicant, Steripath[supreg] ISDD[supreg] implementation may
reduce costs associated with contamination and reduce the average
patient length of stay.
---------------------------------------------------------------------------
\406\ Skoglund E, et al. Estimated clinical and economic impact
through use of a novel blood collection device to reduce blood
culture contamination in the emergency department: A cost-benefit
analysis. Journal of Clinical Microbiology 57.1 (2019).
---------------------------------------------------------------------------
The applicant provided four studies to support its claim that
Steripath[supreg] ISDD[supreg] reduces the inappropriate administration
of vancomycin and other antibiotics to drive antibiotic stewardship.
The applicant submitted the Chang D, et al.\407\ poster, a
retrospective, nonrandomized study that recorded the San Antonio
Military Medical Center Emergency Department's days of therapy (DOT) of
vancomycin for 18 months as a baseline. Then, the hospital implemented
a new blood culture test, and recorded the DOT of vancomycin for 7
months. Subsequently, the hospital implemented the Steripath[supreg]
Gen2 device and recorded the DOT of vancomycin for an additional 14
months to complete the 39-month trial. Investigators found that
Steripath[supreg] Gen2 ISDD[supreg] implementation reduced vancomycin
days of therapy by 14.4 days per 1,000 patient days when compared to
conventional methods of sample acquisition. According to the applicant,
findings from the study, as reported by the study authors, support the
claim that Steripath[supreg] ISDD[supreg] reduces the unnecessary
administration of antibiotics by reducing the rate of false positive
blood cultures.
---------------------------------------------------------------------------
\407\ Chang D, et al. ``Impact of blood culture diversion device
on molecular pathogen identification on vancomycin use.'' Poster
presented at: Society for Healthcare Epidemiology of America (2017).
---------------------------------------------------------------------------
The applicant also submitted the Souvenir D, et al.\408\ cohort
study of 3,276 cultures of blood from 1,433 patients in which
investigators found that physicians treated almost half of all patients
receiving a false positive blood culture result with antibiotics, with
vancomycin misuse occurring in 34 percent of patients. The applicant
also submitted the Heijden Y, et al.\409\ study in which investigators
found that physicians treated 27% of patients receiving a false
positive blood culture result with antibiotics unnecessarily, with the
median antibiotic regimen being 7 days in length. The applicant also
submitted the Bates study,\410\ as discussed previously, which showed
contaminants were independently correlated with a 39 percent increase
in antibiotic charges. According to the applicant, as Steripath[supreg]
ISDD[supreg] is designed to reduce the incidence of blood culture
contamination, Steripath[supreg] ISDD[supreg] implementation may reduce
unnecessary antibiotic administration while supporting antimicrobial
stewardship.
---------------------------------------------------------------------------
\408\ Souvenir D, et al. Blood cultures positive for coagulase-
negative staphylococci: Antisepsis, pseudobacteremia, and therapy of
patients. Journal of Clinical Microbiology 36.7 (1998): 1923-1926.
\409\ Heijden, Yuri F., et al. ``Clinical impact of blood
cultures contaminated with coagulase-negative staphylococci at an
academic medical center. Infection Control and Hospital Epidemiology
32.6 (2011): 623.
\410\ Bates D, et al. Contaminant blood cultures and resource
utilization: The true consequences of false-positive results. JAMA
265.3 (1991): 365-369.
---------------------------------------------------------------------------
In the proposed rule (86 FR 25320 through 25321), we stated the
following concerns regarding the substantial clinical improvement
criterion. We noted that much of the evidence submitted by the
applicant to support that Steripath[supreg] Micro\TM\ represents a
substantial clinical improvement over existing technologies spoke to
the overall clinical value of reducing blood contamination, or the
benefit of manual diversion over no diversion, but did not directly
link the Steripath[supreg] Micro\TM\ to improved clinical endpoints. We
noted that the applicant stated that all of the studies provided that
address the specific technology used to reduce blood contamination
through diversion of the initial sample during blood collection
utilized the Steripath[supreg] Gen2 ISDD[supreg], not the
Steripath[supreg] Micro\TM\ ISDD[supreg] and we therefore question
whether we have sufficient information to assess the clinical impact of
Steripath[supreg] MicroTM. Furthermore, we noted that the
applicant did not present any clinical data to compare
Steripath[supreg] Micro\TM\ ISDD[supreg] to the Steripath[supreg] Gen2
ISDD[supreg]. We also noted that comparative studies between
Steripath[supreg] Micro\TM\ and either manual diversion or competitor
devices were not provided, and we question whether the standard of care
used in the studies (that is, no diversion) is an appropriate
comparator against which to test this technology. Additionally, we
noted that the applicant did not provide any clinical data
demonstrating that the Steripath[supreg] Micro\TM\ directly reduced
length of stay, C. difficile infections, or other secondary results of
antibiotic overuse. We noted our interest in any clinical data that
directly links the Steripath[supreg] Micro\TM\ to these outcomes.
Finally, we noted that the claim of gentle negative pressure in
support of the applicant's assertion that the technology would provide
a treatment option for a new patient population was not addressed by
any of the studies submitted. In addition, no data was supplied that
quantified appropriate levels of negative pressure for either the
typical or DIVA populations. Furthermore, no data was provided which
compared the asserted appropriate level of negative pressure to levels
of negative pressure created by the Steripath[supreg] Micro\TM\ and
Steripath[supreg] Gen2 devices. We noted our interest in any evidence
of clinical improvement using the Steripath[supreg] Micro\TM\
ISDD[supreg] in the specific population identified by the applicant,
the difficult intravenous access population.
We invited public comments on whether the Steripath[supreg]
Micro\TM\ ISDD[supreg] meets the substantial clinical improvement
criterion.
Comment: The applicant submitted a letter that asserted the
Steripath[supreg] Micro\TM\ ISDD[supreg] meets the substantial clinical
improvement criteriona. The applicant stated that the Steripath[supreg]
Micro\TM\ ISDD[supreg] meets the CMS regulatory definition of
``substantial clinical improvement'' because it offers the DIVA,
hypovolemic, hypotensive, and small-in-stature populations access to a
technology for which these groups currently have no other available
option. Per the applicant, Steripath[supreg] Micro\TM\ ISDD[supreg]
confers the same benefits of the Steripath[supreg] Gen2 ISDD[supreg]
onto new patient populations. The applicant further stated that
Steripath[supreg] Micro\TM\ ISDD[supreg] initial results (over 500
blood culture draws with zero contaminations at multiple facilities)
indicate an efficacy profile substantially equivalent to Steripath Gen2
ISDD[supreg].
In response to our concern regarding the lack of clinical data for
the Steripath[supreg] Micro\TM\ ISDD[supreg], the applicant reiterated
that the reduced diversion volume is supported by the literature,\411\
initial data indicates a substantially equivalent efficacy profile, the
DIVA population is eligible for the device, and the FDA cleared the
Steripath[supreg] Micro\TM\ ISDD[supreg] with specific indications for
use to reduce blood culture contamination.
---------------------------------------------------------------------------
\411\ Patton, Richard G., and Timothy Schmitt. ``Innovation for
reducing blood culture contamination: Initial specimen diversion
technique.'' Journal of Clinical Microbiology 48.12 (2010): 4501-
4503.
---------------------------------------------------------------------------
In response to our concern regarding the lack of studies that
compare the Steripath[supreg] Micro\TM\ ISDD[supreg] to any relevant
standard of care or technology, the applicant stated that studies
provided by the applicant regarding manual diversion can be compared to
studies featuring the Steripath[supreg] Gen2 ISDD[supreg], despite the
studies taking place in different times, settings, and patient
populations. The applicant further stated that the initial results
since the commercial launch of the Steripath[supreg]
[[Page 45079]]
Micro\TM\ ISDD[supreg] are equivalent to the Steripath[supreg] Gen2
ISDD[supreg]. The applicant also notes that there are no FDA-cleared
competitive devices that are indicated to reduce blood culture
contamination. The applicant also stated that no diversion is the
standard of care and therefore an appropriate comparator.
In response to our concern that there is no evidence linking the
Steripath[supreg] Micro\TM\ ISDD[supreg] directly to reduced length of
stay, C. difficile infections, or other secondary results of antibiotic
overuse, the applicant stated that the equivalent efficacy of the
Steripath[supreg] Micro\TM\ ISDD[supreg] to the Steripath[supreg] Gen2
ISDD[supreg] indicated that the Steripath[supreg] Micro\TM\
ISDD[supreg] will have equivalent effects on outcomes demonstrated by
use of Steripath[supreg] Gen2 including reduced blood culture
contamination,\412\ reduced length-of-stay \413\ and reduced antibiotic
use.\414\
---------------------------------------------------------------------------
\412\ Doern G, et al. A Comprehensive Update on the Problem of
Blood Culture Contamination and a Discussion of Methods for
Addressing the Problem. Clinical Microbiology Reviews. 2020;
33:e00009-19.
\413\ Bauman, K. ``Don't Stick Me Again! Reducing Blood Culture
Contamination'' Poster presented at: Emergency Nursing Annual
Conference.
\414\ Chang D, et al. ``Impact of blood culture diversion device
on molecular pathogen identification on vancomycin use.'' Poster
presented at: Society for Healthcare Epidemiology of America (2017).
---------------------------------------------------------------------------
In response to our concerns regarding the lack of quantifiable data
related to the pressure of the devices, the applicant noted that the
Steripath[supreg] Micro\TM\ ISDD[supreg] novel bladder architecture
utilizes 78% lower average peak negative pressure compared to Steripath
Gen2 ISDD[supreg] (average range of -0.5 psi compared to -2.3 psi) to
help reduce the risk of vascular compromise and/or interrupted blood
flow during blood culture collection.
We also received additional comments in support of the technology.
A commenter noted that in their hospital's experience with using the
Steripath[supreg] Micro\TM\ ISDD[supreg] in pediatric patients, no
contaminations have occurred. Another commenter stated that the
Steripath[supreg] Micro\TM\ ISDD[supreg] will allow their health system
to reduce blood contamination equitably across populations as it serves
the DIVA population who was previously ineligible for Steripath[supreg]
ISDD[supreg] technology.
Response: We appreciate the commenters' perspectives on the
substantial clinical improvement criterionaand have taken them into
consideration. However, after review of all the data received to date,
we continue to have concerns regarding the substantial clinical
improvement criterion as noted in the FY 2022 IPPS/LTCH PPS proposed
rule. Specifically, we remain concerned that the applicant did not
provide any studies that featured the Steripath[supreg]
MicroTM ISDD[supreg], which is the subject of this
application, and we therefore cannot adequately determine if the
product fully meets the substantial clinical improvement criterion.
While the applicant stated that initial results of blood draws with
Steripath[supreg] MicroTM indicate a substantially
equivalent efficacy profile to that of the Gen2, we did not receive any
data to support this claim, and furthermore, substantial equivalence
does not demonstrate superiority. We agree that existing FDA-cleared
devices are not indicated to reduce blood culture contamination and are
therefore not an appropriate comparator. Though the applicant compared
blood culture contamination reduction rates of manual diversion as
compared to Steripath[supreg] Gen2 and asserted that the
MicroTM has been proven to perform as well as Gen2, without
data using the Steripath[supreg] MicroTM to demonstrate
improved outcomes we are unable to come to this conclusion. Thus, we
also continue to have concerns that the applicant also did not provide
studies that compared the Steripath[supreg] MicroTM
ISDD[supreg] to other Steripath[supreg] devices (specifically
Steripath[supreg] Gen2) or other forms of diversion or best practices
used to reduce blood culture contamination to demonstrate an
improvement in clinical outcomes such as length of stay, treatment
decisions, C. difficile infections, or other secondary results of
antibiotic overuse, as the applicant only reiterated evidence linking
the Steripath[supreg] Gen2 to these outcomes. Though the applicant
asserts that the Micro[supreg]'s comparable efficacy to the Gen2 gives
them no reason to believe these outcomes will be affected with the DIVA
population, we disagree that this is a new patient population as
discussed further below, and believe that this does not speak to the
technology's superiority over existing technologies.
We also continue to have concerns with the applicant's assertion
that Steripath[supreg] MicroTM treats patients ineligible
for current treatments. As discussed previously, the applicant's
website states that the Gen2 is also targeted to treat DIVA patients,
and patients with difficult access are still able to receive blood
cultures. The applicant states that the standard of care is no
diversion, and therefore it follows that these patients will not
require it to receive blood cultures using other forms of best
practices. Since we did not receive any data demonstrating the use of
Steripath[supreg] Micro[supreg] in DIVA patients, we are unable to
determine that it offers a treatment option for patients ineligible for
current therapies.
After consideration of the information previously submitted in the
Steripath[supreg] MicroTM ISDD[supreg] application and
previously summarized in this final rule, and the public comments we
received, we are unable to determine that the Steripath[supreg]
MicroTM ISDD[supreg] meets the substantial clinical
improvement criterion. Therefore, we are not approving new technology
add-on payments for the Steripath[supreg] MicroTM
ISDD[supreg] for FY 2022.
m. StrataGraft\TM\ Skin Tissue
Stratatech Corporation, a Mallinckrodt company, submitted an
application for new technology add-on payments for the StrataGraft\TM\
skin tissue (``StrataGraft'') for topical application for FY 2022. The
applicant describes StrataGraft\TM\ skin tissue as a viable,
bioengineered, regenerative skin construct (BRSC) consisting of an
epidermal layer of viable, fully stratified, allogeneic human
NIKS[supreg] \415\ keratinocytes growing on a dermal layer composed of
viable human dermal fibroblasts embedded in a collagen-rich matrix. The
applicant noted that StrataGraft\TM\ is intended for the treatment of
adult patients with severe thermal burns that contain intact dermal
elements and require surgical intervention (hereinafter referred to as
severe thermal burns [STB]). The applicant stated that StrataGraft\TM\
skin tissue is produced in a rectangular format of approximately 100
cm\2\, approximately 8 cm by 12.5 cm.
---------------------------------------------------------------------------
\415\ Registered trademark of Stratatech Corporation, Madison,
WI.
---------------------------------------------------------------------------
The applicant explained that the StrataGraft\TM\ skin tissue
promotes durable wound closure and regenerative healing for adult
patients with STB. The applicant stated that in addition to providing
immediate wound coverage and epidermal barrier function, the viable and
metabolically active keratinocytes and fibroblasts in StrataGraft\TM\
skin tissue provide sustained expression and secretion of growth
factors, cytokines, and wound healing factors, which are anticipated to
promote regenerative healing. The applicant stated that the
StrataGraft\TM\ skin tissue does not engraft; rather, it promotes
regenerative healing and is replaced by the patient's own cells,
eliminating the need for autografting to attain definitive closure of
treated wounds.
The applicant explained that a thermal burn is the most common type
[[Page 45080]]
of burn injury and accounts for approximately 86 percent of burn
cases.\416\ The applicant noted that burns are classified according to
the depth of tissue injury as superficial (first-degree burns),
partial-thickness (superficial and deep partial-thickness; second-
degree burns), full-thickness (FT, third-degree burns), and fourth-
degree burns (burns that have injured deeper structures such as muscle,
fascia, and bone).417 418 The applicant also noted the
percentage of total body surface area (TBSA) determines burn severity
and directly correlates with mortality.\419\
---------------------------------------------------------------------------
\416\ Schaefer TJ, Tannan SC. Thermal Burns. [Updated 2020 Jun
7]. In: StatPearls [internet]. Treasure Island (FL): StatPearls
Publishing; 2020 Jan-. https://www.ncbi.nlm.nih.gov/books/NBK430773//.
\417\ Kagan RJ, Peck MD, Ahrenholz DH, et al. Surgical
management of the burn wound and use of skin substitutes: An expert
panel white paper. J Burn Care Res. 2013;34(2):e60-e79.
\418\ Rice PL, Orgill DP. Assessment and classification of burn
injury. UpToDate. https://www.uptodate.com/contents/assessment-and-classification-of-burn-injury. Literature review current through
September 2020. Accessed September 25, 2020.
\419\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
---------------------------------------------------------------------------
The applicant stated that in the U.S., approximately 500,000 burn
injuries receive emergency medical treatment each year, leading to
40,000 burn injury hospitalizations with 30,000 at hospital burn
centers.420 421 The applicant noted that children and the
elderly represent especially vulnerable populations at increased risk
for death due to the skin loss and its complications.\422\ The
applicant explained that in 2013, the rate of burn-related hospital
stays was highest for infants aged younger than 1 year (29.6 per
100,000 population) and older adults (20.7 per 100,000 population for
adults aged 65-84 and 26.3 per 100,000 population for adults aged 85
and older).\423\ The applicant also stated that unintentional fire or
burn injuries was the 8th leading cause of death in those 65 years or
older.\424\
---------------------------------------------------------------------------
\420\ Burn Injury Fact Sheet. American Burn Association. https://ameriburn.org/wp-content/uploads/2017/12/nbawfactsheet_121417-1.pdf. Published February 2018. Accessed July 1, 2020.
\421\ HCUPnet, Healthcare Cost and Utilization Project. Agency
for Healthcare Research and Quality, Rockville, MD. https://hcupnet.ahrq.gov/. Accessed June 5, 2019.
\422\ Burn Injury Fact Sheet. American Burn Association. https://ameriburn.org/wp-content/uploads/2017/12/nbawfactsheet_121417-1.pdf. Published February 2018. Accessed July 1, 2020.
\423\ McDermott KW, Weiss AJ, Elixhauser A. Burn-Related
Hospital Inpatient Stays and Emergency Department Visits, 2013:
Statistical Brief #217. 2016 Dec. In: Healthcare Cost and
Utilization Project (HCUP) Statistical Briefs [internet]. Rockville
(MD): Agency for Healthcare Research and Quality (US); 2006 Feb.
https://www.ncbi.nlm.nih.gov/books/NBK409513/. Accessed September
30, 2020.
\424\ Burn Injury Fact Sheet. American Burn Association. https://ameriburn.org/wp-content/uploads/2017/12/nbawfactsheet_121417-1.pdf. Published February 2018. Accessed July 1, 2020.
---------------------------------------------------------------------------
The applicant explained that today, 96.7 percent of burn patients
treated in burn centers will survive. The applicant noted that many of
those survivors will sustain serious scarring and life-long physical
disabilities.\425\ The applicant stated that burn injuries pose a
significant burden to patients; they can have a considerably negative
effect on the patient's health-related quality of life (HRQoL), which
was estimated to be reduced by 30 percent at the time of injury and by
9 percent in the long term.\426\ The applicant explained that although
most functional domains affected by burn injuries recover over time,
HRQoL scores pertaining to physical and emotional role participation,
anxiety, depression, pain, work, and heat sensitivity remained low at
12 months after the injury.\427\
---------------------------------------------------------------------------
\425\ Burn Injury Fact Sheet. American Burn Association. https://ameriburn.org/wp-content/uploads/2017/12/nbawfactsheet_121417-1.pdf. Published February 2018. Accessed July 1, 2020.
\426\ Miller T, Bhattacharya S, Zamula W, et al. Quality-of-life
loss of people admitted to burn centers, United States. Qual Life
Res. 2013;22(9):2293-2305.
\427\ Spronk I, Legemate C, Oen I, van Loey N, Polinder S, van
Baar M. Health related quality of life in adults after burn
injuries: A systematic review. PLoS One. 2018;13(5):e0197507.
Published 2018 May 24.
---------------------------------------------------------------------------
The applicant explained that the standard of care for STB injuries
is early excision and skin grafting.428 429 430 The
applicant noted that common surgical interventions for burn injury
include: Escharotomy, debridement, excision, and skin grafting.\431\
The applicant explained that these burns have been treated with
autografts, allografts, and xenografts in the past. The applicant
stated that autologous grafts (autografts) are used most frequently
because of the problems of infection and rejection when using
allografts or xenografts.\432\
---------------------------------------------------------------------------
\428\ Bittner EA, Shank E, Woodson L, Martyn JA. Acute and
perioperative care of the burn-injured patient. Anesthesiology.
2015;122(2):448-464.
\429\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
\430\ Ibid.
\431\ Kagan RJ, Peck MD, Ahrenholz DH, et al. Surgical
management of the burn wound and use of skin substitutes: An expert
panel white paper. J Burn Care Res. 2013;34(2):e60-e79.
\432\ Shevchenko RV, James SL, James SE. A review of tissue-
engineered skin bioconstructs available for skin reconstruction. J R
Soc Interface. 2010;7(43):229-258.
---------------------------------------------------------------------------
The applicant explained that autografting involves surgical
harvesting of healthy tissue from the patient (donor site) and
transplantation of this skin to an injured site on the same
patient.\433\ The applicant noted that autografts can be harvested as
split thickness or full thickness. According to the applicant, split-
thickness skin grafts (STSGs), also called partial-thickness grafts,
transfer a portion of the donor site skin, including the epidermis and
some of the underlying dermis. The applicant also explained that this
allows the donor site to heal from the epidermal elements left behind.
The applicant also stated that full-thickness skin grafts (FTSGs)
harvest the entire layer of skin as the graft; no dermal or epidermal
elements remain at the donor site, which must be closed by local
advancement of the adjoining skin or by a secondary local flap. The
applicant stated that the process of revascularization takes longer for
an FTSG than for an STSG because of the increased thickness of the
tissue.\434\
---------------------------------------------------------------------------
\433\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
\434\ Leon-Villapalos J. Skin autografting. UpToDate. https://www.uptodate.com/contents/skin-autografting. Literature review
current through September 2020. Accessed October 1, 2020.
---------------------------------------------------------------------------
The applicant explained that early excision and skin grafting
reduce the chance of wound infections and systemic sepsis, and have
become the standard of care.435 436 437 The applicant noted
that without autografting, an STB that contains some dermal elements
usually requires greater than 3 weeks to heal, thereby increasing the
risk for infection and other complications that may lead to the
development of significant scarring and
contracture.438 439 440 The applicant stated that while STBs
require surgical debridement and grafting, superficial first-degree
burns do not; \441\ however, in the acute phase of the burn injury,
[[Page 45081]]
the clinical presentation of the severely injured burn patient usually
involves a range of burn depths from a superficial burn to a FT
burn.\442\
---------------------------------------------------------------------------
\435\ Bittner EA, Shank E, Woodson L, Martyn JA. Acute and
perioperative care of the burn-injured patient. Anesthesiology.
2015;122(2):448-464.
\436\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
\437\ Id.
\438\ Deitch EA, Wheelahan TM, Rose MP, Clothier J, Cotter J.
Hypertrophic burn scars: Analysis of variables. J Trauma.
1983;23(10):895-898.
\439\ Kagan RJ, Peck MD, Ahrenholz DH, et al. Surgical
management of the burn wound and use of skin substitutes: An expert
panel white paper. J Burn Care Res. 2013; 34(2):e60-79.
\440\ Shupp JW, Nasabzadeh TJ, Rosenthal DS, Jordan MH, Fidler
P, Jeng JC. A review of the local pathophysiologic bases of burn
wound progression. J. Burn Care Res. 2010; 31(6):849-873.
\441\ Bittner EA, Shank E, Woodson L, Martyn JA. Acute and
perioperative care of the burn-injured patient. Anesthesiology.
2015;122(2):448-464
\442\ Ibid.
---------------------------------------------------------------------------
The applicant explained that although autografting is effective in
closing wounds and has been a standard treatment for decades, it has
limitations. The applicant stated that donor sites are often associated
with several complications, including excessive pain, pruritus,
infection, dyschromia, hypertrophic scarring, delayed healing, and the
potential for conversion to a FT wound.\443\ The applicant also noted
that donor-site pain is typically more painful than that in the
treatment (burned) site and may become chronic.444 445 In
patients with burns of 50-60 percent TBSA, autograft is limited by
donor-site availability.\446\ The applicant explained that donor sites
may be re-harvested if they heal in time without infection; however,
this practice can lead to prolonged hospitalization and decreased
quality of the skin from re-harvested sites. The applicant stated that
after patients undergo skin grafting, in the long term, both the
grafted wound site and the donor site require continuous physical and
rehabilitative therapy to maintain the range of movement, minimize scar
and contracture development, and maximize functional ability.\447\
---------------------------------------------------------------------------
\443\ 4 Osborne SN, Schmidt MA, Harper JR. An Automated and
Minimally Invasive Tool for Generating Autologous Viable Epidermal
Micrografts. Adv Skin Wound Care. 2016;29(2):57-64.
\444\ Birchall MA, Varma S, Milward TM. The Moriarty sign: An
appraisal. Br J Plast Surg. 1991;44(2):149-150.
\445\ Sinha S, Schreiner AJ, Biernaskie J, et al. Treating pain
on skin graft donor sites. J. Trauma Acute Care Surg. 2017;83(5)954-
964.
\446\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
\447\ Procter F. Rehabilitation of the burn patient. Indian J
Plast Surg. 2010;43(Suppl):S101-S113.
---------------------------------------------------------------------------
The applicant noted that autografting is especially undesirable in
vulnerable patient populations, such as the elderly. The applicant
stated that the healing of donor sites may be delayed or even lacking
in elderly patients or patients whose wound-healing capabilities are
compromised.\448\ The applicant explained that because patients in
these populations have thinner dermis and epidermis than non-elderly
adults,449 450 there is a higher likelihood that the donor
sites will go deep into the dermis during harvest or transform into FT
wounds with their anatomical characteristics. The applicant stated that
these patients are disproportionately affected and are at increased
risk for death due to the skin loss and its complications.\451\ The
applicant also noted that the American College of Surgeons (ACS)
developed guidelines to educate surgeons and other medical
professionals about the significance of older adult burns and evidence-
based prevention activities.\452\
---------------------------------------------------------------------------
\448\ Bradow BP, Hallock GG, Wilcock SP. Immediate Regrafting of
the Split Thickness Skin Graft Donor Site Assists Healing. Plast
Reconstr Surg Glob Open. 2017;5(5):e1339. Published 2017 May 23.
\449\ King A, Balaji S, Keswani SG. Biology and function of
fetal and pediatric skin. Facial Plast Surg Clin North Am.
2013;21(1):1-6.
\450\ Wainwright DJ, Bury SB. Acellular dermal matrix in the
management of the burn patient. Aesthet Surg J. 2011;31(7
Suppl):13S-23S.
\451\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
\452\ Statement on Older Adult Burn Prevention. American College
of Surgeons (ACS). https://www.facs.org/aboutacs/statements/81-older-adult-burn. Published January 1, 2018. Accessed September 26,
2020.
---------------------------------------------------------------------------
The applicant stated that burn injuries result in substantial
economic burden for healthcare systems and society. The applicant noted
the average total hospital charges for a surviving patient with burns
was estimated to be $98,062 and a patient who did not survive burns was
estimated at $309,546.\453\ For patients undergoing inpatient
autografting, the applicant asserted that significant healthcare costs
were observed during the first year, including per patient mean all-
cause healthcare costs which ranged from $155,272 to $184,805.\454\ The
applicant explained that the primary cost driver in the first year was
the cost incurred from the initial inpatient episode with autografting,
accounting for 85 percent of the total costs.\455\
---------------------------------------------------------------------------
\453\ American Burn Association. National Burn Repository 2019
update. 2019.
\454\ Yu TC, Zhang X, Smiell J, Zhou H, Tan R, Boing E, Tan H.
Healthcare resource utilization, treatment patterns, and cost of
care among patients with thermal burns and inpatient autografting in
two large privately insured populations in the United States. Burns.
2020;46(4):825-835.
\455\ Ibid.
---------------------------------------------------------------------------
The applicant stated in their application that there is currently
no skin replacement product approved or available that leads to durable
wound closure while eliminating the need for harvesting an
autograft.456 457
---------------------------------------------------------------------------
\456\ Kagan RJ, Peck MD, Ahrenholz DH, et al. Surgical
management of the burn wound and use of skin substitutes: An expert
panel white paper. J Burn Care Res. 2013;34(2):e60-e79.
\457\ Carter JE, Holmes JH. The Surgical Management of Burn
Wounds. 2016.
---------------------------------------------------------------------------
The applicant explained that skin substitutes are a heterogeneous
group of biologic, synthetic, or biosynthetic materials that can
provide temporary or permanent coverage of open skin wounds. The
applicant stated that the aim of skin substitutes is to replicate the
properties of the normal skin,\458\ and to provide the protective
barrier function until definitive closure of the skin.\459\ The
applicant noted that synthetic skin substitutes need to be removed or
undergo biodegradation or resorption so the skin can heal and
regenerate.\460\ The applicant also stated that biological skin
substitutes have an architecture that resembles native skin and may
allow the construction of a more natural new dermis.\461\
---------------------------------------------------------------------------
\458\ Shahrokhi S. Skin substitutes. UpToDate. https://www.uptodate.com/contents/skin-substitutes. Literature review
current through August 2020.
\459\ MacNeil S. Progress and opportunities for tissue-
engineered skin. Nature 2007;445(7130)874-880.
\460\ Halim A, Khoo T, Shah JY. Biologic and synthetic skin
substitutes: An overview. Indian J. Plast. Surg. 2010;43(3)23.
\461\ Ibid. Halim A, Khoo T, Shah JY. Biologic and synthetic
skin substitutes: An overview. Indian J. Plast. Surg. 2010;43(3)23.
---------------------------------------------------------------------------
The applicant explained that skin substitutes are an important
adjunct in the management of acute or chronic wounds and can be used to
cover defects following burns or other injuries, or for reconstruction,
such as for release of extensive severe post-burn
contractures.462 463 The applicant also stated that Kumar's
3-category system, as shown in the table that follows, is currently the
most frequently used classification system in the field. However, the
applicant notes that there is no universally accepted classification
system that allows for simple categorization of all the products that
are commercially available.\464\ The applicant stated that several
biologic and biosynthetic materials are currently used as skin
substitutes to temporarily cover wounds. The applicant provided the
following table which, according to the applicant, classifies skin
substitutes according to Kumar (2008) and summarizes the applicant's
assertions regarding existing skin substitute products.
---------------------------------------------------------------------------
\462\ Shahrokhi S. Skin substitutes. UpToDate. https://www.uptodate.com/contents/skin-substitutes. Literature review
current through August 2020.
\463\ Leon-Villapalos J. Skin autografting. UpToDate. https://www.uptodate.com/contents/skin-autografting. Literature review
current through September 2020. Accessed October 1, 2020.
\464\ Shahrokhi S. Skin substitutes. UpToDate. https://www.uptodate.com/contents/skin-substitutes. Literature review
current through August 2020. Accessed September 25, 2020.
---------------------------------------------------------------------------
[[Page 45082]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.190
The applicant stated that StrataGraft\TM\ skin tissue is a novel
BRSC which possesses many of the physical and biological properties of
an ideal skin substitute, including both epidermis and dermis with a
barrier function comparable to that of intact human skin.\466\ The
applicant asserted that upon FDA approval, StrataGraft\TM\ skin tissue
will be the only skin substitute for treatment of STB classified by the
FDA as a biologic (as opposed to other available treatments that are
medical devices) that promotes durable wound closure and regenerative
healing, thereby reducing or eliminating the need of autologous skin
harvesting. According to the applicant, on June 5, 2020, Mallinckrodt
finalized the rolling submission of a Biologics License Application
(BLA) to the FDA seeking approval to market StrataGraftTM
skin tissue for the treatment of adult patients with STB. On June 15,
2021, the FDA approved StratagraftTM for the treatment of
adult patients with thermal burns containing intact dermal elements
(remaining deep skin layers) for which surgical intervention is
clinically indicated (also referred to as deep partial thickness
burns). The applicant submitted a request for a unique ICD-10-PCS code
for the use of StratagraftTM beginning FY 2022 and was
granted approval to use the following ICD-10-PCS code effective October
1, 2021: XHRPXF7 (Replacement of skin with bioengineered allogeneic
construct, external approach, new technology group 7).
---------------------------------------------------------------------------
\465\ Kumar P. Classification of skin substitutes. Burns.
2008;34(1)148-149.
\466\ Schurr MJ, Foster KN, Centanni JM, et al. Phase I/II
clinical evaluation of StrataGraft: A consistent, pathogen-free
human skin substitute. J Trauma. 2009;66(3):866-874.
---------------------------------------------------------------------------
The applicant explained that StrataGraft\TM\ skin tissue is a
viable BRSC that may be applied universally to patients, that is, it is
not a patient-specific product. The applicant stated that the active
cellular components of StrataGraft\TM\ skin tissue are the viable and
metabolically active allogeneic human NIKS[supreg] keratinocytes and
normal human dermal fibroblasts (NHDF).
The applicant noted that StrataGraft\TM\ skin tissue comprises an
epidermal layer and a dermal layer. The
[[Page 45083]]
applicant explained that the epidermal layer of StrataGraft\TM\ skin
tissue is composed of differentiated, multilayered, viable epidermal
keratinocytes that are adherent through normal hemidesmosomes to a
dermal equivalent.\467\ The applicant stated that human epidermal
keratinocytes used are NIKS[supreg] keratinocytes, a continuous and
consistent source of well-characterized, non-tumorigenic, long-lived
keratinocyte precursors that are derived from a single neonatal human
foreskin donor. The applicant asserted that NIKS[supreg] keratinocytes
have normal steady state of messenger ribonucleic acid (mRNA) and
protein expression levels for autocrine regulators and growth factors
such as transforming growth factor (TGF)-[alpha], TGF-[beta]1,
epidermal growth factor, and c-myc, providing further evidence of the
normal function of these cells.\468\ The applicant also explained that
NIKS[supreg] keratinocytes produce normal adhesion proteins (example,
integrins and cadherins) that permit tight adherence to each other and
the dermal equivalent.\469\ The applicant stated that cell-cell and
cell-substratum adhesions confer excellent handling characteristics to
StrataGraft\TM\ skin tissue, enabling it to be meshed and secured in
place as is routinely done with STSGs. The applicant noted that the
dermal layer of StrataGraft\TM\ skin tissue contains NHDF derived from
a single healthy tissue donor.
---------------------------------------------------------------------------
\467\ Schurr MJ, Foster KN, Centanni JM, et al. Phase I/II
clinical evaluation of StrataGraft skin tissue: A consistent,
pathogen-free human skin substitute. J Trauma.
2009;66(3):866[hyphen]874.
\468\ Allen-Hoffmann BL, Schlosser SJ, Ivarie CA, Sattler CA,
Meisner LF, O'Connor SL. Normal growth and differentiation in a
spontaneously immortalized near-diploid human keratinocyte cell
line, NIKS. J Invest Dermatol. 2000;114(3):444-455
\469\ Ibid.
---------------------------------------------------------------------------
The applicant explained that viable cells within StrataGraft\TM\
skin tissue express and secrete a wide variety of peptides, growth
factors, and cytokines that are known to promote healing, thereby
reducing or eliminating the need for autograft in the management of
thermal burns.\470\ The applicant also stated that no currently
available technology (competitor) for the treatment of STB is
characterized by the autologous (endogenous) tissue regeneration of the
burned skin.
---------------------------------------------------------------------------
\470\ Harvestine J, Pradhan-Bhatt S, Steiglitz BM, Maher RJ,
Comer AR, Gratz KR, Allen-Hoffmann BL. StrataGraft[supreg] Skin
Tissue, a Bioengineered Regenerative Skin Construct for Severe Acute
Wounds. Poster presented at: 2020 Biomedical Engineering Society
(BMES) Virtual Annual Meeting, October 14-17, 2020.
---------------------------------------------------------------------------
The applicant stated that the StrataGraft\TM\ skin tissue is
manufactured through organotypic culture under aseptic conditions in
compliance with current Good Manufacturing Practices. The applicant
explained that in organotypic culture, NIKS[supreg] keratinocytes
undergo tissue-appropriate differentiation and stratification to
produce a skin tissue that exhibits many of the structural and
biological properties of intact human skin. The applicant noted that
the epidermal layer of StrataGraft\TM\ skin tissue exhibits typical
production and organization of cell-type specific proteins (example,
keratin, filaggrin, involucrin, and transglutaminase), development of a
normal cornified envelope, and production of lipid-filled granules that
are necessary for the generation and maintenance of robust epidermal
barrier function similar to that found in vivo.\471\
---------------------------------------------------------------------------
\471\ Ibid.
---------------------------------------------------------------------------
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 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 to achieve a therapeutic outcome,
according to the applicant, the mechanism of action of StrataGraft\TM\
skin tissue in severe thermal burns is not the same or similar to an
existing technology. The applicant states that StrataGraft\TM\ skin
tissue will be the first and only FDA-approved biologic for the
treatment of STB that reduces or eliminates the need of autograft and
for which the mechanism of action is a sustained expression and
secretion of growth factors, cytokines, and wound healing factors,
which are anticipated to promote regenerative healing and durable wound
closure.472 473 The applicant explains that this unique
mechanism of action is the reason StrataGraft\TM\ skin tissue reduces
or eliminates the need for harvest of donor site tissue.
---------------------------------------------------------------------------
\472\ Proposed prescribing information. for Stratagraft\TM\ skin
tissue;. Submitted to FDA, April 2020.
\473\ Harvestine J, Pradhan-Bhatt S, Steiglitz BM, Maher RJ,
Comer AR, Gratz KR, Allen-Hoffmann BL. StrataGraft[supreg] Skin
Tissue, a Bioengineered Regenerative Skin Construct for Severe Acute
Wounds. Poster presented at: 2020 Biomedical Engineering Society
(BMES) Virtual Annual Meeting, October 14-17, 2020.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product would be
assigned to the same MS-DRGs as existing technologies, the applicant
indicated that the StrataGraft\TM\ skin tissue would be assigned to the
same MS-DRGs as cases representing patients who receive standard of
care (autograft) or existing technologies used to treat STB. The
applicant stated that the MS-DRGs in question do not differentiate
between patients with burns of differential severity degree, in
different body sites, due to thermal injury or corrosion, or with
different percent TBSA involved.\474\
---------------------------------------------------------------------------
\474\ MDC 22 Burns. Non-Extensive Burns. In: ICD-10-CM/PCS MS-
DRG v37.2 Definitions Manual. Centers for Medicare & Medicaid
Services. https://www.cms.gov/icd10m/version372-fullcode-cms/fullcode_cms/P0353.html. Accessed October 1, 2020.
---------------------------------------------------------------------------
With respect to the third criterion, whether a product would be
used to treat the same or similar type of disease and patient
population, the applicant asserted that StrataGraft\TM\ will treat the
same or similar type of disease but not the same or similar patient
population when compared to existing technologies. The applicant
claimed that StrataGraft\TM\ skin tissue will treat a burn patient
population for whom the current standard of care and/or other available
technologies may not be clinically feasible solutions to achieve
durable wound closure. The applicant explains that in patients with
burns of 50-60 percent of the TBSA, donor-site availability is
limited.\475\ The applicant also stated that autografting is especially
undesirable in vulnerable patient populations, such as the elderly;
healing of donor sites may be delayed or even lacking in elderly
patients or patients whose wound-healing capabilities are
compromised.\476\ The applicant explained that these patients are
disproportionately affected and are at increased risk for death due to
the skin loss and its complications.\477\ The applicant also states
that the label for StrataGraft\TM\ skin tissue will not be reserved for
a patient population diagnosed with STB for whom standard-of-care
treatment is not feasible or clinically desirable. The applicant
asserts that this does not imply that StrataGraft\TM\ skin tissue will
not offer a treatment option to a new patient population.
---------------------------------------------------------------------------
\475\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
\476\ Bradow BP, Hallock GG, Wilcock SP. Immediate Regrafting of
the Split Thickness Skin Graft Donor Site Assists Healing. Plast
Reconstr Surg Glob Open. 2017;5(5):e1339. Published 2017 May 23.
\477\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
---------------------------------------------------------------------------
In the FY 2022 IPPS/LTCH PPS proposed rule (86 PR 25321 through
25329), we noted that with respect to the first criterion, there may be
other biologic dressings that use some combination of keratinocytes,
collagen,
[[Page 45084]]
glycosaminoglycans (GAGs), cytokines, chemokines, and/or other growth
factors in either a single, double, or triple layer configuration.
While StrataGraft\TM\ may have a unique combination of these features,
we stated that we were interested in further information on whether
there are any dressings with a regenerative mechanism of action that
may be approved for burns.
With respect to the third criterion, we stated that we believed
that StrataGraft\TM\ may treat the same or similar patient population
as the standard of care or existing technologies to treat STB. While we
agreed that in patients with burns of 50-60 percent of the TBSA, donor-
site availability is more limited, we observed that neither of the two
pivotal studies included patients with burns of 50 percent or greater
of the TBSA.\478\ We were unclear whether this suggests
StratagraftTM is intended for treatment of patients with
burns of less than 50 percent TBSA. We also questioned whether
vulnerable patients, such as the elderly, are a new population as they
are currently treated using standard of care or other technologies.
---------------------------------------------------------------------------
\478\ Girard D, Laverdet B, Buh[eacute] V, et al.
Biotechnological Management of Skin Burn Injuries: Challenges and
Perspectives in Wound Healing and Sensory Recovery. Tissue Eng Part
B Rev. 2017;23(1):59-82.
---------------------------------------------------------------------------
We invited public comments on whether StratagraftTM is
substantially similar to other technologies and whether
StratagraftTM meets the newness criterion.
Comment: The applicant submitted a public comment responding to our
concerns. With respect to our concerns that StrataGraftTM
may have a similar mechanism of action to other biologic dressings, the
applicant stated that StrataGraftTM is an allogeneic
cellularized scaffold product and the first-ever FDA-approved biologic
(drug) product indicated for the treatment of adults with thermal burns
containing intact dermal elements for which surgical intervention is
clinically indicated (DPT burns). The applicant stated that
StrataGraftTM incorporates a unique, biodegradable barrier
layer which does not require physical removal at some point after its
application. The applicant stated that StrataGraftTM
supports the body's ability to heal itself by providing metabolically
active cells that are gradually replaced by the patient's own cells,
and releasing the cytokines and growth factors associated with the
stimulation of healing. The applicant stated that the manner in which
StrataGraftTM supports healing is distinct from that of
autograft, which is reflected in the speed at which healing takes
place--complete healing of DPT burns treated with
StrataGraftTM may lag autografting by a few weeks.
The applicant stated that several medical devices may be available
to Medicare beneficiaries who are receiving treatment for burns;
however, a device, by definition, achieves ``its primary intended
purposes through chemical action within or on the body of man or other
animals and which is not dependent upon being metabolized for the
achievement of its primary intended purposes''. The applicant stated
that such devices are so classified as they are all products in some
way supplemented with cells (the active ingredient). The applicant
stated that in contrast, StrataGraft is a biologic drug product, its
own active ingredient, and a functional unit at the time of delivery
whose functions are to (i) secrete growth factors and cytokines by the
viable cells of the mature tissue to facilitate wound repair and
regenerative healing; and (ii) protect the wound bed by serving as a
natural protective epidermal barrier. The applicant noted that the
actions of the various constituents of StrataGraft are synergic and
cannot be separated. The applicant stated that input collagen is a
structural component that provides a biologically relevant environment
which enables cellular maturation and paracrine signaling between the
NIKS keratinocytes and human dermal fibroblasts (NHDF) during
manufacture, resulting in epidermal differentiation and dermal
compartment organization with endogenous synthesis of human
extracellular matrix (ECM) proteins. The applicant stated that since
StrataGraft is both (i) its own active ingredient and (ii) unique, its
mechanism of action cannot be the same or similar to that of any
existing technology. The applicant noted that StrataGraft does not
share an active ingredient with any other product--the FDA established
a whole new active ingredient descriptor for StrataGraft as part of its
assignment of the Unique Ingredient Identifier (UNII) code.
The applicant noted that StrataGraft supports the body's ability to
heal itself by (i) providing metabolically active cells that are
gradually replaced by the patient's own cells, and (ii) releasing the
cytokines and growth factors associated with the stimulation of
healing. The applicant stated that cells incorporated into StrataGraft
are sourced from the NIKS keratinocyte cell line--a proprietary,
single-source, karyotypically stable, nontumorigenic, and pathogen-free
human keratinocyte progenitor that provides a stable, source of donor
tissue. The applicant asserted that NIKS is not present in any other
technology available to Medicare beneficiaries for the treatment of
burns or any other type of wounds. The applicant stated that this
newness is reflected in the FDA's designation of StrataGraft as a
regenerative medicine advanced therapy (RMAT)--the only RMAT-designated
product for the treatment of burns; a drug is eligible for RMAT
designation if it is a ``regenerative medicine therapy''.
The applicant stated that StrataGraftTM incorporates a
unique, biodegradable allogenic cellularized scaffold comprised of a
purified murine Type I collagen matrix embedded with fibroblasts that
is not present in any medical device, and is eventually replaced by the
patient's own tissue. The applicant noted that a second procedure to
remove StrataGraftTM is not required.
In response to our concern regarding the applicability of
StrataGraftTM to a new patient population of >50% TBSA
burns, the applicant stated that although StrataGraftTM was
not studied in patients with more than 50% total body surface area
(TBSA) burns in STRATA2011 or STRATA2016, this was due to the
intrapatient comparator trial design and is not a limitation of the
product. The applicant also noted that separate from the STRATA2011 and
STRATA2016 clinical trials, StrataGraftTM was used to treat
four adult patients as part of the FDA Single Patient Expanded Access
Program (EAP). The applicant stated that two of these patients had
burns >50% TBSA and one had a major burn (40% TBSA). The applicant
stated that two out of three patients had successful wound closure, and
one patient died three weeks post-surgery for reasons unrelated to
StrataGraftTM treatment. The applicant noted that one
additional request was received for a 74-year-old male with 65% TBSA
flame burn with inhalation injury, but this patient became unstable and
succumbed to his injuries prior to excision and grafting of his burn
wounds.
In response to our concern regarding StrataGraftTM
treating a new subpopulation, the elderly, the applicant reiterated the
undesirability of treating elderly patients with the current standard
of care--autograft--primarily due to co-morbidities or decreased skin
thickness. The applicant also highlighted that diabetic patients may
have impaired wound healing, making the harvest of an autograft
particularly undesirable. The applicant stated that elderly patients
have thinner dermis and epidermis than do non-elderly adults, and their
skin is prone to tears and bruising, which complicates donor
[[Page 45085]]
autograft harvesting. The applicant stated that
StrataGraftTM is the only skin substitute product FDA-
approved for DPT thermal burns of any TBSA that does not require donor
skin harvest and/or subsequent autografts. The applicant asserted that
other technologies, such as Integra, Epicel, and RECELL all require
some degree of skin harvest. The applicant stated that the need for
new, autograft-sparing treatments in this patient population is
reflected in the FDA's decision to allow StrataGraft to be used as part
of the EAP, which the FDA characterizes as a potential pathway for a
patient with an immediately life-threatening condition or serious
disease or condition to gain access to an investigational medical
product (drug, biologic, or medical device) for treatment outside of
clinical trials when no comparable or satisfactory alternative therapy
options are available.
The applicant noted that because StrataGraftTM does not
have to be removed, there is no potential for skin injury similar to
that potentially experienced during removal of other products. The
applicant stated that the directions for use for Epicel note that its
backing layer must be removed after the procedure seven to ten days
after grafting with extreme care to prevent damage to the graft. The
applicant noted that directions for use for RECELL caution providers to
use extreme care when removing dressings to ensure that it is
atraumatic. Additionally, the applicant notes that Integra incorporates
a silicone layer that must be removed about twenty-one days after
application, and prior to autografting, in a separate procedure.
Several commenters asserted that StrataGraftTM will be
the only DPT burn treatment that is an FDA-approved biologic (drug)
product capable of achieving durable wound closure by 3 months similar
to autograft, while eliminating autograft harvest in 96% of patients;
is in receipt of Regenerative Medicine Advanced Therapy (RMAT)
designation; and is characterized by a mechanism of action which
leverages the regenerative capacity of the patient's skin. Several
commenters also asserted that prior to the approval of
StrataGraftTM, the only FDA-approved skin substitutes were
medical devices that required either initial donor harvest (for
example, Epicel[supreg] and RECELL[supreg]) or a subsequent autograft
(for example, Integra[supreg]) for promoting wound closure.
Response: We appreciate the commenters' input on the newness of
StrataGraftTM and the additional information from the
applicant in regard to the newness criterion. We agree that
StrataGraftTM utilizes a unique mechanism of action among
FDA approved treatments for DPT burns because it is a regenerative
technology that allows growth of the patient's own tissue until it is
completely replaced, while functioning as a protective barrier. We
believe this is different than autografting and other burn treatments
that require skin harvest and become incorporated, with the skin
healing around it. We thank the applicant for providing examples of
patients with burns of 50% or more TBSA treated with
StrataGraftTM though these patients were excluded from the
clinical trials. However, we note that this patient population is not
excluded from the standard of care or other technologies, such as
Epicel, which is indicated for use in patients with burns of 30% or
greater TBSA. Further, we note that we do not consider the elderly a
new patient population in regard to the use of StrataGraftTM
as they are currently not excluded from the standard of care or other
technologies. Therefore, we believe that StrataGraftTM
treats the same or similar patient population as existing technologies.
After consideration of the public comments we received and
information submitted by the applicant as part of its FY 2022 new
technology add-on payment application for StrataGraftTM, we
agree with the applicant and commenters that StrataGraftTM
has a unique mechanism of action. Therefore, we believe that
StrataGraftTM is not substantially similar to existing
treatment options and meets the newness criterion. We consider the
newness period to begin on June 15, 2021 when StrataGraft\TM\ was
approved by the FDA.
With regard to the cost criterion, the applicant stated in their
application that StrataGraftTM skin tissue is seeking FDA
approval for the proposed indication of treatment of adult patients
with STBs that contain intact dermal elements and require surgical
intervention. In order to identify the range of MS-DRGs that eligible
patients may map to, the applicant conducted a claims search for cases
that include ICD-10-CM codes for thermal burns of second, third degree,
or those classified according to TSBA to identify cases eligible for
use of StrataGraftTM skin tissue utilization. The applicant
identified cases reporting ICD-10-CM codes for diagnoses of second-
degree thermal burns, any location (T20.2XXX to T25.2XXX); third-degree
thermal burns, any location (T20.3XXX to T25.3XXX); and thermal burns
classified according to extent of body surface involved (T31.XX).
The applicant used the FY 2019 MedPAR Hospital LDS with the FY 2022
thresholds, and the FY 2019 IPPS/LTCH Final Rule Impact File and
Standardizing File. The applicant's claim search in the aggregate
identified 58,624 cases mapping to 21 MS-DRGs as listed in the
following table. Of the total 21 MS-DRGs, only six had case volume
greater than or equal to one percent across all cohorts and
cumulatively represent 97.54 percent of cases. In cases where MS-DRGs
had fewer than 11 discharges, the applicant imputed a minimum value of
11 cases for each MS-DRG.
[[Page 45086]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.191
To demonstrate that the technology meets the cost criterion, the
applicant first identified four separate patient cohorts: Cohort (1)
Patients with thermal burns of second or third degree in any body area,
or thermal burns classified according to TBSA, who received autograft
for reasons only related to thermal burns (n=14,774, MS-DRGs=21);
Cohort (2) Patients with thermal burns of second or third degree in any
body area, or thermal burns classified according to TBSA, who received
autograft for reasons only related to thermal burns, and who underwent
excisional debridement in the inpatient setting (n=13,640, MS-DRGs=20);
Cohort (3) Patients with thermal burns of second or third degree in any
body area, or thermal burns classified according to TBSA, who received
autograft for thermal burns, with or without other conditions
(n=15,744, MS-DRGs=21); and Cohort (4) Patients with thermal burns of
second or third degree in any body area, or thermal burns classified
according to TBSA, who received autograft for thermal burns, with or
without other conditions, and who underwent excisional debridement in
the inpatient setting (n=14,466, MS-DRGs=20). The applicant then
identified eight analyses for the cost criterion: (1) Calculations for
Cohort one (all MS-DRGs); (2) Calculations for cohort two (all MS-
DRGs); (3) Calculations for Cohort three (all MS-DRGs); (4)
Calculations for cohort four (all MS-DRGs); (5) Calculations for Cohort
one (top 4 MS-DRGs by case volume); (6) Calculations for Cohort two
(top 4 MS-DRGs by case volume); (7) Calculations for Cohort three (top
4 MS-DRGs by case volume);
[[Page 45087]]
and (8) Calculations for Cohort 4 (top 4 MS-DRGs by case volume).
The applicant determined an average unstandardized case weighted
charge per case of $173,650 for analysis one, $168,282 for analysis
two, $178,530 for analysis three, $172,277 for analysis four, $158,851
for analysis five, $155,700 for analysis six, $162,377 for analysis
seven, and $158,452 for analysis eight.
The applicant stated that charges for and related to the prior
technologies were not removed from the cost analysis.
After calculating the average standardized charge per case for all
scenarios, the applicant calculated the standardized charge per case
for each MS-DRG. Next, the applicant applied the 2-year inflation
factor used in the FY 2021 IPPS/LTCH PPS final rule to calculate
outlier threshold charges of 13.2 percent (1.13218). The applicant
stated that the price for StratagraftTM skin tissue has not
yet been established and therefore it did not add charges for the
technology. Lastly, the applicant calculated the final average inflated
standardized charge per case and the inflated case weighted
standardized charge per case for each scenario.
The applicant stated that, for analysis one, the final inflated
average case-weighted standardized charge per case of $304,347 exceeded
the average case-weighted threshold amount of $173,650 by $130,697. For
analysis two, the final inflated average case-weighted standardized
charge per case of $279,373 exceeded the average case-weighted
threshold amount of $168,282 by $111,091. For analysis three, the final
inflated average case-weighted standardized charge per case of $332,006
exceeded the average case-weighted threshold amount of $178,530 by
$153,477. For analysis four, the final inflated average case-weighted
standardized charge per case of $299,228 exceeded the average case-
weighted threshold amount of $172,277 by $126,951. For analysis five,
the final inflated average case-weighted standardized charge per case
of $241,186 exceeded the average case-weighted threshold amount of
$158,851 by $82,336. For analysis six, the final inflated average case-
weighted standardized charge per case of $229,661 exceeded the average
case-weighted threshold amount of $155,700 by $73,961. For analysis
seven, the final inflated average case-weighted standardized charge per
case of $257,800 exceeded the average case-weighted threshold amount of
$162,377 by $95,423. For analysis eight, the final inflated average
case-weighted standardized charge per case of $244,042 exceeded the
average case-weighted threshold amount of $158,452 by $85,590.
The applicant stated that because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, StratagraftTM meets the cost
criterion.
We invited public comment on whether StrataGraftTM meets
the cost criterion.
Comment: A commenter, the applicant, maintained that
StrataGraftTM meets the cost criterion because, across
several cost analysis scenarios, the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount.
Response: We appreciate the applicant's response. Based on the
applicant's cost analysis as previously summarized and consideration of
the comment received, we agree that the average case-weighted
standardized charge per case exceeds the average case-weighted
threshold amount. Therefore, StrataGraftTM meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that StrataGraft\TM\ skin tissue is a substantial
clinical improvement over existing technology for the treatment of
adult patients with severe thermal burns with intact dermal elements
because it achieves a significant rate of durable wound closure for
patients with severe burns while minimizing or eliminating the
complications associated with autograft harvest.
According to the applicant, the totality of the circumstances
otherwise demonstrates that StrataGraft\TM\ skin tissue, relative to
technologies previously available, substantially improves the treatment
of STB patients including Medicare beneficiaries. The applicant stated
that because the benefits associated with its use are not accompanied
by an increased incidence of adverse events as compared to autograft,
StrataGraft\TM\ skin tissue is a substantial clinical improvement. The
applicant explained that by significantly reducing or eliminating the
harvest of donor sites, patients who receive StrataGraft\TM\ skin
tissue are spared short- and long-term sequelae and complications and,
to a lesser extent, infection or conversion to a full-thickness wound
of the donor sites.\479\ The applicant stated that by significantly
reducing or eliminating the need for autograft,\480\ StrataGraft\TM\
skin tissue is especially relevant for the elderly population where
autograft is undesirable; these patients are disproportionately
affected and are at increased risk for death due to the skin loss and
its complications.\481\ The applicant explained that aging and
environmental factors can influence the severity of burns in vulnerable
skin.482 483 The applicant stated that geriatric skin also
exhibits slower wound healing and is at increased risk of excessive
scarring.484 485 486 487 488 According to the applicant,
age-related changes in wound healing capacity can include delayed
infiltration of immune cells, decreased secretion of growth factors,
and altered collagen remodeling.\489\
---------------------------------------------------------------------------
\479\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
\480\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
\481\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
\482\ Gosain A, DiPietro LA. Aging and wound healing. World J
Surg. 2004;28(3):321-326.
\483\ Landau M. Exogenous factors in skin aging. Curr Probl
Dermatol. 2007;35:1-13.
\484\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
\485\ Gosain A, DiPietro LA. Aging and wound healing. World J
Surg. 2004;28(3):321-326.
\486\ Greenhalgh DG. Management of the skin and soft tissue in
the geriatric surgical patient. Surg Clin North Am. 2015;95(1):103-
114.
\487\ Ibid.
\488\ Gosain A, DiPietro LA. Aging and wound healing. World J
Surg. 2004;28(3):321-326.
\489\ Ibid.
---------------------------------------------------------------------------
The applicant further explained that use of StrataGraft\TM\ skin
tissue can preserve limited donor sites for the treatment of other
wounds, such as areas of FT injury and wounds in cosmetically sensitive
areas. The applicant noted that it may also reduce the need for
repeated harvest of autograft donor sites, potentially reducing the
number of surgical procedures and total length of time to wound
closure. The applicant explained that burn injury is associated with a
high prevalence of posttraumatic stress disorder, ranging between 11
percent and 50 percent across studies,\490\ and may also lead to
anxiety and depression due to scarring and body image concerns.\491\
Lastly, the applicant stated
[[Page 45088]]
that use of StrataGraft\TM\ skin tissue reduces pain while offering a
comparable scar quality to autograft.\492\
---------------------------------------------------------------------------
\490\ Summer G J, Puntillo KA, Miaskowski C, et al. Burn Injury
Pain: The Continuing Challenge. J. Pain 2007;8(7)533-548.
\491\ Calot[abreve] DR, Ni[tcedil]escu C, Marinescu S, et al.
Correlations between morphological appearance and psychosocial
difficulties in patients with extensive burns who received
allotransplant. Rom J Morphol Embryol. 2012;53(3 Suppl):703-711.
\492\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
---------------------------------------------------------------------------
The applicant provided two controlled and randomized studies,
STRATA2011 and STRATA2016, to support its claims of substantial
clinical improvement. The applicant stated that with the exception of
subject age (STRATA2011, 18 to 64 years of age; STRATA2016, >=18 years
of age), the inclusion and exclusion criteria for the two studies were
similar. According to the applicant, the STRATA2016 study
(NCT03005106--Phase 3 trial--71 patients) 493 494 was a 12-
month, open-label, multicenter, controlled, randomized study that
evaluated the efficacy and safety of StrataGraft\TM\ skin tissue in
promoting autologous skin tissue regeneration of severe thermal burns.
The applicant explained that the STRATA2011 study (NCT01437852--Phase
1b trial--30 patients) 495 496 was a 12-month, open-label,
multicenter, controlled, randomized, dose-escalation study that
evaluated the safety, tolerability, and efficacy of StrataGraft\TM\
skin tissue in promoting the healing of the STB component of complex
skin defects due to thermal injury as an alternative to autografting.
The applicant noted that, in both studies, eligible subjects had 3
percent to 49 percent TBSA burns with two comparable treatment sites
that were prospectively identified, and the sites were randomized to
receive either a single topical application of StrataGraft\TM\ skin
tissue or autograft, such that each subject received both treatments.
The applicant noted that in this intrapatient comparator design, the
area that was autografted served as a subject's own paired control.
---------------------------------------------------------------------------
\493\ StrataGraft skin tissue[supreg] Skin Tissue in the
Promotion of Autologous Skin Regeneration of Complex Skin Defects
Due to Thermal Burns That Contain Intact Dermal Elements.
ClinicalTrials.gov. https://clinicaltrials.gov/ct2/show/NCT03005106.
Accessed June 15, 2020.
\494\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
\495\ StrataGraft skin tissue[supreg] Skin Tissue as an
Alternative to Autografting Deep Partial-Thickness Burns.
ClinicalTrials.gov. https://clinicaltrials.gov/ct2/show/NCT01437852.
Accessed June 15, 2020.
\496\ Holmes JH, Schurr MJ, King BT, et al. An open-label,
prospective, randomized, controlled, multicenter, phase 1b study of
StrataGraft skin tissue versus autografting in patients with deep
partial-thickness thermal burns. Burns 2019;45(8)1749-1758.
---------------------------------------------------------------------------
To support the claim that the use of StrataGraft\TM\ skin tissue
significantly reduces the percent area of the treatment sites
autografted, the applicant explained that the STRATA2016 study showed
the average percent area of the StrataGraft\TM\ skin tissue treatment
site autografted by Month 3 was lower than the average percent area of
the autograft control treatment site autografted by Month 3 (mean
difference: 97.77 percent; P < 0.0001).\497\ We note that the applicant
did not provide detailed information regarding the measurement
methodology.
---------------------------------------------------------------------------
\497\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
---------------------------------------------------------------------------
To support the claim that StrataGraft\TM\ skin tissue is effective
in achieving durable wound closure similar to that of autografting, the
applicant states that the STRATA2016 study showed that the majority of
subjects (59 of 71 subjects, or 83.1 percent, with a 95 percent CI of
74.4 to 91.8) achieved durable wound closure of the StrataGraft\TM\
skin tissue-treated site at Month 3 without the need for autograft
harvest and placement.\498\ The applicant also explained that the
STRATA2011 study showed that no StrataGraft\TM\ treatment sites
required autografting by Day 28. The applicant noted that at Month 3 in
the STRATA2016 study, 93.1 percent of StrataGraft\TM\ treatment sites
were assessed as closed. The applicant stated that all StrataGraft\TM\
skin tissue-treated areas evaluated at 6 months and 12 months remained
closed. The applicant noted that, when comparing these results to that
of autografting, the proportion of wounds that achieved closure was not
statistically different.\499\
---------------------------------------------------------------------------
\498\ Ibid.
\499\ Holmes JH, Schurr MJ, King BT, et al. An open-label,
prospective, randomized, controlled, multicenter, phase 1b study of
StrataGraft skin tissue versus autografting in patients with deep
partial-thickness thermal burns. Burns 2019;45(8)1749-1758.
---------------------------------------------------------------------------
To support the claim of reduction in donor site pain using
StrataGraft, the applicant stated that the STRATA2016 study showed that
the difference between the donor sites preserved for StrataGraft\TM\
skin tissue treatment site failure and autograft donor sites in the
average pain intensity through Day 14 based on the Wong-Baker
FACES[supreg] Pain Rating Scale (FPRS) \500\ was 2.40
1.313 (P <0.0001), indicating significantly less mean donor-site pain
intensity in the reserved StrataGraft\TM\ skin tissue donor sites
compared with autograft donor sites.\501\ The applicant also stated
that the STRATA2011 study showed that patients experienced pain at
harvested donor sites used for autograft, but minimal pain at
unharvested donor sites that had been set aside for potential use with
StrataGraft\TM\ skin tissue.\502\
---------------------------------------------------------------------------
\500\ Wong-Baker FACES Foundation. https://wongbakerfaces.org/.
Accessed July 1, 2020.
\501\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
\502\ Holmes JH, Schurr MJ, King BT, et al. An open-label,
prospective, randomized, controlled, multicenter, phase 1b study of
StrataGraft skin tissue versus autografting in patients with deep
partial-thickness thermal burns. Burns 2019;45(8)1749-1758.
---------------------------------------------------------------------------
According to the applicant, the elimination of autografting leads
to superior scar quality outcome of the presumptive StrataGraft\TM\
skin tissue donor site (that is lack of scarring in the donor sites
reserved for StrataGraft\TM\ treatment site failure), which is a
substantial clinical improvement. The applicant explained that the
STRATA2016 study showed that the evaluation of scarring using the
Patient and Observer Scar Assessment Scale (POSAS) 503 504
observer total scores demonstrated a significant difference in scar
quality between the StrataGraft\TM\ skin tissue and autograft donor
sites at Month 3, 10.0 7.92 (P <0.0001), favoring
StrataGraft\TM\ skin tissue.\505\ The applicant stated that the
STRATA2016 study showed scores for every POSAS category were lower for
StrataGraft\TM\ skin tissue donor sites when compared with autograft
donor sites, indicating they were more like normal skin (that is, the
patient's tissue in the donor sites reserved for StrataGraft\TM\
failure were more like normal skin than tissue present in autograft
donor sites that were harvested).\506\ The applicant explained that the
STRATA2011 study showed
[[Page 45089]]
that observer POSAS total scores from the StrataGraft\TM\ tissue
treatment site and autograft were not significantly different
throughout the study.\507\ The applicant stated that the STRATA2011
showed that mean overall POSAS opinion scores of observers or patients
decreased (that is, became more favorable) from Month 3 through Month
12 after application for both the StrataGraft\TM\ tissue and
autograft.\508\According to the applicant, although direct comparisons
between StrataGraft\TM\ skin tissue and other skin substitutes cannot
be drawn, StrataGraft\TM\ skin tissue, relative to device technologies
previously available, improves the clinical outcomes of STB patients.
The applicant stated that most skin substitutes do not claim to promote
wound closure without the need for subsequent autograft because they
have not been studied in this context,\509\ while clinical studies for
StrataGraft\TM\ skin tissue assessed wound closure as a pre-specified
endpoint.510 511 The applicant further stated that
reparative healing mechanisms, used by most available skin substitutes,
are more likely to result in scarring when compared with regenerative
healing mechanisms used by StrataGraftTM.\512\
---------------------------------------------------------------------------
\503\ Van de Kar AL, Corion LUM, Smeulders MJC, et al. Reliable
and Feasible Evaluation of Linear Scars by the Patient and Observer
Scar Assessment Scale. Plast. Reconstr. Surg. 2005;116(2)514-522.
\504\ The Patient and Observer Scar Assessment Scale (POSAS).
https://www.posas.nl/. Accessed July 1, 2020.
\505\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
\506\ Ibid.
\507\ Holmes JH, Schurr MJ, King BT, et al. An open-label,
prospective, randomized, controlled, multicenter, phase 1b study of
StrataGraft skin tissue versus autografting in patients with deep
partial-thickness thermal burns. Burns 2019;45(8)1749-1758.
\508\ Ibid.
\509\ Stone Ii R, Natesan S, Kowalczewski CJ, et al.
Advancements in Regenerative Strategies Through the Continuum of
Burn Care. Front Pharmacol. 2018;9:672. Published 2018 Jul 9.
\510\ Holmes JH, Schurr MJ, King BT, et al. An open-label,
prospective, randomized, controlled, multicenter, phase 1b study of
StrataGraft skin tissue versus autografting in patients with deep
partial-thickness thermal burns. Burns 2019;45(8)1749-1758.
\511\ Holmes JH, Shupp JW, Smith DJ, et al. T5: Preliminary
analysis of a phase 3 open-label, controlled, randomized trial
evaluating the efficacy and safety of a bioengineered regenerative
skin construct in patients with deep partialthickness thermal burns.
J. Burn Care Res. 2020;41(Supplement_1)S3-S4.
\512\ Hu MS, Maan ZN, Wu JC, et al. Tissue engineering and
regenerative repair in wound healing. Ann Biomed Eng.
2014;42(7):1494-1507.
---------------------------------------------------------------------------
In the proposed rule (86 FR 25329), after reviewing the information
provided by the applicant with regard to the substantial clinical
improvement criterion, we noted a lack of study data provided comparing
StrataGraft\TM\ to other biologic dressings and stated that we were
interested in further information related to whether there are any
dressings that may be approved for burns that demonstrate durable wound
closure. The applicant provided published results of one randomized
trial (STRATA2011), but we questioned whether the sample size of 30 is
adequately generalizable to the larger Medicare population. In
addition, we noted that the STRATA2016 study has not been published and
the results of this study were not submitted in full, and we therefore
may not have the complete outcomes and study results for these
additional patients. We further noted that in the studies provided,
patients with 50 percent or greater TBSA burns were excluded. The
applicant indicated that the product could be especially meaningful for
patients with burns of 50-60 percent TBSA, but we questioned whether we
can fully evaluate this claim because these patients were not assessed.
We invited public comments on whether StrataGraftTM
meets the substantial clinical improvement criterion.
Comment: In its comment, the applicant stated that, subsequent to
publication of the FY 2022 proposed rule, the full results of the
STRATA2016 trial were published. The applicant provided a copy of the
study in full. Seventy-one adult patients aged 19 to 79 who sustained
3% to 37% TBSA thermal burns on the torso, arms, or legs were enrolled
in the phase 3 clinical trial. In each patient, two DPT areas of
comparable depth were randomized to either StrataGraftTM or
autograft. The study results indicated that the safety profiles,
cosmesis, and durable wound closure of autograft and
StrataGraftTM are similar, but StrataGraftTM is
associated with a significant reduction in donor site harvesting.
StrataGraftTM eliminated the need for autograft donor site
harvesting in 96% of cases. Since StrataGraftTM eliminates
the need for harvesting a donor site in most patients, typical donor
site sequelae such as pain and scarring were also reduced.
In response to our concern regarding autograft as the only study
comparator, the applicant noted that StrataGraftTM is the
only product to have demonstrated not just durable wound closure, but
autograft-sparing durable wound closure in clinical trials, and that is
FDA- approved for the treatment of DPT burns in adults. The applicant
noted that when treating DPT burns, durable wound closure is just one
treatment goal. Other treatment goals include mitigating sequelae such
as scarring, scar-complications, and infections; autografts are a major
source of these sequelae.
In response to our question about the generalizability of the
sample size, the applicant provided the STRATA2016 \513\ study with an
additional 71 patients. The applicant also noted that the percentage of
patients >65 years old is in line with clinical trial composition of
other products that have previously received new technology add-on
payments.
---------------------------------------------------------------------------
\513\ Gibson ALF, Holmes JH 4th, Shupp JW, Smith D, Joe V,
Carson J, Litt J, Kahn S, Short T, Cancio L, Rizzo J, Carter JE,
Foster K, Lokuta MA, Comer AR, Smiell JM, Allen-Hoffmann BL. A phase
3, open-label, controlled, randomized, multicenter trial evaluating
the efficacy and safety of StrataGraft[supreg] construct in patients
with deep partial-thickness thermal burns. Burns. 2021 Apr 23:S0305-
4179(21)00110-8. doi: 10.1016/j.burns.2021.04.021. Epub ahead of
print. PMID: 34099322.
---------------------------------------------------------------------------
Several commenters stated that StrataGraft\TM\ reduces donor site
pain and scarring, and achieves clinically similar cosmesis to
autograft at the treatment site in a single procedure. Several
commenters also noted that StrataGraft\TM\ has the potential to reduce
repeated hospitalizations by limiting or even eliminating sequelae
associated with donor site morbidities. Several commenters stated that
autografting is especially undesirable in elderly patient populations
because of compromised wound healing, comorbidities, and risk of
complications. The commenters asserted that these patients also have a
thinner dermis and epidermis compared to younger adults.
Response: We thank the commenters for their input and have taken
these comments into consideration. We also thank the applicant for its
comment as well as the provision of the newly published study and
additional information. After review of the information provided, we
agree with the applicant and commenters that StrataGraftTM
demonstrates substantial clinical improvement by facilitating durable
wound closure without the need for skin harvest and/or autograft.
Because StrataGraftTM does not any require any skin harvest,
it also reduces the necessity for additional healing sites, as well as
the additional scarring and pain that come along with it. For this
reason, we believe it offers a valuable treatment option for patients
at risk for poor wound healing and complications.
After consideration of the public comments we received and the
information included in the applicant's new technology add-on payment
application, we have determined that StrataGraftTM meets the
criteria for approval of the new technology add-on payment. Therefore,
we are approving new technology add-on payments for this technology for
FY 2022.
[[Page 45090]]
Cases involving the use of StrataGraftTM that are
eligible for new technology add-on payments will be identified by ICD-
10- PCS procedure code XHRPXF7 (Replacement of skin with bioengineered
allogeneic construct, external approach, new technology group 7). The
applicant stated that the cost per sheet of StrataGraftTM is
$4,000. According to the applicant, the per-patient utilization for
StrataGraftTM is based on a 10 percent burn of a 1700cm\2\
body surface area skin burn: 17000 cm\2\ (average adult body surface
area) x 10% = 1700 cm\2\ burned body area. This translates to an
average of 17 sheets needed per patient case involving the use of
StrataGraftTM (1700 cm\2\ burned body area/100 cm\2\
StrataGraft skin tissue sheet = 17 sheets). The applicant noted that
the number of sheets needed may vary from one patient to the next,
based on the size of the burn injury and therefore size of the
StrataGraft-treated area.
The applicant estimated that the average cost of
StrataGraftTM to the hospital is $6,800 (17 sheets x $4000
per sheet). Under Sec. 412.88(a)(2), 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
StrataGraftTM is $44,200 for FY 2022.
n. TECARTUS[supreg] (brexucabtagene autoleucel)
Kite Pharma submitted an application for new technology add-on
payment for FY 2022 for TECARTUS[supreg] (brexucabtagene autoleucel).
TECARTUS[supreg] is a CD19 directed genetically modified autologous T-
cell immunotherapy for the treatment of adult patients with relapsed
and refractory (r/r) mantle cell lymphoma (MCL). We noted that Kite
Pharma previously submitted an application for new technology add-on
payments for TECARTUS[supreg] for FY 2021, as summarized in the FY 2021
IPPS/LTCH PPS proposed rule, under the name KTE-X19 (85 FR 32634).
TECARTUS[supreg] is a form of chimeric antigen receptor (CAR) T-
cell immunotherapy that modifies the patient's own T-cells to target
and eliminate tumor cells. More specifically, according to the
applicant, TECARTUS[supreg] is a single infusion product consisting of
autologous T-cells that have been engineered to express an anti-CD19
chimeric antigen receptor. According to the applicant, this therapy
targets the CD19 antigen on the cell surface of normal and malignant B-
cells. The applicant stated that TECARTUS[supreg] is different from
other previously approved technologies because it has a distinct
cellular product that requires a unique manufacturing process.
According to the applicant, Mantle Cell Lymphoma (MCL) is a rare
and aggressive subtype of non-Hodgkin lymphoma (NHL) with distinct
characteristics 514 515 that accounts for 3-10% of all cases
of NHL in the United States and differs from diffuse large B-cell
lymphoma (another subtype of NHL).516 517 518 The applicant
stated that MCL has an annual incidence of 0.5 to 1 cases per 100,000
population with a male-to-female ratio of 3:1 with a median age at
diagnosis for patients with MCL of 68 years.\519\ MCL results from a
malignant transformation of the B lymphocyle in the outer edge of a
lymph node follicle (the mantle zone). Prognosis varies for relapsed/
refractory MCL, but the median survival for MCL is 3-5 years depending
on the risk group (the Mantle Cell Lymphoma International Prognostic
Index categorizes patients into low, intermediate and high risk
groups), according to the applicant.\520\ According to the applicant,
the preferred first line therapy is bendamustine- rituximab which has
decreased toxicity and improved progression-free survival as compared
to rituximab with cyclophosphamide, doxorubicin, vincristine, and
prednisone.\521\ According to the applicant, rituximab is also the only
approved therapy for maintenance for patients in remission. The
applicant stated the median progression free survival ranges from 29-51
months with most of MCL patients eventually relapsing. The applicant
contended that approximately 40% of patients end up with durable long-
term remission after a chemoimmunotherapy first line
therapy.522 523 524
---------------------------------------------------------------------------
\514\ Fakhri B, Kahl B. Current and emerging treatment options
for mantle cell lymphoma. Ther Adv Hematol. 2017;8(8):223-34.
\515\ National Comprehensive Cancer Network. Clinical Practice
Guidelines in Oncology; B-cell Lymphomas, Version 1.2019 [November
30, 2018]. 2017 Available from: https://www.nccn.org/professionals/physician_gls/pdf/b-cell.pdf.
\516\ The Non-Hodgkin's Lymphoma Classification Project. A
clinical evaluation of the International Lymphoma Study Group
classification of non-Hodgkin's lymphoma. Blood. 1997;89(11):3909-
3918.
\517\ Zhou Y, et al. Incidence trends of mantle cell lymphoma in
the United States between 1992 and 2004. Cancer. 2008;113(4):791-
798.
\518\ Teras LR, et al. 2016 US lymphoid malignancy statistics by
World Health Organization subtypes CA Cancer J Clin. 2016;6:443-459.
\519\ Fu S, et al. Trends and variations in mantle cell lymphoma
incidence from 1995 to 2013: A comparative study between Texas and
National SEER areas. Oncotarget. 2017;8(68):112516-29.
\520\ Cheah CY, et al. Mantle cell lymphoma. J Clin Oncol.
2016;34:1256-1269.
\521\ Rummel MJ, et al. Bendamustine plus rituximab versus CHOP
plus rituximab as first-line treatment for patients with indolent
and mantle-cell lymphomas: An open-label, multicentre, randomized,
phase 3 non-inferiority trial. Lancet. 2013;381: 1203-1210.
\522\ Flinn IW, et al. First-line treatment of patients with
indolent non-Hodgkin lymphoma or mantle-cell lymphoma with
bendamustine plus rituximab versus R-CHOP or R-CVP: Results of the
BRIGHT 5-year follow-up study. J Clin Oncol. 2019 Apr 20;37(12):984-
991. doi: 10.1200/JCO.18.00605. Epub 2019 Feb 27.
\523\ LaCasce AS, et al. Comparative outcome of initial therapy
for younger patients with mantle cell lymphoma: an analysis from the
NCCN NHL Database. Blood. 2012;19(9):2093-2099.
\524\ Lenz G, et al. Immunochemotherapy with rituximab and
cyclophosphamide, doxorubicin, vincristine, and prednisone
significantly improves response and time to treatment failure, but
not long-term outcome in patients with previously untreated mantle
cell lymphoma: Results of a prospective randomized trial of the
German Low Grade Lymphoma Study Group (GLSG). J Clin Oncol.
2005:23(9): 1984-1992.
---------------------------------------------------------------------------
The applicant indicated that there is no standard of care that
exists for second-line and higher chemotherapy when a patient has
relapsed or refractory MCL.\525\ According to the applicant, second
line therapies typically depend on the front-line therapy utilized,
comorbidities, the tumor's sensitivity to chemotherapy, and overall
risk-benefit. According to the applicant, currently available options
for second line therapy include: Cytotoxic chemotherapy, proteasome
inhibitors (PI), immunomodulatory drugs (IMiD), tyrosine kinase
inhibitors, and stem cell transplant (both autologous and allogenic
stem cell transplant [ASCT, allo-SCT]). According to the applicant,
Bruton's tyrosine kinase (BTK) inhibitors, ibrutinib, zanubrutinib, and
acalabrutinib, are common third-line therapy used for patients with r/r
MCL and have shown to offer improvements over other chemotherapy-based
regimens for r/r MCL patients. The applicant performed a literature
review and meta-analysis of patients with r/r MCL whose disease had
progressed during or following treatment with a BTK inhibitor and found
that despite high initial response rates, most patients eventually
developed progressive disease. Therefore, according to the applicant,
new therapeutic strategies are needed to improve the prognosis of
patients with r/r MCL whose disease has not been effectively controlled
with chemo-immunotherapy, stem cell transplant, and BTK inhibitors.
---------------------------------------------------------------------------
\525\ Campo E, Rule S. Mantle cell lymphoma: Evolving management
strategies. Blood. 2015;125(1):48-55.
---------------------------------------------------------------------------
[[Page 45091]]
With respect to the newness criterion, the applicant indicated that
the FDA approved the TECARTUS[supreg] Biologics License Application
(BLA) on July 24, 2020 for the indication of the treatment of adult
patients with relapsed/refractory mantle cell lymphoma (MCL). According
to the applicant, TECARTUS[supreg] was granted Breakthrough Therapy
designation for the treatment of patients with r/r MCL on June 15, 2018
and received Orphan Drug designation in 2016 for the treatment of MCL,
acute lymphoblastic leukemia and chronic lymphocytic leukemia. The
following ICD-10-PCS codes were established effective October 1, 2020
to identify the administration of TECARTUS[supreg]: XW23346
(Transfusion of brexucabtagene autoleucel immunotherapy into peripheral
vein, percutaneous approach, new technology group 6) and XW24346
(Transfusion of brexucabtagene autoleucel immunotherapy into central
vein, percutaneous approach, new technology group 6). We note that the
following new ICD-10-PCS codes to describe procedures involving the
administration of TECARTUS[supreg] are effective October 1, 2021:
XW033M7 (Introduction of brexucabtagene autoleucel Immunotherapy into
peripheral vein, percutaneous approach, new technology group 7) and
XW043M7 (Introduction of brexucabtagene autoleucel Immunotherapy into
central vein, percutaneous approach, new technology group 7).
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 for substantial similarity,
whether a product uses the same or similar mechanism of action to
achieve a therapeutic outcome, according to the applicant,
TECARTUS[supreg] is the first CAR T-cell immunotherapy indicated for
the treatment of r/r MCL. The applicant further asserted that it does
not use a substantially similar mechanism of action. The applicant
asserts the FDA concluded and approved TECARTUS[supreg] as distinct
from YESCARTA[supreg] based on differences in the manufacturing
process, certain product specifications and impurities, and formulation
of the final products. Furthermore, the applicant stated that
TECARTUS[supreg] is distinct from currently available CAR T-cell
immunotherapies, namely YESCARTA[supreg] and KYMRIAH[supreg], because
neither prior CAR T-cell therapy is indicated for the treatment of
patients with r/r MCL, and other differences include the manufacturing
process, certain product specifications and impurities, and the final
dose formulation as determined by the FDA. The applicant stated that
MCL is a unique subtype of B-cell Non-Hodgkin's Lymphoma (NHL) and is
distinct from DLBCL as determined by the 2016 WHO classification. The
applicant stated it reviewed data from the FY 2019 100 percent MedPAR
Hospital Limited Data Set to obtain a reference of currently available
products used in the treatment of r/r MCL. The applicant stated that
based on this analysis, available products used in the treatment of r/r
MCL included: Chemotherapies, PIs, IMiDs, or BTK inhibitors. The
applicant described TECARTUS[supreg] as an autologous CAR T-cell
immunotherapy, which genetically modifies the patient's own T-cells to
target and eliminate tumor cells for the treatment of r/r MCL and
asserted that because TECARTUS[supreg] is an autologous CAR T-cell
immunotherapy, it does not use the same mechanism of action as other
treatments currently used to treat r/r MCL (chemotherapies, PIs, IMiDs,
or BTK inhibitors).
To further note the differences between TECARTUS[supreg]'s
mechanism of action and other available therapies for r/r MCL, the
applicant stated that TECARTUS[supreg] represents a unique product that
is customized for B-cell malignancies bearing high levels of
circulating CD19-expressing tumor cells. Given these genetic
modifications and differences, as previously described, the applicant
described TECARTUS[supreg] as having a different mechanism of action
from existing r/r MCL therapies.
The applicant stated that TECARTUS[supreg] is a distinct cellular
product and is produced by a unique manufacturing process customized
for B-cell malignancies characterized by circulating tumor cells and is
designed to minimize the number of CD19-expressing tumor cells in the
final product. The T cells in the leukapheresis product are enriched by
positive selection, activated by culturing with anti-CD3 and anti-CD28
antibodies, and then transduced with a retroviral vector containing the
anti-CD19 CAR gene. These engineered T cells are then propagated in
culture to generate a sufficient number of cells to achieve a
therapeutic effect upon infusion back into the patient. The applicant
further stated that TECARTUS[supreg] has a different mechanism of
action as compared to YESCARTA[supreg] given that the European
Medicines Agency (EMA) deemed TECARTUS[supreg] and YESCARTA[supreg] as
different products.
With respect to the second criterion for substantial similarity,
whether a product is assigned to the same or a different MS-DRG, the
applicant noted that CMS has established the new MS-DRG 018 (Chimeric
Antigen Receptor (CAR) T-cell Immunotherapies), effective October 1,
2020, for CAR T-cell therapies. However, the applicant asserted that
TECARTUS[supreg] will be uniquely identified by ICD-10-PCS codes
different from those used to identify YESCARTA[supreg] and
KYMRIAH[supreg]. As previously noted, under the current coding system,
cases reporting the use of TECARTUS[supreg] would be coded with ICD-10-
PCS codes XW23346 and XW24346, which are currently assigned to MS-DRG
018, and therefore we believe that cases reporting the use of
TECARTUS[supreg] would be assigned to the same MS-DRG as existing CAR
T-cell therapies.
With respect to the third criterion for substantial similarity,
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 TECARTUS[supreg] is the first and
only CAR T-cell immunotherapy indicated for the treatment of r/r MCL
which is identified by ICD-10-CM C83.1X, mantle cell lymphoma,
unspecified site. The applicant noted that the patients treated by
YESCARTA[supreg] and KYMRIAH[supreg] are not assigned ICD-10-CM
diagnosis code C83.1X (Mantle cell lymphoma, unspecified site), as
would patients treated with TECARTUS[supreg]. As previously mentioned,
the applicant described that MCL results from a malignant
transformation of a B lymphocyte in the outer edge of the lymph node
follicle. The applicant further stated that diffuse large b-cell
lymphoma (DLBCL), which YESCARTA[supreg] and KYMRIAH[supreg] treat, is
defined as a neoplasm of large B cells arranged in a diffuse pattern.
The applicant described this distinction as evidence that
TECARTUS[supreg] treats a different subtype of NHL, r/r MCL, as
compared to other FDA approved CAR T-cell therapies. However, we noted
in the proposed rule that the applicant recognized in its application
that MCL and DLBCL patients share similar clinical presentation of
lymphadenopathy, splenomegaly and constitutional symptoms. The
applicant also noted that the disease courses for MCL and DLBCL are
different given that MCL has a unique molecular pathogenesis. The
applicant stated that patients with r/r MCL often present with high
levels of circulating tumor cells
[[Page 45092]]
which are inherent to the disease 526 527 or due to
peripheral mobilization of tumor cells induced by BTK inhibitor
therapy.\528\ According to the applicant, MCL requires a customized CAR
T-cell therapy for B-cell malignancies bearing high levels of
circulating CD19-expressing tumor cells in order to provide a
functional autologous cellular therapy. Unlike MCL, the presence of
circulating tumor cells occurs only rarely in patients with DLBCL.\529\
---------------------------------------------------------------------------
\526\ Argatoff LH, et al. Mantle cell lymphoma: A
clinicopathologic study of 80 cases. Blood. 1997;89 (6):2067-78.
\527\ Gu J, et al. Evaluation of peripheral blood involvement of
mantle cell lymphoma by fluorescence in situ hybridization in
comparison with immunophenotypic and morphologic findings. Mod
Pathol. 2004;17 (5):553-60.
\528\ Chang BY, et al. Egress of CD19(+)CD5(+) cells into
peripheral blood following treatment with the Bruton tyrosine kinase
inhibitor ibrutinib in mantle cell lymphoma patients. Blood.
2013;122(14):2412-24.
\529\ Muringampurath-John D, et al. Characteristics and outcomes
of diffuse large B-cell lymphoma presenting in leukaemic phase. B.
J. Haematol. (2012) 158: 608-614.
---------------------------------------------------------------------------
With respect to the first criterion, the applicant asserted that
TECARTUS[supreg] would provide a new treatment option for adult
patients with r/r MCL and therefore is not substantially similar to any
existing technologies. We noted that for FY 2019 (83 FR 41299), CMS
approved two CD19 directed CAR T-cell therapies, YESCARTA[supreg] and
KYMRIAH[supreg], for new technology add-on payments. In regard to the
mechanism of action, the applicant acknowledged that TECARTUS[supreg]
is a form of CAR T-cell immunotherapy that modifies the patient's own
T-cells, as are YESCARTA[supreg] and KYMRIAH[supreg]. However, the
applicant asserted that the manufacturing process used by
TECARTUS[supreg] makes the therapy significantly different from
YESCARTA[supreg]. The applicant further asserted that its unique
manufacturing process which includes a T-cell selection step for
patients with MCL, ALL, and CLL is distinct from that used for the
manufacture of YESCARTA[supreg] for the treatment of patients with
malignancies characterized by high numbers of circulating tumor types.
Similar to our discussion of the FY 2021 application in the FY 2021
IPPS/LTCH PPS proposed rule (85 FR 32636 and 32637), in the FY 2022
IPPS/LTCH PPS proposed rule, we were concerned as to whether the
differences the applicant described in the manufacturing process should
be considered a different mechanism of action as compared to previous
CAR T-cell therapies. We noted, in their review, the FDA identified
many similarities between TECARTUS[supreg] and YESCARTA[supreg] to
include that, ``the YESCARTA[supreg] and KTE-X19 final products are
very similar and are formulated identically. The same release testing
methods are used for both products.'' \530\ Further, as
TECARTUS[supreg] is also a CD19-directed T-cell immunotherapy for the
treatment of patients with an aggressive subtype of NHL, we continued
to question whether the differences identified by the applicant would
mean that TECARTUS[supreg] does not have a similar mechanism of action
to existing CD19-directed CAR T-cell therapies. We sought public
comment as to whether the differences the applicant described in the
manufacturing process should be considered a different mechanism of
action, as compared to previous CAR T-cell therapies.
---------------------------------------------------------------------------
\530\ Price G, Reiser J, Salz T. CBER CMC BLA Review Memorandum,
BLA #125703, TECARTUS brexucabtagene autoleucel. FDA.
---------------------------------------------------------------------------
With regard to the third criterion for substantial similarity,
though the applicant described differences between MCL and DLBCL, the
applicant also stated that patients with MCL and DLBCL share similar
clinical presentation of lymphadenopathy, splenomegaly and
constitutional symptoms, and they are both subtypes of NHL. We
therefore questioned whether this therapy may involve the treatment of
a similar type of disease when compared to existing CAR T-cell
therapies.
We invited public comments on whether TECARTUS[supreg] is
substantially similar to other technologies and whether
TECARTUS[supreg] meets the newness criterion.
Comment: In response to CMS's concerns, a commenter stated that MCL
and DLBCL differ because MCL is considered largely incurable with
standard treatment approaches and has a propensity to evolve toward
increasing drug resistance over time leading to shorter periods of
remission. The commenter added that clinically, MCL more frequently
involves the bone marrow, spleen, and extranodal sites, such as the
intestinal tract, tonsils--and, in more aggressive cases, the skin,
lungs, and central nervous system--in addition to enlarged lymph nodes.
In contrast, the commenter stated that DLBCL more commonly involves the
lymph nodes, with lower predisposition to marrow and/or organ
involvement. The commenter added that in many ways, the treatment of
MCL has come to more closely resemble that of multiple myeloma, where
there may be limited, if any, freedom from therapy--but with MCL
showing poorer outcomes. The commenter summarized that TECARTUS[supreg]
couples very high response rates and remission duration without a need
for any ongoing therapy.
A second commenter emphasized that MCL has important clinical
features which distinguish it from DLBCL. Most importantly according to
the commenter, where DLBCL is curable in up to 60% of cases, MCL
remains incurable with known therapies. The commenter added that MCL
cases have a median age of 65 as compared to DLBCL of 58 according to
the ZUMA 1 and ZUMA 2 trials respectively. Third, the commenter stated
patients with MCL often have tumor cells circulating in the peripheral
blood unlik5e patients with DLBCL.
A few commenters encouraged CMS to consider assigning new
technology add-on payments for new CAR T-cell therapies to ensure
patient access.
Finally, a commenter stated support for CMS' desire for additional
data and comment to illustrate support that TECARTUS[supreg] meets the
newness criterion to support new technology add-on payment status.
Response: We appreciate the input from the commenters and the
information they have highlighted, and we have taken these comments
into consideration in our final decision, which is discussed later in
this section.
Comment: In response to CMS' concerns the applicant submitted a
public comment. The applicant stated that TECARTUS[supreg] is a
distinct CAR T-cell immunotherapy approved for the treatment of r/r MCL
which is different from large B-cell lymphoma and necessarily requires
a different manufacturing process in order to produce a functional
autologous therapy. The applicant stated that the leukapheresis
material required for TECARTUS[supreg] has a more heterogeneous cell
composition than that required for YESCARTA[supreg]. The applicant
stated that the presence of B-lineage cells in MCL patient apheresis,
unlike diffuse large B-cell lymphoma patient apheresis, necessitated
the development of a CD4+ and CD8+ T-cell manufacturing selection step,
which reduced the likelihood of circulating CD19 expressing tumor cells
in the product and ensured a consistent efficacious and safe product
for the R/R MCL patient population.
The applicant added that both the FDA and European Medicines Agency
(EMA) have concluded that TECARTUS[supreg] is a unique product distinct
from YESCARTA[supreg].
In its comment, the applicant further asserted that MCL is a unique
subtype of B-cell non-Hodgkin lymphoma (NHL)
[[Page 45093]]
and is distinct from DLBCL. The applicant added that while MCL patients
may present with similar symptoms as patients with DLBCL, the
conditions differ based on histopathology, genetics, clinical
characteristics, treatment approaches, and clinical outcomes. The
applicant asserted that the most critical distinction between MCL and
DLBCL is the difference in durable complete remissions and cure with
available therapies. According to the applicant, the standard of care
for patients newly diagnosed with DLBCL is the immuno-chemotherapy
regimen R-CHOP (rituximab, cyclophosphamide, doxorubicin, vincristine,
and prednisone) which leads to a `cure' in 50-60% of patients.\531\ The
applicant added, in contrast, although many combinations of rituximab-
based immuno-chemotherapy have been examined in patients newly
diagnosed with MCL, none is considered curative.\532\ Further, the
applicant stated that another important distinction is that patients
with r/r MCL often present with high levels of circulating tumor cells
which are inherent to the disease 533 534 535 or due to
peripheral mobilization of tumor cells induced by BTK inhibitor
therapy.\536\ The applicant stated that MCL requires a customized CAR
T-cell therapy for B-cell malignancies bearing high levels of
circulating CD19-expressing tumor cells in order to provide a
functional autologous cellular therapy; unlike MCL, the presence of
circulating tumor cells rarely occurs in patients with DLBCL.\537\
Lastly, the applicant stated that the World Health Organization has
classified MCL and DLBCL as two distinct B-cell lymphoid neoplasms
based on the pathogenetic differences.\538\
---------------------------------------------------------------------------
\531\ Liu, Y. and Barta, SK. Diffuse large B-cell lymphoma: 2019
update on diagnosis, risk stratification, and treatment. Am. J.
Hematol. (2019) 94: 604-616.
\532\ Maddocks K. Update on mantle cell lymphoma. Blood. (2018)
132: 1647-1656.
\533\ Argatoff LH, et al. Mantle cell lymphoma: A
clinicopathologic study of 80 cases. Blood. 1997;89 (6):2067-78.
\534\ Gu J., et al. Evaluation of peripheral blood involvement
of mantle cell lymphoma by fluorescence in situ hybridization in
comparison with immunophenotypic and morphologic findings. Mod
Pathol. 2004;17 (5):553-60.
\535\ Muringampurath-John D., et al. Characteristics and
outcomes of diffuse large B-cell lymphoma presenting in leukaemic
phase. B. J. Haematol. (2012) 158: 608-614.
\536\ Chang BY., et al. Egress of CD19(+)CD5(+) cells into
peripheral blood following treatment with the Bruton tyrosine kinase
inhibitor ibrutinib in mantle cell lymphoma patients. Blood.
2013;122(14):2412-24.
\537\ Muringampurath-John D., et al. Characteristics and
outcomes of diffuse large B-cell lymphoma presenting in leukaemic
phase. B.J. Haematol. (2012) 158: 608-614.
\538\ Swerdlow SH., et al. The updated classification of
hematological malignancies; the 2016 revision of the World Health
Organization classification of lymphoid neoplasms. Blood (2016) 127
(20): 2375-2390.
---------------------------------------------------------------------------
Response: We appreciate the additional information from the
applicant regarding whether TECARTUS[supreg] is substantially similar
to existing treatment options. After consideration of the public
comments we received and information submitted by the applicant in its
application, we agree with the applicant that TECARTUS[supreg] does not
use the same or similar mechanism of action as other technologies used
for the treatment of r/r MCL because it is the only CAR T-cell therapy
available for the treatment of r/r MCL. Furthermore, as mentioned by
the applicant, due to the differences based on histopathology,
genetics, clinical characteristics, treatment approaches, and clinical
outcomes we agree that this is a unique disease population as compared
to that treated by other existing CAR T-cell therapies. Based on this
information, we believe that TECARTUS[supreg] is not substantially
similar to existing treatments and meets the newness criterion. We
consider the beginning of the newness period to commence on the date
TECARTUS[supreg] was approved by the FDA, July 24, 2020.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR claims data file with the FY 2019 Final Rule IPPS Impact
File to identify potential cases representing patients who may be
eligible for treatment using TECARTUS[supreg].
The applicant identified claims that reported an ICD-10-CM
diagnosis code of ICD-10-CM C83.1X (Mantle cell lymphoma, unspecified
site). The applicant stated that claims reporting ICD-10-CM code C83.1X
would not involve the use of the other two approved CAR T-cell
therapies because those therapies are not used to treat this diagnosis,
MCL. As such, the applicant stated that it used C83.1X to identify
potential MCL cases and ICD-10-PCS codes XW033C3 and XW043C3 to
identify patients receiving CAR T-cell therapy. In its analysis, the
applicant identified two sets of cohorts (Primary Cohort and
Sensitivity Analysis Cohort) to assess whether this therapy met the
cost criterion. The ICD-10-PCS procedure codes listed in the following
table were used to identify claims involving chemotherapy and the
applicant noted that these were used for both cohorts.
BILLING CODE 4120-01-P
[[Page 45094]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.192
The applicant identified two cohorts for these analyses and used
two CCRs to account for the cost of their technology. The Primary
Cohort included cases with an ICD-10-CM primary diagnosis of MCL, at
least one procedure code indicating receipt of chemotherapy, and no
ICD-10-PCS procedure codes indicating CAR T-cell therapy. The applicant
believed the Primary Cohort most closely aligned with the
characteristics and health of r/r MCL patients who would receive
TECARTUS[supreg] given that this cohort includes patients with far
advanced disease (comparable to the ZUMA-2 study, as discussed later in
this section). The Sensitivity Analysis Cohort included patients with
the ICD-10-CM principal or secondary diagnosis of MCL, at least one
procedure code indicating receipt of chemotherapy, and no ICD-10-PCS
procedure codes indicating CAR T-cell therapy. For each cohort, the
applicant performed two sub-analyses that varied the CCR used to
calculate TECARTUS[supreg] charges: (1) The national pharmacy CCR of
0.187; and (2) the applicant calculated CAR T-cell CCR of 0.314.
According to the applicant, based on the primary diagnosis code and
the presence of chemotherapy, these cases signify that the primary
reason for hospitalization was treatment of the patient's MCL,
including the complications of their advancing disease and
chemotherapy-related complications, and resulted in charges and longer
lengths of stay believed to be most reflective of the r/r MCL
population that is treated by TECARTUS. The applicant added that this
group of MCL cases with MCL as a primary diagnosis most closely
compares with the characteristics and health resource utilization of r/
r MCL patients that will receive TECARTUS. Furthermore, the applicant
stated that the cases in the Primary Cohort had higher charges across
all categories than the cases with MCL as a secondary diagnosis. The
cases with MCL as a primary diagnosis are according to the applicant
more reflective of the r/r MCL population as those cases were more
likely being treated for the complications of their advancing disease
and chemotherapy-related complications. The average length of stay for
hospitalizations in the Primary Cohort was 15.1 days. Lastly, in
explaining why CAR T-cell MCL cases from FY 2019 were excluded from the
cost analysis, the applicant stated that they could not identify
specific charges for CAR T-cell therapy, no individual revenue center
had charges similar to those expected for CAR T-cell therapy, and there
were no CAR T-cell therapy products approved for the treatment of MCL
in FY 2019.
The applicant stated that to estimate the CAR T-cell CCR, they
obtained the MS-DRG 018 arithmetic mean charge in the AOR/BOR FY 2021
Proposed Rule File released by CMS ($1,387,946). The applicant
subtracted non-drug charges for TECARTUS of $201,610 (based on the
TECARTUS FY 2021 new technology add-on payment application) from the
total arithmetic mean charge to estimate CAR T-cell charges
(approximately $1,186,336). The applicant then divided a WAC of CAR T-
cell therapy of $373,000 by the estimated CAR T-cell charges to
estimate a charge-to-cost ratio of 0.314 (CCR = 373,000/1,186,336).
[[Page 45095]]
The claim search conducted by the applicant resulted in 267 claims
in the Primary Cohort, mapped to 13 MS-DRGs, and 1,100 claims in the
Sensitivity Analysis Cohort, mapped to 59 MS-DRGs using the FY 2019
MedPAR Hospital LDS based on the requirements for each cohort outlined
by the applicant. The applicant stated that because TECARTUS cases are
mapped to MS-DRG 018, the cost criterion analysis utilized the
threshold for MS-DRG 018 for all MS-DRGs included in each cohort rather
than the MS-DRG specific threshold. The applicant determined an average
unstandardized case weighted charge per case of $1,251,126 for the
Primary cohort and $1,251,126 for the Sensitivity Analysis Cohort.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
The applicant then removed charges for the prior technology. The
applicant stated that the cases representing patients who had received
[[Page 45098]]
chemotherapy, as reflected by the Medicare claims data, would generally
not receive both chemotherapy and TECARTUS[supreg] as an inpatient
because conditioning chemotherapy would be administered in the
outpatient setting before the patient would be admitted for
TECARTUS[supreg] infusion and monitoring. Otherwise, the applicant
asserted that patients receiving TECARTUS[supreg] would be expected to
incur similar charges to those cases in the Medicare claims data for
patients with a primary diagnosis of MCL and receiving chemotherapy
(Primary Cohort). In its analysis, the applicant noted that in the FY
2019 MedPAR Hospital LDS, charges for chemotherapy drugs were grouped
with charges for oncology, diagnostic radiology, therapeutic radiology,
nuclear medicine, CT scans, and other imaging services. The applicant
believed that removing all radiology charges would understate the cost
of adverse event (AE) clinical management for TECARTUS[supreg] patients
needed. The applicant found that when using data from the Q4 2017 and
Q1 Q3 2018 Standard Analytic files and comparing total chemotherapy
charges to total radiology charges, 2 percent of radiology charges were
chemotherapy charges, on average. Therefore, instead of removing all
radiology charges, the applicant excluded 2 percent of the radiology
charge amount to capture the effect of removing chemotherapy pharmacy
charges.
The applicant then standardized the charges and applied the 2-year
inflation factor used in the FY 2021 IPPS/LTCH PPS final rule to
calculate outlier threshold charges (1.13218). For the Primary and
Sensitivity cohorts, the applicant performed two sub-analyses that
varied the CCR used to calculate TECARTUS[supreg] charges: (1) Using
the national pharmacy CCR (0.187); and (2) using the CAR T-cell CCR
(0.314).
The applicant stated that when comparing the Primary Cohort to the
MS-DRG 018 average case-weighed threshold amount (based on the FY 2021
IPPS/LTCH PPS final rule) and using the national pharmacy CCR, the
final inflated average case-weighted standardized charge per case of
$2,207,969 exceeded the average case-weighted threshold amount of
$1,251,126 by $956,843. When using the CAR T-cell CCR, the final
inflated average case-weighted standardized charge per case of
$1,399,653 exceeded the average case-weighted threshold amount of
$1,251,126 by $148,527. The applicant stated that because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the therapy meets the cost
criterion.
When conducting the same review to assess cost for the Sensitivity
Analysis Cohort, the applicant noted that the sensitivity analysis
cohort also meets the cost criterion when compared to the MS-DRG 018
average case-weighted threshold amount (based on the FY 2021 IPPS/LTCH
PPS data file thresholds for FY 2022). As reported by the applicant,
when using the national pharmacy CCR in the sensitivity analysis cohort
the final inflated average case-weighted standardized charge per case
of $2,142,149 exceeded the average case-weighted threshold amount of
$1,251,126 by $891,023. When using the CAR T-cell CCR in the
sensitivity analysis cohort, the final inflated average case-weighted
standardized charge per case of $1,333,833 exceeded the average case-
weighted threshold amount of $1,251,126 by $82,707. The applicant
stated that because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the therapy meets the cost criterion.
Because the final inflated average case-weighted standardized
charge per case for both the Primary Cohort and the Sensitivity
Analysis Cohort exceeds the average case-weighted threshold amount for
MS-DRG 018, the applicant maintained that the technology meets the cost
criterion.
As noted in previous discussions, the submitted costs for CAR T-
cell therapies vary widely due to differences in provider billing and
charging practices for this therapy. Therefore, with regard to the use
of this data for purposes of calculating a CAR T-cell CCR we stated we
were uncertain how representative this data is for use in the
applicant's cost analyses given this potential for variability.
We stated in the proposed rule that we continue to be interested in
public comments regarding the eligibility of CAR T-cell technologies
for new technology add-on payments when assigned to MS-DRG 018. As we
have noted in prior rulemaking with regard to the CAR T-cell therapies
(83 FR 41172 and 85 FR 58603 through 58608), if a new MS-DRG were to be
created, then consistent with section 1886(d)(5)(K)(ix) of the Act,
there may no longer be a need for a new technology add-on payment under
section 1886(d)(5)(K)(ii)(III) of the Act.
We invited public comment on whether TECARTUS[supreg] meets the
cost criterion.
Comment: We received a comment from MEDPAC which addressed the cost
criterion in general as it relates to CAR T-cell therapies.
Response: Please refer to the response in the BREYANZI[supreg]
application in section II.F.X.c. of the preamble of this final rule for
a detailed discussion of this issue.
Comment: We received multiple comments in response to our concern
for CAR T-cell therapy, the MS-DRG 018 assignment, and new technology
add-on payment eligibility.
Response: For a complete discussion of these comments and our
response, please see the BREYANZI[supreg] application in section
II.F.X.c. of the preamble of this final rule.
Comment: A commenter stated support for CMS' desire for additional
data and comment to illustrate support that TECARTUS[supreg] meets the
cost criterion to support new technology add-on payment status.
Response: We appreciate the input from the commenter and have taken
this comment into consideration in determining whether TECARTUS[supreg]
meets the cost criterion.
Comment: A commenter, the applicant, maintained that the cost
analyses demonstrate that TECARTUS[supreg] meets the cost criterion. In
response to CMS' concern regarding the representativeness of the cost
data for TECARTUS[supreg] based on the CAR T-cell CCR, the applicant
stated it appreciates CMS' concern regarding the ``representativeness''
of the estimated CAR T-cell CCR and agree that CCRs are likely to vary
widely for CAR T-cell therapies. The applicant stated that while it is
standard to use the pharmacy CCR to convert drug costs to charges and
CMS has accepted the use of this CCR in the past for cost criterion
analyses, CAR T-cell therapies, including TECARTUS[supreg], are new and
novel therapeutics, and they were concerned that CMS would question the
applicability of the pharmacy CCR for purposes of demonstrating that
TECARTUS[supreg] met the cost criterion. Therefore, the applicant
created two sets of analyses to demonstrate that TECARTUS[supreg] meets
the cost criterion, using both the national pharmacy CCR and an
estimate of the CAR T-cell CCR. Furthermore, the applicant stated that
the CAR T-cell therapy CCR of 0.314 is similar to the CAR T-cell
therapy CCR of 0.295 used by other applicants for CAR T-cell therapy
for FY 2022 new technology add-on payment applications as summarized in
the FY 2022 CMS IPPS/LTCH PPS proposed rule: BREYANZI (86 FR 25231),
ciltacabtagene autoleucel (86 FR 225237), and idecabtagene vicleucel
(86 FR 225258). Lastly, the applicant
[[Page 45099]]
commented TECARTUS[supreg] would also have met the cost criterion if
the 0.295 CCR had been used in their analyses.
The applicant stated that in the proposed rule, CMS solicited
comments on whether with the creation of MS-DRG 018 there may no longer
be a need for CAR T-cell products to receive a new technology add-on
payment. The applicant stated their belief that the creation of MS-DRG
018 does not alter the new technology add-on payment eligibility of
future CAR T-cell products. The applicant stated the language under
section 1886(d)(5)(K)(ix) is long-standing and has never before been
interpreted as potentially imposing a blanket exclusion from new
technology add-on payment eligibility. The applicant asserted that
instead, CMS has historically operationalized section 1886(d)(5)(K)(ix)
by establishing the new technology add-on payment criteria of newness,
cost, and substantial clinical improvement. In particular, the
applicant contends that CMS has viewed its evaluation under the cost
criterion as directly satisfying the agency's obligation under section
1886(d)(5)(K)(ix) of the Act. The applicant stated, in 2005 rulemaking
where the agency first recognized the addition of section
1886(d)(5)(K)(ix) of the Act, as amended by section 503(c) of Medicare
Prescription Drug, Improvement, and Modernization Act of 2003,\539\ CMS
stated that ``at the time an application for new technology add-on
payments is submitted, the DRGs associated with the new technology are
identified.'' \540\ The applicant added CMS went on to state that it
``only determine[s] that a new DRG assignment is necessary or a new
technology add-on payment is appropriate when the reimbursement under
these currently assigned DRGs is not adequate for this new
technology.'' The applicant asserted that the current MS-DRG assignment
for a case using a new CAR T-cell product would be MS-DRG 018 and CMS
should follow the same approach for a new CAR T-cell product as for all
other products applying for a new technology add-on payment: Determine
whether the current MS-DRG assignment is inadequate and if so, either
make a new MS-DRG assignment or provide for a new technology add-on
payment. The applicant added if the fact that the current MS-DRG
assignment takes into consideration the use of a particular therapy
would disqualify new products from being eligible for a new technology
add-on payment, then many more products in addition to CAR T-cell would
be affected (for example, new pacemakers and the MS-DRGs 242-244 to
which pacemaker cases are assigned).
---------------------------------------------------------------------------
\539\ Public Law 108-173 (Dec. 8, 2003).
\540\ 70 FR 47278, 47343 (Aug. 12, 2005).
---------------------------------------------------------------------------
Response: We appreciate the information provided by the applicant
in their comment in regard to their calculation of a CAR T-cell CCR. As
we stated in section E.2.b. of this rule, we continue to believe that
it is premature to make structural changes to the IPPS at this time to
pay for CAR T-cell therapies (78 FR 58453). As we gain more experience
paying for these therapies under the IPPS, we may consider these
comments to inform future rulemaking. However, we appreciate the
thoughtfulness used by the applicant to provide as clear as possible a
description of CAR T-cell therapy cost calculations. We appreciate the
usage of multiple cost analyses, such as varying the CCR used to
inflate cost to charges, which potentially allowed for a more
conservative markup.
After consideration of the public comments we received and based on
the information included in the applicant's new technology add-on
payment application, we believe that the TECARTUS[supreg] meets the
cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that TECARTUS[supreg] represents a new treatment
option for an adult patient population unresponsive to, or ineligible
for, currently available treatments. The applicant also believes that
the use of TECARTUS[supreg] significantly improves clinical outcomes
for a patient with r/r MCL as compared to currently available
therapies, including BTK inhibitors. The applicant stated that
TECARTUS[supreg] provides access to a treatment option for patients
with r/r MCL who have not been responsive to first line or second line
therapies. The applicant provided further detail regarding these
assertions, referencing the results of a Phase 2 study (Zuma-2) and
historical and meta analyses, which are summarized in this section of
this rule.
According to the applicant, because no effective standard therapy
for subjects with r/r MCL who have progressed following a prior BTK
inhibitor therapy exists, ZUMA-2 lacked a comparison arm. The applicant
described how a historical control was the only ethical and feasible
study design for patients with r/r MCL who had not responded to the
most promising therapies available, including BTK inhibitors.
Therefore, the historical control was identified from prior studies
identified in a meta-analysis of six studies, which included two
studies by Martin et al., (2016) and Cheah et al., (2015), and covered
255 subjects. The ORRs in these six studies ranged from 20%-42% with
the applicant identifying 26%\541\ and 32%\542\ for use as their
comparator.
---------------------------------------------------------------------------
\541\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\542\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
---------------------------------------------------------------------------
According to the Martin et al. (2016) retrospective cohort study
referenced by the applicant, the investigators reported best response
rate (RR) to ibrutinib was 55% (43% partial response [PR], 12% complete
response [CR]), with 35% of patients having a best response of
progressive disease. But among patients who received subsequent
therapy, local clinicians reported that 13 patients (19%) achieved PR,
and 5 (7%) achieved CR. The median overall survival (OS) following
cessation of ibrutinib was 2.9 months (95% confidence interval [CI],
1.6-4.9). Of the 104 patients with data available, 73 underwent at
least one additional line of currently available treatment after
stopping ibrutinib with a median OS of 5.8 months (95% confidence
interval [CI], 3.7-10.4).\543\
---------------------------------------------------------------------------
\543\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
---------------------------------------------------------------------------
A second retrospective study by Cheah et al. identified 42 (54%)
who had discontinued therapy of 78 patients with MCL who had been
treated at MD Anderson Cancer Center between 2011 and 2014.\544\ All 42
patients had received ibrutinib with a median number of cycles of 6.5
(range 1-43). Twenty-eight patients (67%) had disease progression as
the main reason for therapy discontinuation. Of the 31 patients who
experienced disease progression following ibrutinib and underwent
salvage therapy, the overall objective response rate (ORR) and complete
response rate (CRR) was 32% and 19%, respectively. After a median
follow-up of 10.7 (range 2.4-38.9) months from discontinuation of
ibrutinib, the median OS among patients with disease progression was
8.4 months and the estimated one-year OS was 22.1% (95% CI 8.3% to
40.2%).
---------------------------------------------------------------------------
\544\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
---------------------------------------------------------------------------
The applicant summarized further studies that featured BTK therapy.
Dreyling et al. and Epperla et al. identified ORRs of 20% and 42%
respectively while Wang et al. identified an ORR of 29%, CR rate of
14%, and PR rate of 15% and Jaln et al. identified an
[[Page 45100]]
ORR of 29%, CR rate of 14%, and PR rate of
15%.545 546 547 548
---------------------------------------------------------------------------
\545\ Dreyling M, et al. Ibrutinib versus temsirolimus in
patients with relapsed or refractory mantle-cell lymphoma: An
international, randomised, open-label, phase 3 study. Lancet.
2016;387(10020):770-8.
\546\ Epperla N, et al. Predictive factors and outcomes for
ibrutinib therapy in relapsed/refractory mantle cell lymphoma--a
``real world'' study. Hematological Oncology. 2017:1-8.
\547\ Wang M, et al. Observational study of lenalidomide in
patients with mantle cell lymphoma who relapsed/progressed after or
were refractory/intolerant to ibrutinib (MCL-004). J Hematol Oncol.
2017;10:171.
\548\ Jain P, et al. Long-term outcomes and mutation profiling
of patients with mantle cell lymphoma (MCL) who discontinued
ibrutinib. Br J Haematol. 2018a;183:578-87.
---------------------------------------------------------------------------
To evaluate the effectiveness of TECARTUS[supreg], the applicant
noted it used an ORR comparison of 25%, which was derived from two
aforementioned studies (Martin et al. and Cheah et al.) with patients
with r/r MCL who progressed on the most predominantly prescribed BTK
inhibitor, ibrutinib. The results of these two studies showed a median
OS of 5.8 months after receiving at least 1 additional line of
currently available therapy to treat r/r MCL. Those who did not receive
salvage therapy had a median OS of 0.8 months.\549\
---------------------------------------------------------------------------
\549\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
---------------------------------------------------------------------------
According to the applicant, the ZUMA-2 study of TECARTUS[supreg] is
the only pivotal study of CAR T-cell therapy for r/r MCL. ZUMA-2 is a
multicenter, open label, Phase 2 study which evaluated the safety and
efficacy of TECARTUS[supreg] in patients with r/r MCL that relapsed or
are refractory to prior therapy, including BTK inhibitors. The primary
endpoint compared the ORR from the study to the ORR 25% historical
control at a one-sided alpha level of 0.025. The applicant stated that
ZUMA-2 was not designed to compare the efficacy and safety of TECARTUS
to BTK inhibitors, and the results of ZUMA-2 are not intended to
indicate that TECARTUS should definitively be utilized to replace any
existing therapies. Participants were required to have received prior
treatment for MCL, no more than five prior regimens, which must have
included anthracycline (or bendamustine containing chemotherapy), an
anti-CD20 monoclonal antibody and BTK inhibitor. The ZUMA-2 study
included 68 subjects treated with TECARTUS[supreg] out of 75 patients
enrolled. The safety analysis included a review of all 68 subjects,
with the primary analysis of efficacy reviewing the first 60 subjects
treated with TECARTUS[supreg]. ZUMA-2 was conducted at 20 sites in the
United States and Europe. Of the 60 subjects in the primary analysis
set, 59 were from U.S. sites. Of the 68 subjects in the safety analysis
set, 62 were from U.S. sites. Among the 68 subjects, the median age was
65 years (range 38-79) and 57 subjects (84%) were male. Additionally,
58 subjects (85%) had stage IV disease. The sample had a median of 3
prior therapies with 55 (81%) having received >=3 prior therapies. In
addition, 43% had relapsed after a prior autologous stem cell
transplant (ASCT); the remaining subjects had either relapsed after or
were refractory to their last therapy for MCL.
The applicant asserted that the use of TECARTUS[supreg]
significantly improves clinical outcomes for a patient population as
compared to currently available treatments. The applicant contended
that ibrutinib, a BTK inhibitor, is the most common third-line therapy
used for patients with r/r MCL 550 551 and has been shown to
offer improvements over other chemotherapy-based regimens for r/r MCL
patients. The applicant also referenced a more selective BTK inhibitor,
acalabrutinib, which was approved in the US for the treatment of
patients with r/r MCL.552 553 In registrational trials, the
ORR and CRR were 66% and 17%, respectively for ibrutinib, and 81% and
40%, respectively, for acalabrutinib.554 555 The applicant
contended that primary and secondary resistance to BTK inhibitors \556\
is common, and subsequent therapies currently available are minimally
effective.557 558 559
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\550\ Campo E, Rule S. Mantle cell lymphoma: Evolving management
strategies. Blood. 2015;125(1):48-55.
\551\ Vose JM. Mantle cell lymphoma: 2017 update on diagnosis,
risk-stratification, and clinical management. Am J Hematol.
2017;92(8):806-813.
\552\ Kantar Health. CancerMPact[supreg] United States.
September 2018, v1.2.
\553\ Vose JM. Mantle cell lymphoma: 2017 update on diagnosis,
risk-stratification, and clinical management. Am J Hematol.
2017;92(8):806-813.
\554\ Ibrutinib USPI. Available from: https://www.imbruvica.com/docs/librariesprovider7/default-document-library/prescribing_information.pdf.
\555\ Acalabrutinib USPI. Available from: https://www.azpicentral.com/calquence/calquence.pdf#page=1.
\556\ Rule S, et al. Median 3.5-year follow-up of ibrutinib
treatment in patients with relapsed/refractory Mantle Cell Lymphoma:
a pooled analysis. Blood Dec. 2017;130(Suppl 1):151.
\557\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
\558\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\559\ DerSimonian R, Laird N. Meta-analysis in clinical trials.
Control Clin Trials. 1986;7(3):177-88.
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Among the 68 patients treated in the ZUMA-2 study, the primary
efficacy analysis was conducted after 60 patients had been enrolled,
treated, and evaluated for response for six months after the week four
disease assessment. Based on the primary analysis of the 60 subjects
included in the ZUMA-2 study, there was an ORR of 93% after a single
dose of TECARTUS[supreg] (56 of 60 subjects with a 95% CI of 83.8%,
98.2%). The applicant reported that the complete response rate was 67%
(40 of 60 subjects with a 95% CI of 53.3%, 78.3%). The applicant noted
the ORR of 93% and CR 67% were observed across age groups (94% ages
>=65; 93% ages <65 and, of the 40 subjects achieving CR, 22 subjects
were aged >=65 and 18 were aged <65). The applicant highlighted that
the ORR of 93% was significantly higher than the prespecified
historical control rate of 25%. Furthermore, the applicant noted that
among the 42 subjects who initially had a partial response (PR) or
stable disease (SD), 24 subjects (57%) went on to achieve a CR after a
median of 2.2 months (range: 1.8 to 8.3 months). Twenty-one subjects
converted from PR to CR, and 3 subjects converted from stable disease
(SD) to CR.
According to the applicant, the median DOR was not reached with a
median follow-up time for DOR of 8.6 months (95% CI: 7.8, 19.6 months)
with a median study follow-up of 12.3 months; this result was
consistent across age groups. Kaplan-Meier estimates of the progression
free survival (PFS) rates at 6 months and 12 months were 77.0% and
60.9%, respectively, and the median PFS was not reached at the median
potential follow-up of 12.3 months. Additionally, 57% of all patients
and 78% of patients with a CR remained in remission (results consistent
across age groups). Furthermore, as reported by the applicant, among
the first 28 subjects studied as part of the interim analysis, 43%
remained in continued remission without additional therapy at the
follow-up period of 27 months (range, 25.3-32.3).
The applicant also conducted an additional analysis of OS among the
first 28 subjects (ZUMA-2 interim analysis) who were treated with
TECARTUS[supreg] and had a potential follow-up of >=24 months. Among
these subjects, the OS rate estimate at 24 months was 67.9% and the
median OS was not reached. In comparison, the Cheah et al. (2015) post-
ibrutinib salvage therapy study reported a lower one-year survival rate
of 22%. Additionally, among the subjects in CR at month 3 who had the
opportunity to
[[Page 45101]]
be followed to month 12, 90% remained in CR at month 12. The applicant
contended that this statistic showcased that early responses to
TECARTUS[supreg] are likely indicative of long-term remission after the
single infusion of TECARTUS[supreg]. Furthermore, the applicant
suggested that a substantial number of patients with r/r MCL treated
with TECARTUS[supreg] will achieve a CR, and that this suggests these
patients will likely experience a long-term remission after a single
infusion of TECARTUS[supreg]. The applicant also noted that these
results were consistent across age groups at the time of the primary
data analysis cut-off (July 24, 2019). By contrast, the applicant noted
that patients with r/r MCL who had prior BTK inhibitor treatment had CR
rates ranging from 7-22%. Additionally, the applicant noted that the
majority of patients on BTK inhibitor treatment go on to have
progressive disease given that the responses achieved with currently
available salvage therapies are short lived and have a DOR ranging from
3 to 5.8 months.560 561 562 563
---------------------------------------------------------------------------
\560\ Kochenderfer JN, et al. Lymphoma Remissions Caused by
Anti-CD19 Chimeric Antigen Receptor T Cells Are Associated With High
Serum Interleukin-15 Levels. J Clin Oncol. 2017a;35(16):1803-13.
\561\ Kochenderfer JN, et al. Long-Duration Complete Remissions
of Diffuse Large B Cell Lymphoma after Anti-CD19 Chimeric Antigen
Receptor T Cell Therapy. Mol Ther. 2017b;25(10):2245-53.
\562\ Gupta S, et al. Recommendations for the design,
optimization, and qualification of cell-based assays used for the
detection of neutralizing antibody responses elicited to biological
therapeutics. Journal of Immunological Methods. 2007;321(1-2):1-18.
\563\ Davila ML, et al. Efficacy and toxicity management of 19-
28z CAR T cell therapy in B cell acute lymphoblastic leukemia. Sci
Transl Med. 2014;6(224):224ra25.
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With regard to the safety of TECARTUS[supreg], the applicant argued
that the ZUMA-2 study demonstrated a positive benefit-risk of
TECARTUS[supreg] over the current therapy options for patients with r/r
MCL. The applicant stated that the toxicity profile that is associated
with TECARTUS[supreg] therapy can be managed based upon established
guidance. The applicant further stated that the risk evaluation and
mitigation strategies (REMS) program will ensure that hospitals
providing TECARTUS[supreg] therapy are certified so that all who
prescribe, dispense, or administer TECARTUS[supreg] are aware of how to
manage the risk of cytokine release syndrome (CRS) and neurologic
events. However, the applicant notes that patients who were >=65 years
old showed a trend toward a higher incidence of Grade 3 or higher CRS
compared to those <=65 years old. (21% versus 7%). Additionally, all
subjects in the ZUMA-2 primary analysis had at least one adverse event
(AE), 99% of subjects had at least one AE that was Grade 3 or higher,
and 68% of subjects had at least one serious adverse event (SAE). Among
all 68 treated patients, the most common Grade 3 or higher AEs were
anemia (51%), neutropenia (53%), and leukopenia (41%). Furthermore, CRS
occurred in 62 subjects (91%) in the ZUMA-2 safety analysis. Of these,
10 subjects (15%) had Grade 3 CRS or higher. No subject had Grade 5
CRS, according to the applicant. Furthermore, according the applicant,
the most common CRS symptoms of any grade were pyrexia, hypotension,
and hypoxia. The most common Grade 3 or higher CRS symptoms were
hypotension (35 subjects, 51%), hypoxia (23 subjects, 34%), and pyrexia
(62 subjects, 91%). No patient in the ZUMA-2 study treated with
TECARTUS[supreg] died from CRS.
The applicant mentioned that 43 of the 68 patients (63%) in the
ZUMA-2 study also experienced forms of neurologic events. Of these, 15
subjects (22%) had a worst Grade 3 neurologic event, and 6 subjects
(9%) had a worst Grade 4 neurologic event. Twenty-two subjects (32%)
had serious neurologic events, however, the applicant noted no subject
had a Grade 5 neurologic event. The most common neurologic events of
any grade were encephalopathy (21 subjects, 31%), confusional state (14
subjects, 21%), and tremor (24 subjects, 35%). Compared with subjects
who were <65 years of age, subjects who were >=65 years of age showed a
trend toward a higher incidence of Grade 3 or higher neurologic events
(36% versus 24%). The applicant noted that these neurologic events
resolved for all but 6 subjects and that among those whose neurologic
events had resolved, the median duration was 12 days. Additionally, no
patient died from neurologic events.
In response to CMS's concern as discussed in the FY 2021 IPPS/LTCH
PPS proposed rule (85 FR 32646 through 32647) regarding the
generalizability of the findings from ZUMA-2 to the general Medicare
population, the applicant stated that the ZUMA-2 study sample is
representative of the Medicare population. The applicant stated that
57% of the sample were 65 to 79 years of age, and that MCL
predominantly affects older adults, with a median age at diagnosis
ranging from 65 to 73.564 565 The applicant asserted that
the advanced disease characteristics, including Stage IV disease in
85%, bone marrow involvement in 54%, and splenic involvement in 34%,
closely align with those observed in the general MCL population where
newly diagnosed and previously untreated patients present with stage
III/IV disease and commonly exhibit splenomegaly and bone marrow
infiltration.\566\ The applicant added that the key baseline
characteristics of the ZUMA-2 population mirror the r/r MCL Medicare
population refractory to BTK inhibitors, including age of study
subjects and stage of disease at study initiation. Overall, ZUMA-2
primary results showed that at the time of the analysis cutoff (July
2019), 16 of 68 subjects (24%) had died; 4 deaths occurred >30 days
through 3 months after infusion of TECARTUS[supreg] and 12 deaths
occurred >=3 months after infusion of TECARTUS[supreg]. Fourteen of the
16 subjects died as a result of progressive disease and two of the 16
subjects died due to AEs (Grade 5 AE of staphylococcal bacteremia and
Grade 5 AE of organizing pneumonia).
---------------------------------------------------------------------------
\564\ Smith A, et al. Lymphoma incidence, survival and
prevalence 2004-2014: Sub-type analyses from the UK's Haematological
Malignancy Research Network. Br J Cancer. 2015;112(9):1575-84.
\565\ Romaguera JE, et al. High rate of durable remissions after
treatment of newly diagnosed aggressive mantle-cell lymphoma with
rituximab plus hyper-CVAD alternating with rituximab plus high-dose
methotrexate and cytarabine. J Clin Oncol. 2005;23(28):7013-23.
\566\ McKay P, et al. Guidelines for investigation and
management of mantle cell lymphoma. Br J Haematol. (2012) 159, 405-
426.
---------------------------------------------------------------------------
Based on the information provided by the applicant, we had several
concerns with regard to the substantial clinical improvement criterion.
As we noted in the FY 2021 IPPS/LTCH PPS proposed rule, the combined
sample size from the literature search and ZUMA-2 study performed by
the applicant is relatively small. While the applicant stated that it
closely communicated with FDA in the development of the ZUMA-2 study,
including in the development of the sample size, we questioned whether
the ZUMA-2 study results would support a determination of substantial
clinical improvement given the small sample size. Although the
applicant's analysis of the ZUMA-2 study concluded that
TECARTUS[supreg] offers a treatment option for a patient population
unresponsive to, or ineligible for, currently available treatments, we
questioned whether the sample size and research presented in this
application support extrapolating these results across the Medicare
population.
Relatedly, we had concerns regarding the potential for selection
bias and its effects on results from the ZUMA-2 study. Seventy-four
patients were enrolled in the trial and underwent leukapheresis, of
which TECARTUS[supreg] was successfully manufactured for 71
[[Page 45102]]
(96%) and administered for 68 (92%).\567\ According to the authors, the
primary efficacy analysis was performed among the 60 first treated
patients who had at least 7 months of follow up. We also noted that the
reported ORR among the first 60 is 93% (95% CI 84-98) and the ORR among
all 74 patients enrolled is 85%. We had concerns, given the small
sample, about the potential effects of selection bias and of patients
being selected out of a study on the results of ZUMA-2, which forms the
keystone of the applicant's assertions regarding substantial clinical
improvement. Further, some research suggests that trials stopped early
for benefit overestimate treatment effects 568 569 570 and
that formal stopping rules do not reduce this bias, particularly in
samples less than 500 events or cases.\571\ Given the lack of
confidence intervals around the ORR among all 74 patients and the
potential for the overestimation of treatment effects, we stated it was
unclear whether there was sufficient information to determine a
substantial clinical improvement.
---------------------------------------------------------------------------
\567\ Wang M, et al. KTE-X19 CAR T-Cell therapy in relapsed or
refractory mantle-cell lymphoma. N Engl J Med. (2020) 382(14): 1331-
1342.
\568\ Pocock SJ. When (not) to stop a clinical trial for
benefit. JAMA 2005;294:2228e30.
\569\ Pocock SJ, Hughes MD. Practical problems in interim
analyses, with particular regard to estimation. Control Clin Trials
1989;10(4 Suppl): 209Se21S.
\570\ Montori VM, Devereaux PJ, Adhikari NK, Burns KE, Eggert
CH, Briel M, et al. Randomized trials stopped early for benefit: A
systematic review. JAMA 2005;294:2203e9.
\571\ Bassler D, Briel M, Montori VM, Lane M, Glasziou P, Zhou
Q, et al. Stopping randomized trials early for benefit and
estimation of treatment effects: systematic review and meta-
regression analysis. JAMA 2010;303:1180e7.
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As noted in the FY 2021 IPPS/LTCH PPS proposed rule, there had not
been a direct study completed comparing outcomes of patients with r/r
MCL treatment with TECARTUS[supreg] and BTK inhibitors. According to
the applicant, ZUMA-2 remains the only study to evaluate patient
outcomes after receiving TECARTUS[supreg] for the treatment of r/r MCL,
but this study did not include a direct comparison to other existing
therapies for r/r MCL. Despite there being no standard of second-line
care for r/r MCL patients that failed on previous therapies, according
to the applicant, a BTK inhibitor reflects the best currently available
therapy for treating r/r MCL.\572\
---------------------------------------------------------------------------
\572\ Campo E, Rule S. Mantle cell lymphoma: evolving management
strategies. Blood. 2015;125(1):48-55.
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The applicant's assertions of substantial clinical improvement are
based on the ZUMA-2 trial that uses a historical control ORR of 25%.
Given that the ORR in the provided literature review of six articles
ranges from 20%-42%, and that, according to the applicant, two specific
articles were used to develop the pre-specified historical control rate
(26% \573\ and 32% \574\ respectively),we stated it was unclear whether
the historical control is appropriate or representative of r/r MCL
patients. Furthermore, given that the applicant states that ZUMA-2 was
not designed to compare efficacy and safety of TECARTUS[supreg] to BTK
inhibitors, we were uncertain whether it would support a determination
of substantial clinical improvement.
---------------------------------------------------------------------------
\573\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\574\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
---------------------------------------------------------------------------
We stated that, as noted in the FY 2021 IPPS/LTCH PPS proposed
rule, a longer-term analysis of this population is not available to
evaluate the overall survival and mortality data. We noted that the
applicant did conduct an additional analysis of OS among the first 28
subjects (ZUMA-2 interim analysis) which showed an OS rate estimate at
24 months of 67.9% while the median OS was not reached. Additionally,
the applicant referenced that all subjects in the ZUMA-2 primary
analysis had at least 1 adverse event, and that throughout the course
of the ZUMA-2 study, 16 deaths were recorded. However, while the
applicant noted only 2 of these 16 deaths were related to adverse
events, we stated that we remained concerned that further analysis may
be needed to evaluate the safety of TECARTUS[supreg] and the longer
term effects of the CRS and neurological events associated with the
TECARTUS[supreg] therapy.
We invited public comments on whether TECARTUS[supreg] meets the
substantial clinical improvement criterion.
Comment: A commenter submitted a comment stating that with regard
to whether there is a high unmet need for Medicare patients with R/R
MCL, two observations are important: (1) Median age at diagnosis of MCL
is approximately 68 years old and (2) MCL is considered an incurable
malignancy. The commenter stated that the median duration of remission
is 3 to 5 years suggesting that the age at first relapse is
approximately 70 years; this was reflected by the pivotal trial, Zuma
2, where over half of the patients were over age 65. The commenter
stated that the decision to treat older patients with comorbid
conditions was not taken lightly. The commenter stated that, rather
then focus on the specific clinical outcomes observed with
TECARTUS[supreg] in CMS' review and in publication, that they desired
to lend support as evidenced by their experience with the technology
and respond directly to CMS' concerns. The commenter concluded that
they were able to demonstrate safety and efficacy data that parallel
the clinical trial experience in spite of treating older patients with
comorbid conditions, many of which would have failed to meet trial
eligibility.
A second commenter stated their agreement with the assertion
included in the new technology add-on payment application that the
registration study population for the ZUMA-2 trial and the overall U.S.
mantle cell lymphoma population are both representative of the Medicare
population. The commenter stated that TECARTUS[supreg] has the
potential to impact this population with an efficacy profile that is
even stronger than that of approved CAR T-cell therapies for DLBCL.
A third commenter stated that while MCL and DLBCL share similar
clinical presentations, they believe the key distinction between MCL
and large B cell Lymphoma (LBCL) in relation to CAR T-cell therapy is
that MCL has a leukemic phase in all MCL patients that both needs to be
accounted for in production and accounts for a higher disease burden
driving TECARTUS[supreg] CAR19 expansion. The commenter added that the
real-world use of TECARTUS[supreg] is heavily skewed to an elderly
patient population with most being age 65 or older and having new
technology add-on payment support is critical to continued
TECARTUS[supreg] usage.
Finally, a commenter stated support for CMS' desire for additional
data and comment to illustrate that TECARTUS[supreg] meets the
substantial clinical improvement criterion to support new technology
add-on payment status.
Response: We appreciate the input from the commenters with regard
to TECARTUS[supreg] and we have taken these comments into consideration
in determining whether to approve TECARTUS[supreg] for the new
technology add-on payment, as discussed below in this section.
Comment: In response to CMS' concern about the small sample size of
the ZUMA-2 study, the applicant stated that sample size and power
calculations for ZUMA-2 were carefully designed to demonstrate that
TECARTUS[supreg] is an effective treatment for patients with r/r MCL
who have not responded to currently available therapy. The
[[Page 45103]]
applicant reiterated that the ORR achieved in ZUMA-2 was 93% which was
significantly higher than the prespecified historical control and the
pooled meta-analysis ORR. The applicant asserted the ZUMA-2 study
design called for the primary analysis to be conducted after 60
subjects in Cohort 1 were treated with TECARTUS[supreg] and had the
opportunity to be assessed for response 6 months after the week 4
disease assessment. The applicant added that a sample size of 60
subjects in cohort 1 had at least 96% power to distinguish between an
active therapy with a true response rate of 50% or higher from a
therapy with an ORR of 25% or less 575 576 with a 1-sided
alpha level of 0.025. The applicant added that the ZUMA-2 study
reported an ORR of 93% (95% CI: 83.8%, 98.2%) after a single-dose of
TECARTUS[supreg], significantly higher than the prespecified historical
control rate of 25% (p <0.0001) and the meta-analysis pooled ORR rate
of 28% (95% CI: 23%, 34%) to salvage therapies that are currently
available.\577\ Lastly, in regard to this concern, the applicant stated
the ZUMA-2 population, in which 57% of the study subjects were 65 years
of age or older, was representative of the Medicare population.
---------------------------------------------------------------------------
\575\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
\576\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\577\ Wang M, et al. KTE-X19 CAR T-Cell therapy in relapsed or
refractory mantle-cell lymphoma. N Engl J Med. (2020) 382(14): 1331-
1342.
---------------------------------------------------------------------------
In response to CMS' concerns about the potential for selection bias
and the differences of the ORR among the first 60 patients as compared
to that from all 74 patients, the applicant commented that the observed
ORR in ZUMA-2 is consistently higher than the prespecified historical
control rate or the pooled ORR reported in the meta-analysis whether
comparing the 60 subjects of the primary analysis or the 74 subjects in
the full analysis. The applicant stated that the ORR from the 6-study
meta-analysis was 28% (95% CI: 23-34%) which when compared to the
updated analysis for the efficacy analysis (n=60) ORR of 92% (95% CI:
81.6%, 97.2%) and the full analysis set (n=74) ORR of 84% (95% CI:
73.4%, 91.3%) continues to show no overlap of confidences intervals.
Lastly, in response to this concern, the applicant states that it is
important to note that ZUMA-2 was not stopped early and is ongoing with
18 months of follow-up data available.
In response to CMS' concern that the historical control may not be
appropriate or representative of r/r MCL patients, and that ZUMA-2 was
not designed to compare efficacy and safety of TECARTUS[supreg] to BTK
inhibitors, the applicant commented that the prespecified historical
control rate for ORR in ZUMA-2, the meta-analyses subsequently
conducted, and a separate systematic literature review and sensitivity
meta-analysis provide a complete review of published clinical studies
(through February 2019). The applicant stated the prespecified
historical control rate was based on two retrospective studies that
were published at the time of ZUMA-2 protocol development; these two
studies demonstrated that patients with r/r MCL who had >=3 prior lines
of therapy before receiving a BTK inhibitor had ORRs to salvage therapy
of approximately 25%.578 579 The applicant asserted that
subsequent to the initial historical control rate estimation, the
applicant conducted a meta-analysis of 6 published clinical studies and
commissioned an independent systematic literature review, resulting in
an updated, sensitivity meta-analysis. The applicant added that the
pooled ORR estimate from the 6-study meta-analysis
580 581 582 583 584 585 (ORR: 28%, 95% CI, 23%, 34%) is
reported in Table 3 in the TECARTUS[supreg] new technology add-on
payment application. The applicant stated ZUMA-2 had no comparator arm
because there was no effective standard therapy for patients with r/r
MCL after they had progressed. Therefore, according to the applicant,
an historical control was the only ethical and feasible study design
for patients with r/r MCL who have not responded to the most promising
therapies available, including BTK inhibitors. Lastly, the applicant
asserts that the FDA recognizes a historical control as a valid
comparison of the experimental group in clinical trials used to provide
evidence that a product is safe and effective for its intended
use.\586\
---------------------------------------------------------------------------
\578\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
\579\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\580\ Cheah CY, et al. Patients with mantle cell lymphoma
failing ibrutinib are unlikely to respond to salvage chemotherapy
and have poor outcomes. Ann Oncol. 2015;26(6):1175-9.
\581\ Martin P, et al. Postibrutinib outcomes in patients with
mantle cell lymphoma. Blood. 2016;127 (12):1559-63.
\582\ Dreyling M, et al. Ibrutinib versus temsirolimus in
patients with relapsed or refractory mantle-cell lymphoma: an
international, randomised, open-label, phase 3 study. Lancet.
2016;387(10020):770-8.
\583\ Epperla N, et al. Predictive factors and outcomes for
ibrutinib therapy in relapsed/refractory mantle cell lymphoma--a
``real world'' study. Hematological Oncology. 2017:1-8.
\584\ Wang M, et al. Observational study of lenalidomide in
patients with mantle cell lymphoma who relapsed/progressed after or
were refractory/intolerant to ibrutinib (MCL-004). J Hematol Oncol.
2017;10:171.
\585\ Jain P, et al. Long-term outcomes and mutation profiling
of patients with mantle cell lymphoma (MCL) who discontinued
ibrutinib. Br J Haematol. 2018a;183:578-87.
\586\ Rare Diseases and Orphan Products--Institute of Medicine
(US) Committee on Accelerating Rare Diseases Research and Orphan
Product Development; Field MJ, Boat TF, editors. Rare Diseases and
Orphan Products: Accelerating Research and Development. Washington
(DC): National Academies Press (US); 2010. 3, Regulatory Framework
for Drugs for Rare Diseases. Available from: https://www.ncbi.nlm.nih.gov/books/NBK56185/.
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Lastly, in response to CMS' concern that a longer-term analysis of
the population of interest is not available to evaluate the overall
survival and mortality data, the applicant commented that updated
efficacy and safety data was submitted in the TECARTUS[supreg] new
technology add-on payment application dated December 31, 2019, which
represented the first update following the primary analysis. The
applicant then stated that an updated 18-month analysis, with a cut-off
date of December 31, 2020, has been completed but is confidential. The
applicant then stated that the data confirmed there were no changes to
overall incidence in the following safety categories as compared to the
primary analysis results: Adverse events, serious adverse events,
related adverse events, related serious adverse events, any cytokine
release syndrome (CRS), grade 3 or higher CRS, overall neurologic
events, and grade 3 or higher neurologic events. The applicant added
that there were no changes to comparisons of CRS or neurologic events
across age group comparisons (>=65 years of age and <65 years of age).
The applicant further stated two additional deaths occurred between the
data cutoff dates for the primary analysis and that updated analysis
due to disease progression: 18 of 68 Subjects in ZUMA-2 (26%) had died
as of the December 31, 2019 updated analysis cutoff. The applicant
added, of these, 4 deaths occurred >30 days through 3 months after
infusion of TECARTUS[supreg] and 14 deaths occurred >=3 months after
infusion of TECARTUS[supreg]. The applicant further added that sixteen
(16) of the 18 subjects died as a result of progressive disease; two
subjects died due to AEs other than disease progression: 1 subject had
a Grade 5 AE of Staphylococcal bacteremia (deemed
[[Page 45104]]
related to conditioning chemotherapy and TECARTUS[supreg]), and 1
subject had a Grade 5 AE of organizing pneumonia (deemed related to
conditioning chemotherapy).
Response: We thank the applicant for its comment and additional
information regarding the substantial clinical improvement criterion.
After consideration of the comments received, we agree with the
applicant and commenters that TECARTUS[supreg] represents a substantial
clinical improvement over existing therapies for relapsed and
refractory MCL because TECARTUS[supreg] allows access to a treatment
option for patients unresponsive to or ineligible for currently
available therapies, including patients who have progressed following a
prior BTK inhibitor. In addition, we believe that the ORR of 93% seen
after one dose with TECARTUS[supreg], and the difference in ORR between
use of TECARTUS[supreg] and the historical controls demonstrate a
substantial clinical improvement over existing technologies.
After consideration of the public comments we received and the
information included in the applicant's new technology add-on payment
application, we have determined, for the reasons stated previously,
that TECARTUS[supreg] meets the criteria for approval of the new
technology add-on payment. Therefore, we are approving new technology
add-on payments for this technology for FY 2022. Cases involving the
use of TECARTUS[supreg] that are eligible for new technology add-on
payments will be identified by procedure codes XW033M7 (Introduction of
brexucabtagene autoleucel immunotherapy into peripheral vein,
percutaneous approach, new technology group 7) or XW043M7 (Introduction
of brexucabtagene autoleucel immunotherapy into central vein,
percutaneous approach, new technology group 7).
In its application, the applicant estimated that the cost of
TECARTUS[supreg] is $373,000.00 per patient. Under Sec. 412.88(a)(2),
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. However, in their public
comment the applicant stated that effective April 15, 2021, the WAC for
TECARTUS[supreg] is $399,000.00 per each patient-specific, single-
infusion bag.\587\ As a result, the maximum new technology add-on
payment for a case involving the use of TECARTUS[supreg] is $259,350
for FY 2022.
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\587\ FDB MedKnowledge Product Update Report: 4/15/2021.
---------------------------------------------------------------------------
o. VEKLURY[supreg] (remdesivir)
Gilead Sciences, Inc. submitted an application for new technology
add-on payments for VEKLURY[supreg] (remdesivir) for FY 2022.
VEKLURY[supreg] is a nucleotide analog that inhibits viral RNA-
dependent RNA polymerases, demonstrating activity countering viral
pathogens such as severe acute respiratory syndrome coronavirus 2
(SARS-CoV-2), the virus that causes coronavirus disease 2019 (COVID-
19).
According to the applicant, spread of COVID-19 is presumed largely
to occur through respiratory droplets and approximately 80% is
predicted to occur by pre- and asymptomatic individuals. The applicant
asserted viral incubation averages 3-7 days and can occur for up to 2
weeks.\588\ According to the applicant, once infected, approximately
81% of COVID-19 patients experience mild disease, 14% experience severe
disease, and 5% experience critical disease.\589\ The applicant stated
that severity of disease changes with age--approximately 113 in 100,000
people aged 18-49 years are hospitalized, compared to 250 in 100,000
aged 50-64 years and 451 in 100,000 aged 65+.\590\ The applicant
asserted that other risk factors for severity include underlying
comorbidities but severe illness can occur in otherwise healthy
individuals at any age.\591\
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\588\ Cascella M, Rajnik M, Cuomo A, et al. Features,
Evaluation, and Treatment of Coronavirus (COVID-19). StatPearls,
published August 10, 2020. https://www.ncbi.nlm.nih.gov/books/NBK554776/.
\589\ McIntosh K, Hirsch MS (ed), and Bloom A (ed). Coronavirus
disease 2019 (COVID-19): Clinical features. UpToDate, updated
September 14, 2020. https://www.uptodate.com/contents/coronavirusdisease-2019-covid-19-clinical-features.
\590\ Centers for Disease Control and Prevention (CDC).
COVIDView A weekly Surveillance Summary of U.S. COVID-19 Activity,
published September 11, 2020. https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/index.html.
\591\ McIntosh K, Hirsch MS (ed), and Bloom A (ed). Coronavirus
disease 2019 (COVID-19): Clinical features. UpToDate, updated
September 14, 2020. https://www.uptodate.com/contents/coronavirusdisease-2019-covid-19-clinical-features.
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According to the applicant, patients who present to the hospital
with evidence of pneumonia may require supplemental oxygen in severe
cases, or, those with critical illness may develop hypoxemic
respiratory failure, acute respiratory distress syndrome, and
multiorgan failure that requires ventilation support.\592\ The
applicant cited one study of 2,482 hospitalized COVID-19 patients, in
which 32% of patients were admitted to the intensive care unit (ICU)
for a median stay of 6 days and 19% received invasive mechanical
ventilation, 53% of whom died in the hospital.\593\
---------------------------------------------------------------------------
\592\ Ibid.
\593\ Kim L, Garg S, O'Halloran A, et al. Risk Factors for
Intensive Care Unit Admission and Inhospital Mortality Among
Hospitalized Adults Identified through the US Coronavirus Disease
2019 (COVID-19)-Associated Hospitalization Surveillance Network
(COVID-NET). Clinical Infectious Diseases. 2020; ciaa1012, https://doi.org/10.1093/cid/ciaa1012.
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According to the applicant, VEKLURY[supreg] received FDA approval
for use in the inpatient setting on October 22, 2020 via Priority
Review and had received Fast Track designation.\594\ Under the New Drug
Application (NDA) FDA approval, VEKLURY[supreg] is indicated for adults
and pediatric patients (12 years of age and older and weighing at least
40 kg) for the treatment of COVID-19 requiring
hospitalization.595 596 Prior to its approval, on May 1,
2020, VEKLURY[supreg] received an Emergency Use Authorization (EUA)
from FDA for the treatment of suspected or laboratory-confirmed COVID-
19 in adults and children hospitalized with severe disease.\597\
VEKLURY[supreg] continues to have an EUA for pediatric patients (12
years of age or younger weighing at least 3.5 kg or weighing 3.5 kg to
less than 40 kgs) for emergency use to treat suspected or laboratory-
confirmed COVID-19 in hospitalized pediatric
patients.598 599
---------------------------------------------------------------------------
\594\ FDA. FDA News Release: FDA Approves First Treatment for
COVID-19, published October 22, 2020. https://www.fda.gov/news-events/press-announcements/fda-approves-first-treatment-covid-19.
\595\ VEKLURY[supreg] NDA approval: https://www.accessdata.fda.gov/drugsatfda_docs/appletter/2020/214787Orig1s000ltr.pdf; https://www.fda.gov/media/143189/download.
\596\ FDA. Fact Sheet for Health Care Providers Emergency Use
Authorization (EUA) of VEKLURY[supreg] (remdesivir): https://www.fda.gov/media/137566/download.
\597\ FDA News Release: Coronavirus (COVID-19) Update: FDA
Issues Emergency Use Authorization for Potential COVID-19 Treatment.
Published May 1, 2020. https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-issues-emergency-use-authorization-potential-covid-19-treatment.
\598\ VEKLURY[supreg] EUA: https://www.fda.gov/media/137564/download.
\599\ FDA News Release: COVID-19 Update: FDA Broadens Emergency
Use Authorization for VEKLURY[supreg] (remdesivir) to Include All
Hospitalized Patients for Treatment of COVID-19, published August
28, 2020. https://www.fda.gov/news-events/press-announcements/covid-19-update-fda-broadens-emergency-use-authorization-VEKLURY[supreg]-
remdesivir-include-all-hospitalized.
---------------------------------------------------------------------------
According to the applicant, VEKLURY[supreg] has been available
under the EUA since it was first issued in May 2020 for emergency use
in the inpatient setting for patients with COVID-19. The applicant
asserted that between July 1, 2020 and September 30, 2020, it entered
[[Page 45105]]
into an agreement with the U.S. Government to allocate and distribute
commercially-available VEKLURY[supreg] across the country.\600\ The
applicant stated that under this agreement, the first sale of
VEKLURY[supreg] was completed on July 10, 2020. The applicant stated
that they transitioned to a more traditional, unallocated model of
distribution as of October 1, 2020.
---------------------------------------------------------------------------
\600\ Veklury (remdesivir)--ASPR's Portfolio of COVID-19 Medical
Countermeasures Made Available as a Licensed Product https://www.phe.gov/emergency/events/COVID19/investigation-MCM/Pages/Veklury.aspx.
---------------------------------------------------------------------------
According to the applicant, as of August 1, 2020, VEKLURY[supreg]
is uniquely identified by ICD-10-PCS codes XW033E5 (Introduction of
remdesivir anti-infective into peripheral vein, percutaneous approach,
new technology group 5) and XW043E5 (Introduction of remdesivir anti-
infective into central vein, percutaneous approach, new technology
group 5). Prior to August 1, 2020, the generic, non-COVID-19 ICD-10-PCS
codes 3E033GC (Introduction of other therapeutic substance into
peripheral vein, percutaneous approach) and 3E043GC (Introduction of
other therapeutic substance into central vein, percutaneous approach)
could be reported for the use of VEKLURY[supreg].
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 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 VEKLURY[supreg] is a SARS-CoV-2 nucleotide analog
RNA polymerase inhibitor, and that there are no other antiretroviral
therapies that have received an EUA or an approval from FDA to treat
COVID-19. The applicant stated, however, that convalescent plasma has
also received an EUA for the treatment of hospitalized patients with
COVID-19.601 602 According to the applicant, convalescent
plasma is collected from individuals who have been infected with SARS-
CoV-2 and have developed antibodies to the virus. The applicant stated
that plasma is transfused into infected patients with the expectation
that the antibodies present will neutralize the virus.\603\ The
applicant asserted this mechanism of action is different from
VEKLURY[supreg] which works as a nucleotide analog to inhibit viral
replication. We noted that, as a result of their evaluation of the most
recent information available, on February 4, 2021 FDA reissued the EUA
for convalescent plasma. The EUA authorizes only the use of high titer
COVID-19 convalescent plasma, for the treatment of hospitalized
patients early in the course of disease. The use of low titer COVID-19
convalescent plasma is not authorized under the EUA.\604\
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\601\ Convalescent plasma EUA: https://www.fda.gov/media/141477/download.
\602\ FDA. Emergency Use Authorizations: Drug and Biological
Products. 2020. https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/emergency-use-authorization#coviddrugs.
\603\ Liu STH, Li MH, Baine I, at al. Convalescent plasma
treatment of severe COVID-19: A propensity score-matched control
study. Nature Medicine. 2020. https://doi.org/10.1038/s41591-020-1088-9.
\604\ FDA reissued the EUA on March 9, 2021. FDA In Brief: FDA
Updates Emergency Use Authorization for COVID-19 Convalescent Plasma
to Reflect New Data, published February 4, 2021. https://www.fda.gov/news-events/fda-brief/fda-brief-fda-updates-emergency-use-authorization-covid-19-convalescent-plasma-reflect-new-data and
https://www.fda.gov/media/141477/download.
---------------------------------------------------------------------------
We noted that another inpatient treatment for COVID-19,
Olumiant[supreg] (baricitinib), in combination with VEKLURY[supreg],
has received an EUA. Specifically, the EUA for Olumiant[supreg], which
should be administered in combination with VEKLURY[supreg], is for the
treatment of COVID-19 in certain hospitalized patients requiring
supplemental oxygen, invasive mechanical ventilation, or extracorporeal
membrane oxygenation (ECMO).\605\ Olumiant[supreg] is a Janus kinase
(JAK) inhibitor with prior FDA approval for another indication--the
treatment of adult patients with moderately to severely active
rheumatoid arthritis who have had inadequate response to one or more
tumor necrosis factor (TNF) antagonist therapies.\606\
---------------------------------------------------------------------------
\605\ Olumiant[supreg] EUA: https://www.fda.gov/media/143822/download.
\606\ Olumiant[supreg] (baricitinib) [package insert]. FDA,
revised July 8, 2020. https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/207924s002lbl.pdf.
---------------------------------------------------------------------------
According to the applicant, because of the rapidly evolving nature
of the COVID-19 pandemic, there is not a current standard of care used
across hospitals in the United States.
With regard to the second criterion, whether the technology is
assigned to the same or a different MS-DRG, the applicant asserted that
as there no other antiretroviral therapies for the treatment of
patients with COVID-19, VEKLURY[supreg] could not be assigned to the
same MS-DRG as existing 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, the applicant
asserted VEKLURY[supreg] represents a novel treatment option for
patients with COVID-19 who are hospitalized. The applicant stated
COVID-19 is a completely separate disease from those caused by other
coronaviruses. The applicant asserted severe acute respiratory syndrome
(SARS) is caused by the coronavirus SARS-CoV and was first reported in
2003. The applicant stated SARS symptoms were similar to COVID-19 and
included high fever, body aches, and mild respiratory symptoms but no
treatments specific to SARS-CoV have been developed.\607\ According to
the applicant, MERS-CoV, the Middle east respiratory syndrome
coronavirus, was first identified in 2012 and has some similarities in
etiology to SARS-CoV-2 but lacks treatment options.\608\
---------------------------------------------------------------------------
\607\ CDC. Severe Acute Respiratory Syndrome (SARS), updated
December 6, 2017. https://www.cdc.gov/sars/index.html.
\608\ CDC. About MERS, Updated August 2, 2019. https://www.cdc.gov/coronavirus/mers/about/index.html.
---------------------------------------------------------------------------
Based on the applicant's statements as summarized previously, the
applicant believes that VEKLURY[supreg] is not substantially similar to
other currently available therapies and/or technologies and meets the
``newness'' criterion. In the proposed rule, we noted that although
there may not be other antiretrovirals available for the treatment of
COVID-19, cases involving VEKLURY[supreg] may map to the same MS-DRGs
as other treatments for COVID-19. We also noted that VEKLURY[supreg]
may not treat a different disease or patient population as existing
treatments for COVID-19, as Olumiant[supreg] (administered with
VEKLURY[supreg]) and convalescent plasma appear to treat the same
disease and similar patient population.
In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we
revised 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. We stated that new
technologies that have not received FDA approval do not meet the
newness criterion. In addition, we stated we do not believe it is
appropriate for CMS to determine whether a medical service or
technology represents a substantial clinical improvement over existing
technologies before the FDA makes a determination as to whether the
medical service or technology is safe and effective. For these reasons,
we first determine whether a new technology meets the newness
criterion, and only if so, do we make a determination as to whether the
technology meets the cost threshold and represents a substantial
[[Page 45106]]
clinical improvement over existing medical services or technologies. We
also finalized at 42 CFR 412.87(c) (subsequently redesignated as
412.87(e)) 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.
In the FY 2021 IPPS/LTCH PPS final rule, to more precisely describe
the various types of FDA approvals, clearances, licensures, and
classifications that we consider under our new technology add-on
payment policy, we finalized a technical clarification to Sec.
412.87(e)(2) to indicate that new technologies must receive FDA
marketing authorization (for example, pre-market approval (PMA); 510(k)
clearance; the granting of a De Novo classification request; approval
of a New Drug Application (NDA); or Biologics License Application (BLA)
licensure) by July 1 of the year prior to the beginning of the fiscal
year for which the application is being considered. As noted in the FY
2021 IPPS/LTCH PPS final rule, this technical clarification did not
change our longstanding policy for evaluating whether a technology is
eligible for new technology add-on payment for a given fiscal year, and
we continue to consider FDA marketing authorization as representing
that a product has received FDA approval or clearance for purposes of
eligibility for the new technology add-on payment under Sec.
412.87(e)(2) (85 FR 58742).
An EUA by the FDA allows a product to be used for emergency use,
but under our longstanding policy, we believe it would not be
considered an FDA marketing authorization for the purpose of new
technology add-on payments, as a product that is available only through
an EUA is not considered to have FDA approval or clearance. Therefore,
under the current regulations at 42 CFR 412.87(e)(2) and consistent
with our longstanding policy of not considering eligibility for new
technology add-on payments prior to a product receiving FDA approval or
clearance, we believe a product available only through an EUA would not
be eligible for new technology add-on payments. Therefore, cases
involving hospitalized pediatric patients (12 years of age or younger
weighing at least 3.5 kg or weighing 3.5 kg to less than 40 kgs)
receiving VEKLURY[supreg] for emergency use to treat suspected or
laboratory-confirmed COVID-19 are not eligible for new technology add-
on payment.
We refer the reader to our comment solicitation in section II.F.7
of the preamble of the proposed rule (86 FR 25394 through 25395)
regarding how data reflecting the costs of a product with an EUA, which
may become available upon authorization of the product for emergency
use (but prior to FDA approval or clearance), should be considered for
purposes of the 2-year to 3-year period of newness for new technology
add-on payments for a product with or expected to receive an EUA,
including whether the newness period should begin with the date of the
EUA.
We also invited public comments on any implications of the
distribution agreement described previously with regard to the market
availability of VEKLURY[supreg].
We also refer the reader to our proposal in section II.F.8 of the
preamble of the proposed rule (86 FR 25394) to extend the new COVID-19
treatments add-on payment (NCTAP) through the end of the fiscal year in
which the PHE ends for certain products and discontinue NCTAP for
products approved for new technology add-on payments in FY 2022. We
also refer the reader to section II.F.8 of the preamble of this final
rule, where we discuss our finalized policy to extend the NCTAP through
the end of the fiscal year in which the PHE ends for all eligible
products.
We invited public comments on whether VEKLURY[supreg] meets the
newness criterion.
Comment: The applicant submitted a comment in response to our
concerns regarding newness. With respect to our concern that cases
involving VEKLURY[supreg] may map to the same MS-DRGs as other
treatments for COVID-19 and that VEKLURY[supreg] may not treat a
different disease or patient population as existing treatments for
COVID-19, as Olumiant[supreg] (administered with VEKLURY[supreg]) and
convalescent plasma appear to treat the same disease and similar
patient population, the applicant agreed that cases involving
VEKLURY[supreg] may map to the same MS-DRG as other treatments for
COVID-19 because those cases are likely to have the same principal
diagnosis.
With regard to our concern that VEKLURY may not treat a different
disease or patient population, the applicant stated that COVID-19 is
noted to have discrete phases, including an early infectious phase, a
pulmonary phase, and a hyperinflammatory phase. According to the
applicant, VEKLURY[supreg] has a unique mechanism of action and may be
used in patients at different phases of COVID-19, which differentiates
it from other COVID-19 therapies.\609\ The applicant also stated that
the utility of antiviral agents such as VEKLURY[supreg] is expected to
be strongest in the earliest phases of COVID-19, while that of
immunomodulators such as Olumiant or dexamethasone is likely strongest
in the later phases of the COVID-19. The applicant also stated that
COVID-19 drugs are currently used in conjunction with one another for
effective treatment, depending on the patient population. For example,
the NIH recommends VEKLURY[supreg] with or without dexamethasone for
patients hospitalized on low-flow oxygen.\610\ Similarly, for patients
hospitalized with high-flow oxygen/non-invasive ventilation the NIH
guidelines recommend use of VEKLURY[supreg] with dexamethasone, and
tocilizumab as an addition in case of rapidly progressive disease with
systemic inflammation. The applicant noted that Olumiant is only
recommended for use with VEKLURY[supreg] as an alternative to
dexamethasone + VEKLURY[supreg] when corticosteroids cannot be used.
Further, the applicant stated that the Olumiant EUA is for use in
combination with VEKLURY[supreg], and Olumiant is not yet FDA approved
for the treatment of COVID-19. Current NIH treatment guidelines
recommend against use of low-titer convalescent plasma for treatment of
COVID-19, and recommends against use of convalescent plasma for
hospitalized patients who do not have impaired immunity.\611\
---------------------------------------------------------------------------
\609\ Siddiqi HK, Mehra MR. COVID-19 illness in native and
immunosuppressed states: A clinical therapeutic staging proposal. J.
Heart Lung Transplant. 2020; 39: 405-407. https://doi.org/10.1016/j.healun.2020.03.012.
\610\ National Institutes of Health. Therapeutic Management of
Adults with COVID-19. Last updated May 24, 2021. https://www.covid19treatmentguidelines.nih.gov/therapeutic-management/.
\611\ Ibid.
---------------------------------------------------------------------------
Response: We thank the applicant for its comment and additional
input regarding the newness criterion. After consideration of the
comment received and information submitted by the applicant, we
continue to believe that the new use of the technology may involve the
treatment of the same or similar type of disease and the same or
similar patient population as existing technologies that treat COVID-
19, such as Olumiant (administered with VEKLURY[supreg]). However, we
agree that VEKLURY[supreg] does not use the same or a similar mechanism
of action to achieve a therapeutic outcome when compared to existing
treatment. VEKLURY[supreg] works as a nucleotide analog to inhibit
viral replication and there are no other antiretroviral therapies that
have received an EUA or an approval from
[[Page 45107]]
FDA to treat COVID-19. Therefore, we believe that VEKLURY[supreg] is
not substantially similar to an existing technology and meets the
newness criterion with an indication for use in adults and pediatric
patients (12 years of age and older and weighing at least 40 kg) for
the treatment of COVID-19 requiring hospitalization. Consistent with
our longstanding policy, we consider the newness period to begin on
October 22, 2020, when the NDA for VEKLURY[supreg] was approved by the
FDA. We refer the reader to section II.F.7. of this final rule for a
discussion of the comment solicitation regarding the newness period for
products available through an EUA for COVID-19 including a summary of
the comments received from the applicant and other commenters regarding
this solicitation.
With regard to the cost criterion, the applicant used the FY 2019
MedPAR LDS and the February through June 2020 Electronic Data
Interchange (EDI) transaction data to identify applicable cases. The
applicant used the FY 2022 thresholds and the FY 2019 NPRM IPPS/LTCH
impact file to standardize charges. As COVID-19 is an emergent disease,
the applicant asserted that FY 2019 MedPAR claims may not be reflective
of actual cases. Accordingly, and as summarized below, the applicant
identified the FY 2019 MedPAR cases as proxy COVID-19 cases in its cost
analysis. To supplement and confirm its MedPAR findings, the applicant
used EDI data that includes actual COVID-19 cases from February through
June 2020 to capture what the applicant described as true COVID-19 MS-
DRG mapping and charges.
For the MedPAR LDS cases, the applicant used B97.29 with a
manifestation code (J12.89 or J20.8 or J40 or J22 or J98.8 or J80).
According to the applicant, this is based on the CDC guidance which
specifies use of B97.29 with additional coding to identify the
manifestation prior to the April 1, 2020 COVID-19 code. The applicant
developed 3 sensitivity scenarios to further differentiate the MedPAR
cases; Scenario 1: All Proxy COVID-19, Scenario 2: Proxy COVID-19
without ventilation, and Scenario 3: Proxy COVID19 with ventilation.
Next, the applicant analyzed linked 837 and 835 inpatient EDI
transaction sets that were processed February through June of 2020. The
837 and 835 transaction sets are updated daily and stored in the
Inovalon provider research datasets, accounting for approximately 5-7%
of the total Medicare FFS volume nationally on average. For cases prior
to April 1, the applicant used the same coding as the MedPAR analysis.
For claims on or after April 1, 2020, the applicant used the actual
COVID-19 code U07.1. The applicant then identified cases using the 3
sensitivity scenarios; Scenario 4: All COVID-19, Scenario 5: COVID-19
without ventilation, and Scenario 6: COVID-19 with ventilation.
The claim search conducted by the applicant identified 1,726 cases
mapping to 25 MS-DRGs for scenario one, 274 cases mapping to eight MS-
DRGs for scenario two, 1,393 cases mapping to 21 MS-DRGs for scenario
three, 3,826 cases mapping to 21 MS-DRGs for scenario four, 859 cases
mapping to seven MS-DRGs for scenario five, and 2,917 cases mapping to
14 MS-DRGs for scenario six. The MS-DRGs identified in each scenario
are listed in the following tables.
BILLING CODE 4120-01-P
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BILLING CODE 4120-01-C
The applicant determined an average unstandardized case weighted
charge per case of $56,643 for Scenario 1; $82,733 for Scenario 2;
$51,100 for Scenario 3; $75,891 for Scenario 4; $131,004 for Scenario
5; and $59,393 for Scenario 6.
The applicant stated that 33 percent of the length of stay charges
from relevant cases were removed as charges for and related to the
prior technologies in order to estimate the potential decrease in
length of stay achieved by use of VEKLURY[supreg]. The applicant stated
that these length of stay charges were removed from relevant cases to
conservatively estimate the potential reduction in charges due to
decreased length of stay through use of VEKLURY[supreg]. The applicant
asserted that this offset was determined based on findings from the
Adaptive COVID-19 Treatment Trial (ACTT-1), which found those treated
with VEKLURY[supreg] had a median recovery time of 10 days, as compared
with 15 days for those who received placebo.
After calculating the average standardized charge per case for all
scenarios, the applicant calculated the standardized charge per case
for each MS-DRG. Next, for the analysis involving MedPAR, the applicant
indicated that it applied the 2-year inflation factor used in the FY
2021 IPPS/LTCH PPS final rule to calculate outlier threshold charges of
13.1 percent. We note that the inflation factor used in the FY 2021
IPPS/LTCH PPS final rule was 13.2 percent (1.13218) (85 FR 59039),
which would have increased the inflated charges. For the analysis
involving the EDI, the applicant used an inflation factor of 1.06353 or
6.4%, which it indicated was the same inflation factor used in the FY
2021 IPPS/LTCH PPS final rule (85 FR 59039). We note that the inflation
factor used in the FY 2021 IPPS/LTCH PPS final rule was 6.4% (1.06404)
(85 FR 59039), but this does not affect the cost analysis. To calculate
the charges for the technology, the applicant used the
[[Page 45113]]
national average CCR for the Drugs cost center of 0.187 from the FY
2021 Final IPPS rule. Lastly, the applicant calculated the case-
weighted threshold amount and the final inflated average case-weighted
standardized charge per case for each scenario.
The applicant stated that for Scenario 1, the final inflated
average case-weighted standardized charge per case of $69,741 exceeded
the average case-weighted threshold amount of $56,643 by $13,098. For
Scenario 2, the final inflated average case-weighted standardized
charge per case of $107,860 exceeded the average case-weighted
threshold amount of $82,733 by $25,127. For Scenario 3, the final
inflated average case-weighted standardized charge per case of $60,749
exceeded the average case-weighted threshold amount of $51,100 by
$9,649. For Scenario 4, the final inflated average case-weighted
standardized charge per case of $110,553 exceeded the average case-
weighted threshold amount of $75,891 by $34,662. For Scenario 5, the
final inflated average case-weighted standardized charge per case of
$203,406 exceeded the average case-weighted threshold amount of
$131,004 by $72,402. For Scenario 6, the final inflated average case-
weighted standardized charge per case of $63,915 exceeded the average
case-weighted threshold amount of $59,393 by $4,522.
The applicant stated that because the final inflated average case-
weighted standardized charge per case exceeded the average case-
weighted threshold amount, VEKLURY[supreg] meets the cost criterion.
We invited public comment on whether VEKLURY[supreg] meets the cost
criterion.
Response: We did not receive comments regarding whether
VEKLURY[supreg] meets the cost criterion. Based on the information
included in the applicant's new technology add-on payment application,
we believe that the VEKLURY[supreg] meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that VEKLURY[supreg] represents a substantial
clinical improvement over existing technologies because it shortens
time to recovery in patients hospitalized with severe COVID-19. The
applicant also asserted that it represents a substantial clinical
improvement because the technology results in improved clinical status
and a trend toward reduced mortality, with the most significant
reduction seen in a post-hoc analysis of patients with COVID-19 on low-
flow oxygen treated with VEKLURY[supreg]. The applicant further
asserted VEKLURY[supreg] results in better clinical status for patients
hospitalized with moderate COVID-19.
As stated previously, the applicant asserted that VEKLURY[supreg]
represents a substantial clinical improvement over existing
technologies because it shortens time to recovery in patients
hospitalized with severe COVID-19. To support this claim, the applicant
referenced published, peer-reviewed results from the ACTT-1 study, a
multi-center, multi-country adaptive, double-blinded, placebo-
controlled, randomized clinical trial. Patients with confirmed COVID-19
and evidence of lung involvement were randomly assigned to receive
either VEKLURY[supreg] (n=532; 200 mg loading dose on day 1, followed
by 100 mg daily for up to 9 additional days) or placebo (n=516) for up
to 10 days. Patients could receive other treatments if a participating
hospital had a written policy or guideline for treating COVID-19. The
study was conducted in 60 trial sites across the world with a majority
of trial sites within the United States (45 trial sites plus 13 sub-
sites within the United States). The other sites were in Denmark (8),
the United Kingdom (5), Greece (4), Germany (3), Korea (2), Mexico (2),
Spain (2), Japan (1), and Singapore (1). The primary outcome measure of
the ACTT-1 study was time to recovery, defined as the first day, from
the time of enrollment into the study, that patients exhibited
improvement in conditions based on hospitalization activity limitation,
oxygen requirement, and medical care requirement.\612\
---------------------------------------------------------------------------
\612\ Beigel JH, Tomashek KM, Dodd LE, et al. Remdesivir for the
Treatment of Covid-19--Final Report. N Engl J Med. 2020.
---------------------------------------------------------------------------
According to the applicant, as part of the trial design, an interim
analysis was planned to determine if the study should be stopped early
for futility, efficacy, or safety, if there was clear and substantial
evidence of a treatment difference between study drug and placebo. An
independent data and safety monitoring board met to review interim data
and determined VEKLURY[supreg] was better than a placebo for the
primary endpoint, time to recovery.\613\ The applicant stated those
treated with VEKLURY[supreg] had a median recovery time of 10 days, as
compared with 15 days for those who received placebo (rate ratio for
recovery, 1.29; 95% confidence interval [CI], 1.12 to 1.49; P <0.001),
and the number of serious adverse events was lower in the
VEKLURY[supreg] treated group.\614\
---------------------------------------------------------------------------
\613\ The National Institutes of Health (NIH). NIH clinical
trial shows Remdesivir accelerates recovery from advanced COVID-19,
published April 29, 2020. https://www.nih.gov/news-events/news-releases/nih-clinical-trial-shows-remdesivir-accelerates-recovery-advanced-covid-19.
\614\ Beigel JH, Tomashek KM, Dodd LE, et al. Remdesivir for the
Treatment of Covid-19--Final Report. N Engl J Med. 2020.
---------------------------------------------------------------------------
As stated previously, the applicant asserted VEKLURY[supreg]
represents a substantial clinical improvement over existing
technologies because use of VEKLURY[supreg] results in improved
clinical status and reduced mortality in patients with COVID-19 on low-
flow oxygen. According to the applicant, the pivotal ACTT-1 study
showed an overall trend toward reduction in mortality with the most
significant reduction observed in a post-hoc analysis of patients on
low-flow oxyen treated with VEKLURY[supreg]. The overall mortality
effect was not statistically significant. The applicant stated those
treated with VEKLURY[supreg] continued to receive oxygen for fewer days
(median, 13 days vs. 21 days) and the incidence of new oxygen use was
lower in the VEKLURY[supreg] group (incidence, 36%; 95% CI, 26% to 47%)
compared with the placebo group (incidence, 44%; 95% CI, 33% to 57%).
In the post-hoc analysis, those receiving low-flow supplemental oxygen
(that is, not those receiving noninvasive ventilation or high-flow
oxygen, nor those receiving invasive mechanical ventilation or ECMO)
treated with VEKLURY[supreg] had the largest reduction in mortality
compared to the same cohort receiving the placebo (hazard ratio, 0.30;
95% CI, 0.14 to 0.64).\615\
---------------------------------------------------------------------------
\615\ Ibid.
---------------------------------------------------------------------------
As stated previously, the applicant asserted VEKLURY[supreg]
results in better clinical status for patients hospitalized with
moderate COVID-19. To support this claim, the applicant referenced
published, peer-reviewed results from an open label, placebo
controlled, randomized clinical trial. Patients with moderately severe
COVID-19 (pulmonary infiltrates on imaging but oxygen saturation >94
percent on room air) were randomly assigned to receive either
VEKLURY[supreg] plus continued standard of care for 10 days (n=197),
VEKLURY[supreg] plus continued standard of care for 5 days (n=199), or
continued standard of care (n=200). Standard of care could include use
of concomitant medications such as steroids, hydroxychloroquine/
chloroquine, lopinavir-ritonavir, tocilizumab, and azithromycin. The
median time to start VEKLURY[supreg] treatment was 8 days after start
of symptoms. The median length of treatment in the 10-day group was
actually 6 days. Patients who improved could be discharged from the
hospital before completing their assigned course of treatment. The
study was conducted
[[Page 45114]]
in 105 trial sites in the United States, Europe and Asia. The primary
end point was assessment of clinical status on day 11 after initiation
of treatment. Clinical status was assessed on a 7-point ordinal scale
ranging from death (category 1) to discharged (category 7).\616\
---------------------------------------------------------------------------
\616\ Spinner CD, Gottlieb RL, Criner GJ, et al. Effect of
Remdesivir vs Standard Care on Clinical Status at 11 Days in
Patients With Moderate COVID-19 A Randomized Clinical Trial. JAMA.
2020; 342(11):1048-1057.
---------------------------------------------------------------------------
According to the applicant, on day 11, patients with moderate
COVID-19 treated with VEKLURY[supreg] for 5 days had a better clinical
status compared with the standard of care (odds ratio 1.65; 95% CI,
1.09 to 2.48, P=0.02). The applicant stated the difference was not
statistically significant between those treated with VEKLURY[supreg]
for 10 days compared with the standard of care (P=0.18 by Wilcoxon rank
sum test; the proportional odds assumption was not met for this
comparison). The applicant asserted that post hoc analyses demonstrated
improved clinical status in both the 5- and 10-day treated cohorts at
14 days (P=.03 for both groups). The applicant stated there were no
significant differences in adverse events for those treated with
Veklury for 5 days.\617\
---------------------------------------------------------------------------
\617\ Ibid. Spinner CD, Gottlieb RL, Criner GJ, et al. Effect of
Remdesivir vs Standard Care on Clinical Status at 11 Days in
Patients With Moderate COVID-19 A Randomized Clinical Trial. JAMA.
2020; 342(11):1048-1057.
---------------------------------------------------------------------------
In the proposed rule, we noted that the articles submitted by the
applicant in support of substantial clinical improvement used study
designs that may be subject to bias, such as the adaptive and open
label design. The ACTT-1 study included a prespecified interim analysis
as part of its adaptive design but no changes were made to the placebo
arm. We were unclear whether this may suggest that VEKLURY[supreg] did
not demonstrate superiority over the control. We also noted the ACTT-1
study showed considerable differences between geographic regions in
median time to recovery for patients assigned to VEKLURY[supreg]
compared to those assigned to placebo. For example, for the patient
population studied at U.S. sites, the median time to recovery in the
VEKLURY[supreg] group (n=310) vs. the placebo group (n=271) was 11 days
vs. 16 days, respectively, whereas at non-US sites, patients treated
with VEKLURY[supreg] (n=89) vs. placebo (n=81) experienced a median
time to recovery of 8 vs. 12 days, respectively.\618\ Furthermore, the
ACTT-1 study allowed other simultaneous treatments based on individual
hospital policies or guidelines, which we stated may have potentially
confounded the results of the trial.
---------------------------------------------------------------------------
\618\ Beigel JH, Tomashek KM, Dodd LE, et al. Remdesivir for the
Treatment of Covid-19--Final Report. N Engl J Med. 2020. See
Supplementary Table S6.
---------------------------------------------------------------------------
We invited public comments on whether VEKLURY[supreg] meets the
substantial clinical improvement criterion.
Comment: We received comments in support of approval of the new
technology add-on payment for VEKLURY[supreg] with the commenters
stating that this technology is used as standard of care for the
treatment of hospitalized patients with COVID-19.
Response: We appreciate these comments and will have considered
them in our determination of substantial clinical improvement, which is
discussed later in this section.
Comment: The applicant submitted comments in response to CMS'
concerns regarding the substantial clinical improvement criterion. In
response to the concern that the articles submitted used study designs
that may be subject to bias, such as the adaptive and open label
design, the applicant stated that the ACTT-1 study was the first stage
of the ACTT program and in this first stage, the only treatment
evaluated was VEKLURY[supreg] versus placebo. The applicant stated that
this comparison was done in a randomized, double-blinded manner and
that this addressed potential biases and mitigated potential
confounding. The applicant also stated that the term ``adaptive''
applies to the entire ACTT program as a whole, rather than any
individual stage and that based on the superiority of VEKLURY[supreg]
over placebo demonstrated in ACTT-1, subsequent stages of the study
(ACTT-2, ACTT-3, ACTT-4) evaluated the efficacy of the addition of
other treatments (for example, baricitinib, interferon-[beta],
dexamethasone) to VEKLURY[supreg].
The applicant also responded to CMS' concern that the ACTT-1 study
included a prespecified interim analysis as part of its adaptive
design, but no changes were made to the placebo arm making it unclear
whether VEKLURY[supreg] demonstrated superiority over the control. The
applicant noted the final report on ACTT-1,\619\ which stated that due
to the rapid enrollment of the study, the planned interim analysis was
conducted after enrollment of the study was completed and while follow-
up of enrolled patients was ongoing. The applicant stated that at the
recommendation of the independent Data and Safety Monitoring Board, the
interim results were shared with the study team and then made public.
The applicant stated that no changes were made in the randomization
scheme; however, treating physicians could request to be made aware of
the treatment assignment of patients who had not completed day 29 if
clinically indicated (for example, because of worsening clinical
status), and patients originally in the placebo group could be given
VEKLURY[supreg]. Lastly, the applicant stated that analyses of the
impact of this crossover were evaluated in sensitivity analyses and
found to produce results similar to those of the prespecified primary
analysis, which demonstrated superiority of VEKLURY[supreg] over
placebo.
---------------------------------------------------------------------------
\619\ Beigel, JH, et al. Remdesivir for the Treatment of COVID-
19--Final Report. New Engl J Med 2020; 282: 1813-26. DOI: 10.1056/
NEJMoa2007764.
---------------------------------------------------------------------------
In response to CMS' concern that the ACTT-1 study showed
considerable differences between geographic regions in median time to
recovery for patients assigned to VEKLURY[supreg] compared to those
assigned to placebo, the applicant stated that ACTT-1 was conducted
early in the course of the COVID-19 pandemic and enrolled a diverse
population of patients across the globe. The applicant also stated that
at the time of the ACTT-1 study, the impact of COVID-19 was
particularly great in Italy \620\ and other parts of Europe, with
hospital resources stretched to the point that healthcare resources
were being reserved for those most likely to recover.\621\ The
applicant stated that at the time, there were no known effective
treatments for COVID-19 and ventilators were in short supply and were
being rationed or shared between multiple patients. The applicant noted
that despite these regional differences, VEKLURY[supreg] remained
superior to placebo across the entire study population, even within
these subgroups. The applicant also noted that the study was designed a
priori to evaluate the efficacy of VEKLURY[supreg] over placebo in the
entire enrolled population, rather than individual subgroups, including
those defined by region. Therefore, the applicant concluded, the
geographic variation in time to recovery was likely due to differential
impact of pandemic at the time, and different characteristics of
patients in each region.
---------------------------------------------------------------------------
\620\ Odone A, Delmonte D, Scognamiglio, T, Signorelli C. COVID-
19 deaths in Lombardy, Italy: Data in context. Lancet Public Health.
2020; 6: E310. https://www.thelancet.com/journals/lanpub/article/PIIS2468-2667(20)30099-/fulltext.
\621\ Doldi M, Moscatelli A, Ravelli A, Spiazzi R, Petralia P.
Medicine and humanism in the time of COVID-19. Ethical choices. Acta
Biomed [internet]. 2020 Nov. 10 [cited 2021 Jun. 3];91(4):e2020167.
Available from: https://mattioli1885journals.com/index.php/actabiomedica/article/view/10569.
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[[Page 45115]]
The applicant also referenced three additional studies presented at
the World Microbe Forum in June 2021 that provided real-world data that
demonstrated that effectiveness of VEKLURY[supreg] by baseline oxygen
requirement subgroup and for mortality. The first study was an open
label trial of 5 vs 10 days of treatment with VEKLURY[supreg] among
patients hospitalized with severe COVID-19 compared to a real-world
cohort of patients with severe COVID-19 who were not treated with
VEKLURY[supreg] during the same time period, that is, through end of
May 2020.\622\ According to the applicant, in this analysis, among
1,974 patients treated with VEKLURY[supreg] for up to 10 days and 1,426
propensity score weighted control patients, VEKLURY[supreg] was
associated with reduced mortality by day 28 both overall (Hazard Ratio
[HR]: 0.46, 95% CI: 0.39-0.54) and in subgroups of baseline oxygen
requirement (low flow, HR: 0.35, 95% CI: 0.26-0.46; high-flow/non-
invasive ventilation, HR: 0.54, 95% CI: 0.42-0.69; invasive mechanical
ventilation[IMV]/extracorporeal membrane oxygenation [ECMO], HR: 0.43,
95% CI: 0.39-0.54). In addition, after the 10-day treatment course of
the trial extension, VEKLURY[supreg] was associated with an increased
likelihood of hospital discharge by day 28 overall (HR: 1.64, 95% CI:
1.43-1.87) and in patients requiring low flow oxygen and high-flow/non-
invasive ventilation at baseline (HR: 1.85, 95% CI: 1.56-2.20; and HR:
1.82, 95% CI: 1.40-2.37, respectively). No discharge benefit was
observed in patients on IMV/ECMO at baseline.
---------------------------------------------------------------------------
\622\ Go et al, WMF, 2021
---------------------------------------------------------------------------
The second study was a comparative analysis of real-world U.S.
hospital chargemaster data from Premier Healthcare. In the study,
27,559 patients treated with VEKLURY[supreg] within 2 days of
hospitalization and not requiring IMV/ECMO were propensity-score
matched to 27,559 patients not treated with VEKLURY[supreg] in the same
time period (August-November 2020).\623\ According to the applicant, in
patients not requiring oxygen, treatment with VEKLURY[supreg] was
associated with a statistically significant reduction in mortality at
both day 14 (HR: 0.69, 95%CI: 0.57-0.83) and day 28 (HR: 0.80, 95% CI:
0.68-0.94). Similarly, in patients requiring low-flow oxygen, treatment
with VEKLURY[supreg] was associated with a statistically significant
reduction mortality at both day 14 (HR: 0.67, 95% CI:0.59-0.77) and day
28 (HR: 0.76, 95% CI:0.68-0.86). Among patients requiring high-flow
oxygen/non-invasive ventilation (NIV), treatment with VEKLURY[supreg]
was associated with a statistically significant reduction in mortality
at day 14 (HR: 0.81, 95% CI: 0.70--0.93); however, there was no
statistically significant difference between the VEKLURY[supreg] and
control groups at day 28.
---------------------------------------------------------------------------
\623\ Mozaffari et al, WMF, 2021.
---------------------------------------------------------------------------
The third study was a comparative analysis of integrated US
hospital chargemaster and medical/pharmacy claims from HealthVerity
that examined patients newly diagnosed with COVID-19 between May 1,
2020 (the date of Emergency Use Authorization from FDA) and May 3,
2021.\624\ In this analysis, 24,856 patients treated with
VEKLURY[supreg] were matched to 24,856 referent patients using risk set
sampling and propensity score matching. In this data analysis,
VEKLURY[supreg] was associated with reduced all-cause mortality by day
28 overall (HR: 0.77, 95% CI: 0.73-0.81) and in each subgroup of
baseline oxygen requirement: Room air (HR: 0.87, 95% CI: 0.80-0.94),
low flow oxygen (HR: 0.78, 95% CI: 0.69-0.87), high-flow oxygen/NIV
(HR: 0.73, 95% CI: 0.66-0.80), and IMV/ECMO (HR: 0.76, 95% CI: 0.66-
0.88). In addition, after completion of the 5-day treatment course,
VEKLURY[supreg] was associated with a statistically significantly
increased likelihood of hospital discharge overall (HR: 1.19, 95% CI:
1.14, 1.25). This improvement in hospital discharge was statistically
significant for patients on room air at baseline (HR: 1.24, 95% CI:
1.16-1.32) and on low-flow oxygen at baseline (HR: 1.10, 95% CI: 1.00-
1.22), and suggestive for patients high-flow/NIV at baseline (HR: 1.14,
95% CI: 0.98-1.33); no association was observed for hospital discharge
among patients on ECMO/IMV.
---------------------------------------------------------------------------
\624\ Chokkalingam et al, WMF, 2021.
---------------------------------------------------------------------------
In response to CMS' concerns that the ACTT-1 study allowed other
simultaneous treatments based on individual hospital policies or
guidelines, which may have potentially confounded the results of the
trial, the applicant stated that although the study allowed
simultaneous treatment with other drugs according to local guidelines
or practices, the randomized, placebo-controlled, double-blinded design
of the study guarded against bias and minimized potential confounding.
The applicant also stated that despite the added noise of other
simultaneous treatments, VEKLURY[supreg] was demonstrated to be
effective at both the interim and final analyses. The applicant also
noted that at the time of ACTT-1, no other treatments had demonstrated
efficacy against COVID-19, and many, including hydroxychloroquine and
lopinavir/ritonavir, were later found to be ineffective. According to
the applicant, the RECOVERY trial first reported results demonstrating
a benefit of glucocorticoids in June 2020, after ACTT-1 enrollment was
complete.\625\ Lastly, the applicant stated that the sensitivity
analyses of ACTT-1 in which data were censored at earliest reported use
of glucocorticoids or hydroxychloroquine still showed efficacy of
VEKLURY[supreg].\626\
---------------------------------------------------------------------------
\625\ University of Oxford. Low-cost dexamethasone reduces death
by up to one third in hospitalised patients with severe respiratory
complications of COVID-19. 16 June 2020. https://www.recoverytrial.net/news/low-costdexamethasone-reduces-death-by-up-to-one-third-in-hospitalised-patients-with-severe-respiratory-complications-ofcovid-19.
\626\ Beigel, JH, et al. Remdesivir for the Treatment of COVID-
19--Final Report. New Engl J Med 2020; 282: 1813-26. DOI: 10.1056/
NEJMoa2007764.
---------------------------------------------------------------------------
Response: We thank the applicant for the additional data it
provided and for its comment. We believe that the clarifications
provided by the applicant addressed the concerns we noted in the FY
2022 IPPS/LTCH PPS proposed rule regarding the differences between
geographic regions in median time to recovery between VEKLURY[supreg]
patients and placebo patients. Although we note that controlling for
the effect of geographic area would result in more robust analyses, we
agree with the applicant that the geographic variation in time to
recovery could be due to differential impact of pandemic at the time,
and different characteristics of patients in each region. Lastly, we
believe that the additional information from the applicant has
addressed our concerns regarding the potential for bias in the study
design and the prespecified interim analysis. Therefore, based on the
data submitted by the applicant, we believe that VEKLURY[supreg] meets
the substantial clinical improvement criterion because it because it
has been shown to shorten time to recovery in patients hospitalized
with severe COVID-19 by five days compared to patients treated with
placebo and reduce mortality among patients receiving low-flow
supplemental oxygen compared to the same cohort receiving the placebo.
After consideration of the public comments we received, we have
determined that VEKLURY[supreg] meets all of the criteria for approval
of new technology add-on payments, and we are approving new technology
add-on payments for VEKLURY[supreg] for FY 2022 when used for adults
and pediatric patients (12 years of age and older and
[[Page 45116]]
weighing at least 40 kg) for the treatment of COVID-19 requiring
hospitalization. Cases involving VEKLURY[supreg] that are eligible for
new technology add-on payments will be identified by ICD-10-PCS codes
XW033E5 (Introduction of remdesivir anti-infective into peripheral
vein, percutaneous approach, new technology group 5) or XW043E5
(Introduction of remdesivir anti-infective into central vein,
percutaneous approach, new technology group 5).
In its application, the applicant stated that the cost per case for
VEKLURY[supreg] is $3,120 per case. Under Sec. 412.88(a)(2), 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 VEKLURY[supreg] is $2,028 for FY 2022. In addition, as discussed in
section II.F.8, we established the NCTAP to pay hospitals the lesser
of: (1) 65 percent of the operating outlier threshold for the claim; or
(2) 65 percent of the amount by which the costs of the case exceed the
standard DRG payment, including the adjustment to the relative weight
under section 3710 of the Coronavirus Aid, Relief, and Economic
Security (CARES) Act, for certain cases that include the use of a drug
or biological product currently authorized for emergency use or
approved for treating COVID-19. As discussed in section II.F.8, we are
finalizing to extend the NCTAP through the end of the fiscal year in
which the PHE ends for all eligible products. We are also finalizing
that we will reduce the NCTAP for an eligible case by the amount of any
new technology add-on payments. Therefore, cases involving the use of
VEKLURY[supreg] in FY 2022 are eligible for new technology add-on
payments and NCTAP, with the NCTAP to be reduced by a maximum of $2,028
for the same treatment.
p. ZEPZELCATM (lurbinectedin)
Jazz Pharmaceuticals submitted an application for new technology
add-on payments for ZEPZELCATM for FY 2022. According to the
applicant, ZEPZELCATM is an alkylating drug indicated for
the treatment of adult patients with metastatic small cell lung cancer
(SCLC) with disease progression on or after platinum-based
chemotherapy. ZEPZELCATM is a marine-derived, synthetic
antineoplastic compound that inhibits transcription-dependent
replication stress and genome instability in tumor cells.
According to the applicant, small cell lung cancer (SCLC) is an
aggressive type of lung cancer where patients that progress after
first-line chemotherapy have a poor prognosis due to limited clinical
benefit from currently available second-line chemotherapy. Patients
relapsing or progressing more than 90 days after completion of first-
line treatment are considered platinum sensitive and may be
rechallenged with platinum-based chemotherapy.\627\ The majority of
SCLC treated patients show disease relapse and are eligible for second-
line therapy; however, few second-line treatment options exist.\628\
---------------------------------------------------------------------------
\627\ Garassino MC, et al. Outcomes of small-cell lung cancer
patients treated with second-line chemotherapy: A multi-
institutional retrospective analysis. Lung Cancer 72 (2011) 378-383.
\628\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: A single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
According to the applicant, lung cancer overall is the second most
common malignancy in the United States with 234,030 new cases and
154,050 deaths estimated in 2018.\629\ Per the applicant, where most
lung cancers are classified as non-SCLC, SCLC now comprises
approximately 15% of all lung cancers. According to the applicant, SCLC
is the most aggressive form of lung cancer characterized by rapid
disease progression and early metastatic spread
630 631 632--doubling in cell number about every 30 days and
spreading quickly to lymph nodes and other organs.\633\ The applicant
stated that the Veterans Lung Cancer Study Group used a two-stage
system for describing SCLC, with a limited-stage (30% of cases) which
is confined to a smaller portion of the body, and an extensive-stage
(70% of cases) where the tumor was widespread.634 635 Many
patients with SCLC have substantial comorbidities that may affect
performance status and treatment options.\636\ A retrospective review
analysis of Extensive-stage SCLC (ES-SCLC) patients found that when
compared to patients at diagnosis, patients receiving second-line
therapy were more likely to have congestive heart failure (67% vs 49%),
thromboembolism (9% vs 2%), and depression (11% vs 7%).\637\ Further,
these patients receiving second-line therapy were more likely to have
infectious disease (57% vs 43%), electrolyte disorders (50% vs 22%),
anemia (45% vs 19%), neutropenia (17% vs <0.2%), thrombocytopenia (12%
vs 2%), and diarrhea (7% vs 3%) compared to the incidence of these
comorbidities at diagnosis of ES-SCLC.\638\
---------------------------------------------------------------------------
\629\ Tan WT, et al. Small Cell Lung Cancer (SCLC), Medscape,
Oncology. Updated June 19, 2020. Emedicine.medscape.com.
\630\ Ibid.
\631\ Naito Y, et al. Rechallenge treatment with a platinum-
based regimen in patients with sensitive relapsed small-cell lung
cancer. Medical Oncology (2018) 35:61.
\632\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
\633\ Surveillance, Epidemiology, and End Results Program
(SEER). Cancer stat facts: lung and bronchus cancer. https://seer.cancer.gov/statfacts/html/lungb.html. Accessed September 2020.
\634\ Ibid.
\635\ PDQ Adult Treatment Editorial Board. PDQ small cell lung
cancer treatment. Bethesda, MD: National Cancer Institute. Updated
March 20, 2020. https://www.cancer.gov/types/lung/hp/small-cell-lung-treatment-pdq. Accessed March 22, 2020. [PMID: 26389347].
\636\ Kalemkerian GP. Small cell lung cancer. Semin Respir Crit
Care Med. 2016;6(37):783-796.
\637\ Danese M, et al. Comorbidity in patients with extensive
disease small cell lung cancer. Presented at the AMCP Managed Care &
Specialty Pharmacy Annual Meeting; March 27-30, 2017; Denver, CO.
\638\ Ibid. Danese M, et al. Comorbidity in patients with
extensive disease small cell lung cancer. Presented at the AMCP
Managed Care & Specialty Pharmacy Annual Meeting; March 27-30, 2017;
Denver, CO.
---------------------------------------------------------------------------
According to the applicant, the standard of care for first-line
chemotherapy for both limited-stage SCLC and ES-SCLC is platinum
doublet and, in the case of ES-SCLC, platinum doublet in combination
with a checkpoint inhibitor. SCLC is sensitive to platinum-based
chemotherapy in the first-line setting but almost universally relapses,
requiring subsequent lines of therapy.639 640 641 Once a
patient relapses, the likelihood of response is highly dependent on
time from initial therapy to relapse,\642\ with survival based on the
duration of remission.\643\ According to the applicant, ES-SCLC is
incurable; patients are treated with palliative intent, with a median
survival of 7 to 11 months after diagnosis and with less than 5%
survival at 2
[[Page 45117]]
years.644 645 Even limited-stage disease is rarely cured
with radical local therapy (surgery or radiotherapy), and systemic
chemotherapy (platinum plus etoposide) remains the cornerstone of
first-line treatment in SCLC.\646\ Despite best management, the 5-year
overall survival (OS) of even limited-stage SCLC is still only 15% to
25%.647 648
---------------------------------------------------------------------------
\639\ Shao C, et al. Chemotherapy treatments, costs of care, and
survival for patients diagnosed with small cell lung cancer: a SEER-
Medicare study. Cancer Med. 2019;8:7613-7622.
\640\ He J, et al. Survival, chemotherapy treatments, and health
care utilization among patients with advanced small cell lung
cancer: an observational study. Adv Ther. 2020;37:552-565.
\641\ Karve SJ, et al. Comparison of demographics, treatment
patterns, health care utilization, and costs among elderly patients
with extensive-stage small cell and metastatic non-small cell lung
cancers. BMC Health Serv Res. 2014;14:555.
\642\ Shao C, et al. Chemotherapy treatments, costs of care, and
survival for patients diagnosed with small cell lung cancer: a SEER-
Medicare study. Cancer Med. 2019;8:7613-7622.
\643\ Pietanza MC, et al. Small cell lung cancer: will recent
progress lead to improved outcomes? Clin Cancer Res.
2015;21(10):2244-2255.
\644\ Simos D, et al. Third-line chemotherapy in small-cell lung
cancer: an international analysis. Clin Lung Cancer (2014) 15 (2):
110-8.
\645\ Pelayo AM, et al. Chemotherapy versus best supportive care
for extensive small cell lung cancer. Cochrane Database Syst Rev
(2013) 11: CD001990.
\646\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
\647\ Simos D, et al. Third-line chemotherapy in small-cell lung
cancer: an international analysis. Clin Lung Cancer (2014) 15 (2):
110-8.
\648\ Pelayo AM, et al. Chemotherapy versus best supportive care
for extensive small cell lung cancer. Cochrane Database Syst Rev
(2013) 11: CD001990.
---------------------------------------------------------------------------
The applicant asserted that while SCLC shows high sensitivity to
first-line chemotherapy and radiotherapy, most patients develop disease
relapse or progression within one year of
treatment.649 650 651 It is reported that about 80% of
limited-disease SCLC patients and almost all patients with ES-SCLC will
develop relapse or progression after first-line treatment. Without
second-line chemotherapy, the median survival time is 2 to 4
months.652 653 The applicant stated that for patients
classified as sensitive to first line treatment, due to remaining
relapse-free for at least 3 months after treatment, rechallenge with
the same chemotherapy regimen given as first line treatment is
reasonable. For those classified as refractory (disease progression
through first line treatment) and resistant (patients who show initial
response to treatment but whose disease progresses within 3 months of
completing chemotherapy), the second line treatment is Hycamtin
(topotecan). According to the applicant, topotecan was the only
preferred agent in the National Comprehensive Cancer Network (NCCN)
Clinical Practice Guidelines for second-line treatment of patients with
a Chemotherapy-free Interval (CTFI) <6 months. In summarizing the
evidence of topotecan efficacy, the applicant stated that studies
showed a median survival of 6.8 to 7.8 months,654 655 656
progression free survival of 2.7 to 3.5 months,657 658 659
and a median time to progression of 13.3 weeks.\660\ Furthermore, the
applicant asserted that topotecan is associated with hematological
toxicities such as anemia, neutropenia, thrombocytopenia, and febrile
neutropenia.661 662 663
---------------------------------------------------------------------------
\649\ Naito Y, et al. Rechallenge treatment with a platinum-
based regimen in patients with sensitive relapsed small-cell lung
cancer. Medical Oncology (2018) 35:61.
15437.
\650\ Shiozawa, T. Rechallenge with first-line platinum
chemotherapy for sensitive-relapsed small-cell lung cancer. Case Rep
Oncol. 2018;11:622-632.
\651\ Horita N, et al. Topotecan for relapsed small-cell lung
cancer: systematic review and meta-analysis of 1347 patients. Sci
Rep 2015;5: 15437.
\652\ Shiozawa, T. Rechallenge with first-line platinum
chemotherapy for sensitive-relapsed small-cell lung cancer. Case Rep
Oncol. 2018;11:622-632.
\653\ Wakuda K et al. Efficacy of second-line chemotherapy in
patients with sensitive relapsed small-cell lung cancer. In vivo.
33:2229-2234 (2019).
\654\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228. Monnet I, et al. Carboplatin-etoposide versus topotecan
as second-line treatment for sensitive relapsed small-cell lung
cancer: phase 3 trial (ID 546) IASLC. 2019 World Conference on Lung
Cancer; Barcelona, Spain; September 7-10, 2019 (abstr OA15.02). von
Pawel JTopotecanTopotecancyclophosphamidecyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent. J
ClinVolVol 17, No 2, 1999: 658-667.
\655\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
\656\ Von Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667.
\657\ vonVon Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35. Evans TL,
et al. Cabazitaxel versus topotecan in patients with small-cell lung
cancer with progressive disease during or after first-line platinum-
based chemotherapy. J Thorac Oncol. 2015;10: 1221-1228. Monnet I, et
al. Carboplatin-etoposide versus topotecan as second-line treatment
for sensitive relapsed small-cell lung cancer: phase 3 trial (ID
546) IASLC. 2019 World Conference on Lung Cancer; Barcelona, Spain;
September 7-10, 2019 (abstr OA15.02).
\658\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228.
\659\ von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35. Evans TL,
et al. Cabazitaxel versus topotecan in patients with small-cell lung
cancer with progressive disease during or after first-line platinum-
based chemotherapy. J Thorac Oncol. 2015;10: 1221-1228. Monnet I, et
al. Carboplatin-etoposide versus topotecan as second-line treatment
for sensitive relapsed small-cell lung cancer: phase 3 trial (ID
546) IASLC. 2019 World Conference on Lung Cancer; Barcelona, Spain;
September 7-10, 2019 (abstr OA15.02).
\660\ vonVvon Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667.
\661\ vonvVon Pawel JEvans TL, et al. CabazitaxelRandomized
phase III trial of amrubicinCabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228. Monnet I, et al. Carboplatin-etoposide versus topotecan
as second-line treatment for patients with small-cell lung cancer. J
Clin Oncol. (2014) 32:35. sensitive relapsed small-cell lung cancer:
phase 3 trial (ID 546) IASLC. 2019 World Conference on Lung Cancer;
Barcelona, Spain; September 7-10, 2019 (abstr OA15.02).
\662\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228.
\663\ Monnet I, et al. Carboplatin-etoposide versus topotecan as
second-line treatment for sensitive relapsed small-cell lung cancer:
phase 3 trial (ID 546) IASLC. 2019 World Conference on Lung Cancer;
Barcelona, Spain; September 7-10, 2019 (abstr OA15.02).
---------------------------------------------------------------------------
The applicant stated that since topotecan's approval in 1998, no
other second-line SCLC treatment option had been approved until
ZEPZELCATM gained approval in June 2020. According to the
applicant, ZEPZELCATM is the first second-line treatment
option for SCLC since 1998.
According to the applicant, the FDA approved ZEPZELCATM
on June 15, 2020 under the FDA's Accelerated Approval Program with
Priority Review. ZEPZELCATM was also granted Orphan Drug
Designation by the FDA. ZEPZELCATM is administered
intravenously as a 3.2 mg/m\2\ dose over one hour, repeated every 21
days until disease progression or unacceptable toxicity.
ZEPZELCATM will typically be administered in an outpatient
clinic. However, per the applicant, because many patients with SCLC
have substantial comorbidities that may necessitate hospitalization and
initiation of treatment, the first infusion and possibly some
additional infusions will be administered in the inpatient hospital
setting.\664\ The applicant submitted a request for a unique ICD-10-PCS
code to identify the technology beginning FY 2022 and was granted
approval for the following codes effective October 1, 2022: XW03387
(Introduction of lurbinectedin into peripheral vein, percutaneous
approach, new technology group 7) and XW04387 (Introduction of
lurbinectedin into central vein, percutaneous approach, new technology
group 7).
---------------------------------------------------------------------------
\664\ Danese M, et al. Comorbidity in patients with extensive
disease small cell lung cancer. Presented at the AMCP Managed Care &
Specialty Pharmacy Annual Meeting; March 27-30, 2017; Denver, CO.
---------------------------------------------------------------------------
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, therefore, would not be
considered ``new'' for purposes of new technology add-on payments.
With respect to the first criterion, whether a product uses the
same or a
[[Page 45118]]
similar mechanism of action to achieve a therapeutic outcome, the
applicant asserted that the mechanism of action of
ZEPZELCATM is not the same or similar to the mechanism of
action of currently available products used in the treatment of
patients with metastatic SCLC with disease progression on or after
platinum-based chemotherapy. Per the applicant, ZEPZELCATM
is a novel synthetic antineoplastic marine derived compound with a
unique mode of action and chemical structure, with a terminal half-life
of 51 hours and total plasma clearance of 11 L/h
(50%).665 666 According to the applicant,
ZEPZELCATM is a transcription inhibitor that binds DNA
preferentially in quinine-rich sequences located within gene regulatory
elements and induces a rapid degradation of transcribing RNA polymerase
II that induces the eviction of oncogenic transcription factors and the
silencing of their transcription program. The applicant states that
ZEPZELCATM has preclinical data which suggests that
oncogenic transcription of DNA to RNA was selectively inhibited via the
dual actions of RNA polymerase II degradation and the formation of DNA
breaks, which leads to apoptosis.\667\ The applicant further states
that ZEPZELCATM has been shown to induce immunogenic cell
death,\668\ and based on preclinical data, impacts the tumor
microenvironment by altering the survival of tumor-associated
macrophages (TAMs) and the production and function of key oncogenic
inflammatory and growth factors.\669\
---------------------------------------------------------------------------
\665\ ZEPZELCA website, ZEPZELCATM prescribing
information., Rev. 6/2020:. https://www.zepzelcapro.com/.
\666\ Romano M. et al. Travectedin and lurbinectedin are
effective against leukemic cells derived from patients affected by
chronic and juvenile myelomonocytic leukemia. European Journal of
Cancer. 50 (6 Suppl):48.
\667\ Santamaria G, et al. Lurbinectedin reverses platinum
dependent IRFI overexpression and nuclear localization, partially
responsible for resistance to platinum drugs in ovarian cancer.
Proceedings of the American Association for Cancer Research (2017)
58:311.
\668\ Xie W, et al. Lurbinectedin synergizes with immune
checkpoint blockade to generate anticancer immunity. Oncoimmunology.
2019;5;8(11):e1656502.
\669\ Farago AF, et al. ATLANTIS: A phase III study of
lurbinectedin/doxorubicin versus topotecan or cyclophosphamide/
doxorubicin/vincristine in patients with small-cell lung cancer who
have failed one prior platinum-containing line. Future Oncol.
2019;15(3):231-239.
---------------------------------------------------------------------------
According to the applicant, topotecan is a semi-synthetic
derivative of camptothecin with topoisomerase I-inhibitory activity
that relieves torsional strain in DNA by inducing reversible single
strand breaks. The pharmacokinetics of topotecan have been evaluated in
cancer patients following doses of 0.5 to 1.5 mg/m\2\ administered as a
30-minute infusion. Topotecan exhibits multiexponential
pharmacokinetics with a terminal half-life of 2 to 3 hours. Total
exposure area under the curve (AUC) is approximately dose
proportional.\670\ The applicant asserts that a clinical differentiator
of ZEPZELCATM from topotecan is the rate of hematologic
adverse reactions including neutropenia, anemia, thrombocytopenia, and
febrile neutropenia.671 672 673
---------------------------------------------------------------------------
\670\ FDA website, Hycamtin (topotecan) prescribing
information., Rev. 2/2014: https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/022453s002lbl.pdf.
\671\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
\672\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228.
\673\ Monnet I, et al. Carboplatin-etoposide versus topotecan as
second-line treatment for sensitive relapsed small-cell lung cancer:
phase 3 trial (ID 546) IASLC. 2019 World Conference on Lung Cancer;
Barcelona, Spain; September 7-10, 2019 (abstr OA15.02).
---------------------------------------------------------------------------
Lastly, the applicant asserted that ZEPZELCATM is not
substantially similar to the more recently approved first-line
treatments for ES-SCLC, TECENTRIQ[supreg] (atezolizumab) and
IMFINZI[supreg] (durvalumab), both of which are PD-L1 blocking
antibodies.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that
ZEPZELCATM will not map to MS-DRGs distinct from other
treatments for SCLC.
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 when compared to an
existing technology, the applicant stated that there have been no
approved treatments for second-line treatment of SCLC since 1998 when
topotecan was approved. Topotecan is indicated for the treatment of
small cell lung cancers in patients with chemotherapy-sensitive disease
after failure of first-line chemotherapy.\674\ The applicant states
that topotecan is approved for relapses at least 60 days after
initiation of a platinum-containing first-line regimen.
ZEPZELCATM is indicated for the treatment of adult patients
with metastatic small cell lung cancer (SCLC) with disease progression
on or after platinum-based chemotherapy.\675\ The applicant also stated
that ZEPZELCA was listed as a preferred regimen by the NCCN Clinical
Practice Guidelines for second-line treatment of patients with a
chemotherapy free interval (CTFI) <=6 months and recommended for
patients with a CTFI >6 months.\676\
---------------------------------------------------------------------------
\674\ FDA website, Hycamtin (topotecan) prescribing
information., Rev. 2/2014: https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/022453s002lbl.pdf .
\675\ ZEPZELCA website, ZEPZELCATM prescribing
information., Rev. 6/2020:. https://www.zepzelcapro.com/.
\676\ NCCN Clinical Practice Guidelines in Oncology, Small Cell
Lung Cancer. Version 4.2020, July 7, 2020. https://nccn.org.
---------------------------------------------------------------------------
The applicant repeated results concerning the efficacy of topotecan
and asserted that the efficacy results were achieved with a high rate
of grade three and four hematologic Treatment Emergent Adverse Events
(TEAEs).
In summary, the applicant asserted that ZEPZELCATM meets
the newness criterion because its mechanism of action is not the same
or similar to the mechanism of action of currently available products
used in the treatment of adult patients with metastatic SCLC and
because it is indicated in patients with disease progression on or
after platinum-based chemotherapy.
We invited public comments on whether ZEPZELCATM is
substantially similar to an existing technology and whether it meets
the newness criterion.
Comment: The applicant submitted comments reiterating its belief
that ZEPZELCATM meets the newness criterion. First, the
applicant stated that ZEPZELCATM's mechanism of action is
not the same or similar to that of existing technology approved for
treatment of the same patient population. Per the applicant, SCLC is a
difficult to treat, extraordinarily lethal malignancy \677\ and that
misregulated oncogenic transcriptions seem to direct SCLC initation and
evolution, with transcription addiction being a feasible therapeutic
target to treat the disease.678 679 Per the applicant,
ZEPZELCATM represents an innovative approach to conventional
anti-cancer drugs, with an elegant mechanism of action that has been
well characterized in peer-reviewed, scientific journals and is based
on the inhibition of transcription-dependent replication stress and
genome instability of tumor cells.\680\ The applicant reiterated that
[[Page 45119]]
ZEPZELCATM is a novel synthetic antineoplastic compound, a
marine-derived agent,\681\ with a unique mode of action and chemical
structure. The applicant stated that ZEPZELCATM is not
substantially similar to topotecan (brand name: Hycamtin), the only
drug approved in over 20 years for patients with disease sensitive to
treatment. The applicant further noted that topotecan is approved for
relapses at least 60 days after initiation of a platinum containing
first-line regimen.\682\ The applicant also stated that ZEPZELCA is
also not substantially similar to the more recently approved first-line
treatments for ES-SCLC: TECENTRIQ[supreg] (atezolizumab) and
IMFINZI[supreg] (durvalumab), both of which are PD-L1 blocking
antibodies.
---------------------------------------------------------------------------
\677\ Gazdar AF, et al. Small-cell lung cancer: What we now,
what we need to know and the path forward. Nat Rev Cancer (2017) 17
(12): 725-37.
\678\ Rudin CM, et al. Molecular subtypes of small cell lung
cancer: a synthesis of human and mouse model data. Nat Rev Cancer.
(2019) 19 (5): 289-97
\679\ Christensen CL, et al. Targeting transcriptional
addictions in small cell lung cancer with a covalent CDK7 inhibitor.
Cancer Cell. (2014) 26 (6): 909.22.
\680\ Arrieta O, et al. New opportunities in a challenging
disease: lurbinectedin for relapsed small-cell lung cancer. Comment
in Lancet Oncology. www.thelancet.com/oncology, Published online
March 27, 2020.https://doi.org/10.1016/S1470-2045(20)30097-8.
\681\ Romano M. et al. Travectedin and lurbinectedin are
effective against leukemic cells derived from patients affected by
chronic and juvenile myelomonocytic leukemia. European Journal of
Cancer. 50 (6 Suppl):48.
\682\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
The applicant also stated that patient cases receiving intravenous
infusion of ZEPZELCATM will be discretely identified by
unique ICD-10-PCS procedure codes for ZEPZELCATM
administration. The applicant stated that Jazz Pharmaceuticals' request
for ZEPZELCATM-specific ICD-10-PCS codes was reviewed during
the March 2021 ICD-10 Coordination and Maintenance (C&M) Committee
meeting and that the effective date of these codes will be October 1,
2021.
Response: We thank the applicant for its comment. Based on our
review of comments received and information submitted by the applicant
as part of its FY 2022 new technology add-on payment application for
ZEPZELCATM, as discussed in the proposed rule (86 FR 25353)
and previously summarized, we agree with the applicant that
ZEPZELCATM has a unique mechanism of action as a
transcription inhibitor in the treatment of metastatic SCLC.\683\
Therefore, we believe ZEPZELCATM is not substantially
similar to existing treatment options and meets the newness criterion.
We consider the beginning of the newness period to commence when
ZEPZELCATM was approved by FDA for the indication of adult
patients with metastatic SCLC with disease progression on or after
platinum-based chemotherapy, on June 15, 2020.
---------------------------------------------------------------------------
\683\ Farago AF, et al. ATLANTIS: a phase III study of
lurbinectedin/doxorubicin versus topotecan or cyclophosphamide/
doxorubicin/vincristine in patients with small-cell lung cancer who
have failed one prior platinum-containing line. Future Oncol.
2019;15(3):231-239.
---------------------------------------------------------------------------
With respect to the cost criterion, the applicant conducted the
following analysis to demonstrate that ZEPZELCATM meets the
cost criterion. For the primary cost analysis cohort the applicant used
the selection criteria of the presence of a lung cancer code as defined
by ICD-10-CM family C34 (Malignant neoplasm of bronchus and lung) as
the principal diagnosis and the presence of any chemotherapy code as
defined by ICD_10-CM Z51.11 (Encounter for antineoplastic
chemotherapy), ICD-10-CM Z51.12 (Encounter for antineoplastic
immunotherapy), or any ICD-10-PCS chemotherapy code. Additionally, the
applicant performed three sensitivity analyses for the cost criterion.
The first is a broad cohort with the selection criteria of the presence
of at least one lung cancer code (C34xx) and the presence of any
chemotherapy code as defined by ICD-10-CM code Z51.11 (Encounter for
antineoplastic chemotherapy), Z51.12 (Encounter for antineoplastic
immunotherapy), or any ICD-10-PCS chemotherapy code. The second and
third analyses involved TECENTRIQ[supreg] and IMFINZI[supreg] which are
both immunotherapy drugs that have FDA approval for use as part of the
first-line treatment in patients with SCLC. These drugs are to be used
along with chemotherapy. The second analysis is the
``TECENTRIQ[supreg]'' cohort with the selection criteria of the
presence of at least one lung cancer code (C34xx) as either the
principal or admitting diagnosis, and excluding cases with any ES-SCLC
surgical codes. The final analysis, the ``IMFINZI[supreg]'' cohort, has
the selection criteria of at least one of the following: (1) Presence
of at least one lung cancer code (C34xx) and presence of any platinum-
based chemotherapy code as defined by ICD-10-CM Z51.11 (Encounter for
antineoplastic chemotherapy) or Z51.12 (Encounter for antineoplastic
immunotherapy); (2) Presence of at least one lung cancer code (C34xx)
and assigned to MS-DRGs for respiratory neoplasms (180-182). The
applicant stated that ZEPZELCATM is supplied in 4 mg single-
dose vials with the recommended dose of 3.2 mg/m\2\ by intravenous
infusion over 60 minutes every 21 days until disease progression or
unacceptable toxicity. Based on clinical study, the applicant stated
that a single dose of ZEPZELCATM ranged from 4.05 mg to 6.4
mg. To identify cases that may be eligible for the use of
ZEPZELCATM, the applicant searched the FY 2019 MedPAR LDS
file using these cohort selection criteria. The applicant stated that
in all analyses, they imputed a case count of 11 for MS-DRGs with fewer
than 11 cases and calculated the weighted average standardized charges
across all MS-DRGs.
Based on the FY 2019 MedPAR LDS file, the applicant identified a
total of 1,100 cases in the primary cohort (mapped to 17 MS-DRGs),
4,034 cases in the first sensitivity cohort (mapped to 195 MS-DRGs),
34,437 cases in the second sensitivity cohort (mapped to 253 MS-DRGs),
and 24,209 cases in the third sensitivity cohort (mapped to 128 MS-
DRGs). The applicant utilized the FY 2019 Final Rule with Correction
Notice IPPS Impact File. Using the cases identified, the applicant then
calculated the unstandardized average charges per case for each MS-DRG.
The applicant expects that ES-SCLC patients will receive their initial
dose of ZEPZELCATM in the inpatient setting. The applicant
then standardized the charges and inflated the charges by 1.13218 or
13.2 percent, the same inflation factor used by CMS to update the
outlier threshold in the FY 2021 IPPS/LTCH PPS final rule. The
applicant removed charges associated with chemotherapy since treatment
with ZEPZELCATM would replace chemotherapy. To do so the
applicant found the ratio of chemotherapy charges to radiology charges
(0.14470075) from claims in the FY 2019 inpatient standard analytic
file with a primary diagnosis of lung cancer (ICD-10-CM C34xx) and
chemotherapy charges greater than zero. The applicant then added the
charges for ZEPZELCATM by converting the costs of a single
treatment (two single-dose vials) to a charge by dividing the cost by
the national average cost-to-charge ratio of 0.187 for pharmacy from
the FY 2021 IPPS/LTCH PPS final rule. The applicant calculated a final
inflated average case weighted standardized charge per case for the
primary cohort as $206,030, and $182,895, $146,174, and $130,975 for
sensitivity cohorts 1, 2 and 3, respectively. The applicant referred to
the FY 2022 New Technology Thresholds data file to determine the
average case-weighted threshold amount for the primary cohort as
$79,420, and $70,499, $70,226, and $57,383 for sensitivity cohorts 1, 2
and 3, respectively. The final inflated average case-weighted
standardized charge per case in the primary cohort and three
[[Page 45120]]
sensitivity cohorts exceeded the average case-weighted threshold amount
by $126,610, $112,396, $75,948, and $73,592 respectively. Because the
final inflated average case-weighted standardized charge per case
exceeds in all scenarios the average case-weighted threshold amount,
the applicant maintained that the technology meets the cost criterion.
While we would not expect a significant difference, we noted in the
proposed rule that instead of referring to the correction notice tab
within the FY 2022 New Technology Thresholds data file, the applicant
referred to the final rule tab. The FY 2022 New Technology Thresholds
data file is available on the CMS IPPS home page at: https://www.cms.gov/medicare/acute-inpatient-pps/fy-2021-ipps-final-rule-home-page#Data.
We also noted that the analysis provided by the applicant includes
many MS-DRGs that are defined by factors that may or may not be related
to ZEPZELCATM's indication for metastatic SCLC. For example,
it is not clear that MS-DRG 004 Trach w MV >96 Hrs or Pdx Exc Face,
Mouth & Neck w/o Maj O.R has a direct connection to small cell lung
cancer though it may be related.
We invited public comment on whether ZEPZELCATM meets
the cost criterion.
Comment: The applicant submitted a comment in response to these
concerns. First, with respect to the MS-DRGs that were selected, the
applicant clarified that in conducting the cost criterion analysis for
the primary cohort, it identified patients that would best represent
candidates for ZEPZELCATM, without regard to MS-DRG
assignment. The applicant further stated that there is no ICD-10-CM
diagnosis code specific to SCLC, only C34--malignant neoplasm of
bronchus and lung and as such, the applicant believes that
ZEPZELCATM candidates would have a principal diagnosis of
Malignant Neoplasm of Bronchus and Lung and receive chemotherapy during
the hospital stay. Per the applicant, the top 4 MS-DRGs within the
primary cohort were DRG 180 RESPIRATORY NEOPLASMS WITH MCC, DRG 181
RESPIRATORY NEOPLASMS WITH CC, DRG 166--OTHER RESPIRATORY SYSTEM O.R.
PROCEDURES WITH MCC, and DRG 167--OTHER RESPIRATORY SYSTEM O.R.
PROCEDURES WITH CC. The applicant stated that these 4 MS-DRGs represent
almost 81 percent of all cases in the ZEPZELCATM primary
cohort but acknowledges that some of the MS-DRGs are atypical MS-DRGs
for SCLC patients. Per the applicant, all cases had a principal
diagnosis of Malignant Neoplasm of Bronchus and Lung and received
chemotherapy during the hospital stay. The applicant stated that these
atypical MS-DRGs may have appeared because of complications and other
factors that drive MS-DRG assignment but that these complications alone
would not render the inclusion of these MS-DRGs inappropriate. The
applicant further noted that the MS-DRGs referenced by CMS represent a
small share of all cases (for example, MS-DRG 004 accounts for 1
percent of the full primary cohort) and that if deemed appropriate,
excluding certain MS-DRGs from the cost analysis would not impact the
cost criterion results as virtually all individual MS-DRGs have
standardized charges that exceed the cost criterion threshold. The
applicant concluded by stating that ZEPZELCATM meets the
cost criterion in the primary and three sensitivity cohort analyses.
Next, the applicant indicated that it performed an analysis on a
primary cohort and three sensitivity cohorts. Per the applicant, the
primary cohort included inpatient hospital stays with the principal
diagnosis code Malignant neoplasm of bronchus and lung (ICD-10-CM
C34xx) and the patient received chemotherapy, as determined by presence
of an ICD-10-CM Z51.11 (Encounter for antineoplastic chemotherapy),
ICD-10-CM Z51.12 (Encounter for antineoplastic immunotherapy), or any
ICD-10-PCS chemotherapy code on the claim. The applicant also reported
its results from the three sensitivity cohorts.
Finally, with respect to referencing the correction notice tab
within the FY 2022 New Technology Threshold data file, the applicant
stated that it re-evaluated the cost criterion for the primary and 3
sensitivity cohorts using the correction notice thresholds and did not
find material difference in the threshold or cost criterion findings.
Specifically, the applicant identified the average case-weighted
threshold amount for the primary cohort as $79,439, and $70,505,
$70,245, and $57,384 for sensitivity cohorts 1, 2 and 3, respectively.
The applicant stated the final inflated average case-weighted
standardized charge per case in the primary cohort and three
sensitivity cohorts exceeded the average case-weighted threshold amount
by $126,591, $112,390, $75,929, and $73,591 respectively.
Response: We appreciate the applicant's clarification regarding the
MS-DRGs included in the analysis and agree that atypical DRGs represent
a small share of all cases. Because virtually all individual MS-DRGs
have standardized charges that exceed the cost criterion threshold we
believe that the applicant has sufficiently addressed this concern.
Based on the information submitted by the applicant as part of its FY
2022 new technology add-on payment application for
ZEPZELCATM, as discussed in the proposed rule (86 FR 25355
through 25356) and previously summarized, and consideration of the
comment received, we agree the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount in each of the primary and 3 sensitivity cohorts.
Therefore, ZEPZELCATM meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that ZEPZELCATM significantly improves
clinical outcomes over existing treatment options for adult patients
with metastatic SCLC with disease progression on or after platinum-
based chemotherapy in five ways. First, ZEPZELCATM offers an
improved treatment option from both a safety and efficacy standpoint.
Second, ZEPZELCATM offers safety improvement for treatment
of patients with metastatic SCLC with disease progression on or after
platinum-based chemotherapy over safety results previously reported in
the literature for a comparable patient population. Third, patients
with metastatic SCLC whose disease progresses on or after platinum-
based chemotherapy achieved higher overall response rates (ORRs)
following treatment with ZEPZELCATM than ORR that had been
previously reported in the literature for a comparable patient
population. Fourth, overall survival (OS) rates achieved with
ZEPZELCATM are clinically meaningful and are the highest
rates reported for patients with metastatic SCLC whose disease
progresses on or after platinum-based chemotherapy in more than 2
decades. Fifth, the applicant asserted that ZEPZELCATM may
represent a valuable treatment alternative to platinum rechallenge. The
applicant submitted (or in some cases, referred to) multiple sources in
support of these claims including retrospective analyses and other
studies, a meta-analysis, data abstracts, literature reviews,
prescribing information, FDA approved cancer therapies, practice
guidelines, workgroup deliberations, a commentary, and an opinion
regarding survival outcomes.
With regard to the first claim, the applicant stated that
ZEPZELCATM is the first second-line treatment option
approved for SCLC since 1998 and is indicated for the treatment of
adult
[[Page 45121]]
patients with metastatic SCLC with disease progression on or after
platinum-based chemotherapy, a patient population with dismal outcomes.
The applicant also stated that ZEPZELCATM offers an improved
treatment option from both a safety and efficacy standpoint. The
applicant outlined the nature of small cell lung cancer, patient
treatment and prognosis. The applicant also stated that
ZEPZELCATM could represent a valuable option for a patient
population with high unmet medical need.\684\ Specifically, the
applicant referred to four analyses, an epidemiology review,
prescribing information, practice guidelines, a literature review
inclusive of four articles, and one ZEPZELCATM study.
---------------------------------------------------------------------------
\684\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
First, an analysis stated that although small cell lung cancer
shows high sensitivity to first-line chemotherapy and radiotherapy,
most patients develop disease relapse or progression.\685\ Another
analysis stated that most patients experience relapse of small cell
lung cancer within 1 year of treatment.\686\ A separate analysis
indicated that most patients who have initially responded to
chemotherapy and radiotherapy eventually experience recurrence of the
cancer in a few months.\687\ The fourth analysis indicated that almost
all patients with extended disease will develop disease relapse or
progression after first-line treatment and that without second-line
chemotherapy, the median survival time is 2 to 4 months.\688\
---------------------------------------------------------------------------
\685\ Shiozawa, T. Rechallenge with first-line platinum
chemotherapy for sensitive-relapsed small-cell lung cancer. Case Rep
Oncol. 2018;11:622-632.
\686\ Naito Y, et al. Rechallenge treatment with a platinum-
based regimen in patients with sensitive relapsed small-cell lung
cancer. Medical Oncology (2018) 35:61.
\687\ Horita N, et al. Topotecan for relapsed small-cell lung
cancer: systematic review and meta-analysis of 1347 patients. Sci
Rep 2015;5: 15437.
\688\ Wakuda K et al. Efficacy of second-line chemotherapy in
patients with sensitive relapsed small-cell lung cancer. In vivo.
33:2229-2234 (2019).
---------------------------------------------------------------------------
Next, in referring to the epidemiology review, the applicant stated
that most cases of small cell lung cancer occur in individuals aged 60-
80.\689\ In referring to prescribing information, the applicant stated
that in 1998, Hycamtin (topotecan) was approved for patients with SCLC
sensitive disease after failure of first-line chemotherapy. The
applicant further stated that in the topotecan Phase 3 clinical study,
sensitive disease was defined as disease responding to chemotherapy,
but subsequently progressing at least 60 days after chemotherapy.\690\
---------------------------------------------------------------------------
\689\ Tan WT, et al. Small Cell Lung Cancer (SCLC), Medscape,
Oncology. Updated June 19, 2020. Emedicine.medscape.com.
\690\ FDA website, Hycamtin (topotecan) prescribing
information., Rev. 2/2014: https://www.accessdata.fda.gov/drugsatfda_docs/label/2014/022453s002lbl.pdf .
---------------------------------------------------------------------------
Next, in referring to practice guidelines, the applicant stated
that ZEPZELCA was studied in a broader (resistant disease and sensitive
disease) population of SCLC patients and that prespecified subgroup
analyses of ZEPZELCA results were done for patients with SCLC by CTFI
in patients with resistant disease (CTFI <90 days) and sensitive
disease (CTFI interval >=90 days). The applicant further noted that
NCCN guidelines list ZEPZELCA as a preferred regimen for second-line
treatment of patients with a CTFI <=6 months and recommended ZEPZELCA
for patients with a CTFI >6 months.\691\
---------------------------------------------------------------------------
\691\ NCCN Clinical Practice Guidelines in Oncology, Small Cell
Lung Cancer. Version 4.2020, July 7, 2020. https://nccn.org.
---------------------------------------------------------------------------
Next, the applicant referred to a literature review and submitted
four sources. First, per the applicant, Iams et. al. describes
available data on clinical efficacy, the emerging evidence regarding
biomarkers and ongoing clinical trials using immune checkpoint
inhibitors and other immunotherapies in patients with SCLC. The article
included a discussion of the significant unmet needs in second-line
therapy for SCLC.\692\ Second, per the applicant, Tsiouprou et. al.
reported on a literature review of immunotherapy in treatment of ES-
SCLC and included a discussion of the significant unmet needs in
second-line therapy for SCLC.\693\ Third, per the applicant, Wang et.
al. presented a review of SCLC development, current therapy and
included a discussion of the significant unmet needs in second-line
therapy for SCLC.\694\ Fourth, per the applicant, Taniguchi et. al., is
an opinion article discussing recent developments in the treatment of
SCLC and includes a discussion of the significant unmet needs in
second-line therapy for SCLC.\695\
---------------------------------------------------------------------------
\692\ Iams WT, et al. Immunotherapeutic approaches for small-
cell lung cancer. Nat Rev Clin Oncol. 2020 May; 17(5):300-312. doi:
10.1038/s41571-019-0316-z. Epub 2020 Feb 13.
\693\ Tsiouprou I, et al. The r[ocirc]le of immunotherapy in
extensive stage small-cell lung cancer: a review of the literature.
Can Respir J. 2019 Nov 3;2019:6860432. doi: 10.1155/2019/6860432.
eCollection 2019.
\694\ Wang Y, et al. New insights into small-cell lung cancer
development and therapy. Cell Biol Int. 2020 Aug;44(8):1564-1576.
doi: 10.1002/cbin.11359. Epub 2020 Apr 18.
\695\ Taniguchi H, et al. Targeted therapies and biomarkers in
small cell lung cancer. Front Oncol. 2020 May 20;10:741. doi:
10.3389/fonc.2020.00741. eCollection 2020.
---------------------------------------------------------------------------
Finally, the applicant referred to Trigo, et. al., and stated that
authors expressed that ZEPZELCA could present a valuable potential new
treatment option after first-line platinum-based chemotherapy.\696\
---------------------------------------------------------------------------
\696\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
With regard to the second claim, the applicant asserted that
ZEPZELCATM offers safety improvement for treatment of
patients with metastatic SCLC with disease progression on or after
platinum-based chemotherapy over safety results previously reported in
the literature for a comparable patient population. The applicant
asserted that safety is of particular importance for patients
65 with age being a major patient-related risk factor.\697\
The applicant also referred to a meeting abstract stating that several
acute comorbidities were more common in Medicare patients initiating
second-line chemotherapy than in all patients at diagnosis: infectious
disease (57% versus 43%), electrolyte disorder (50% versus 22%), anemia
(45% versus 19%), neutropenia (17% versus 0.1%), thrombocytopenia (12%
versus 2%), and diarrhea (7% versus 3%).\698\
---------------------------------------------------------------------------
\697\ Simeone E, et al. Nivolumab for the treatment of small
cell lung cancer. Exp Rev Resp Med. 2020;14(1):5-13.
\698\ Danese M, et al. Comorbidity in patients with extensive
disease small cell lung cancer. Presented at the AMCP Managed Care &
Specialty Pharmacy Annual Meeting; March 27-30, 2017; Denver, CO.
---------------------------------------------------------------------------
The applicant also referred to six studies to support this claim.
First, the applicant submitted Trigo et. al., that was based on Study
B-005 (NCT01454972), a single-arm, open label, phase II basket trial to
evaluate the activity and safety of lurbinectedin in patients with SCLC
after failure of platinum-based chemotherapy. One hundred five patients
with a diagnosis of SCLC and pre-treated with only one previous
chemotherapy-containing line of treatment were included. Treatment
consisted of 3.2mg/m2 lurbinectedin intravenously every 3 weeks until
disease progression or unacceptable toxicity. The safety-related
outcomes demonstrated the following adverse events: anemia 9%,
leucopenia 29%, neutropenia 46%, and thrombocytopenia 7%. Serious
treatment-related adverse events occurred in 10% of patients, of which
neutropenia and febrile neutropenia
[[Page 45122]]
were the most common with 5% of patients for each.\699\
---------------------------------------------------------------------------
\699\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
Second, the applicant submitted an article from Von Pawel, et. al.,
of a randomized phase 3 study of a total of 637 patients with
refractory or sensitive SCLC treated with topotecan and reported
hematologic toxicities of grade >=3 anemia, 30.5%; neutropenia, 53.8%;
thrombocytopenia, 54.3%; febrile neutropenia, 3%.\700\
---------------------------------------------------------------------------
\700\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
---------------------------------------------------------------------------
Third, the applicant submitted an open label phase 2 study of 179
patients with SCLC who relapsed after initial platinum-based
chemotherapy, treated with topotecan and reported hematologic
toxicities of neutropenia, 78.4%; thrombocytopenia, 45.5%; and febrile
neutropenia/neutropenic infection/neutropenic sepsis, 18%.\701\
---------------------------------------------------------------------------
\701\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228.
---------------------------------------------------------------------------
Fourth, the applicant submitted an abstract from Monnet, et. al. of
an open-label, multicenter, phase 3 trial that randomized patients with
SCLC that responded to first-line platin-etoposide doublet treatment
but showed evidence of disease relapse or progression at least 90 days
after completion of the first-line treatment. Eighty-two patients were
assigned to each treatment group: Those receiving combination
chemotherapy (carboplatin and etoposide) versus those receiving oral
topotecan. The abstract indicated that grade \3/4\ neutropenia was
significantly more common in the topotecan group at 35.8% versus 19.7%;
insignificantly more febrile neutropenia in the topotecan arm at 13.6%
versus 6.2%; no difference for grade \3/4\ thrombocytopenia, 35.8%
versus 30.9%; and anemia, 24.6% versus 21%.\702\
---------------------------------------------------------------------------
\702\ Monnet, 2 L., et. al. Carboplatin-Etoposide Versus
Topotecan as Second-Line Treatment for Sensitive Relapsed Small-Cell
Lung Cancer: Phase 3 Trial. Journal of Thoracic Oncology Vol. 14 No.
10S.
---------------------------------------------------------------------------
Fifth, the applicant submitted an abstract from Leary, et. al.,
that is described as a pooled safety analysis with data from the phase
II, single arm basket study by Trigo, et. al. (discussed previously),
and a phase III RCT, the CORAIL study. The pooled analysis included a
total of 554 patients treated with lurbinectedin. Of the 554, 335 were
from the phase II basket study with selected solid tumors (9
indications including 105 patients with small cell lung cancer) and 219
were from the phase III CORAIL study with platinum resistant ovarian
cancer. Authors presented an indirect exploratory comparison (pooled
data from CORAIL + basket) and a direct comparison (data from CORAIL)
of lurbinectedin vs. topotecan. Authors reported adverse events with
lurbinectedin were grade \1/2\ fatigue, nausea and vomiting. Treatment-
related lurbinectedin/topotecan outcomes showed: dose reductions: 22.9/
48.3%; delays: 25.8/52.9%; grade >=3 serious adverse events: 15.0/
32.2%; discontinuations: 3.2/5.7%; deaths: 1.3/1.5%; granulocyte colony
stimulating factor (G-CSF) use: 23.8/70.1%; and transfusions: 15.9/
52.9%. Authors concluded by stating that a significant safety advantage
was observed when lurbinectedin was compared with topotecan in the
CORAIL trial in terms of hematological toxicities. Authors also noted
that with the limitations of indirect comparisons, in the pooled safety
analysis, fewer lurbinectedin-treated patients had severe hematological
toxicities, severe adverse events, dose adjustments, treatment
discontinuations and use of supportive treatments than topotecan-
treated patients.\703\
---------------------------------------------------------------------------
\703\ Leary A, et al. Pooled safety analysis of single-agent
lurbinectedin versus topotecan (Results from a randomized phase III
trial CORAIL and a phase II basket trial). ASCO2020 (American
Society of Oncology); May 29-31, 2020. Abstract and poster.
---------------------------------------------------------------------------
Sixth, the applicant provided a presentation summarizing results
from the randomized phase 3 CORAIL study. The patient population was
comprised of platinum resistant ovarian, fallopian or primary
peritoneal cancer. Enrolled patients were randomly assigned to receive
lurbinectedin or investigator choice of pegylated liposomal doxorubicin
(PLD) or topotecan. The applicant stated that ZEPZELCATM was
better tolerated than the control arm and that, overall, the data
support a favorable safety profile for ZEPZELCATM.\704\
---------------------------------------------------------------------------
\704\ Gaillard S, et al. Phase III trial of lurbinectedin versus
PLD or topotecan in platinum-resistant ovarian cancer patients:
results of the CORAIL trial. 2018 ESMO Presentation
---------------------------------------------------------------------------
With regard to the third claim, the applicant stated that patients
with metastatic SCLC whose disease progresses on or after platinum-
based chemotherapy achieved higher ORRs following treatment with
ZEPZELCATM than ORR that had been previously reported in the
literature for a comparable patient population. The applicant referred
to four primary resources in support of ZEPZELCATM. First,
as described previously, the applicant submitted Trigo, et. al., in
which the primary endpoint is described as lurbinectedin anti-tumor
activity in terms of investigator-assessed overall response (OR) and
duration of response (DOR) as a secondary endpoint.\705\ The OR rate
was identified as 35.2% and the mean DOR as 5.3 months. Second, the
applicant submitted an abstract from Subbiah, et. al., a sub-study from
Study B-005, that concluded that time from randomization to response
was similar regardless of prior resistance or sensitivity to platinum-
based chemotherapy, and clinically meaningful DOR was noted in both
subgroups of responders. \706\ Third, the applicant submitted an
abstract from a second sub-study from Study B-005, indicating that ORR
was similar across baseline characteristics: Age <65 = 36.8%; age >65 =
32.4%; female = 31%; male = 38.1%; 1 prior line of therapy = 34.7%; >2
prior lines of therapy = 42.9%; BSA 1.8m2 = 34.5%; and BSA >1.8m2 =
36%. The authors concluded by noting that response to lurbinectedin
appeared consistent regardless of baseline patient
characteristics.\707\ Fourth, the applicant submitted a commentary from
Arrieta, et. al., and stated that ZEPZELCATM outperformed
all previously reported results for topotecan.\708\
---------------------------------------------------------------------------
\705\ Additional secondary endpoints are discussed with the
overall survival claim.
\706\ Subbiah V, et al. Phase 2 basket trial of lurbinectedin in
second-line SCLC: Characteristics and outcomes in treatment
responders. IASLC 2020 North American Conference on Lung Cancer.
Accepted for presentation October 16-17, 2020.
\707\ Sands J, et al. Phase 2 basket trial of lurbinectedin in
small-cell lung cancer (SCLC): Analysis of efficacy by baseline
characteristics. IASLC 2020 North American Conference on Lung
Cancer. Accepted for presentation October 16-17, 2020.
\708\ Arrieta O, et al. New opportunities in a challenging
disease: lurbinectedin for relapsed small-cell lung cancer. Comment
in Lancet Oncology. www.thelancet.com/oncology, Published online
March 27, 2020..https://doi.org/10.1016/S1470-2045(20)30097-8.
---------------------------------------------------------------------------
The applicant also referred to three additional sources reflecting
ORRs following treatment with topotecan. The Phase 3 trial of a total
of 637 patients with refractory or sensitive SCLC treated with
topotecan demonstrated an ORR of 16.9% and DOR of 4.2 months.\709\ In
the open-label, multicenter, phase 3 trial of 164 patients with
sensitive relapsed SCLC that responded to first-line platin etoposide
doublet treatment but showed evidence of disease relapse or progression
at least 90 days after completion of the first-line treatment,
[[Page 45123]]
patients randomized to the topotecan group demonstrated an ORR of
25%.\710\ Lastly, a randomized, multi-center phase 3 trial of 107
patients treated with topotecan reported an ORR of 24.3%.\711\
---------------------------------------------------------------------------
\709\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
\710\ Monnet, 2 L., et. al. Carboplatin-Etoposide Versus
Topotecan as Second-Line Treatment for Sensitive Relapsed Small-Cell
Lung Cancer: Phase 3 Trial. Journal of Thoracic Oncology Vol. 14 No.
10S
\711\ Von Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667.
---------------------------------------------------------------------------
With regard to the fourth claim, the applicant stated that the OS
rates achieved with ZEPZELCATM are clinically meaningful and
are the highest rates reported for patients with metastatic SCLC whose
disease progresses on or after platinum-based chemotherapy in more than
2 decades. The applicant submitted two studies in support of its claim
of improved survival rates in patients treated with
ZEPZELCATM. First, as described previously, the applicant
submitted Trigo, et. al. and highlighted secondary endpoints including
progression-free survival, progression-free survival at 4 and 6 months,
overall survival and overall survival at 6 and 12 months. The mean
progression free survival was identified as 3.5 months, mean overall
survival 9.3 months in the overall population, 11.9 months in patients
with a CTFI >=90 days and 5.0 months in those with CTFI <90 days.\712\
---------------------------------------------------------------------------
\712\ Trigo J, et al. Lurbinectedin as second-line treatment for
patients with small-cell lung cancer: a single-arm, open-label,
phase 2 basket trial. Lancet Oncology. www.thelancet.com/oncology,
Published online March 27, 2020. https://doi.org/10.1016/S1470-2045.
---------------------------------------------------------------------------
Second, the applicant submitted an abstract from Subbiah, et. al.,
that summarized a sub-study from Study B-005 in which overall survival
was a secondary endpoint. Authors report that patients treated with
lurbinectedin had CTFI >=180 days and form the basis for their
analysis. Sixty percent of patients were male, had ECOG PS 0-1, and had
a median age of 57 years. Extensive stage disease at initial diagnosis
was present in 35% of patients. All 20 patients had received prior
platinum/etoposide, with no prior immunotherapy. Authors also reported
that with a censoring of 55.0%, the median overall survival was 16.2
months. Per the abstract, eleven patients (55.0%) were censored for
survival analysis: Eight were on follow-up after disease progression,
two were ongoing lurbinectedin treatment, and one had treatment
discontinuation because of a treatment-related adverse event (worsening
of prior peripheral neuropathy). Median follow-up was 15.6 months.
Authors concluded time from randomization to response was similar
regardless of prior resistance or sensitivity to platinum-based
chemotherapy.\713\
---------------------------------------------------------------------------
\713\ Subbiah V, et al. Activity of lurbinectedin in second-line
SCLC patients who are candidates for platinum rechallenge IASLC 2020
North American Conference on Lung Cancer. Accepted for presentation
October 16-17, 2020.
---------------------------------------------------------------------------
The applicant also referred to several randomized phase I and II
studies of patients undergoing alternate therapies and highlighted
those OS rates. The applicant provided an abstract from Monnet, et.
al., (as mentioned previously with respect to applicant's second and
third claims) summarizing results from a study that investigated
whether the doublet carboplatin-etoposide was superior to topotecan
monotherapy as second-line treatment in patients with sensitive
relapsed SCLC. Authors reported patients treated with topotecan had
progression free survival (PFS) of 2.7 months and OS of 7.4
months.\714\ The applicant also referred to Evans, et. al., summarizing
results from a study of patients with SCLC who relapsed after initial
platinum-based chemotherapy who were divided into subgroups,
chemosensitive vs. chemo-resistant/refractory disease. Patients were
treated with topotecan. Authors reported topotecan PFS of 3.0 months
and OS of 6.8 months.\715\ The applicant referred to Von Pawel, et.
al., summarizing the results of a phase 3 trial of a total of 637
patients with refractory or sensitive SCLC, including topotecan PFS of
3.5 months and OS of 7.8 months (5.7 months for refractory).\716\
Lastly, the applicant referred to Von Pawel, et. al., that reported
randomized, multi-center phase 3 results for topotecan with time to
progression of 13.3 weeks and median OS of 25 weeks.\717\
---------------------------------------------------------------------------
\714\ Monnet, 2 L., et. al. Carboplatin-Etoposide Versus
Topotecan as Second-Line Treatment for Sensitive Relapsed Small-Cell
Lung Cancer: Phase 3 Trial. Journal of Thoracic Oncology Vol. 14 No.
10S
\715\ Evans TL, et al. Cabazitaxel versus topotecan in patients
with small-cell lung cancer with progressive disease during or after
first-line platinum-based chemotherapy. J Thorac Oncol. 2015;10:
1221-1228.
\716\ Von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line treatment for patients
with small-cell lung cancer. J Clin Oncol. (2014) 32:35.
\717\ Von Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667.
---------------------------------------------------------------------------
The applicant explained that a statement from an American Society
of Clinical Oncology (ASCO) workgroup indicated that relative
improvements in median OS of at least 20% are necessary to define a
clinically meaningful improvement in outcome.\718\ The applicant
summarized oncology literature reviews between 2014 and 2016 asserting
that ASCO's threshold for OS was met in only 12% of studies (6 of 49)
and 19% of therapies.719 720
---------------------------------------------------------------------------
\718\ Ellis LM, et al. American Society of Clinical Oncology
perspective: raising the bar for clinical trials by defining
clinically meaningful outcomes. J Clin Oncol. 2014;32(12:1277-1280.
\719\ Dreicer JJ, et al. Clinically meaningful benefit: real
world use compared against the American and European guidelines.
Blood Cancer Journal. 7,10.1038/s41408-017-0009-8.
\720\ Kumar H, et al. An appraisal of clinically meaningful
outcomes guidelines for oncology clinical trials, JAMA Oncology.
Published online: Vol 2, No 9, 1238-1240.
---------------------------------------------------------------------------
The applicant further stated that ZEPZELCATM's median OS
for the overall population compared to the literature, meets the ASCO
threshold and, for subsets of patient groups, median OS exceeds the
ASCO threshold for clinically meaningful.
The applicant concluded by stating that there is an urgent need for
new treatment options for the SCLC population.\721\ The applicant
asserted that CMS's new technology add-on payment approval of
TECENTRIQ[supreg] for the treatment of patients with ES-SCLC effective
for FY 2021 (85 FR 58684) further supports the urgency, referring to
its 2 month improvement in survival.
---------------------------------------------------------------------------
\721\ NCI Staff. For small cell lung cancer, immunotherapy drug
finally brings improved survival. National Cancer Institute. October
3, 2018. https://www.cancer.gov/news-events/cancer-currents-blog/2018/small-cell-lung-cancer-atezolizumab-survival.
---------------------------------------------------------------------------
The applicant also referred to comments from specialists in the
field of lung cancer stating that despite small trial sizes,
improvement in overall survival is a major achievement and that any
advance in survival is important given that few patients diagnosed with
SCLC survive for even a year despite treatment.\722\
---------------------------------------------------------------------------
\722\ NCI Staff. For small cell lung cancer, immunotherapy drug
finally brings improved survival. National Cancer Institute. October
3, 2018. https://www.cancer.gov/news-events/cancer-currents-blog/2018/small-cell-lung-cancer-atezolizumab-survival.
---------------------------------------------------------------------------
With regard to the fifth claim, that ZEPZELCATM may
represent a valuable treatment alternative to platinum rechallenge, the
applicant submitted several sources pertaining to
ZEPZELCATM. First, the applicant submitted two sub-analyses
from Subbiah, et al., that were based on Study B-005 as its primary
support for ZEPZELCATM. In both of these sub-analyses,
patients had been pre-treated with one prior platinum-containing line.
The first analysis included 20 patients from a subset of patients with
CTFI >180 and authors report that patients treated with lurbinectedin
had an ORR
[[Page 45124]]
at 60.0% and a median DoR of 5.5 months. The second analysis included
60 patients from a SCLC cohort of the basket trial, with CTFI >90 d (20
pts with CTFI >180 d). The applicant states that ZEPZELCATM
was shown to be effective and well-tolerated in the platinum-sensitive
relapsed SCLC population especially when CTFI >180 days. From these
results, the authors concluded that ZEPZELCATM may represent
a valuable alternative to platinum rechallenge.723 724 The
applicant also referenced Arrieta et al., stating that
ZEPZELCATM data outperformed less established treatment
schemes including platinum rechallenge.\725\ The applicant stated that
the July 7, 2020 NCCN Clinical Practice Guidelines in Oncology indicate
that lurbinectedin is identified as a Preferred Regimen in relapse <=6
months and a Recommended Regimen in relapse >6 months.\726\ The
applicant referred to the authors' conclusion in Genestreti et al.,
stating that the outcome for second line chemotherapy for SCLC is poor
and that rechallenge platinum/etoposide is a reasonable option with
potentially better outcomes than standard chemotherapy.\727\
---------------------------------------------------------------------------
\723\ Subbiah V, et al. Activity of lurbinectedin in second-line
SCLC patients who are candidates for platinum rechallenge IASLC 2020
North American Conference on Lung Cancer. Accepted for presentation
October 16-17, 2020.
\724\ Subbiah V, et al. Activity in second-line SCLC patient
candidates for platinum rechallenge. ESMO (European Society for
Medical Oncology) 2020 Congress; September 19-21, 2020. Poster
1784P.
\725\ Arrieta O, et al. New opportunities in a challenging
disease: lurbinectedin for relapsed small-cell lung cancer. Comment
in Lancet Oncology. www.thelancet.com/oncology, Published online
March 27, 2020 . . . https://doi.org/10.1016/S1470-2045(20)30097-8.
\726\ NCCN Clinical Practice Guidelines in Oncology, Small Cell
Lung Cancer. Version 4.2020, July 7, 2020. https://nccn.org.
\727\ Genestreti G, et al. Outcomes of platinum-sensitive small-
cell lung cancer patients treated with platinum/etoposide
rechallenge: a multi-institutional retrospective analysis. Clinical
Lung Cancer, Vol. 16, No. 6, e223-8.
---------------------------------------------------------------------------
Finally, the applicant referred to Monnet, et al., stating that
patients treated with combination therapy, carboplatin and etoposide,
achieved a median OS of 7.4 months and ORR of 49%.\728\
---------------------------------------------------------------------------
\728\ Monnet, 2 L., et al. Carboplatin-Etoposide Versus
Topotecan as Second-Line Treatment for Sensitive Relapsed Small-Cell
Lung Cancer: Phase 3 Trial. Journal of Thoracic Oncology Vol. 14 No.
10S
---------------------------------------------------------------------------
In the proposed rule (86 FR 25360), we noted the following
concerns. The evidence submitted by the applicant in support of
ZEPZELCATM's improvement in overall response and survival
rates was based on one single-arm, open label, phase II basket study
(Study B-005 (NCT01454972)) and several smaller subsetted analyses that
were based on the basket study, and we noted that without a direct
comparison arm it may be more difficult to draw definitive
conclusions.729 730 731 732 We noted the following
differences between the historical control patients and patients
treated with ZEPZELCATM in these studies, which may confound
the comparisons: First, patients with central nervous system
involvement (brain metastases) were excluded from ZEPZELCATM
treatment, and we noted that Arrieta, et al., noted that this criterion
is of particular interest when translating results to the clinical
setting, since patients with SCLC are known to be prone to develop
brain metastases, and up to 50% do so throughout the disease
course.\733\ Second, patients treated with ZEPZELCATM had
access to immunotherapy during first line treatment, which may support
patients' immune systems in fighting cancer. Third, the CTFI used in
the single arm basket trial differed from those used in the historical
controls of topotecan studies, and we noted that CTFIs can impact
treatment response and outcome. As, per the applicant,
ZEPZELCATM was listed as a preferred regimen by the NCCN
Clinical Practice Guidelines for second-line treatment of patients with
a CTFI <=6 months and recommended for patients with a CTFI >6 months,
while topotecan is only FDA approved for chemotherapy-sensitive cases,
defined using a 60 day CTFI, we noted that the appropriate comparator
treatment for ZEPZELCATM would differ depending on the CTFI
subset. However, the historical controls relied on an overall topotecan
population with CTFI >60. To the extent that this group was more
heavily weighted with patients in the lower CTFI group, it was unclear
whether this may partially explain the poorer outcomes of patients in
the historical control groups. We also noted that, while the claim of
improved hematological outcomes using ZEPZELCATM appeared to
be mostly supported by the female-only arm of the CORAIL study, results
from the pooled sample of the basket trial still appeared to
demonstrate an improvement over the topotecan arm. We believed that
this may suggest that the inclusion of male patients did not alter the
conclusion that patients treated with ZEPZELCATM appeared
more favorable than those treated with topotecan. We further noted that
bone marrow stimulating drugs were allowed in the topotecan arm of the
CORAIL study so the observed adverse hematologic effects may have been
the best case for that arm of the study. Finally, we noted that the
subsetted analyses generated from the primary basket study had small
sample sizes and the authors of these studies stated that further
research on larger populations is required to draw firm
conclusions.734 735
---------------------------------------------------------------------------
\729\ Sands J, et al. Phase 2 basket trial of lurbinectedin in
small-cell lung cancer (SCLC): Analysis of efficacy by baseline
characteristics. IASLC 2020 North American Conference on Lung
Cancer. Accepted for presentation October 16-17, 2020.
\730\ Subbiah V, et al. Phase 2 basket trial of lurbinectedin in
second-line SCLC: Characteristics and outcomes in treatment
responders. IASLC 2020 North American Conference on Lung Cancer.
Accepted for presentation October 16-17, 2020.
\731\ Subbiah V, et al. Activity of lurbinectedin in second-line
SCLC patients who are candidates for platinum rechallenge IASLC 2020
North American Conference on Lung Cancer. Accepted for presentation
October 16-17, 2020.
\732\ Subbiah V, et al. Activity in second-line SCLC patient
candidates for platinum rechallenge. ESMO (European Society for
Medical Oncology) 2020 Congress; September 19-21, 2020. Poster
1784P.
\733\ Arrieta O, et al. New opportunities in a challenging
disease: lurbinectedin for relapsed small-cell lung cancer. Comment
in Lancet Oncology. www.thelancet.com/oncology, Published online
March 27, 2020 . . . https://doi.org/10.1016/S1470-2045(20)30097-8.
\734\ Subbiah V, et al. Activity in second-line SCLC patient
candidates for platinum rechallenge. ESMO (European Society for
Medical Oncology) 2020 Congress; September 19-21, 2020. Poster
1784P.
\735\ Sands J, et al. Phase 2 basket trial of lurbinectedin in
small-cell lung cancer (SCLC): Analysis of efficacy by baseline
characteristics. IASLC 2020 North American Conference on Lung
Cancer. Accepted for presentation October 16-17, 2020.
---------------------------------------------------------------------------
We invited public comments on whether ZEPZELCATM meets
the substantial clinical improvement criterion.
Comment: The applicant submitted comments in response to CMS'
concerns pertaining to substantial clinical improvement. First, with
respect to the concern that the evidence submitted by the applicant was
based on one single-arm, open label, phase II basket study (Study B-005
(NCT01454972) and several smaller subsetted analyses, the applicant
stated that the basket study evaluated ZEPZELCATM as a
single-agent in patient cohorts across 9 different tumor types (a
basket trial design), including a cohort of patients with SCLC with
disease progression on or after platinum-based chemotherapy (n=105)
(NCT02454972), conducted at 26 investigational sites in the European
Union, United Kingdom and U.S. The applicant stated that the study was
originally intended to be a signal-finding study, was designed as a
single-arm trial, and the overall response rate (ORR) in the SCLC
cohort, which consisted of patients who had received a prior line of
chemotherapy, was
[[Page 45125]]
notable at 35 percent.\736\ The applicant further noted that based on
the study ORR and duration of response in the SCLC cohort, the FDA
granted accelerated approval of ZEPZELCATM to allow for
earlier approval of drugs that treat serious conditions and that fill
an unmet medical need based on a surrogate endpoint (ORR and duration
of response) that is thought to predict clinical benefit. The applicant
stated that continued approval may be contingent upon verification and
description of clinical benefit in a confirmatory trial(s). Per the
applicant, accelerated approval of ZEPZELCATM is of
paramount importance to metastatic SCLC patients given the high relapse
and disease progression rates in SCLC2-5 and because no second-line
therapy options had been approved in over 20 years (that is, topotecan
in 1998). The applicant stated that because most cases of SCLC occur in
individuals aged 60-80 years,\737\ this is a risk-benefit profile that
warrants additional second-line treatment options and that
ZEPZELCATM fulfills a high unmet need for patients with
metastatic SCLC, with a majority being Medicare beneficiaries.
---------------------------------------------------------------------------
\736\ Naito Y, et al. Rechallenge treatment with a platinum-
based regimen in patients with sensitive relapsed small-cell lung
cancer. Medical Oncology (2018) 35:61.
\737\ Tan WT, et al. Small Cell Lung Cancer (SCLC), Medscape,
Oncology. Updated June 19, 2020. Emedicine.medscape.com
---------------------------------------------------------------------------
Next, with respect to the differences between the historical
control patients and patients treated with ZEPZELCATM in
these studies, the applicant stated that while SCLC patients often
develop brain metastases, it is common for clinical trials in SCLC to
exclude patients with central nervous system (CNS) involvement,
including the Phase 3 trial for amrubicin versus topotecan, where
patients with prior brain metastasis and symptomatic CNS metastases
were excluded.\738\ Per the applicant, such exclusions are in part due
to the poor clinical status of these patients. The applicant stated
that in Study B-005, there were 4 patients that had CNS involvement (3
patients had a history of CNS involvement, and 1 patient had CNS
involvement at baseline (protocol deviation)). The applicant also
stated that among these 4 patients treated with ZEPZELCATM,
there were 2 partial responses, 1 stable disease, and 1 progressive
disease (data on file).
---------------------------------------------------------------------------
\738\ von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line therapy in small cell lung
cancer. J Clin Oncol. Vol 32, No 35, 2014: 4012-4020.
---------------------------------------------------------------------------
With respect to the concern that patients treated with
ZEPZELCATM had access to immunotherapy during first line
treatment, the applicant stated that Study B-005 was initiated prior to
the FDA approval of immunotherapy agents such as atezolizumab,
nivolumab, and durvalumab. The applicant also stated that in total,
only 8 of the 105 patients enrolled were previously treated with
immunotherapy. Per the applicant, in reviewing the data in the small
number of patients that fell into this category, it could not determine
that these patients were driving the median overall response. The
applicant stated that the median OS 95% confidence interval of the 105
patients is overlapping with the 95% confidence interval of the 97
patients who were not treated with immunotherapy (data on file).
With respect to the concern that the CTFI used in the single arm
basket trial differs from those used in the historical controls of
topotecan studies, the applicant stated that while it is possible that
grouping by CTFI may affect efficacy measures, it is important to
understand that the clinical community uses different CTFI groups with
no singular convention. Per the applicant, some in the oncology
community use 90 days as a cutoff (concordant with European Society for
Medical Oncology (ESMO)), and others use 180 days (concordant with NCCN
guidelines). The applicant stated that the study that led to the FDA
approval of topotecan used 60 days as a CTFI cutoff; \739\ Study B-005
used 90 days. Per the applicant, Study B-005 also included a population
that was actually sicker than populations in several SCLC studies
because of the inclusion of patients who had CTFI <30 days (n=21 of 105
patients). In order to demonstrate a more specific comparison with the
topotecan trial that led to its FDA approval, an exploratory analysis
was conducted excluding patients with CTFI <60 from the Study B-005
results. The applicant stated that this analysis supports that when
matching CTFI groupings for comparison purposes, the efficacy profile
of ZEPZELCATM is substantially improved over study results
that Van Pawel et. al.\740\ reported for topotecan.
---------------------------------------------------------------------------
\739\ von Pawel J, et al. Randomized phase III trial of
amrubicin versus topotecan as second-line therapy in small cell lung
cancer. J Clin Oncol. Vol 32, No 35, 2014: 4012-4020
\740\ von Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667.
---------------------------------------------------------------------------
With respect to the concern that improved hematological outcomes
using ZEPZELCATM appears to be mostly supported by the
female-only arm of the CORAIL study, the applicant stated that a
significant safety advantage was observed when ZEPZELCATM
was compared with topotecan in the CORAIL trial in terms of
hematological toxicities. Per the applicant, this finding was based on
an indirect exploratory comparison (pooled data from CORAIL + Study B-
005) and a direct comparison (data from CORAIL).\741\ The applicant
stated that the inclusion of male patients in the pooled safety
analysis did not alter the conclusion that patients treated with
ZEPZELCATM appeared more favorable than those treated with
topotecan.
---------------------------------------------------------------------------
\741\ Leary A, et al. Pooled safety analysis of single-agent
lurbinectedin versus topotecan (Results from a randomized phase III
trial CORAIL and a phase II Basket trial). ASCO2020 (American
Society of Oncology); May 29-31, 2020. Abstract and poster.
---------------------------------------------------------------------------
With respect to the concern regarding bone marrow stimulating
drugs, the applicant stated that bone marrow stimulating drugs were
allowed in the topotecan arm of the CORAIL study so the observed
adverse hematologic effects may have been the best case for that arm of
the study, concurring with CMS' observations. The applicant reiterated
that a significant safety advantage was observed when
ZEPZELCATM was compared with topotecan in the CORAIL trial
and in terms of hematological toxicities based on indirect exploratory
comparison (pooled data from CORAIL + Study B-005) and a direct
comparison (data from CORAIL).\742\ Per the applicant, inclusion of
male patients in the pooled safety analysis did not alter the
conclusion that patients treated with ZEPZELCATM appeared
more favorable than those treated with topotecan.
---------------------------------------------------------------------------
\742\ Ibid
---------------------------------------------------------------------------
Finally, with respect to the concern that the subsetted analyses
generated from the primary basket study have small sample sizes, the
applicant stated that while the subset sizes are small in number, these
are actually sizable for a rare disease such as SCLC. Per the
applicant, it is standard practice for study investigators and authors
to conclude that further research is needed when presenting study
results but that subset analyses can provide extremely meaningful
clinical findings for consideration when clinicians evaluate and make
real-world treatment decisions. The applicant stated that
ZEPZELCATM may represent a valuable clinical option to
platinum rechallenge. Per the applicant, the results of this post-hoc
analysis were recently published in December 2020 by Subbiah et. al. in
the peer-reviewed journal, Lung Cancer,\743\ showing that Study B-
[[Page 45126]]
005 patients with CTFI >180 days (n=20) achieved a 60% ORR (Table 23 of
the New Technology Add-on Payment application), which compares
favorably to the ORR of 46% (n=11) in a previous platinum-rechallenge
study sub-group analysis reported by Wakuda et. al.\744\ Per the
applicant, overall survival in the Study B-005 post-hoc analysis in
patients with CTFI <180 days was 16.2 months (Table 23), which compares
favorably to that reported by Wakuda et al, 15.7 months (n=11).\745\
The applicant stated that while the CTFI >180 days cohort was small, it
represented nearly 20% of the Study B-005 SCLC trial population and
demonstrated high ORR and overall survival that appears in line with
clinical efficacy of platinum rechallenge. The applicant concluded by
stating that these findings are now informing clinical practice in the
treatment of SCLC.
---------------------------------------------------------------------------
\743\ von Pawel J, et al. Topotecan versus cyclophosphamide,
doxorubicin, and vincristine for the treatment of recurrent small-
cell lung cancer. J Clin Oncol. Vol 17, No 2, 1999: 658-667
\744\ Wakuda K, et al. Efficacy of rechallenge chemotherapy in
patients with sensitive relapsed small cell lung cancer. Am J Clin
Oncol 38(1) (2015) 28-32.
\745\ Ibid.
---------------------------------------------------------------------------
We also received several comments from clinicians in the fields of
oncology and pharmacy, stating that the rapid spread of SCLC and early
relapse after first-line treatment make management of this disease very
challenging. The commenters stated that ZEPZELCATM is
effective in the treatment of relapsed SCLC, fills an unmet need in
second line treatment, is easy to administer and is well tolerated.
Commenters stated that approving ZEPZELCATM for new
technology add-on payments would expedite care and offer an added
treatment option for eligible patients.
Response: We thank the applicant and other commenters for their
comments regarding the substantial clinical improvement criterion.
After consideration of the comments received and the information
provided, we agree with the applicant and other commenters that
ZEPZELCATM represents a substantial clinical improvement
because it fills an unmet need in second-line treatment for ES-SCLC.
Because existing treatments are indicated for patients with platinum-
sensitive disease, ZEPZELCATM treats a disease for which
there are no existing treatments. We also believe that, given the
context of those patients who were treated, we believe the improvement
seen in the matched comparison between topotecan and
ZEPZELCATM in overall survival (25 weeks vs. 11.8 months)
and ORR (26% vs. 32%) represents a substantial clinical improvement
over existing technologies in the second line treatment of patients
with metastatic SCLC with disease progression on or after platinum-
based chemotherapy.
Based on the information received to date and comments received, we
have determined that ZEPZELCATM meets all of the criteria
for approval for new technology add-on payments for the reasons stated
previously. Therefore, we are approving new technology add-on payments
for ZEPZELCATM for FY 2022. Cases involving the use of
ZEPZELCATM that are eligible for new technology add-on
payments will be identified by ICD-10-PCS procedure codes: XW03387
(Introduction of lurbinectedin into peripheral vein, percutaneous
approach, new technology group 7) or XW04387 (Introduction of
lurbinectedin into central vein, percutaneous approach, new technology
group 7).
In its application, the applicant estimated that the cost of
ZEPZELCATM is $13,266 per patient. Under Sec. 412.88(a)(2),
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
ZEPZELCATM is $8,622.90 for FY 2022.
6. FY 2022 Applications for New Technology Add-On Payments (Alternative
Pathways)
As discussed previously, beginning with applications for FY 2021, a
medical device that is part of FDA's Breakthrough Devices Program and
has received marketing authorization for the indication covered by the
Breakthrough Device designation may qualify for the new technology add-
on payment under an alternative pathway. Additionally, beginning with
FY 2021, a medical product that is designated by the FDA as a Qualified
Infectious Disease Product (QIDP) and has received marketing
authorization for the indication covered by the QIDP designation, and,
beginning with FY 2022, a medical product that is a new medical product
approved under FDA's Limited Population Pathway for Antibacterial and
Antifungal Drugs (LPAD) and used for the indication approved under the
LPAD pathway, may also qualify for the new technology add-on payment
under an alternative pathway. Under an alternative pathway, a
technology 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 will not need to meet the requirement that it
represents an advance that substantially improves, relative to
technologies previously available, the diagnosis or treatment of
Medicare beneficiaries. These technologies must still meet the cost
criterion.
We note, 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. Our regulations in Sec. 412.87(c)(2) for breakthrough
devices and Sec. 412.87(d)(2) for certain antimicrobial products state
that a medical device/product that meets the condition in paragraph
(c)(1) or (d)(1) of Sec. 412.87 will be considered new for not less
than 2 years and not more than 3 years after the point at which data
begin to become available reflecting the inpatient hospital code (as
defined in section 1886(d)(5)(K)(iii) of the Act) assigned to the new
technology (depending on when a new code is assigned and data on the
new technology become available for DRG recalibration). After CMS has
recalibrated the DRGs, based on available data, to reflect the costs of
an otherwise new medical technology, the medical technology will no
longer be considered ``new'' under the criterion of this section.
We received 17 applications for new technology add-on payments for
FY 2022 under the alternative new technology add-on payment pathway. In
accordance with the regulations under Sec. 412.87(e)(2), applicants
for new technology add-on payments, including Breakthrough Devices,
must have FDA marketing authorization by July 1 of the year prior to
the beginning of the fiscal year for which the application is being
considered. We first determine whether a new technology meets the
newness criterion, and only if so, do we make a determination as to
whether the technology meets the cost threshold. One applicant withdrew
its application prior to the issuance of the proposed rule. Of the
remaining 16 applications, 13 of the technologies received a
Breakthrough Device designation from FDA and three were designated as a
QIDP by FDA. We did not receive any applications for technologies
approved through the LPAD pathway. Subsequently, two applicants
withdrew their applications for the Neovasc ReducerTM and
ThoraflexTM Hybrid Device prior to the issuance of this
final rule. Two applicants, BONESUPPORT Inc. (the applicant for
CERAMENT[supreg] G)
[[Page 45127]]
and Phagenesis Ltd. (the applicant for the Phagenyx[supreg] System),
did not meet the deadline of July 1, 2021 for FDA approval or clearance
of the technology and, therefore, the technologies are not eligible for
consideration for new technology add-on payments for FY 2022. We note
that we did receive some comments requesting that CMS extend the policy
that allows for conditional approval for certain antimicrobials to
Breakthrough Devices that have not received FDA marketing authorization
by July 1 to facilitate timely access to these technologies for
beneficiaries. As discussed in the FY 2021 IPPS/LTCH final rule (85 FR
58742), we may consider this for future rulemaking as we gain more
experience with this conditional approval process for certain
antimicrobial products, but the July 1 deadline for FDA approval or
clearance for consideration of new technology add-on payment
applications, as set forth in the regulations at Sec. 412.87(e),
continues to apply to applications for new technology add-on payments
for Breakthrough Devices for FY 2022. A discussion of the remaining 12
applications is presented in this final rule, including 9 technologies
that have received a Breakthrough Device designation from FDA and three
that were designated as a QIDP by FDA.
Under the policy finalized in the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58742), we revised the regulations at Sec. 412.87(e) by adding
a new paragraph (3) which provides for conditional approval for a
technology for which an application is submitted under the alternative
pathway for certain antimicrobial products (QIDPs and LPADs) at Sec.
412.87(d) that does not receive FDA marketing authorization by the July
1 deadline specified in Sec. 412.87(e)(2), provided that the
technology receives FDA marketing authorization by July 1 of the
particular fiscal year for which the applicant applied for new
technology add-on payments. We refer the reader to the FY 2021 IPPS/
LTCH PPS final rule for a complete discussion of this policy (85 FR
58737 through 58742).
As we did in the FY 2021 IPPS/LTCH PPS proposed rule, for
applications under the alternative new technology add-on payment
pathway, in the FY 2022 IPPS/LTCH PPS proposed rule, we proposed to
approve or disapprove each of these 12 applications for FY 2022 new
technology add-on payments. Therefore, in this section of the preamble
of this final rule, we provide background information on each of these
12 alternative pathway applications and discuss whether or not each
technology is eligible for the new technology add-on payment for FY
2022. As previously noted, the applications for the Neovasc
ReducerTM and ThoraflexTM Hybrid Device were
withdrawn prior to the issuance of this final rule, and the remaining
two technologies, CERAMENT[supreg] G and the Phagenyx[supreg] System,
did not meet the deadline of July 1, 2021 for FDA approval or clearance
of the technology and, therefore, these technologies are not eligible
for consideration for new technology add-on payments for FY 2022. We
refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR 42292
through 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58715
through 58733) for a complete discussion of the alternative new
technology add-on payment pathways for these technologies.
a. Alternative Pathway for Breakthrough Devices
(1) AprevoTM Intervertebral Body Fusion Device
Carlsmed, Inc. submitted an application for new technology-add on
payments for the aprevoTM Intervertebral Fusion Device
(aprevoTM) for FY 2022. Per the applicant, the device is an
interbody fusion implant that stabilizes the lumbar spinal column and
facilitates fusion during lumbar fusion procedures indicated for the
treatment of spinal deformity. The applicant states that the implant
device is custom made for patient-specific features, by using patient
CT scans to create 3D virtual models of the deformity. The device is
used during anterior lumbar interbody fusion, lateral lumbar interbody
fusion, transforaminal lumbar interbody fusion, or standalone anterior
lumbar interbody fusion procedures. According to the applicant, the
aprevoTM device is additively manufactured and made from
Titanium Alloy (Ti-6Al-4V) per ASTM F3001, and has a cavity intended
for the packing of bone graft. In addition, the applicant explained
that aprevoTM is used with supplemental fixation devices and
bone graft packing. Per the applicant, the device was formerly known as
``CorraTM.''
The aprevoTM device received FDA Breakthrough Device
designation under the name ``Corra'' on July 1, 2020 for the Corra
Anterior, Corra Transforaminal and Corra Lateral Lumbar Fusion System
interbody device which is intended for use in anterior lumbar interbody
fusion (ALIF), lateral lumbar interbody fusion (LLIF), and
transforaminal lumbar interbody fusion (TLIF) under this designation.
The applicant was granted FDA 510(k) clearance as a Class II medical
device for the anterior lumbar interbody fusion and lateral lumbar
interbody fusion indications on December 3, 2020. We stated in the
proposed rule that the applicant anticipated that the
aprevoTM device would receive FDA marketing authorization by
May 2021 for the additional indications of transforaminal interbody
fusion and standalone anterior lumbar interbody fusion (which
incorporates supplemental fixation), and was granted 510(k) clearance
for the TLIF indication on June 30, 2021. Since the anterior and
lateral lumbar fusion indications that received marketing authorization
on December 3, 2020 correspond to the indications that received
Breakthrough Device designation, we stated that we believed the newness
date for these indications would be December 3, 2020. The
transforaminal interbody fusion indication, which also corresponds to
the indication that received Breakthrough Device designation, received
marketing authorization on June 30, 2021, and we therefore believe the
newness date for this indication would be June 30, 2021. We noted that
under the eligibility criteria for approval under the alternative
pathway for certain transformative new devices, only the use of
aprevoTM for the ALIF, LLIF, and TLIF indications, and the
FDA Breakthrough Device designations it received for these uses, are
relevant for purposes of the new technology add-on payment application
for FY 2022. As the use of aprevoTM for the standalone
indication is not included in the Breakthrough Device designation
indications, it is not eligible for new technology add-on payments.
The applicant submitted a request to the ICD-10 Coordination and
Maintenance Committee for approval of a code for FY 2022 to uniquely
identify the technology and was granted approval for the following
procedure codes effective October 1, 2021:
BILLING CODE 4120-01-P
[[Page 45128]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.205
With respect to the cost criterion, the applicant provided the
following analysis. The applicant used the MS-DRG grouping function
within FindACode software in conjunction with the online MS-DRG v37.0
Definitions Manual to identify the appropriate MS-DRGs to which
potential cases that may be eligible for treatment involving
aprevoTM patient-specific interbody cages would most likely
map. The applicant identified the following six relevant MS-DRGs:
[GRAPHIC] [TIFF OMITTED] TR13AU21.206
The applicant conducted a review of ICD-10-PCS codes for procedures
in which the aprevoTM patient-specific intervertebral body
fusion cases might be placed into the lumbar spine of an adult patient
diagnosed with spinal curvature. For MS-DRGs 453, 454, and 455, the
applicant searched the FY 2019 MedPAR dataset for cases with any of the
following procedure codes:
[[Page 45129]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.207
For MS-DRGs 456, 457, and 458, the applicant searched the FY 2019
MedPAR dataset for cases reporting a procedure code in Table A in
combination with a primary diagnosis code in Table B or a secondary
diagnosis code in Table C.
[GRAPHIC] [TIFF OMITTED] TR13AU21.208
[[Page 45130]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.209
[[Page 45131]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.210
[GRAPHIC] [TIFF OMITTED] TR13AU21.211
[[Page 45132]]
BILLING CODE 4120-01-C
The applicant identified 45,331 cases across all six MS-DRGs. The
applicant first removed charges to account for the two types of prior
technology devices that the applicant asserted are most likely to be
replaced by aprevoTM Intervertebral Body Fusion Device.
Specifically, the applicant calculated an average cost for the top five
selling devices in each category of prior technology, which include
standalone ALIF and LLIF lateral expandable cages.\746\ The applicant
then multiplied the cost of the technology being replaced by three,
which, per the applicant, is the number of lumbar cages implanted for
the correction of spinal curvature, to arrive at an estimated hospital
cost per case.\747\ The applicant converted costs to charges by
weighting the operating cost-to-charge ratios for each of the 3,315
hospitals in the FY 2021 IPPS/LTCH final rule and correction notice
impact file by each hospital's share of the 9,235,824 submitted claims
to obtain a national average CCR of 0.2546, of which the inverse is a
national-average hospital markup of 393 percent. The applicant then
standardized the charges and applied an inflation factor of 13.1
percent, which, per the applicant, is the outlier charge inflation
factor used in the FY 2021 IPPS/LTCH final rule (85 FR 59038), to
update the charges from FY 2019 to FY 2021. We note that the applicant
appears to have used the FY 2021 IPPS/LTCH PPS proposed rule inflation
factor rather than the 2-year inflation factor from the FY 2021 IPPS/
LTCH PPS final rule of 13.2 percent (85 FR 59039), which would have
resulted in a higher inflated charge figure. The applicant then added
charges for the new technology by multiplying the estimated average
cost for the aprevoTM Intervertebral Body Fusion Device by
three devices per case and converting the cost to charges using the 393
percent hospital charge markup.
---------------------------------------------------------------------------
\746\ Orthopedic Network News. ``2019 Spinal Surgery update.''
Volume 30, No. 4. October 2019.
\747\ Ibid.
---------------------------------------------------------------------------
The applicant calculated a final inflated case-weighted average
standardized charge per case of $247,648 and an average case-weighted
threshold of $157,600. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25364), we agreed
with the applicant that the aprevoTM Intervertebral Body
Fusion meets the cost criterion and therefore proposed to approve the
aprevoTM Intervertebral Body Fusion device for the
indications of ALIF and LLIF, and for the indication of TLIF, subject
to the technology receiving FDA marketing authorization for that
indication by July 1, 2021, as these indications correspond to the
Breakthrough Device designation, for new technology add-on payments for
FY 2022.
Based on preliminary information from the applicant at the time of
the proposed rule, the cost of the aprevoTM Intervertebral
Body Fusion is $31,500, or an estimated average cost of $10,500 per
device multiplied by three, which, according to the applicant, is the
average number of devices used per procedure. We noted that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), 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, we proposed that the maximum new technology add-on payment
for a case involving the use of the aprevoTM Intervertebral
Body Fusion Device would be $20,475 for FY 2022 (that is 65 percent of
the average cost of the technology).
We invited public comments on whether the aprevoTM
Intervertebral Body Fusion Device meets the cost criterion and our
proposal to approve new technology add-on payments for
aprevoTM Intervertebral Body Fusion Device for FY 2022 for
ALIF and LLIF, and for TLIF, subject to the technology receiving
marketing authorization for that indication by July 1, 2021.
Comment: We received several comments expressing support for the
approval of the aprevoTM Intervertebral Body Fusion Device
for the new technology add-on payment for FY 2022. The commenters
stated that aprevoTM provides a more effective treatment for
surgeries for adult spinal deformities and improves patient care by
reducing complications. Also, a commenter expressed general support for
the approval of the aprevoTM Intervertebral Body Fusion
Device as an orthopaedic device which advances the care of
musculoskeletal disorders and improves patients' quality of life.
Response: We appreciate the commenters' support.
Comment: The applicant submitted a comment noting that CMS
determines eligibility for the new technology add-on payment based on
the newness of the technology, which has been established in regulation
as being measured from the first date upon which data become available
reflecting inpatient use of the technology. The applicant requested
that CMS adjust the beginning of the newness period for the
aprevoTM Intervertebral Body Fusion Device from the date of
FDA clearance on December 3, 2020, to the date the device was first
used commercially on February 23, 2021. Per the applicant, using the
date of FDA approval or clearance as the basis for the start of the
newness period does not account for situations where a product may be
approved by the FDA for distribution and use but is not yet being
distributed to or used by hospitals in caring for patients.
Response: We thank the applicant for its comment. As we have
discussed in prior rulemaking (77 FR 53348), generally, our policy is
to begin the newness period on the date of FDA approval or clearance
or, if later, the date of availability of the product on the U.S.
market. The applicant states that the aprevoTM
Intervertebral Body Fusion Device was first used commercially on
February 23, 2021, but it is unclear from the information provided when
the technology first became available for sale and, absent additional
information from the applicant, we cannot determine a newness date
based on a documented delay in the technology's availability on the
U.S. market. However, we note that using either the FDA clearance date
of December 3, 2020, or the date suggested by manufacturer of February
23, 2021, aprevoTM is still considered new for FY 2022
because the 3-year anniversary date (December 3, 2023 or February 23,
2024, respectively) would occur after FY 2022.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe the aprevoTM Intervertebral
Body Fusion meets the cost criterion. The aprevoTM
Intervertebral Body Fusion received marketing authorization from the
FDA on December 3, 2020 for the indications for ALIF and LLIF and on
June 30, 2021 for the indication for TLIF, that are covered by its
Breakthrough Device designation. Therefore, we are finalizing our
proposal to approve new technology add-on payments for the
aprevoTM Intervertebral Body Fusion for FY 2022, and we
consider the beginning of the newness period to commence on December 3,
2020 for the indications for ALIF and LLIF and June 30, 2021 for the
indication for TLIF, which is when the technology received FDA
marketing authorization for the indications
[[Page 45133]]
covered by its Breakthrough Device designation. Based on the
information at the time of this final rule, the cost per case is
$31,500 or an estimated average cost of $10,500 per device multiplied
by three, which, according to the applicant, is the average number of
devices used per procedure. Under Sec. 412.88(a)(2), 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, we are finalizing that the
maximum new technology add-on payment for a case involving the use of
the aprevoTM Intervertebral Body Fusion Device would be
$20,475 for FY 2022 (that is 65 percent of the average cost of the
technology). Cases involving the use of the aprevoTM
Intervertebral Body Fusion Device that are eligible for new technology
add-on payments will be identified by any of the following ICD-10-PCS
codes:
[GRAPHIC] [TIFF OMITTED] TR13AU21.212
(2) aScopeTM Duodeno
Ambu, Inc. submitted an application for new technology add on
payments for the aScopeTM Duodeno for FY 2022. The device is
a sterile, single-use endoscope for endoscopy and endoscopic surgery
indicated for treatment of the upper gastrointestinal (GI) tract. Per
the applicant, the device includes a flexible insertion tube with a
bendable tip equipped with lighting and camera. According to the
applicant, the aScopeTM Duodeno is inserted into the mouth
of the patient and steered via the esophagus and stomach to the
duodenum. The applicant states that single-use scopes eliminate the
risk of patient-to-patient transmission of infection related to
reprocessing. The applicant also states the device is designed to be
used with aBox Duodeno, which is a video processor that outputs video
imaging for observation and recording. Per the applicant, the device
may also be used with existing external video monitors for image
display as well as other endoscopic accessories and equipment.
The aScopeTM Duodeno (formerly aScope 1 Duo) was
designated as a Breakthrough Device, indicated for use with the aScope
Base (now aBox Duodeno), endo-therapy accessories (for example, biopsy
forceps) and other ancillary equipment (for example, video monitor) for
endoscopy and endoscopic surgery within the duodenum, and received FDA
510(k) clearance as a Class II medical device on July 17, 2020 for the
same indication. Per the applicant, the device was available on the
market immediately after FDA clearance.
The applicant stated that the applicant for EXALTTM
Model D, another technology discussed in this section, submitted a
request to the ICD-10 Coordination and Maintenance Committee for FY
2022 for a unique code to identify use of single-use duodenoscopes. The
applicant further stated that since this code would describe and
identify use of aScope, they did not submit a request for approval of a
code to uniquely identify the technology. The applicant for
aScopeTM Duodeno was granted approval for the following
procedure codes effective October 1, 2021: XFJB8A7 (Inspection of
hepatobiliary duct using single-use duodenoscope, new technology group
7) and XFJD8A7 (Inspection of pancreatic duct using single-use
duodenoscope, new technology group 7).
To demonstrate that the technology meets the cost criterion, the
applicant searched the FY 2019 MedPAR Limited Data Set (LDS) for cases
reporting one of the following ICD-10-PCS codes commonly used to report
endoscopic retrograde cholangiopancreatography (ERCP) and use of
duodenoscopes:
BILLING CODE 4120-01-P
[[Page 45134]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.213
BILLING CODE 4120-01-C
The applicant excluded MS-DRGs that had fewer than 100 cases from
the analysis. The applicant did not say how many cases it excluded
based on this criterion.
In total, the applicant identified 54,848 cases across 40 unique
MS-DRGs. The applicant then removed charges for prior technology by
dividing the per use cost for reusable duodenoscopes and related
components \748\ by the hospital-specific cost-to-charge ratio from the
FY 2021 IPPS/LTCH Proposed Rule Impact File at the claims level and
averaging the resulting estimated charges by MS-DRG. The applicant then
standardized the charges and applied an inflation factor of 13.2
percent, or the 2-year inflation factor used to update the outlier
threshold in the FY 2021 IPPS/LTCH final rule (85 FR 59039), to update
the charges from FY 2019 to FY 2021. The applicant added charges for
the aScopeTM Duodeno and related components by dividing the
cost per use by the national cost-to-charge ratio of 0.2970 for
Supplies and Equipment (85 FR 58601).
---------------------------------------------------------------------------
\748\ Derived from Travis, et al. minus the 20 percent overhead
cost.
---------------------------------------------------------------------------
The applicant calculated a final inflated average case-weighted
standardized charge per case of $89,945 and an average case-weighted
threshold of $64,894. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25366), we agreed
with the applicant that the aScopeTM Duodeno meets the cost
criterion; and therefore, we proposed to approve the
aScopeTM Duodeno for new technology add-on payments for FY
2022.
Based on preliminary information from the applicant at the time of
the proposed rule, the cost of the aScopeTM Duodeno is
$2,184.27. However, the applicant noted in its application that this
cost is broken down into three components, including the disposable
sleeve, the aBox Duodeno (a video processor and light source), and
other endoscopic accessories and equipment. We stated that we believed
it is appropriate to only consider the cost of the disposable sleeve as
the cost of the technology, as the other two components, which include
the aBox Duodeno and an external monitor that, per the applicant, do
not incur new costs per use, would thus be paid for under the IPPS for
capital-related costs. As noted previously, because section
1886(d)(5)(K)(i) of the Act requires that the Secretary establish a
mechanism to recognize the costs of new medical services or
technologies under the payment system established under that
subsection, which establishes the system for paying for the operating
costs of inpatient hospital services, we do not include capital costs
in the add-on payments for a new medical service or technology or make
new technology add on payments under the IPPS for capital-related
costs. Thus, we stated that we believe the operating cost of the
aScopeTM Duodeno is $1,995.
Based on the information available at the time of the proposed
rule, we stated that it appeared that both aScopeTM Duodeno
and EXALTTM Model D will be identified by the same ICD-10-
PCS code and share the same indication for endoscopy and endoscopic
surgery within the duodenum. We stated that as we are unable to
separately identify these cases to apply two separate payment amounts
for these technologies, we were proposing to use a case-weighted
average to calculate a single cost that would be used to
[[Page 45135]]
determine the new technology add-on payment amount for both
technologies. To compute the weighted average cost, we summed the total
number of projected cases for each of the applicants, which equaled
12,064 (3,750 plus 8,314). Then we divided the number of projected
cases for each of the applicants by the total number of cases, which
resulted in the following case-weighted percentages: 31 percent for
aScopeTM Duodeno and 69 percent for EXALTTM Model
D. We multiplied the cost per case for the manufacturer specific
technology by the case-weighted percentage (0.31 * $1,995 = $620.13 for
aScopeTM Duodeno and 0.69 * $2,930 = $2,019.23 for
EXALTTM Model D). This resulted in a case-weighted average
cost of $2,639.36 for both technologies. We invited public comments on
the proposed case-weighted average, as well as any alternative
approaches for determining and applying the new technology add-on
payment amount for cases involving these technologies, for FY 2022.
We noted that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 412.88(a)(2), 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, we proposed that the
maximum new technology add-on payment for a case involving the use of
aScopeTM Duodeno or EXALTTM Model D would be
$1,715.59 for FY 2022 (that is, 65 percent of the case-weighted average
cost of both technologies).
We invited public comments on whether aScopeTM Duodeno
meets the cost criterion and our proposal to approve new technology
add-on payments for aScopeTM Duodeno for FY 2022. We further
invited public comments on the calculation of the maximum new
technology add-on payment amount for the aScopeTM Duodeno.
We did not receive comments on our proposals for the
aScopeTM Duodeno for the new technology add-on payment for
FY 2022. As we discuss later in this section, we separately received
comments from the applicant for the EXALTTM Model D
supporting CMS' proposal to use a case-weighted average to calculate a
single cost that would be used to determine the new technology add-on
payment amount.
Based on the information provided in the application for new
technology add-on payments we believe aScopeTM Duodeno meets
the cost criterion. Also, aScopeTM Duodeno received
marketing authorization from the FDA on July 17, 2020 for the
indication covered by its Breakthrough Device designation. Therefore,
we are finalizing our proposal to approve new technology add-on
payments for aScopeTM Duodeno for FY 2022, and we consider
the beginning of the newness period to commence on July 17, 2020 which
is when the technology received FDA marketing authorization for the
indication covered by its Breakthrough Device designation. Based on the
information at the time of this final rule, and using the case-weighted
average cost as described in the proposed rule and earlier in this
final rule, the cost per case is $2,639.36. Under Sec. 412.88(a)(2),
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, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of the aScopeTM Duodeno or
EXALTTM Model D would be $ 1,715.59 for FY 2022 (that is 65
percent of the case-weighted average cost of both technologies). Cases
involving the use of the aScopeTM Duodeno eligible for new
technology add-on payments will be identified by ICD-10- PCS codes:
XFJB8A7 (Inspection of hepatobiliary duct using single-use
duodenoscope, new technology group 7) or XFJD8A7 (Inspection of
pancreatic duct using single-use duodenoscope, new technology group).
(3) Caption GuidanceTM
Caption Health, Inc. submitted an application for new technology-
add on payments for Caption GuidanceTM for FY 2022. Per the
applicant, Caption GuidanceTM is an artificial intelligence
(AI) guided medical imaging acquisition software system indicated for
the acquisition of cardiac ultrasound images. The applicant explained
that the system provides real-time guidance during transthoracic
echocardiography (2D-TTE) to assist in obtaining anatomically correct
and optimized images that represent standard 2D echocardiographic
diagnostic views and orientations. The applicant also states that the
technology is classified by FDA as software as a medical device (SaMD),
so in order to use the software, the Caption GuidanceTM
system must be installed on a compatible third-party ultrasound system.
Caption GuidanceTM is designated as a Breakthrough
Device, indicated to assist medical professionals in the acquisition of
cardiac ultrasound images, and received FDA De Novo approval on
February 7, 2020 for the same indication. The applicant stated that an
updated version of the system subsequently received 510(k) clearance
under 510(k) number K200755 on April 16, 2020 on an expedited basis due
to COVID-19. Per the applicant, an interim version of the software
became available on March 17, 2020, though not sold, on an emergency
basis to assist sites in responding to the COVID-19 pandemic. According
to the applicant, the first version of the technology was released
commercially on September 15, 2020 with a first date of sale of
September 29, 2020. Therefore, we stated that we believe that the
newness date for this technology is the date on which Caption
GuidanceTM became available on the market, September 15,
2020. The item is a Class II medical device assigned to product code
QJU with descriptor Image Acquisition And/Or Optimization Guided By
Artificial Intelligence. The applicant submitted a request to the ICD-
10 Coordination and Maintenance Committee for a new code to uniquely
identify the technology and was granted approval to identify Caption
GuidanceTM using the following procedure code effective
October 1, 2021: X2JAX47 (Inspection of heart using transthoracic
echocardiography, computer-aided guidance, new technology group 7).
Comment: Several commenters, including the applicant, supported the
proposal to consider September 15, 2020, as the date on which Caption
GuidanceTM became available for purposes of evaluating the
newness period for new technology add-on payments. The applicant stated
that the proposed newness date is appropriate given that, during FY
2019, which is the time period of the data CMS proposed to use for
recalibrating the MS-DRGs, Caption Guidance was not yet commercially
available and as a result, the claims do not adequately reflect the
cost of technology. In addition, the applicant stated that CMS has
defaulted to the FDA approval date despite other reasons being provided
by applicants regarding the date of first commercial availability.
Another commenter also stated that requiring a manufacturer to submit
information rebutting a presumption that the date of first availability
is the date of FDA marketing authorization adds unnecessary burden and
complexity to the new technology add-on payments application and review
process. The commenter believes that a more efficient and appropriate
policy would be for the new technology add-on payment newness period to
[[Page 45136]]
begin with the date of the first claim, which is consistent with the
definition of newness used in determining the period of eligibility for
Transitional Pass-through status in the Hospital Outpatient Prospective
Payment System (OPPS).
Response: We thank the commenters for their support and feedback
and agree that the newness date for this technology is the date on
which Caption GuidanceTM became available on the market,
September 15, 2020, and that Caption GuidanceTM meets the
newness criterion for FY 2022. We note that though, generally, our
policy is to begin the newness period on the date of FDA approval or
clearance, we may consider a documented delay in the technology's
market availability in our determination of newness (77 FR 53348 and 70
FR 47341).
Regarding the commenter's belief that beginning the newness period
on the date of first claim would be a more efficient and appropriate
policy, as well as consistent with the definition of newness used in
determining the period of eligibility for Transitional Pass-through
status in OPPS, we note that ``newness'' for purposes of the OPPS pass-
through policy refers to a drug, biological, or device's eligibility
for pass-through status. In particular, for pass-through drugs and
biologicals, ``newness'' means that the drug or biological was first
payable as an outpatient hospital service after December 31, 1996. For
pass-through devices, ``newness'' means that CMS received the
applicant's pass-through application within 3 years of the date of FDA
approval for the device. It appears the commenter is referring not to
newness in terms of eligibility for OPPS pass-through status, but
rather to the two-to-three-year period for pass-through status can be
in effect. Under Sec. Sec. 419.64(c)(2) and 419.66(g), the pass-
through period begins on the date on which CMS makes its first pass-
through payment for a drug, biological, or device. For new technology
add-on payments, as we have discussed in prior rulemaking (77 FR 53348)
and noted above, generally, our policy is to begin the newness period
on the date of FDA approval or clearance or, if later, the date of
availability of the product on the U.S. market.
With respect to the cost criterion, the applicant searched the CY
2019 Limited Data Set (LDS)--Carrier Standard Analytic File (SAF), 5
percent sample, for beneficiaries receiving limited echocardiography,
as described by Current Procedural Terminology (CPT[supreg]) code 93308
(Echocardiography, transthoracic, real-time with image documentation
(2D), includes M-mode recording, when performed, follow-up or limited
study) with a place of service code 21 (inpatient hospital) or 23
(emergency department) and the associated inpatient stays. Per the
applicant, limited echocardiography, the procedure most likely to
include Caption Guidance, is not reliably reported in the inpatient
setting. As a result, the applicant used a multi-step approach where
corresponding inpatient stays were identified in the CY 2019 LDS--
Inpatient SAF for the beneficiaries identified in the Carrier SAF.
Inpatient stays were identified by matching on the unique beneficiary
ID and by matching the carrier claim date of service against the
inpatient admission and discharge dates. The applicant counted an
inpatient stay if the date of service for CPT code 93308 occurred on or
after the inpatient admission date (or during the three days preceding
the date of admission), but was also on or before the discharge date of
the hospital stay. The applicant eliminated non-inpatient claims and
claims with a payment amount less than or equal to zero, as well as
claims from hospitals that are not used in the ratesetting process.
The applicant summarized the remaining claims by MS-DRG, and by
principal diagnosis and MS-DRG. The applicant cross-walked the MS-DRG
codes to FY 2021 MS-DRG definitions using the MS-DRG grouper for FY
2021 and identified a list of 461 unique MS-DRGs to which cases
representing patients who may be eligible for use of Caption
GuidanceTM mapped. The applicant also utilized data from
current Caption GuidanceTM customers to obtain a list of
principal diagnoses associated with each MS-DRG. The applicant noted
that, because this analysis began with the CY 2019 LDS Carrier SAF, 5
percent sample, the inpatient claims captured underrepresent the total
number of inpatient stays in which CPT code 93308 is expected to be
performed. The applicant applied the unique MS-DRG and principal
diagnosis combinations to all inpatient claims in the CY 2018 and CY
2019 LDS SAF with a discharge date in FY 2019. The applicant then
removed any claims where there were no billed charges in revenue
centers 0480 (Cardiology-General) and 0483 (Cardiology-Echocardiology).
The applicant explained that MS-DRG and principal diagnosis alone are
unlikely to be a good proxy for performance of CPT code 93308. The
applicant noted that there are charges to revenue centers 0480 and 0483
among nearly 100 percent of cases identified, and that no other revenue
centers were billed at such high frequency. The applicant explained
that it did not use the FY 2021 MedPAR LDS for this reason, as the
dataset does not report charges by revenue center.
The applicant identified 1,932,386 cases mapping to 461 MS-DRGs.
Then the applicant standardized the charges and applied the 2-year
charge inflation factor used to adjust the outlier threshold
determination, which the applicant stated was 10.22 percent. We note
that the applicant appears to have used an inflation factor lower than
the FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59039),
which would have resulted in a higher inflated charge figure. The
applicant did not remove charges for prior technology as the applicant
maintained that no existing technology is comparable to Caption
GuidanceTM.
The applicant then added charges for the new technology. The
applicant calculated the technology's cost per case in a multi-step
process. First, the applicant multiplied the cost of Caption
GuidanceTM by the number of devices under the CCN of each
subscribing provider to obtain a provider-specific total device cost.
Next, for each subscribing provider, the applicant identified Medicare
inpatient cases that would be eligible for Caption
GuidanceTM using the criteria and methodology described
previously. The applicant then multiplied the number of inpatient cases
by 15 percent, which per the applicant is consistent with published
evidence that the percent of limited echocardiography cases ranged from
12 to 15 percent of all inpatient echocardiography services.\749\ The
applicant then added the number of Medicare hospital outpatient cases
for CPT code 93308 for each subscribing provider to the estimated
inpatient limited echocardiography utilization to estimate total
Medicare limited echocardiography by provider. The applicant divided
the total Medicare inpatient and outpatient cases receiving limited
echocardiogram by an average Medicare share of 63 percent, which the
applicant estimated by analyzing discharges reporting three ICD-10-PCS
codes: B244ZZZ (Ultrasonography of right heart), B245ZZZ
(Ultrasonography of left heart), and B246ZZZ (Ultrasonography of right
and left heart) from HCUPnet's Nationwide Inpatient
[[Page 45137]]
Sample, 2017, to obtain the total limited echocardiography cases. The
applicant then divided the total device cost by the total limited
echocardiography cases to obtain a provider-specific cost per case,
which it then averaged across all subscriber hospitals. Finally, the
applicant converted the cost per case to charges per case by dividing
the cost per case by the national average cost-to-charge ratio for the
cardiology cost center of 0.094 (85 FR 58601).
---------------------------------------------------------------------------
\749\ Ward RP, Lee L, Ward TJ, Lang RM. Utilization and
Appropriateness of Transthoracic Echocardiography in Response to he
COVID-19 Pandemic. J Am Soc Echoardiogr. 2020 June;33(6):690-691.
doi: 101.1016/j.echo.2020.04.006. Epub 2020 April 10.
---------------------------------------------------------------------------
The applicant calculated a final inflated case-weighted average
standardized charge per case of $113,435 and an average case-weighted
threshold of $69,197. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
We agreed with the applicant that, using the cost per case provided
by the applicant, the Caption GuidanceTM system would meet
the cost criterion and therefore proposed to approve the Caption
GuidanceTM system for new technology add-on payments for FY
2022.
We stated that based on preliminary information from the applicant
at the time of proposed rule, the cost per case of the Caption
Guidance\TM\ system is $2,874. We noted that the cost information for
this technology may be updated in the final rule based on revised or
additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), 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, we proposed that the maximum new technology add-on payment for
a case involving the use of the Caption GuidanceTM system
would be $1,868.10 for FY 2022 (that is 65 percent of the average cost
of the technology).
In the proposed rule, we stated our concern that the applicant
appears to have used a single list price of Caption
GuidanceTM per hospital with a cost per patient that can
vary based on the volume of cases. We stated that we were interested in
information about whether the cost per patient varies based on the
utilization of the technology by the hospitals. We stated that the cost
per patient could be skewed by the small number of hospitals utilizing
the technology and their low case volumes. It is possible, if hospitals
with large patient populations adopt Caption GuidanceTM, the
cost per patient would be significantly lower.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58628), in a similar
instance, we stated our understanding that there are unique
circumstances to determining a cost per case for a technology that
utilizes a subscription for its cost. We invited comments from the
public as to the appropriate method to determine a cost per case for
such technologies, including comments on whether the cost per case
should be estimated based on subscriber hospital data as described
previously, and if so, whether the cost analysis should be updated
based on the most recent subscriber data for each year for which the
technology may be eligible for the new technology add-on payment.
We invited public comments on whether the Caption
GuidanceTM system meets the cost criterion and our proposal
to approve new technology add-on payments for Caption
GuidanceTM system for FY 2022, including on whether the
newness period for this technology would begin on September 15, 2020.
Comment: We received a few comments on our request for comment
regarding technologies sold on a subscription basis and whether the
cost per case should be estimated based on subscriber hospital data,
and if so, whether the cost analysis should be updated based on the
most recent subscriber data for each year for which the technology may
be eligible for the new technology add-on payment. Most commenters
agreed that in determining the cost per case for technologies seeking
new technology add-on payment that utilize a subscription model, we
should limit our analysis to subscriber hospitals and update the cost
analysis on an annual basis. A commenter noted that alternative
methodologies involving estimating the number of patients who would be
eligible to receive treatment utilizing a technology sold on a
subscription basis would be likely to result in a payment amount that
does not adequately reflect the estimated average cost of such service
or technology as required by the statute. The commenter believes that
given the direct impact of utilization changes on cost per case when
using a subscription model, it is reasonable for CMS to annually update
the payment amount using the most recent subscriber utilization data.
We also received a comment from the applicant stating that Caption
GuidanceTM had been commercially available for less than 30
days prior to the application deadline and that the first sale was
completed within two weeks of this deadline. The applicant stated as
there were too few subscriber hospitals to limit the cost per case
analysis to just subscribers, they calculated the anticipated cost per
case across all IPPS hospitals. The applicant explained that each
hospital's anticipated total cost was determined based on the estimated
number of devices multiplied by the list price per device. The
applicant then explained that the cost per case was calculated using
the anticipated total device costs and the estimated number of Medicare
and non-Medicare cases. The applicant stated that an average of these
unique costs per case was taken to derive the average cost per case
across all IPPS hospitals, which the applicant then converted to
charges using the national average cost-to-charge ratio of 0.094 for
cardiology cost centers (85 FR 58601). The applicant also noted that it
updated its cost analysis with the correct inflation factor of 13.22
percent as advised in the FY 2022 IPPS proposed rule and stated that
with the change, the technology still meets the cost criterion.
Response: We thank the commenters for the support and feedback and
agree that Caption GuidanceTM meets the cost criterion. We
also thank the commenters for their feedback on determining a cost per
case for technologies sold on a subscription basis. CMS will continue
to consider the issues relating to calculation of the cost per unit of
technologies sold on a subscription basis, including the merits of
calculating the cost per case across all IPPS hospitals versus limiting
the cost per case analysis to current users and whether the cost
analysis should be updated based on the most recent subscriber data for
each year for which the technology may be eligible for the new
technology add-on payment, as we gain more experience in this area.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe Caption GuidanceTM system
meets the cost criterion. Therefore, we are finalizing our proposal to
approve new technology add-on payments for the Caption
GuidanceTM system for FY 2022, and we consider the beginning
of the newness period to commence on September 15, 2020 which is when
the technology became commercially available for the indication covered
by its Breakthrough Device designation. Based on the information at the
time of this final rule, the cost per case of the Caption
GuidanceTM system is $2,874. Under Sec. 412.88(a)(2), 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
[[Page 45138]]
for the case. As a result, we are finalizing that the maximum new
technology add-on payment for a case involving the use of the Caption
GuidanceTM system would be $1,868.10 for FY 2022 (that is 65
percent of the average cost of the technology). Cases involving the use
of the Caption GuidanceTM system that are eligible for new
technology add-on payments will be identified by ICD-10-PCS code:
X2JAX47 (Inspection of heart using transthoracic echocardiography,
computer-aided guidance, new technology group 7).
(5) EXALTTM Model D Single-Use Duodenoscope
Boston Scientific Corporation applied for new technology-add on
payments for EXALTTM Model D Single-Use Duodenoscope
(EXALTTM) for FY 2022. Per the applicant, EXALTTM
is a single-use, flexible duodenoscope indicated for diagnostic and
therapeutic treatment of the pancreaticobiliary system during
endoscopic retrograde cholangiopancreatography (ERCP) procedures.
According to the applicant, the scope is most commonly used to
facilitate therapeutic maneuvers such as removal of gallstones from the
bile ducts, dilation of strictures in the bile or pancreatic ducts, or
to relieve an obstruction by inserting a plastic or metal stent. The
applicant states that EXALTTM is intended to eliminate the
risk of patient-to-patient transmission of infection related to
reprocessing of reusable duodenoscopes.
EXALTTM is designated as a Breakthrough Device,
indicated for intended use with a Boston Scientific endoscopic video
imaging system for endoscopy and endoscopic surgery within the
duodenum, and received FDA 510(k) clearance as a Class II medical
device on December 13, 2019 for the same indication. The applicant
indicates that this device is the first FDA-cleared single-use
duodenoscope in the U.S. According to the applicant, EXALTTM
was available on the market immediately after FDA approval. The
applicant listed 50 ICD-10-PCS codes that describe ERCP and other
procedures in which EXALTTM and other duodenoscopes are
used. The applicant submitted a request to the ICD-10 Coordination and
Maintenance Committee for approval of a code to uniquely identify the
technology and was granted approval to identify the EXALTTM
using the following procedure codes effective October 1, 2021: XFJB8A7
(Inspection of hepatobiliary duct using single-use duodenoscope, new
technology group 7) and XFJD8A7 (Inspection of pancreatic duct using
single-use duodenoscope, new technology group 7).
With respect to the cost criterion, the applicant conducted two
analyses based on 100 percent of identified claims and 76 percent of
identified claims, both of which are further described later in this
section. To identify potential cases where EXALTTM could be
utilized, the applicant searched the FY 2019 MedPAR file for the
following ICD-10-PCS codes:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.214
[[Page 45139]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.215
For the analysis using 100 percent of cases, the applicant
identified a total of 59,966 cases spanning 440 MS-DRGs. The applicant
then removed 100 percent of charges associated with the service
Medical/Surgical Supplies and Devices for the prior technology. The
applicant stated that it does not believe use of EXALTTM
will replace any other medical supplies but removed 100 percent of
charges associated with service category Medical/Surgical Supply Charge
Amount, which included the revenue center code 027x, to be as
conservative as possible. The applicant then standardized the charges
and applied an inflation factor of 13.2 percent, which is the same
inflation factor used by CMS to update the outlier threshold in the FY
2021 IPPS/LTCH PPS final rule, to update the charges from FY 2019 to FY
2021 (85 FR 59039). The applicant added charges for the new technology
by multiplying the cost of the technology by the national CCR for
implantable devices from the FY 2021 IPPS/LTCH PPS final rule. Under
the analysis based on 100 percent of claims, the applicant determined
an average case-weighted threshold amount of $66,588 and a final
inflated case weighted average standardized charge per case of $96,079.
For the analysis using 76 percent of cases, which the applicant
conducted due to these cases mapping to just 14 MS-DRGs, the applicant
used the same methodology, which identified 45,530 cases across 14 MS-
DRGs. The applicant determined an average case-weighted threshold
amount of $63,762 and a final inflated case weighted average
standardized charge per case of $84,631. Because the final inflated
case-weighted average standardized charge per case exceeded the average
case-weighted threshold amount for both analyses, the applicant
asserted that the technology meets the cost criterion.
We stated in the proposed rule that we are concerned that the
applicant used the national CCR for implantable devices from the FY
2021 IPPS/LTCH PPS final rule, as a duodenoscope is not an implantable
device. We noted that the cost analysis for another duodenoscope that
is the subject of an application for new technology add-on payments for
FY 2022, the aScopeTM Duodeno, used the national CCR for
supplies and equipment to convert the cost of the technology to
charges, and that we believe that the same CCR should apply for
purposes of the cost analysis for EXALTTM Model D Single-Use
Duodenoscope.
We stated that we agreed with the applicant that EXALTTM
Model D Single-Use Duodenoscope meets the cost criterion and therefore
proposed to approve EXALTTM Model D Single-Use Duodenoscope
for new technology add on payments for FY 2022.
As discussed previously, based on the information available at the
time of the proposed rule, it appeared that both aScopeTM
Duodeno and EXALTTM Model D will be identified by the same
ICD-10-PCS code and share the same indication for endoscopy and
endoscopic surgery within the duodenum. We stated that thus, as we are
unable to separately identify these cases to apply two separate payment
amounts for these technologies, we were proposing to use a case-
weighted average to calculate a single cost that would be used to
determine the new technology add-on payment amount for both
technologies. To compute the weighted average cost, we summed the total
number of projected cases for each of the applicants, which equaled
12,064 (3,750 plus 8,314). Then we divided the number of projected
cases for each of the applicants by the total number of cases, which
resulted in the following case-weighted percentages: 31 Percent for
aScopeTM Duodeno and 69 percent for EXALTTM Model
D. We then multiplied the cost per case for the manufacturer specific
technology by the case-weighted percentage (0.31 * $1,995 = $620.13 for
aScopeTM Duodeno and 0.69 * $2,930 = $2,019.23 for
EXALTTM Model D). This resulted in a case-weighted average
cost of $2,639.36 for both technologies. We invited public comments on
the proposed case-weighted average, as well as any alternative
approaches for determining and applying the new technology add-on
payment amount for cases involving these technologies, for FY 2022.
We noted that the cost information for this technology may be
updated in the final rule based on revised or additional information
CMS receives prior to the final rule. Under Sec. 412.88(a)(2), we
limit new technology add-on payments to the
[[Page 45140]]
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, we proposed that the maximum new technology add-on payment for
a case involving the use of the product EXALTTM Model D
Single-Use Duodenoscope or aScopeTM Duodeno would be
$1,715.59 for FY 2022 (that is 65 percent of the case-weighted average
cost of both technologies).
We invited public comments on whether EXALTTM Model D
Single-Use Duodenoscope meets the cost criterion and our proposal to
approve new technology add-on payments for EXALTTM Model D
Single-Use Duodenoscope for FY 2022. We further invited public comments
on our calculation of the maximum new technology add-on payment amount
for the EXALTTM Model D.
Comment: A commenter, the applicant, submitted a public comment
urging CMS to finalize its proposal to approve an add-on payment for
EXALTTM Model D Single-Use Duodenoscope. The commenter
agreed that EXALT Model D meets the cost criterion and therefore
satisfies the criteria under the alternative new technology pathway for
certain transformative new devices finalized by CMS in the FY 2020 IPPS
Final Rule. The commenter also supported CMS' proposal to use a case-
weighted average to calculate a single cost that would be used to
determine the new technology add-on payment amount.
Response: We thank the commenter for its support and feedback.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe EXALTTM Model D meets the
cost criterion. Also, EXALTTM Model D received marketing
authorization from the FDA on December 13, 2019 for the indication
covered by its Breakthrough Device designation. Therefore, we are
finalizing our proposal to approve new technology add-on payments for
the EXALTTM Model D for FY 2022, and we consider the
beginning of the newness period to commence on December 13, 2019 which
is when the technology received FDA marketing authorization for the
indication covered by its Breakthrough Device designation. Based on the
information at the time of this final rule, and using the case-weighted
average cost as described in the proposed rule and earlier in this
final rule, the cost per case of the EXALTTM Model D is
$2,639.36. Under Sec. 412.88(a)(2), 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, we are finalizing that the maximum new
technology add-on payment for a case involving the use of the
EXALTTM Model D Single-Use Duodenoscope or
aScopeTM Duodeno would be $1,715.59 for FY 2022 (that is 65
percent of the case-weighted average cost of both technologies). Cases
involving the use of the EXALTTM Model D eligible for new
technology add-on payments will be identified by ICD-10- PCS codes:
XFJB8A7 (Inspection of hepatobiliary duct using single-use
duodenoscope, new technology group 7) or XFJD8A7 (Inspection of
pancreatic duct using single-use duodenoscope, new technology group 7).
(6) FUJIFILM EP-7000X System
Fujifilm Corporation submitted an application for new technology-
add on payments for FUJIFILM EP-7000X System for FY 2022. The FUJIFILM
EP-7000X system is an endoscopic video imaging system used for
endoscopic observation, diagnosis, treatment, and image recording in
minimally invasive surgeries of abdominal gynecologic and thoracic
areas. Per the applicant, this system allows for the visualization of
hemoglobin oxygen saturation levels of blood in superficial tissue
under a 2D endoscopic image, which helps physicians identify tissue
that is not appropriately oxygenated and thus potentially ischemic. The
applicant further explains that the technology consists of four
components: Video Laparoscope EL-R740M, Processor VP-7000, Light Source
BL-7000X, and Image Processing Unit EX-0.
The FUJIFILM EP-7000X system received Breakthrough Device
designation for endoscopic observation, diagnosis, treatment, and image
recording in patients requiring such procedures on September 17, 2020
and was granted FDA 510(k) clearance on June 30, 2021. The applicant
submitted a request to the ICD-10 Coordination and Maintenance
Committee for approval of a unique code for FY 2022 to identify the
technology and was granted approval to identify the FUJIFILM EP-7000X
system using the following procedure codes effective October 1, 2021:
[GRAPHIC] [TIFF OMITTED] TR13AU21.216
With respect to the cost criterion, the applicant searched the FY
2019 MedPAR claims data file to identify potential cases representing
patients who may be eligible for treatment with the EP-7000X System.
The applicant identified claims that reported an ICD-10-PCS procedure
code for gastrointestinal bypass or hernia repair, which the applicant
listed in the following table:
[[Page 45141]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.217
[[Page 45142]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.218
[[Page 45143]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.219
[[Page 45144]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.220
[[Page 45145]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.221
BILLING CODE 4120-01-C
Per the applicant, oxygen saturation endoscopic imaging would not
be necessary, as both imaging procedures are used to evaluate vascular
perfusion and therefore the applicant excluded cases with the ICD-10-
PCS procedure code 4A1BXSH (Monitoring of Gastrointestinal Vascular
Perfusion using Indocyanine Green Dye, External Approach). In addition,
the applicant compared cases with procedure code 4A1BXSH to cases
without procedure code 4A1BXSH and found that cases with the procedure
code have higher total standardized charges. The applicant further
limited the cases to MS-DRGs with at least one percent of case volume,
leaving 12,020 cases spread across 16 MS-DRGs, or 83 percent of the
14,522 cases initially identified. The applicant standardized the
charges and applied an inflation factor of 13.2 percent, which is the
same inflation factor used by CMS to update the outlier threshold in
the FY 2021 IPPS/LTCH PPS final rule, to update the charges from FY
2019 to FY 2021 (85 FR 59039). The applicant did not remove charges for
the current technology as the applicant believed the use of EP-87000X
System would not replace any other therapies except for the vascular
perfusion monitoring procedure for which cases were already excluded.
The applicant then added charges for the new technology. The
applicant explained that the total cost of the EP-87000X System
consists of the capital equipment as well as a service contract for the
equipment and a calibration fee required to perform a calibration
between a video laparoscope and light source every 6 months. The
applicant stated that it calculated the equipment cost per minute using
the Medicare physician fee schedule formula used for calculating
practice expense relative value units (RVUs). The applicant stated that
it also assumed a 3 percent usage rate, a 5.5 percent interest rate, a
0 percent maintenance factor (as the maintenance fee is built into the
cost of the equipment), and a 5-year useful life. The applicant
multiplied the machine cost per minute by the number of minutes of
procedure time, which the applicant estimated to be 4.5 hours or 270
minutes, to obtain the per patient cost. The applicant then converted
the cost to charges by dividing the cost per patient by the national
average cost-to-charge ratio for supplies and equipment (0.297).
Based on the cost information, the applicant calculated a final
inflated case-weighted average standardized charge per case of $106,603
and an average case-weighted threshold of $80,392. Because the final
inflated case-weighted average standardized charge per case exceeded
the average case-weighted threshold amount, the applicant asserted that
the technology meets the cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25380), we stated
that because section 1886(d)(5)(K)(i) of the Act requires that the
Secretary establish a mechanism to recognize the costs of new medical
services or technologies under the payment system established under
that subsection, which establishes the system for paying for the
operating costs of inpatient hospital services, we do not include
capital costs in the add-on payments for a new medical service or
technology or make new technology add-on payments under the IPPS for
capital-related costs. We stated that based on preliminary information
from the applicant, it appeared that the costs of the FUJIFILM EP-7000X
System did not include any operating costs. Therefore, we stated that
even if the technology meets the cost criterion, it appeared that no
new technology add-on payment would be made for the FUJIFILM EP-7000X
System because, as discussed in prior rulemaking and noted previously,
we only make new technology add-on payments for operating costs (72 FR
47307 through 47308). We invited public comments on whether the
[[Page 45146]]
FUJIFILM EP-7000X System has any operating costs. We proposed to
approve new technology add-on payments for only the operating costs of
FUJIFILM EP-7000X System for FY 2022 if it was determined that the
technology does have operating costs, since it appears to meet the cost
criterion as previously noted, subject to the technology receiving FDA
marketing authorization for endoscopic observation, diagnosis,
treatment, and image recording in patients requiring such procedures by
July 1, 2021.
Comment: We received one comment from the applicant supporting the
FUJIFILM EP-7000X System be approved for new technology add-on payment
for FY 2022. The commenter stated that by virtue of the 510(k)
clearance (K203717) the FDA marketing authorization is expected by July
15, 2021. Also, the applicant provided updated cost information and
stated that the EP-7000X System contains both capital and operating
costs. Per the applicant, the capital costs include those associated
with the processor, light source, and imaging processing unit, and the
operating costs include (1) the flexible endoscope/video laparoscope,
which are types of minor equipment treatable as operating costs by
hospitals, and (2) the maintenance cost associated with reprocessing
and calibration, which are treated as operating expenses by CMS. The
commenter asserted that the video laparoscope and flexible endoscope
are ``minor equipment'' and, therefore, treatable as an operating cost
and not a capital cost. The applicant stated that CMS has a multi-
factored test for determining whether a device is minor equipment: (a)
In general it has no fixed location and is subject to use by various
departments of the provider's facility; (b) it is comparatively small
in size and unit cost; (c) it is subject to inventory control; (d)
there is a fairly large quantity in use; and, (e) generally, it has a
useful life of approximately 3 years or less.\750\ Per the applicant,
the video laparoscope and flexible endoscope are minor equipment
because they are relatively small in size (the video laparoscope is
only 330 mm in length), are mobile and not in a fixed location, and may
be inventoried separately from other components of the device because
they are reprocessed between uses. The applicant further stated that
the useful life of the video laparoscope and flexible endoscope is one
year, as evidenced by the product warranty of that length of time. Per
the applicant, because the video laparoscope and flexible endoscope are
integral to the EP-7000X and are treatable as operating costs by virtue
of being minor equipment, there are operating costs associated with the
technology.
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\750\ Provider Reimbursement Manual (PRM) Part 1, ch. 1, Sec.
104.5.
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The applicant further stated that the fees and costs associated
with reprocessing, sterilization, and maintenance of the device are
maintenance fees due to the use of the video laparoscope and flexible
endoscope for more than one patient and are also not considered to be
capital costs.\751\
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\751\ Provider Reimbursement Manual (PRM), Part 1, ch. 28 Sec.
2806.2.
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Response: We thank the applicant for their comment. However, we
remain concerned that the cost for FUJIFILM EP-7000X System includes
only capital-related costs and does not include operating costs. We
note that the flexible endoscope is not included on the Breakthrough
Device designation and is therefore ineligible for new technology add-
on payments under the alternative pathway, and the remainder of our
response refers only to the video laparoscope listed on the
Breakthrough Device designation. We agree that minor equipment, as
determined by the multi-factor test described in the Provider
Reimbursement Manual (PRM) above, can be considered to be operating
costs in some cases. Though the applicant asserts that the technology
meets the criteria to be considered minor equipment, we disagree that
the useful life of a technology is evidenced by its warranty, and
believe that the useful life described in the criteria would extend for
many years past that, particularly in the case of scopes. Since we
believe that the video laparoscope would have a useful life extending
past 3 years, we cannot consider it to be treatable as operating costs
as it is not minor equipment. We further note that the PRM states that
items that have a standalone functional capability may be considered on
an item-by-item basis, but items purchased as in integrated system must
be considered as a single asset when applying the capitalization
threshold.\752\ Since the video laparoscope does not have a standalone
functional capacity as it requires connections to the capital
components of the system (that is, light source, processor) to
function, we consider the FUJIFILM EP-7000x System to be capital as it
is an integrated system and believe we should not separate individual
components of the system for the purposes of determining whether it
includes operating costs.
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\752\ PRM, Part1, ch. 1, Sec. 108.1.
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In addition, while we agree with the applicant's assertion that
maintenance and processing fees are considered operating expenses, when
determining a new technology add-on payment, we provide payment based
on the cost of the actual technology (such as the drug or device
itself) and not for additional costs related to the use of the device,
such as the ongoing use of the device including maintenance and
processing fees. For example, if a technology required an extra hour of
operating room time, or reduced the amount of procedure time, we would
neither add nor deduct costs based on this, and would only consider the
actual cost of the technology at the time of purchase in our
determination of the add-on payment. Therefore, the maintenance and
processing fees described by the applicant are not eligible to be
included in new technology add-on payments.
Based on the above, we continue to believe that there are no
operating costs with the use of the FUJIFILM EP-7000X System.
Therefore, we are not approving new technology add-on payments for the
FUJIFILM EP-7000X System for FY 2022.
(7) HarmonyTM Transcatheter Pulmonary Valve (TPV) System
Medtronic submitted an application for new technology-add on
payments for HarmonyTM Transcatheter Pulmonary Valve (TPV)
System (``HarmonyTM'') for FY 2022. The system consists of a
bioprosthetic heart valve developed from porcine pericardial tissue
mounted on self-expanding nitinol struts sewn to a polyester fabric.
According to the applicant, HarmonyTM is implanted in the
patient's heart between the right ventricle and the bifurcation of the
pulmonary arteries to treat patients with congenital heart disease who
are indicated for a pulmonary valve replacement. The applicant states
that HarmonyTM is the first transcatheter pulmonary valve
that is designed to treat the patient's condition at the native site of
the pulmonary valve without a pre-existing valve conduit or pre-
existing bioprosthetic valve.
The HarmonyTM TPV System received designation as a
Breakthrough Device on May 1, 2019, with the indication for the
treatment of symptomatic severe pulmonary regurgitation in patients
with a surgically-repaired right ventricular outflow tract. In the
proposed rule, we stated that the applicant noted that the proposed
indication for the FDA marketing authorization would be more expansive
than the indication for the FDA
[[Page 45147]]
Breakthrough Device status, to include patients who have had a prior
transcatheter intervention. We noted that under the eligibility
criteria for approval under the alternative pathway for certain
transformative new devices, only the use of the HarmonyTM
TPV System for the treatment of symptomatic severe pulmonary
regurgitation in patients with a surgically-repaired RVOT, and the FDA
Breakthrough Device designation it received for that use, are relevant
for purposes of the new technology add-on payment application for FY
2022. Subsequently, the applicant received Premarket Approval (PMA) as
a Class III medical device on March 26, 2021 with an indication for use
in the management of pediatric and adult patients with severe pulmonary
regurgitation (that is, severe pulmonary regurgitation as determined by
echocardiography and/or pulmonary regurgitant fraction >=30% as
determined by cardiac magnetic resonance imaging) who have a native or
surgically-repaired right ventricular outflow tract and are clinically
indicated for surgical pulmonary valve replacement. Since the
Breakthrough Device designation is indicated for use in patients with a
surgically-repaired RVOT, and does not include patients with a native
RVOT, we note that only the Breakthrough Device indication is eligible
for new technology add-on payments.
The applicant noted that the HarmonyTM TPV System is
currently reported within table 02R of the ICD-10 PCS tabular list
(body part value Pulmonary Valve, approach value Percutaneous, device
value as appropriate, and qualifier value No Qualifier). Per the
applicant, this same code also applies to existing technology for
transcatheter valve replacement within a conduit or a pre-existing
prosthetic valve. The applicant submitted a request to the ICD-10
Coordination and Maintenance Committee for approval of a unique code
for FY 2022 to identify the technology and was granted approval to
identify the HarmonyTM Transcatheter Pulmonary Valve (TPV)
using the following procedure code effective October 1, 2021: 02RH38M
(Replacement of pulmonary valve with zooplastic tissue, native site,
percutaneous approach).
With respect to the cost criterion, the applicant searched the FY
2019 MedPAR dataset for claims representing patients with congenital
diagnoses who received a surgical valve or a transcatheter procedure.
The applicant identified claims across five MS-DRGs after excluding
cases with outlier payments. Per the applicant, 6 percent of cases were
in MS-DRG 216, 24 percent of cases were in MS-DRG 219, 12 percent of
cases were in MS-DRG 220, 26 percent of cases were in MS-DRG 266, and
32 percent of cases were in MS-DRG 267. The applicant did not provide
case counts because the volume in each MS-DRG was fewer than 11 cases.
Next, the applicant removed charges for the prior technology and
standardized the charges. The applicant described the charges for the
technology that would be replaced as ``the sum of the medical-surgical
pacemaker amount, the intraocular lens amount, the other implants
amount, and the investigational device amount.'' The applicant also
removed charges related to the prior technology, which it described as
``the sum of the medical surgical supplies amount, the durable medical
equipment amount, and the used durable medical amount minus the prior
technology charges.'' The applicant then applied an inflation factor of
13.1 percent, which per the applicant is the same inflation factor used
by CMS to update the outlier threshold in the FY 2021 IPPS/LTCH PPS
final rule, to update the charges from FY 2019 to FY 2021. We note that
the applicant appears to have used the FY 2021 IPPS/LTCH PPS proposed
rule inflation factor rather than the 2-year inflation factor from the
FY 2021 IPPS/LTCH PPS final rule of 13.2 percent (85 FR 59039), which
would have resulted in a higher inflated charge figure. The applicant
added charges for the new technology by dividing the cost of the
HarmonyTM TPV by the national CCR for implantable devices,
which is 0.293 (85 FR 58601). The applicant also added charges related
to the new technology, which the applicant estimated to be similar to
the charges related to transcatheter procedures within MS-DRGs 266-267.
The applicant calculated a final inflated case-weighted average
standardized charge per case of $257,970 and an average case-weighted
threshold of $202,037. Because the final inflated case-weighted average
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25381), we
expressed our concern that the applicant's charge threshold analysis
utilized a small sample of 55 cases, given that the applicant projected
a case volume of over 1,000 cases for FY 2022. Subject to the applicant
adequately addressing this concern, we stated that we would agree that
the technology meets the cost criterion and therefore are proposing to
approve HarmonyTM Transcatheter Pulmonary Valve (TPV) System
for new technology add-on payments for FY 2022, subject to the
technology receiving FDA marketing authorization for the treatment of
symptomatic severe pulmonary regurgitation in patients with a
surgically-repaired right ventricular outflow tract by July 1, 2021. We
stated that, as noted previously, only the use of the
HarmonyTM TPV System for the treatment of symptomatic severe
pulmonary regurgitation in patients with a surgically-repaired right
ventricular outflow tract, and the FDA Breakthrough Device designation
it received for that use, are relevant for purposes of the new
technology add-on payment application for FY 2022.
Based on preliminary information from the applicant at the time of
the proposed rule, the cost of the HarmonyTM Transcatheter
Pulmonary Valve (TPV) System is $41,500. Per the applicant, this cost
is comprised of $33,000 for the HarmonyTM TPV and $8,500 for
the HarmonyTM transcatheter pulmonary valve delivery and
loading system. We stated that it was not clear to us whether these
costs reflect the use of capital equipment. We noted that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), 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.
We stated as a result, if both components of the HarmonyTM
Transcatheter Pulmonary Valve (TPV) System are operating costs, we were
proposing that the maximum new technology add-on payment for a case
involving the use of the HarmonyTM Transcatheter Pulmonary
Valve (TPV) System would be $26,975 for FY 2022 (that is 65 percent of
the average cost of the technology).
We invited public comments on whether the HarmonyTM
Transcatheter Pulmonary Valve (TPV) System meets the cost criterion and
our proposal to approve new technology add-on payments for
HarmonyTM Transcatheter Pulmonary Valve (TPV) System for FY
2022, subject to FDA marketing authorization of HarmonyTM
Transcatheter Pulmonary Valve (TPV) System by July 1, 2021 for the
treatment of patients with severe pulmonary regurgitation who have had
prior intervention on the right ventricular outflow tract and are
clinically indicated for a pulmonary valve
[[Page 45148]]
replacement. We also invited public comment on whether the costs of the
HarmonyTM TPV and HarmonyTM transcatheter
pulmonary valve delivery and loading system reflect use of capital
equipment.
Comment: The applicant submitted a public comment urging CMS to
finalize its proposal to approve a new technology add-on payment for
HarmonyTM Transcatheter Pulmonary Valve (TPV) System. The
commenter noted that the proposed rule referred to the anticipated FDA
approval of the technology as 510(k) clearance instead of premarket
approval application (PMA). The commenter also requested that CMS
consider that because FDA grants Breakthrough Device designation early
in the product development process, the final indication for a product
may evolve based on clinical research findings, and therefore may not
be identical to the proposed indication wording at the time the
designation is granted. In the specific case of the
HarmonyTM TPV System, the applicant stated that the final
commercial indication differs from the Breakthrough Device designation
in that it also includes use in native right ventricular outflow tracts
in addition to surgically-repaired right ventricular outflow tracts.
The applicant further stated that the final approval reflects a single,
ongoing development and review process, which is distinct from
scenarios in which a manufacturer may submit additional indications for
separate reviews and approvals/clearances that are not encompassed by
the single process arising from the Breakthrough Device designation.
Accordingly, it requested that the new technology add-on payment
eligibility apply to the full FDA-approved indication for the
HarmonyTM TPV System.
With respect to the concerns for the cost criterion that the charge
threshold analysis conducted for the HarmonyTM TPV System
utilized a small sample of 55 cases, while their projected case volume
was over 1,000 cases for FY 2022 (86 FR 25381) the applicant clarified
that the projected sales volume of 1,054 that was included in the
application included patients across payer types, while the cost
criterion analysis was based on Medicare claims data only. The
applicant stated that it was indicated in the application, based on
analysis of the Nationwide Inpatient Sample (NIS) dataset, which is
part of the Healthcare Cost and Utilization Project sponsored by the
Agency for Healthcare Research and Quality, that approximately 16
percent of the total number of patients with the relevant congenital
heart disease diagnosis codes (selected based on the patients enrolled
in the HarmonyTM feasibility and IDE studies) were Medicare
beneficiaries. The commenter applied this percentage to the projected
sales volume of 1,054 to project the anticipated Medicare volume to be
171 patients. While the projected Medicare volume of 171 still exceeds
the cases found in the historical claims data for the target patient
population, the applicant stated it is directionally more consistent
than the figure of over 1,000 cases, about which CMS expressed concern
in the proposed rule. The applicant further stated that because
HarmonyTM represents a new, less invasive treatment option
for patients, it is reasonable to expect that more interventions may be
performed in the future than what is currently reflected by the number
of cases in the historical claims data.
With respect to the concern that the costs of HarmonyTM
TPV may include capital costs, the applicant stated that they can
confirm that neither of the components listed are considered capital
equipment, as both the bioprosthetic heart valve and the delivery
system are single-use products. The applicant stated that specifically,
the bioprosthetic valve is implanted in the patient's heart where it
remains, and the delivery system delivers the valve to the heart and is
then discarded after a single use.
Response: We thank the commenter for the additional information and
feedback. We agree that the FDA approval of the technology should be
listed as a premarket approval application (PMA) and in this final
rule, have revised the description of the relevant approval to indicate
that the applicant received Premarket Approval (PMA) as a Class III
medical device on March 26, 2021. With regard to the differences
between the Breakthrough Device designation indication and the PMA
indication, under Sec. 412.87(c)(1), a new medical device under the
alternative pathway must receive marketing authorization for the
indication covered by the Breakthrough Devices Program designation (85
FR 58736). Since the PMA indication is broader than the Breakthrough
Device indication in that it includes native outflow tracts in addition
to surgically-repaired outflow tracts, only the Breakthrough Device
indication is applicable for purposes of new technology add-on
payments.
Regarding the cost criterion, we thank the applicant for its
explanation of the discrepancy between the projected sales volume and
the anticipated Medicare volume. We also agree with the applicant that
both the bioprosthetic heart valve and the delivery system are single-
use products and that these components are not capital costs.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe HarmonyTM Transcatheter
Pulmonary Valve (TPV) System meets the cost criterion. Therefore, we
are finalizing our proposal to approve new technology add-on payments
for the HarmonyTM Transcatheter Pulmonary Valve (TPV) System
for FY 2022, and we consider the beginning of the newness period to
commence on March 26, 2021, which is when the technology received FDA
marketing authorization for use in the management of pediatric and
adult patients with severe pulmonary regurgitation (that is, severe
pulmonary regurgitation as determined by echocardiography and/or
pulmonary regurgitant fraction >=30% as determined by cardiac magnetic
resonance imaging) who have a native or surgically-repaired right
ventricular outflow tract and are clinically indicated for surgical
pulmonary valve replacement. As previously discussed, under the
eligibility criteria for approval under the alternative pathway for
certain transformative new devices, only the use of the
HarmonyTM TPV System for the treatment of symptomatic severe
pulmonary regurgitation in patients with a surgically-repaired RVOT,
and the FDA Breakthrough Device designation it received for that use,
are relevant for purposes of the new technology add-on payment
application for FY 2022. Since the Breakthrough Device designation is
indicated for use in patients with a surgically-repaired RVOT, and does
not include patients with a native RVOT, only cases involving the
Breakthrough Device indication for use in patients with a surgically-
repaired RVOT are eligible for new technology add-on payments.
Based on the information at the time of this final rule, the cost
per case of the HarmonyTM Transcatheter Pulmonary Valve
(TPV) System is $41,500. Under Sec. 412.88(a)(2), 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, we are finalizing that the
maximum new technology add-on payment for a case involving the use of
the HarmonyTM Transcatheter Pulmonary Valve (TPV) System
would be $26,975 for FY 2022 (that is 65 percent of the average cost of
the technology). Cases involving the use of the HarmonyTM
Transcatheter Pulmonary Valve (TPV) System that are
[[Page 45149]]
eligible for new technology add-on payments will be identified by ICD-
10- PCS code 02RH38M (Replacement of pulmonary valve with zooplastic
tissue, native site, percutaneous approach).
(10) INTERCEPT Fibrinogen Complex (PRCFC)
Cerus Corporation applied for new technology-add on payments for
INTERCEPT Fibrinogen Complex (pathogen reduced cryoprecipitated
fibrinogen complex), for FY 2022. INTERCEPT Fibrinogen Complex is a
blood product indicated for the treatment for fibrinogen deficiency-
related bleeding, including massive hemorrhage. Per the applicant, this
blood product is useful in emergency departments and operating rooms
due to its 5-day shelf life at room temperature. The applicant stated
that the 5-day shelf life of the blood product makes it immediately
available in a ready-to-transfuse form as a fibrinogen source and
thereby provides a significant benefit for patients with massive
hemorrhage in a real time-critical fashion that is not achievable with
other existing fibrinogen replacement products.
INTERCEPT Fibrinogen Complex is designated as a Breakthrough
Device, indicated for control of massive bleeding associated with
fibrinogen (Fg) deficiency, and received FDA premarket approval (PMA)
on November 24, 2020 for the following indications: (1) Treatment and
control of bleeding, including massive hemorrhage, associated with
fibrinogen deficiency; (2) control of bleeding when recombinant and/or
specific virally inactivated preparations of factor XIII or von
Willebrand factor (vWF) are not available; (3) second-line therapy for
von Willebrand disease (vWD); and (4) control of uremic bleeding after
other treatment modalities have failed. The applicant provided
information stating that the product was not available for sale until
May 5, 2021 due to manufacturing lead time for system components as
well as validations and quality control analyses that needed to be
completed by the manufacturing facilities and delayed production of
commercially available product. We note that, under the eligibility
criteria for approval under the alternative pathway for certain
transformative new devices, only the use of INTERCEPT Fibrinogen
Complex for the control of massive bleeding associated with fibrinogen
(Fg) deficiency, and the FDA Breakthrough Device designation it
received for that use, are relevant for purposes of the new technology
add-on payment application for FY 2022.
The applicant submitted a request to the ICD-10 Coordination and
Maintenance Committee for approval of a unique code for FY 2022 to
identify the technology and was granted approval to identify INTERCEPT
Fibrinogen Complex using the following procedure codes effective
October 1, 2021: 30233D1 (Transfusion of nonautologous pathogen reduced
cryoprecipitated fibrinogen complex into peripheral vein, percutaneous
approach) and 30243D1 (Transfusion of nonautologous pathogen reduced
cryoprecipitated fibrinogen complex into central vein, percutaneous
approach).
With respect to the cost criterion, the applicant searched the FY
2019 MedPAR dataset for cases reporting an ICD-10-PCS procedure code
for nonautologous plasma cryoprecipitate. The applicant identified
8,553 cases spanning over 369 MS-DRGs.
[GRAPHIC] [TIFF OMITTED] TR13AU21.222
Per the applicant, the top 5 MS-DRGs were 219 (Cardiac Valve and
Other Major Cardiothoracic Procedures Without Cardiac Catheterization
with MCC), 220 (Cardiac Valve and Other Major Cardiothoracic Procedures
Without Cardiac Catheterization with CC), 871 (Septicemia or Severe
Sepsis Without Mv >96 Hours with MCC), 003 (ECMO or Tracheostomy with
Mv >96 Hours Or Principal Diagnosis Except Face, Mouth And Neck With
Major O.R. Procedure), and 216 (Cardiac Valve and Other Major
Cardiothoracic Procedures with Cardiac Catheterization with MCC) and
accounted for 34 percent of all cases. The applicant then removed
charges for the technology being replaced. Per the applicant, INTERCEPT
Fibrinogen Complex would replace the current nonautologous plasma
cryoprecipitate billed with a blood revenue code. The applicant
explained that it could not separate nonautologous plasma
cryoprecipitate from other blood charges and therefore removed all
charges from the blood department. The applicant then standardized the
charges and applied the 2-year outlier inflation factor of 13.2 percent
used to update the outlier threshold in the FY 2021 IPPS/LTCH final
rule (85 FR 59039). To estimate the cost of the technology, the
applicant multiplied the sale price of INTERCEPT Fibrinogen Complex by
an average of 12.9 units of cryoprecipitate required per patient, which
the applicant asserted as equivalent to 5.2 grams of fibrinogen based
on a recent study in adult cardiac surgery patients with clinically
significant bleeding and fibrinogen deficiency.\753\ The applicant
estimated an average per-patient cost of $3,900, which the applicant
converted to charges using the national cost-to-charge ratio for blood
and blood products (0.271) from the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58601). The applicant indicated that the outlier inflation
factor was not applied to charges for INTERCEPT Fibrinogen Complex.
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\753\ Callum J. et al. (2019). Effect of fibrinogen concentrate
vs cryoprecipitate on blood component transfusion after cardiac
surgery: The FIBRES randomized clinical trial. JAMA, 322(20), 1-11.
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The applicant calculated a final inflated case-weighted average
standardized charge per case of $299,895 and an average case-weighted
threshold of $183,897. Because the final inflated case-weighted average
standardized charge per case exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25385), we agreed
with the applicant that INTERCEPT Fibrinogen Complex meets the cost
criterion and therefore proposed to approve INTERCEPT Fibrinogen
[[Page 45150]]
Complex for new technology add-on payments for FY 2022 when used for
the control of massive bleeding associated with fibrinogen (Fg)
deficiency. Based on preliminary information from the applicant at the
time of the proposed rule, the cost of INTERCEPT Fibrinogen Complex is
$750 per gram x 5.2 grams for the amount of $3,900 per patient. Under
Sec. 412.88(a)(2), 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, we proposed that the maximum new technology add-on payment for
a case involving the use of INTERCEPT Fibrinogen Complex would be
$2,535 per patient for FY 2022 (that is, 65 percent of the average cost
of the technology).
We invited public comments on whether INTERCEPT Fibrinogen Complex
meets the cost criterion and our proposal to approve new technology
add-on payments for INTERCEPT Fibrinogen Complex for FY 2022 when used
for the control of massive bleeding associated with fibrinogen (Fg)
deficiency.
Comment: Several commenters, including the applicant, urged CMS to
finalize our proposal to approve a new technology add-on payment for
INTERCEPT Fibrinogen Complex. The applicant also requested that CMS
include the commercial name for the technology, INTERCEPT Fibrinogen
Complex, in the final rule so that providers understand that pathogen
reduced cryoprecipitated fibrinogen complex (PRCFC) and INTERCEPT
Fibrinogen Complex are the same product.
Response: We thank the commenters for their support and feedback
and note that we have included the commercial name for INTERCEPT
Fibrinogen Complex in this final rule.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe INTERCEPT Fibrinogen Complex meets the
cost criterion. Also, the applicant received FDA marketing
authorization on November 24, 2020 for the following indications: (1)
Treatment and control of bleeding, including massive hemorrhage,
associated with fibrinogen deficiency; (2) control of bleeding when
recombinant and/or specific virally inactivated preparations of factor
XIII or von Willebrand factor (vWF) are not available; (3) second-line
therapy for von Willebrand disease (vWD); and (4) control of uremic
bleeding after other treatment modalities have failed. Therefore, we
are finalizing our proposal to approve new technology add-on payments
for INTERCEPT Fibrinogen Complex for FY 2022, and we consider the
beginning of the newness period to commence on May 5, 2021, based on
information provided by the applicant that the product first became
available for sale on that date. We note that, under the eligibility
criteria for approval under the alternative pathway for certain
transformative new devices, only the use of INTERCEPT Fibrinogen
Complex for the treatment of massive bleeding associated with
fibrinogen (Fg) deficiency, and the FDA Breakthrough Device designation
it received for that use, are relevant for purposes of the new
technology add-on payment application for FY 2022. Since the
Breakthrough Device designation is indicated for use in the treatment
of massive bleeding associated with fibrinogen (Fg) deficiency, and not
for the other uses under the FDA marketing authorization, only cases
involving the use of INTERCEPT Fibrinogen Complex for the Breakthrough
Device indication for use in the treatment of massive bleeding
associated with fibrinogen (Fg) deficiency are eligible for new
technology add-on payments.
Based on the information at the time of this final rule, the cost
per case of the INTERCEPT Fibrinogen Complex is $3,900. Under Sec.
412.88(a)(2), 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, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of INTERCEPT Fibrinogen Complex, is $2,535 for FY
2022 (that is 65 percent of the average cost of the technology). Cases
involving the use of the INTERCEPT Fibrinogen Complex that would be
eligible for new technology add-on payments will be identified by ICD-
10-PCS codes: 30233D1 (Transfusion of nonautologous pathogen reduced
cryoprecipitated fibrinogen complex into peripheral vein, percutaneous
approach) or 30243D1 (Transfusion of nonautologous pathogen reduced
cryoprecipitated fibrinogen complex into central vein, percutaneous
approach), in combination with one of the following ICD-10-CM codes:
D65 (Disseminated intravascular coagulation) or D68.2 (Hereditary
deficiency of other clotting factors).
(11) RECELL[supreg] Autologous Cell Harvesting Device
Avita Medical submitted an application for new technology-add on
payments for RECELL[supreg] Autologous Cell Harvesting Device
(RECELL[supreg]). The device is a standalone, single-use, battery-
powered device used to process an autologous skin cell suspension for
the treatment of acute thermal burn wounds. Per the applicant, the
purpose of the device is to assist with harvesting a small graft from
the patient's healthy skin and immediate processing into an autologous
skin cell suspension which is then immediately applied to the patient's
burn wound following surgical preparation of the acute thermal burn
wound. The applicant describes the device components as including a
mechanical scraping tray, wells for incubating the donor graft with a
proprietary enzyme solution, a rinsing well, a cell strainer, a spray
applicator as well as buttons for ``self-test'', and ``run.''
RECELL[supreg] was granted Expedited Access Pathway (EAP) by FDA
(and is therefore considered part of the Breakthrough Devices Program
by FDA \754\ on December 10, 2015 with the indication for use at the
patient's point-of care for preparation of an autologous epithelial
cell suspension to be applied to a prepared wound bed; under the
supervision of a healthcare professional, the suspension is used to
achieve epithelial regeneration for definitive closure of burn
injuries, particularly in patients having limited availability of donor
skin for autografting. RECELL[supreg] received FDA premarket approval
(PMA) on September 20, 2018 with the indication for use listed as
indicated for the treatment of acute thermal burn wounds in patients 18
years of age and older. We stated in the proposed rule that since the
narrower indication for which the technology received PMA is included
within the scope of the EAP indication, it appears that the PMA
indication is appropriate for new technology add-on payment under the
alternative pathway criteria. Per the applicant, RECELL[supreg] was
available for sale upon FDA approval, albeit on a very limited basis
primarily to burn centers involved with the clinical trials. According
to the applicant, new ICD-10-PCS codes that are specific to
RECELL[supreg] were created effective October 1, 2019. Per the
applicant, the first three characters of these codes are ``0HR,''
followed by a fourth character signifying which body part is impacted,
then ``X72'' for the final three characters.
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\754\ https://www.fda.gov/regulatory-information/search-fida-guidance-documents/breakthrough-devices-program.
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With regard to the newness criterion, we stated that we believe
that the beginning of the newness period for RECELL[supreg] commences
from the date of
[[Page 45151]]
approval by the FDA on September 20, 2018, as the applicant indicated
the technology was available for sale from that date. Because the 3-
year anniversary date of the entry of RECELL[supreg] onto the U.S.
market (September 20, 2021) will occur in FY 2021, we stated that we do
not believe that the device is eligible for new technology add on
payments for FY 2022. Accordingly, we proposed to disapprove
RECELL[supreg] Autologous Cell Harvesting Device for new technology add
on payments for FY 2022. We invited public comments on our proposal to
disapprove new technology add-on payments for the RECELL Autologous
Cell Harvesting Device for FY 2022, including on whether the technology
meets the newness criterion.
Comment: The applicant submitted a comment in response to our
concerns. The applicant asserted that the eligibility date for the
newness criterion for RECELL[supreg] should be the date on which
inpatient coding was available for the technology. Since the unique
Cell Suspension Technique ICD-10 code qualifier describing
RECELL[supreg] did not go into effect until October 1, 2019, the
applicant asserts that should be the date considered for new technology
add-on payment eligibility purposes and not the date of FDA approval on
September 20, 2018. The applicant explains that the regulation at 42
CFR 412.87(c) states that under the alternative pathway, the newness
period begins after the point at which data begin to become available
reflecting the inpatient hospital code (as defined in section
1886(d)(5)(K)(iii) of the Social Security Act) assigned to the new
technology (depending on when a new code is assigned and data on the
new technology become available for DRG recalibration). The applicant
emphasized that the regulatory section does not reference the FDA
approval date, which it stated is appropriate because there is
typically a lag between FDA approval and assignment of codes for the
technology. Additionally, the applicant stated that 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 (88
FR 25211). Also, the applicant stated CMS proposed to extend new
technology add-on payment status for numerous technologies that were
cleared by FDA on dates earlier than the RECELL approval date. The
applicant believes it would be inconsistent and arbitrary for CMS to
deny new technology add-on payments for RECELL in FY 2022 on the basis
of the FDA clearance date while extending new technology add-on payment
status to technologies that are less ``new'' than RECELL[supreg].
Therefore the applicant believes RECELL[supreg] should qualify for new
technology add-on payment in FY 2022.
We also received several comments reiterating the applicant's
comments. The commenters also added that they are requesting approval
of new technology add-on payment for RECELL due to the clinically
meaningful improvements in healing they observed in their patients, in
order to make it financially viable to provide to patients.
Response: We thank the applicant and the other commenters for their
comments. However, we disagree that the newness date should begin with
the date that the unique ICD-10-PCS code describing RECELL[supreg] was
effective on October 1, 2019 and not with the date of FDA approval,
September 20, 2018. We note that in the FY 2005 final rule (69 FR
49002), we provided a detailed explanation for why using the date on
which a specific code is assigned to a technology is not an appropriate
test of newness. In that rule, we noted that, in many instances, a
technology may have been in use for several years, or even several
decades, prior to the assignment of a new code (69 FR 49003). Thus, we
continue to believe it is appropriate to determine newness based on the
date on which a product becomes available for use in the Medicare
population and the date when hospitals can begin to use either an
existing or new code to bill for the new service or technology.
Consistent with the statute and our implementing regulations, a
technology is no longer considered as ``new'' once it is more than 2 to
3 years old, irrespective of how frequently the medical service or
technology has been used in the Medicare population (70 FR 47349). As
such, in this case, because RECELL has been available on the U.S.
market for more than 2 to 3 years, we consider the costs to have been
included in the MS-DRG relative weights. In addition, although we are
finalizing our proposal to extend new technology add-on payments for
technologies with a newness date prior to RECELL[supreg], this policy
does not extend to technologies that were not approved for new
technology add-on payments for FY 2021. We note that our process
requires applicants to submit their application for new technology add-
on payments by the appropriate deadlines for the fiscal year in which
they wish to be granted new technology status. We further note that the
applicant received FDA approval on September 20, 2018 and could have
submitted an application for new technology add on payments for earlier
fiscal years under either the traditional or alternative pathways. The
applicant did not apply for and was not approved for new technology add
on payments for FY 2021. Our proposal was limited to an extension of
new technology add-on payments for previously approved technologies and
not to grant a new approval for add-on payments, and therefore
RECELL[supreg] does not fit within the parameters of this proposal. We
do not believe it would be appropriate to grant RECELL[supreg] a new
technology add-on payment when it is not new for the fiscal year for
which it is applying.
Therefore, for the reasons stated in the proposed rule and in this
final rule, because the RECELL[supreg] Autologous Cell Harvesting
Device will not be within the newness period for FY 2022 and is
therefore ineligible to receive new technology add-on payments, we are
not approving new technology add-on payments for the RECELL[supreg]
Autologous Cell Harvesting Device for FY 2022. As discussed previously,
our past and present practice is to analyze the new technology add-on
payment criteria in a sequential fashion, beginning with newness. We
note that the applicant submitted a comment in regard to the cost
criterion. However, as RECELL[supreg] does not meet the criterion for
newness, we will not be making a determination in regard to cost or
summarizing comments on the cost criterion in this final rule.
(12) Shockwave C2 Intravascular Lithotripsy (IVL) System
Shockwave Medical Inc. submitted an application for new technology-
add on payments for Shockwave C2 Intravascular Lithotripsy (IVL) System
for FY 2022. Per the applicant, the IVL Catheter is intended for
lithotripsy-enabled, low-pressure dilation of calcified, stenotic de
novo coronary arteries prior to stenting. The applicant explained that
the device is delivered through the coronary arterial system, and it
generates intermittent sonic waves within the target treatment site
that disrupt calcium within the lesion, allowing subsequent dilation of
a coronary artery stenosis using low balloon pressure. The applicant
also noted that the procedure can be used for otherwise difficult to
treat calcified stenosis, including calcified stenosis that are
anticipated to exhibit resistance to full balloon dilation or
subsequent uniform coronary stent expansion.
[[Page 45152]]
Shockwave C2 Intravascular Lithotripsy (IVL) System was designated
as a Breakthrough Device in August 2019, indicated for lithotripsy-
enabled, low-pressure dilation of calcified, stenotic de novo coronary
arteries prior to stenting.
The applicant received Pre-Market Approval as a Class III device
from the FDA on February 12, 2021 for the same proposed indication. The
applicant stated that though they expected market availability by April
2021, the device became available immediately after FDA approval. The
applicant submitted a request to the ICD-10 Coordination and
Maintenance Committee for approval of a unique code for FY 2022 to
identify the technology and was granted approval to identify the
Shockwave C2 Intravascular Lithotripsy (IVL) System using the following
procedure codes effective October 1, 2021:
[GRAPHIC] [TIFF OMITTED] TR13AU21.223
With regard to the cost criterion, the applicant conducted two
analyses based on 100 percent of identified claims and 81 percent of
identified claims. To identify potential cases where Coronary IVL could
be utilized, the applicant searched the FY 2019 MedPAR file for ICD-10-
PCS codes for the placement of a coronary stent, consistent with the
anticipated FDA indication for Shockwave C2 Intravascular Lithotripsy
(IVL). The applicant included all codes beginning with ``027'' and
ending with ``6'' or Z'' in its search. The applicant highlighted the
potential codes in between using the table that follows:
[GRAPHIC] [TIFF OMITTED] TR13AU21.224
[[Page 45153]]
For the analysis using 100 percent of cases, the applicant
identified 160,901 cases mapping to 209 MS-DRGs. Per the applicant,
Shockwave C2 Intravascular Lithotripsy (IVL) does not replace any
current devices used for indicated patients. However, to be
conservative, the applicant removed 50 percent of charges associated
with revenue center 0278--other implants. The applicant then
standardized the charges and applied the 2-year outlier inflation
factor of 13.2 percent used to update the outlier threshold in the FY
2021 IPPS/LTCH PPS final rule (85 FR 59039), to update the charges from
FY 2019 to FY 2021. The applicant added charges for the new technology
by multiplying the cost of the technology by the estimated number of
devices per patient and then dividing by the national CCR for
implantable devices (0.293) from the FY 2021 IPPS/LTCH PPS final rule.
Under the analysis based on 100 percent of identified claims, the
applicant calculated a final inflated case-weighted average
standardized charge per case of $143,805 and an average case-weighted
threshold of $115,693.
For the analysis using 81 percent of cases, the applicant
identified 130,907 cases mapping to MS-DRGs 246 and 247. The applicant
conducted the same analysis noted previously and determined a final
inflated case-weighted average standardized charge per case of $122,020
and an average case-weighted threshold of $104,783. Because the final
inflated case-weighted average standardized charge per case exceeded
the average case-weighted threshold amount under both analyses, the
applicant asserted that the technology meets the cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25389), we agreed
with the applicant that Shockwave C2 Intravascular Lithotripsy (IVL)
System meets the cost criterion and therefore proposed to approve
Shockwave C2 Intravascular Lithotripsy (IVL) System for new technology
add on payments for FY 2022, subject to the technology receiving FDA
marketing authorization for lithotripsy-enabled, low-pressure dilation
of calcified, stenotic de novo coronary arteries prior to stenting by
July 1, 2021.
Based on preliminary information from the applicant at the time of
the proposed rule, the cost of the Shockwave C2 Intravascular
Lithotripsy (IVL) System is $4,700 per device x 1.2 devices required
per case for an amount of $5,640. Under Sec. 412.88(a)(2), 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, we proposed that the
maximum new technology add-on payment for a case involving the use of
the Shockwave C2 Intravascular Lithotripsy (IVL) System would be $3,666
for FY 2022 (that is, 65 percent of the average cost of the
technology).
We invited public comments on whether the Shockwave C2
Intravascular Lithotripsy (IVL) System meets the cost criterion and our
proposal to approve new technology add-on payments for the Shockwave C2
Intravascular Lithotripsy (IVL) System for FY 2022, subject to
Shockwave C2 Intravascular Lithotripsy (IVL) System receiving FDA
marketing authorization by July 1, 2021 for lithotripsy-enabled, low-
pressure dilation of calcified, stenotic de novo coronary arteries
prior to stenting.
Comment: The applicant submitted a public comment expressing
support for the approval of the Shockwave C2 Intravascular Lithotripsy
(IVL) System for the new technology add-on payment for FY 2022. The
applicant further stated that the device became commercially available
approximately two weeks after the date of FDA approval.
Response: We thank the commenter for their support and for
providing additional information. We note that we had previously
received communication from the applicant stating that the device was
commercially available immediately after FDA approval and therefore,
absent additional information, it is unclear which is the date of
commercial availability. However, we note that, using either date as
the beginning of the newness period, the technology would be considered
new for FY 2022.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe Shockwave C2 Intravascular Lithotripsy
(IVL) System meets the cost criterion. Shockwave C2 Intravascular
Lithotripsy (IVL) System received marketing authorization from the FDA
on February 12, 2021 for the indications covered by its Breakthrough
Device designation for lithotripsy-enabled, low-pressure dilation of
calcified, stenotic de novo coronary arteries prior to stenting.
Therefore, we are finalizing our proposal to approve new technology
add-on payments for the Shockwave C2 Intravascular Lithotripsy (IVL)
System for FY 2022, and we consider the beginning of the newness period
to commence on February 12, 2021 which is the date on which the
technology received FDA marketing authorization for the indication
covered by its Breakthrough Device designation.
Based on the information at the time of this final rule, the cost
per case of the Shockwave C2 Intravascular Lithotripsy (IVL) System is
$4,700 per device x 1.2 devices required per case for an amount of
$5,640. Under Sec. 412.88(a)(2), 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, we are finalizing that the maximum new
technology add-on payment for a case involving the use of the Shockwave
C2 Intravascular Lithotripsy (IVL) System is $3,666 for FY 2022 (that
is 65 percent of the average cost of the technology). Cases involving
the use of the Shockwave C2 Intravascular Lithotripsy (IVL) System that
are eligible for new technology add-on payments will be identified by
ICD-10- PCS codes:
[GRAPHIC] [TIFF OMITTED] TR13AU21.225
[[Page 45154]]
b. Alternative Pathways for Qualified Infectious Disease Products
(QIDPs)
(1) CONTEPOTM (fosfomycin)
Nabriva Therapeutics US, Inc. submitted an application for new
technology-add on payments for CONTEPOTM (fosfomycin) for FY
2022. CONTEPOTM is an intravenously administered epoxide
antibiotic intended for the treatment of complicated urinary tract
infections (cUTI) including acute pyelonephritis (AP) caused by
designated susceptible bacteria. Per the applicant, the drug inhibits
cell wall synthesis at an earlier stage and provides new treatment for
patients with cUTIs including acute pyelonephritis caused by
Escherichia coli and Klebsiella pneumonia that have failed to respond
to other first-line therapies.
CONTEPOTM is designated as a QIDP. The applicant
initially applied for FDA approval when submitting a New Drug
Application (NDA) in October 2018 seeking marketing approval of IV
fosfomycin for injection (ZTI-01) for the treatment of patients 18
years and older with cUTI including acute pyelonephritis caused by
designated susceptible bacteria. According to the applicant, on June
19, 2020, the FDA rejected the applicant's resubmitted NDA due to
unresolved manufacturing issues that required an in-person inspection,
which the FDA was not able to conduct due to travel restrictions. The
applicant stated that it planned to resubmit an NDA after discussing
next steps with the FDA and hoped to receive FDA approval prior to July
1, 2021.
The applicant previously applied for a new technology add-on
payment for the same indication for FY 2021 and received conditional
approval for new technology add-on payments for FY 2021, subject to
CONTEPOTM receiving FDA marketing authorization before July
1, 2021 (85 FR 58724). In the FY 2022 IPPS/LTCH PPS proposed rule (86
FR 25391), we explained that if CONTEPO\TM\ receives FDA marketing
authorization before July 1, 2021, the new technology add-on payment
for cases involving the use of this technology would be made effective
for discharges beginning in the first quarter after FDA marketing
authorization is granted. We stated that if the FDA marketing
authorization is received on or after July 1, 2021, no new technology
add-on payments will be made for cases involving the use of CONTEPO\TM\
for FY 2021.
We further stated that if CONTEPOTM receives FDA
marketing authorization before July 1, 2021, the applicant has
indicated that it would withdraw its application for FY 2022 and would
instead seek new technology add-on payments for CONTEPOTM
for FY 2022 as a continuation of the conditional approval for FY 2021.
The applicant requested in its application for FY 2022 that if the
technology does not receive FDA marketing authorization by July 1,
2021, CMS conditionally approve CONTEPOTM for new technology
add-on payments for FY 2022. We note that CONTEPOTM did not
receive FDA marketing authorization by July 1, 2021.
The applicant applied for and received a unique ICD-10-PCS
procedure code to identify cases involving the administration of
CONTEPOTM in 2019. Effective October 1, 2019,
CONTEPOTM administration can be identified by ICD-10-PCS
procedure codes XW033K5 (Introduction of fosfomycin anti-infective into
peripheral vein, percutaneous approach, new technology group 5) and
XW043K5 (Introduction of fosfomycin anti-infective into central vein,
percutaneous approach, new technology group 5), which the applicant
states are unique to CONTEPOTM administration.
With regard to the cost criterion, the applicant used the FY 2019
MedPAR Limited Data Set (LDS) to assess the MS-DRGs to which potential
cases representing hospitalized patients who may be eligible for
treatment involving CONTEPOTM would most likely be mapped.
According to the applicant, CONTEPOTM is anticipated to be
indicated for the treatment of hospitalized patients who have been
diagnosed with complicated urinary tract infections (cUTIs). The
applicant identified 199 ICD-10-CM diagnosis code combinations that
identify hospitalized patients who have been diagnosed with a cUTI.
Searching the FY 2019 MedPAR data file for these ICD-10-CM diagnosis
codes resulted in a total of 525,876 potential cases that span 507
unique MS-DRGs. The applicant noted that the cases identified are fewer
than in the FY 2021 new technology add-on payment application. Per the
applicant, this change occurred because the applicant excluded
additional claims for Medicare Advantage and inpatient ``full-
encounter'' claims from all cohorts. The applicant maintained that
while cohorts are smaller, the effects on the results were minimal.
The applicant examined associated charges per MS-DRG and removed
charges for potential antibiotics that may be replaced by the use of
CONTEPOTM. Specifically, the applicant identified 5
antibiotics currently used for the treatment of patients who have been
diagnosed with a cUTI and calculated the cost of each of these drugs
for administration over 14-day inpatient hospitalization. Because
patients who have been diagnosed with a cUTI would typically only be
treated with one of these antibiotics at a time, the applicant
estimated an average of the 14-day cost for the 5 antibiotics. The
applicant then converted the cost to charges by dividing the costs by
the national average CCR of 0.187 for drugs from the FY 2021 IPPS/LTCH
PPS final rule (85 FR 58601). The applicant then standardized the
charges for each case and inflated each case's charges by applying the
FY 2021 IPPS/LTCH PPS final rule outlier charge inflation factor of
13.2 percent (85 FR 59039).
The applicant then added the charges for the new technology by
calculating the per-day cost per patient. The applicant noted that the
duration of therapy of up to 14 days (patients that had a cUTI with
concurrent bacteremia) is consistent with the prospective prescribing
information, and that it used this 14-day duration of therapy to
calculate total inpatient cost. The applicant then converted these
costs to charges by dividing the costs per patient by the national
average cost-to charge ratio of 0.187 for drugs from the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58601). The applicant calculated a final
inflated case-weighted average standardized charge per case of $79,619
and a case weighted threshold of $59,237. Because the final inflated
case-weighted average standardized charge per case for
CONTEPOTM exceeded the average case-weighted threshold
amount, the applicant maintained it meets the cost criterion.
As summarized, the applicant used a 14-day duration of therapy to
calculate total inpatient cost for purposes of its cost analysis.
However, the applicant noted that the average number of days a patient
would be administered CONTEPOTM will most likely fall
between 10 to 14 days of therapy given the current guideline
recommendations. Of these treatment days, the applicant noted that
nearly all would occur during the inpatient hospital stay. Consistent
with our historical practice, and as stated in the FY 2021 IPPS/LTCH
PPS final rule, we believe the new technology add-on payment for
CONTEPOTM, if approved, would be based on the average cost
of the technology and not the maximum (85 FR 58724). Without further
information from the applicant regarding the average number of days
CONTEPOTM is administered, we continue to believe using the
middle ground of 12.5 days,
[[Page 45155]]
based on the 10-14 day period indicated by the applicant, is
appropriate for this analysis to determine the average number of days
CONTEPOTM is administered in the hospital. To assess whether
the technology would meet the cost criterion using an average cost for
the technology based on this 12.5-day period for CONTEPOTM
administration, we converted the costs to charges by dividing the costs
per patient by the national average cost-to charge ratio of 0.187 for
drugs from the FY 2021 IPPS/LTCH PPS final rule (85 FR 58601). Based on
data from the applicant, this resulted in a final inflated average
case-weighted standardized charge per case of $77,613, which exceeds
the case weighted threshold of $59,237.
Because of the large number of cases included in this cost
analysis, the applicant supplemented the analysis as described
previously with additional sensitivity analyses. In these analyses, the
previous cost analysis was repeated using only the top 75 percent of
cases and the top 20 MS-DRGs. In these two additional sensitivity
analyses, the final inflated case-weighted average standardized charge
per case for CONTEPOTM of $70,718 and $70,046 exceeded the
average case-weighted threshold amount of $55,388 and $55,468,
respectively. Because the final inflated case-weighted average
standardized charge per case for CONTEPOTM exceeded the
average case-weighted threshold amount, the applicant asserts that
CONTEPOTM meets the cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25391), we agreed
with the applicant that CONTEPOTM (fosfomycin) meets the
cost criterion. We stated that therefore, if CONTEPOTM does
not receive FDA approval by July 1, 2021 to receive new technology add-
on payments beginning with FY 2021, for FY 2022, per the policy
finalized in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58739 through
58742), we proposed to conditionally approve CONTEPOTM for
new technology add-on payments, subject to the technology receiving FDA
marketing authorization by July 1, 2022 (that is, by July 1 of the
fiscal year for which the applicant applied for new technology add-on
payments (2022)). If CONTEPOTM receives FDA marketing
authorization before July 1, 2022, the new technology add-on payment
for cases involving the use of this technology would be made effective
for discharges beginning in the first quarter after FDA marketing
authorization is granted. If the FDA marketing authorization is
received on or after July 1, 2022, no new technology add-on payments
would be made for cases involving the use of CONTEPOTM for
FY 2022. As previously noted, the applicant has received a unique ICD-
10-PCS procedure code to identify cases involving the administration of
CONTEPOTM. We stated that if CONTEPOTM receives
FDA marketing authorization prior to July 1, 2021, we were proposing to
continue making new technology add-on payments for CONTEPOTM
in FY 2022.
As discussed previously, without further information from the
applicant regarding the average number of days CONTEPOTM is
administered, and consistent with our approach for the FY 2021 IPPS/
LTCH PPS final rule, we believe using a 12.5-day duration of therapy is
a reasonable approach for estimating the average cost of the
technology. Based on preliminary information from the applicant at the
time of the proposed rule, the cost of CONTEPOTM
administered over 12.5 days is $3,500. We noted that the cost
information for this technology may be updated in the final rule based
on revised or additional information CMS receives prior to the final
rule. Under Sec. 412.88(a)(2), we limit new technology add-on payments
for QIDPs to the lesser of 75 percent of the average cost of the
technology, or 75 percent of the costs in excess of the MS-DRG payment
for the case. As a result, we proposed that if CONTEPOTM
receives FDA marketing authorization prior to July 1, 2022, the maximum
new technology add-on payment for a case involving the use of
CONTEPOTM (fosfomycin) would be $2,625 for FY 2022 (that is,
75 percent of the average cost of the technology). Cases involving the
use of CONTEPOTM that would be eligible for new technology
add-on payments will be identified by ICD-10-PCS procedure codes
XW033K5 (Introduction of fosfomycin anti-infective into peripheral
vein, percutaneous approach, new technology group 5) or XW043K5
(Introduction of fosfomycin anti-infective into central vein,
percutaneous approach, new technology group 5).
We invited public comments on whether CONTEPOTM
(fosfomycin) meets the cost criterion and our proposal to approve new
technology add-on payments for CONTEPOTM (fosfomycin) for FY
2022.
Comment: A commenter, the applicant, supported CMS' proposal to
approve new technology add-on payments for FY 2022 for
CONTEPOTM. The applicant also voiced support for CMS'
proposal to grant conditional approval for new technology add-on
payments for CONTEPOTM for FY 2022 in the event that it did
not receive marketing approval by July 1, 2021, subject to
CONTEPOTM receiving marketing approval by July 1, 2022. Per
the applicant, in light of delays with FDA onsite inspections due to
ongoing FDA travel restrictions, CONTEPOTM did not receive
FDA approval by the July 1, 2021 deadline, and it will keep CMS
informed with regard to the status of its NDA once a new PDUFA date is
confirmed.
Response: We thank the applicant for their comment and update.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comment we received, we believe CONTEPOTM meets the cost
criterion. Therefore, because CONTEPOTM otherwise meets the
new technology add-on payment criteria under the alternative pathway
for products designated as QIDPs, we are granting a conditional
approval for CONTEPOTM for new technology add-on payments,
subject to the technology receiving FDA marketing authorization by July
1, 2022 (that is, by July 1 of the fiscal year for which the applicant
applied for new technology add-on payments (2022)). If
CONTEPOTM receives FDA marketing authorization before July
1, 2022, the new technology add-on payment for cases involving the use
of this technology would be made effective for discharges beginning in
the first quarter after FDA marketing authorization is granted. If the
FDA marketing authorization is received on or after July 1, 2022, no
new technology add-on payments will be made for cases involving the use
of CONTEPOTM for FY 2022.
Based on the information at the time of this final rule, the cost
per case of CONTEPOTM is $3,500. Under Sec. 412.88(a)(2),
we limit new technology add-on payments for QIDPs to the lesser of 75
percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS DRG payment for the case. As a result, we are
finalizing that, subject to CONTEPO receiving marketing authorization
by July 1, 2022, the maximum new technology add-on payment for a case
involving the use of CONTEPOTM will be for $2,625 for FY
2022 (that is 75 percent of the average cost of the technology). Cases
involving the use of CONTEPOTM that would be eligible for
new technology add-on payments will be identified by ICD-10- PCS codes:
XW033K5 (Introduction of fosfomycin anti-infective into peripheral
vein, percutaneous approach, new technology group 5) or XW043K5
(Introduction of fosfomycin anti-infective into central vein,
percutaneous approach, new technology group 5).
[[Page 45156]]
(2) FETROJA[supreg] (cefiderocol)
Shionogi & Co., Ltd submitted an application for new technology-add
on payments for FETROJA[supreg] (cefiderocol) for FY 2022.
FETROJA[supreg] is an injectable siderophore cephalosporin indicated
for the treatment of hospital-acquired bacterial pneumonia (HABP)/
ventilator-associated bacterial pneumonia (VABP) on September 25, 2020.
Per the applicant, FETROJA[supreg] should be used to treat infections
where limited or no alternative treatment options are available and
where FETROJA[supreg] (cefiderocol) is likely to be an appropriate
treatment option, which may include use in patients with infections
caused by documented or highly suspected carbapenem-resistant and/or
multidrug-resistant gram-negative (GN) pathogens. The applicant asserts
that the principal antibacterial/bactericidal activity of
FETROJA[supreg] occurs with inhibiting GN bacterial cell wall synthesis
by binding to penicillin-binding proteins.
FETROJA[supreg] was designated as a QIDP for HABP/VABP and received
FDA marketing approval for this indication on September 25, 2020.
FETROJA[supreg] became available on the market for the treatment of
HABP/VABP after FDA approval for this indication. FETROJA[supreg] also
has a QIDP designation and is FDA approved for cUTI, and was granted a
new technology add-on payment under the alternative new technology add-
on payment pathway for certain antimicrobials for this indication in
the FY 2021 IPPS/LTCH final rule (85 FR 58721). The current new
technology add-on payment application for FY 2022 is specific to the
indication of HABP/VABP. According to the applicant, the ICD-10
Coordination and Maintenance Committee approved the following ICD-10-
PCS codes to specifically describe the IV administration of FETROJA,
effective October 1, 2020: XW033A6 (Introduction of cefiderocol anti-
infective into peripheral vein, percutaneous approach, new technology
group 6) and XW043A6 (Introduction of cefiderocol anti-infective into
central vein, percutaneous approach, new technology group 6).
With regard to the cost criterion, the applicant conducted two
analyses based on 100 percent and 75 percent of identified claims. For
both scenarios, the applicant used the FY 2019 MedPAR Limited Data Set
(LDS) to assess the MS-DRGs to which potential cases representing
hospitalized patients who may be eligible for FETROJA[supreg] treatment
would be mapped. The applicant identified eligible cases by searching
the FY 2019 MedPAR for cases reporting ICD-10-CM codes for pneumonia
and for resistance to antimicrobial drugs.
Under the first scenario of 100 percent of cases, the applicant
identified 9,595 cases mapping to 203 MS-DRGs. Under the second
scenario of 75 percent of cases, the applicant identified 7,218 cases
mapping to 19 MS-DRGs. The applicant standardized the charges after
calculating the average case-weighted unstandardized charge per case
for both scenarios and removing 50 percent of charges associated with
the drug revenue centers 025x, 026x, and 063x under both scenarios. Per
the applicant, FETROJA[supreg] is expected to replace some of the drugs
that would otherwise be utilized to treat these patients. The applicant
stated that it believes 50 percent of these total charges to be a
conservative estimate as other drugs will still be required for these
patients during their hospital stay. The applicant then applied an
inflation factor of 13.2 percent, which was the 2-year outlier charge
inflation factor used in the FY 2021 IPPS/LTCH PPS final rule (85 FR
59039), to update the charges from FY 2019 to FY 2021. The applicant
then added charges for FETROJA[supreg] by dividing the total average
hospital cost of FETROJA[supreg] by the national average cost-to-charge
ratio (0.187) for drugs published in the FY 2021 IPPS/LTCH PPS final
rule (85 FR 58601).
The applicant calculated a final inflated case-weighted average
standardized charge per case of $164,825 for the first scenario and
$148,821 for the second scenario and an average case-weighted threshold
amount of $78,296 for the first scenario and $73,607 for the second
scenario. Because the final inflated case-weighted average standardized
charge per case for each scenario exceeds the average case-weighted
threshold amount for each scenario, the applicant asserted that the
technology meets the cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25392), we agreed
with the applicant that FETROJA[supreg] (cefiderocol) meets the cost
criterion and therefore proposed to approve FETROJA[supreg] for new
technology add-on payments for FY 2022 when used for the treatment of
HABP/VABP. Cases involving the use of FETROJA[supreg] that are eligible
for new technology add-on payments will be identified by ICD-10-PCS
procedure codes XW033A6 or XW043A6.
Based on preliminary information from the applicant at the time of
the proposed rule, the cost of FETROJA[supreg] administered over an
average of 10.4 days is $11,439.79. We noted that the cost information
for this technology may be updated in the final rule based on revised
or additional information CMS receives prior to the final rule. Under
Sec. 412.88(a)(2), we limit new technology add-on payments for QIDPs
to the lesser of 75 percent of the average cost of the technology, or
75 percent of the costs in excess of the MS-DRG payment for the case.
As a result, we proposed that the maximum new technology add-on payment
for a case involving the use of FETROJA[supreg] when used for the
treatment of HABP/VABP would be $8,579.84 for FY 2022 (that is, 75
percent of the average cost of the technology).
We invited public comments on whether FETROJA[supreg] (cefiderocol)
meets the cost criterion and our proposal to approve new technology
add-on payments for FETROJA[supreg] for FY 2022 for the treatment of
HABP/VABP.
Comment: A commenter, the applicant, supported CMS' proposal to
approve new technology add-on payments for FY 2022 for FETROJA[supreg].
The applicant also noted two incorrect codes in the list of ICD-10-PCS
codes for the administration of FETROJA in the proposed rule (86 FR
25392) and requested that we correct the list to include XW033A6 and
XW043A6.
Response: We thank the applicant for its comment. We appreciate the
clarification and note that in this final rule, as noted below, cases
involving the use of FETROJA[supreg] eligible for new technology add-on
payments will be identified by the ICD-10-PCS codes listed by the
commenter.
Based on the information provided in the application for new
technology add-on payments, and after consideration of the public
comments we received, we believe FETROJA[supreg] meets the cost
criterion. Also, FETROJA[supreg] was designated as a QIDP for HABP/VABP
and received FDA marketing approval for this indication on September
25, 2020. Therefore, we are finalizing our proposal to approve new
technology add-on payments for FETROJA[supreg] for FY 2022. We consider
the beginning of the newness period to commence on September 25, 2020
which is when the technology received FDA marketing authorization for
this indication. Based on the information at the time of this final
rule, the cost per case of FETROJA[supreg] is $11,439.79. Under Sec.
412.88(a)(2), we limit new technology add-on payments to the lesser of
75 percent of the average cost of the technology, or 75 percent of the
costs in excess of the MS DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of FETROJA[supreg] for the HABP/VABP indication is
$8,579.84 for FY 2022 (that
[[Page 45157]]
is 75 percent of the average cost of the technology). Cases involving
the use of FETROJA[supreg] eligible for new technology add-on payments
will be identified by ICD-10- PCS codes: XW033A6 (Introduction of
cefiderocol anti-infective into peripheral vein, percutaneous approach,
new technology group 6) or XW043A6 (Introduction of cefiderocol anti-
infective into central vein, percutaneous approach, new technology
group 6).
(3) RECARBRIOTM (imipenem, cilastatin, and relebactam)
Merck & Co. submitted an application for new technology add-on
payments for RECARBRIOTM for FY 2022. RECARBRIOTM
is a fixed-dose combination of imipenem, a penem antibacterial;
cilastatin, a renal dehydropeptidase inhibitor; and relebactam, a novel
b-lactamase inhibitor (BLI) administered via intravenous infusion. Per
the applicant, RECARBRIOTM is indicated for the treatment of
hospital-acquired bacterial pneumonia (HABP) and ventilator-associated
bacterial pneumonia (VABP) caused by susceptible Gram-negative
bacteria. RECARBRIOTM is also indicated for complicated
urinary tract infections (cUTI) and complicated intra-abdominal
infections (cIAI) and was approved for new technology add-on payment
for these indications in the FY 2021 IPPS/LTCH PPS final rule (85 FR
58728).
The applicant explained that the recommended dose of
RECARBRIOTM is 1.25 grams administered by intravenous
infusion over 30 minutes every 6 hours in patients 18 years of age and
older with creatinine clearance (CrCl) 90 mL/min or greater. Per the
applicant, the recommended treatment course suggests that a patient
will receive 1 vial per dose and 4 doses per day. Per
RECARBRIOTM's prescribing information, the recommended
duration of treatment is 4 days to 14 days.
RECARBRIOTM is designated as a QIDP indicated for the
treatment of HABP/VABP and received FDA approval through a supplemental
NDA on June 4, 2020 for this indication. According to the applicant,
RECARBRIOTM originally submitted an NDA for the cUTI and
cIAI indications and received FDA approval on July 16, 2019. The
applicant previously applied for the new technology add-on payment for
the cUTI and cIAI indications, which CMS approved in the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58728). The application for new technology
add-on payments for FY 2022 is specific to the HABP and VABP
indications. The applicant noted that RECARBRIOTM can be
identified with ICD-10-PCS codes XW033U5 (Introduction of imipenem-
cilastatin-relebactam anti-infective into peripheral vein, percutaneous
approach, new technology group 5) or XW043U5 (Introduction of imipenem-
cilastatin-relebactam anti-infective into central vein, percutaneous
approach, new technology group 5).
To demonstrate that the technology meets the cost criterion, the
applicant searched the FY 2019 MedPAR Limited Data Set (LDS) for cases
reporting ICD-10-CM diagnosis code J95.851 (Ventilator assisted
pneumonia) for VABP, and the following list of codes for HABP:
[GRAPHIC] [TIFF OMITTED] TR13AU21.226
Additionally, for HABP, the applicant identified cases that
included present on admission indicators of N (Diagnosis was not
present at time of inpatient admission), U (Documentation insufficient
to determine if condition was present at the time of inpatient
admission), W (Clinically undetermined), or 1 (Unreported/not used).
The applicant identified a total 106,964 cases, which were mapped
to 355 unique MS-DRGs. The applicant removed 88 MS-DRGs with minimal
frequencies (fewer than 11 cases), leaving 106,655 cases mapping to 267
MS-DRGs. Per the applicant, the top 10 MS-DRGs covered approximately
34.1 percent of all patients. The applicant examined associated charges
per MS-DRG and removed all pharmacy charges to be replaced using
RECARBRIOTM. The applicant then standardized and inflated
the charges by applying the FY 2021 IPPS/LTCH PPS final rule outlier
charge inflation factor of 1.13218 (85 FR 59039).
The applicant estimated an average cost of RECARBRIOTM
for the treatment of HABP and VABP in the inpatient setting based on
the recommended dose of 1.25 grams (imipenem 500 mg, cilastatin 500 mg,
relebactam 250 mg) administered by intravenous infusion over 30 minutes
every 6 hours in patients 18 years of age and older with creatinine
clearance (CLcr) 90 mL/min or greater. As stated previously, according
to the applicant, the recommended treatment course suggests that a
patient will receive 1 vial per dose, 4 doses per day within a
recommended treatment duration of 4 to 14 days. To determine the cost
per patient, the applicant stated it used the FY 2019 MedPAR analysis
of total cases representing hospitalized patients who may be eligible
for treatment involving RECARBRIOTM to identify a percentage
of total cases per indication: HABP 94.07 percent of cases and VABP
5.93
[[Page 45158]]
percent. According to the applicant, it next identified the average
length of stay per indication: HABP 14.2 days and VABP 24.2 days. The
applicant also assumed that 70 percent of patients would receive
RECARBRIOTM beginning on the fourth day after admission
while the remaining 30 percent of these patients would receive
RECARBRIOTM beginning on the second day of their
hospitalization. The applicant then multiplied the daily dose cost by
the two scenarios for each HABP and VABP indication to determine the
cost per stay for each indication by days of drug use. Next it
multiplied the cost per stay for each indication by the share of cases
by days in use (70/30 percent split) to determine the weighted cost for
days in use estimation. The applicant then summed the 70/30 percent
case breakdown (weighted cost) for patients initiating on day 2 and 4
to determine the average cost per indication for HABP and VABP.
Finally, the applicant multiplied the average cost per indication by
the percent of total cases for HABP and VABP, then summed them to get
the overall average cost. The applicant converted this cost to a charge
by dividing the costs by the national average cost-to-charge ratio of
0.187 for drugs published in the FY 2021 IPPS/LTCH PPS final rule (85
FR 58601) and added the resulting charges to determine the final
inflated case-weighted average standardized charge per case.
The applicant calculated a final inflated case-weighted average
standardized charge per case of $258,946 and an average case-weighted
threshold amount of $123,172. The applicant also calculated an average
case-weighted standardized charge per case for HABP and VABP separately
using the same methodology previously described and determined final
inflated case-weighted average standardized charges per case of
$249,992 for HABP and $394,992 for VABP and average case-weighted
thresholds of $117,466 for HABP and $214,869 for VABP.
In addition, because RECARBRIOTM was previously approved
for a new technology add-on payment for the cUTI and cIAI indications,
the applicant modified the added amount of the charge for
RECARBRIOTM based on the cost calculation of the technology
using all four indications. Using the same methodology previously
described, the applicant determined final inflated case-weighted
average standardized charges per case of $250,209 for HABP and VABP,
$241,255 for HABP, and $386,255 for VABP and average case-weighted
thresholds of $123,172 for HABP and VABP, $117,466 for HABP, and
$214,869 for VABP. Because the final inflated case-weighted average
standardized charge per case exceeded the average case-weighted
threshold amount in each scenario, the applicant maintained that the
technology met the cost criterion.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25394), we agreed
with the applicant that RECARBRIOTM meets the cost criterion
and therefore proposed to approve RECARBRIOTM for new
technology add-on payments for FY 2022 when used for treatment of HABP
and VABP. Based on preliminary information from the applicant at the
time of the proposed rule, the cost of RECARBRIOTM is
$12,768.68 when used for the treatment of HABP and VABP. We noted that
the cost information for this technology may be updated in the final
rule based on revised or additional information CMS receives prior to
the final rule. Under Sec. 412.88(a)(2), we limit new technology add-
on payments for QIDPs to the lesser of 75 percent of the costs of the
new medical service or technology, or 75 percent of the amount by which
the costs of the case exceed the MS-DRG payment. As a result, we
proposed that the maximum new technology add-on payment for a case
involving the use of RECARBRIOTM would be $9,576.51 for FY
2022 (that is, 75 percent of the average cost of the technology) when
used for treatment of HABP and VABP.
We invited public comments on whether RECARBRIOTM
(imipenem, cilastatin, and relebactam) meets the cost criterion and our
proposal to approve new technology add-on payments for the
RECARBRIOTM (imipenem, cilastatin, and relebactam) for the
indications of HABP and VABP for FY 2022.
We did not receive any comments on our proposal to approve
RECARBRIOTM for new technology add-on payments for FY 2022.
Based on the information provided in the application for new
technology add-on payments, we believe RECARBRIOTM meets the
cost criterion. Also, RECARBRIOTM is designated as a QIDP
indicated for the treatment of HABP/VABP and received FDA approval
through a supplemental NDA on June 4, 2020 for this indication.
Therefore, we are finalizing our proposal to approve new technology
add-on payments for RECARBRIOTM for FY 2022, and we consider
the beginning of the newness period to commence on June 4, 2020 for the
treatment of HABP/VABP, which is when the technology received FDA
marketing authorization for this indication. Based on the information
at the time of this final rule, the cost per case of
RECARBRIOTM is $12,769. Under Sec. 412.88(a)(2), we limit
new technology add-on payments for QIDPs to the lesser of 75 percent of
the average cost of the technology, or 75 percent of the costs in
excess of the MS DRG payment for the case. As a result, we are
finalizing that the maximum new technology add-on payment for a case
involving the use of the RECARBRIOTM for the treatment of
HABP/VABP is $9,577 for FY 2022 (that is 75 percent of the average cost
of the technology). Cases involving the use of RECARBRIOTM
that are eligible for new technology add-on payments will be identified
by ICD-10-PCS codes: XW033U5 (Introduction of imipenem-cilastatin-
relebactam anti-infective into peripheral vein, percutaneous approach,
new technology group 5) or XW043U5 (Introduction of imipenem-
cilastatin-relebactam anti-infective into central vein, percutaneous
approach, new technology group 5).
c. Other Comments
Comment: We received multiple comments regarding payment for QIDPs
and new technology add-on payment policies, including that Medicare
should pay QIDP antibiotics separately from DRGs, make payment for QIDP
products at 100%, and reduce the new technology add-on payment approval
timeframes to shorten application cycles to streamline access to
coverage, coding, and payment for new technologies. Also, several
commenters recommended CMS initiate accelerated antibacterial and
antifungal guideline updates to facilitate clinician education and
correspond with the new technology add-on payment pathway for
antimicrobials. Another commenter recommended that CMS extend the new
technology add- on payment pathway to microbiome therapeutics that also
treat urgent antimicrobial threats, such as Clostridioides difficile
infection (CDI). Similarly, several commenters recommended that CMS
establish an additional new technology add-on payment pathway for
Breakthrough and Regenerative Medicine Advanced Therapies (RMAT)
designated products to enhance payment for these products that have
received FDA marketing authorization and for Breakthrough gene therapy
products, similar to the pathway developed for QIDPs. Furthermore, the
commenters recommended the add-on payment amount for products that
qualify for new technology add-on payment pathways should be similar to
products qualifying for the QIDP and LPAD pathway which pursuant to
Sec. 412.88(a)(2)(ii)(B) is the lesser of: (1)
[[Page 45159]]
Seventy-five percent of the costs of the new medical service or
technology; or (2) seventy-five percent of the amount by which the
costs of the case exceed the standard DRG payment.
Response: We appreciate the commenters' recommendations for
potential changes to the new technology add-on payment program and
recognize the importance of addressing these critical issues. We will
take these comments into consideration for future rulemaking.
Comment: A commenter stated that CMS should not extend the 20%
adjustment codified in section 3710 of the CARES Act for discharges
involving a patient diagnosed with COVID-19 beyond the duration of the
PHE. A commenter recommended that CMS use its exceptions and
adjustments authority under 42 U.S.C. 1886(d)(5)(I) to adopt a parallel
policy that continues the 20 percent increase in the MS-DRG weight for
discharges of patients diagnosed with COVID-19 through the end of the
fiscal year in which the COVID-19 emergency period ends.
Response: Per the statute in section 3710 of the CARES Act, the 20%
payment adjustment is scheduled to end at the end the PHE. Unless
Congress extends the end date of the 20% payment adjustment beyond the
end of the PHE, we expect to discontinue these payments at the time
specified by the statute.
7. Comment Solicitation on the New Technology Add-On Payment Newness
Period for Products Available Through an Emergency Use Authorization
(EUA) for COVID-19
As noted previously, and explained in the FY 2005 IPPS final rule
(69 FR 49002), the intent of section 1886(d)(5)(K) of the Act and
regulations under Sec. 412.87(b)(2) is to pay for new medical services
and technologies for the first 2 to 3 years that a product comes on the
market, during the period when the costs of the new technology are not
yet fully reflected in the DRG weights.
As we have discussed in prior rulemaking (77 FR 53348), generally,
our policy is to begin the newness period on the date of FDA approval
or clearance or, if later, the date of availability of the product on
the U.S. market, when data reflecting the costs of the technology begin
to become available for recalibration of the DRGs. In some specific
circumstances, we have recognized a date later than FDA approval as the
appropriate starting point for the 2-year to 3-year newness period for
new technologies approved for add-on payments (85 FR 58734).
As discussed previously, in the FY 2009 IPPS final rule (73 FR
48561 through 48563), we revised 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. We stated that new technologies that have not received
FDA approval do not meet the newness criterion. In addition, we stated
we do not believe it is appropriate for CMS to determine whether a
medical service or technology represents a substantial clinical
improvement over existing technologies before the FDA makes a
determination as to whether the medical service or technology is safe
and effective. For these reasons, we first determine whether a new
technology meets the newness criterion, and only if so, do we make a
determination as to whether the technology meets the cost threshold and
represents a substantial clinical improvement over existing medical
services or technologies. We also finalized at 42 CFR 412.87(c)
(subsequently redesignated as 412.87(e)) 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.
In the FY 2021 IPPS/LTCH PPS final rule, to more precisely describe
the various types of FDA approvals, clearances, licensures, and
classifications that we consider under our new technology add-on
payment policy, we finalized a technical clarification to Sec.
412.87(e)(2) to indicate that new technologies must receive FDA
marketing authorization (for example, pre-market approval (PMA); 510(k)
clearance; the granting of a De Novo classification request; approval
of a New Drug Application (NDA); or Biologics License Application (BLA)
licensure) by July 1 of the year prior to the beginning of the fiscal
year for which the application is being considered. As noted in the FY
2021 IPPS/LTCH PPS final rule, this technical clarification did not
change our longstanding policy for evaluating whether a technology is
eligible for new technology add-on payment for a given fiscal year, and
we continue to consider FDA marketing authorization as representing
that a product has received FDA approval or clearance for purposes of
eligibility for the new technology add-on payment under Sec.
412.87(e)(2) (85 FR 58742).
An EUA by the FDA allows a product to be used for emergency use,
but under our longstanding policy, we believe it would not be
considered an FDA marketing authorization for the purpose of new
technology add-on payments, as a product that is available only through
an EUA is not considered to have an FDA approval or clearance.
Therefore, under the current regulations at 42 CFR 412.87(e)(2) and
consistent with our longstanding policy of not considering eligibility
for new technology add-on payments prior to a product receiving FDA
approval or clearance, we believe a product available only through an
EUA would not be eligible for new technology add-on payments.
Although an EUA is not an FDA approval or clearance that would be
considered FDA marketing authorization within the meaning of Sec.
412.87(e)(2), data reflecting the costs of products that have received
an EUA could become available as soon as the date of the EUA issuance
and prior to receiving FDA approval or clearance. CMS also recognizes
that the manufacturers of products with EUAs (such as some COVID-19
treatments) might further engage with FDA to seek approval or
clearance, and may be eligible for new technology add-on payments in
the future. We sought comment on how data reflecting the costs of a
product with an EUA, which may become available upon authorization of
the product for emergency use (but prior to FDA approval or clearance),
should be considered for purposes of the 2-year to 3-year period of
newness for new technology add-on payments for a product with or
expected to receive an EUA, including whether the newness period should
begin with the date of the EUA.
Comment: We received multiple comments in response to our request
for comment. Commenters recommended that CMS use the date of FDA
approval, and not the date of the EUA, as the beginning of the 2-year
to 3-year newness period. The commenters stated that a full FDA review
process is in the interest of patient safety and clinical efficacy
rather than expanding eligibility to include products under the
expedited EUA process; and that data collected during the EUA period
may reflect high variability in estimates of costs due to challenges
associated with variable treatment practices in the context of the
global pandemic and a novel disease. The commenters further stated that
the data collected may not reflect government price subsidies provided
for products during the EUA period. These factors may distort estimates
of the cost of treatment and not appropriately reflect the total cost
of care for patients who receive treatment using new COVID-19
therapeutics. A commenter also stated that while data
[[Page 45160]]
reflecting the costs of EUA products may become available from the date
of the EUA, CMS should not base the newness period on data gathered
during the EUA period, but rather, should monitor how pricing may have
changed once the product receives full marketing authorization. Some
commenters recommended that CMS allow EUAs as an appropriate form of
FDA authorization as required under the new technology add-on payment
process. A commenter stated that CMS' belief that an EUA should not be
considered an FDA marketing authorization for the purpose of new
technology add-on payments as a product that is available only through
an EUA is not considered to have FDA approval or clearance, is highly
problematic since an EUA is an authorization to allow products on the
US market within the limitations established under the letter of
authorization which contemplates marketing actions including
advertising and promotional activities. The commenter further stated
that it is clear from the text of the proposed rule that market
authorization, not approval, is the criterion for add-on payment
eligibility and that an EUA is a formal FDA authorization to market.
Response: We thank the commenters for their feedback and we will
consider these comments for future rulemaking where applicable. With
regard to the commenter who asserted that CMS should allow EUAs as an
appropriate form of FDA authorization for new technology add-on
payments as an EUA is a formal authorization to market, we note that
there are distinct eligibility criteria for new technology add-on
payments. As noted previously, historically, CMS has stated that for
the purposes of new technology add-on payments, new technologies that
have not received FDA approval do not meet the newness criterion. As
noted in section F.1.a.3 of this final rule, in addition to the newness
criterion, a technology must meet the substantial improvement criterion
to qualify for new technology add-on payment. We have previously stated
(73 FR 48561 through 48563) that we do not believe it is appropriate
for CMS to determine whether a medical service or technology represents
a substantial clinical improvement over existing technologies before
the FDA makes a determination as to whether the medical service or
technology is safe and effective. For these reasons, we first determine
whether a new technology meets the newness criterion, and only if so,
do we make a determination as to whether the technology meets the cost
threshold and represents a substantial clinical improvement over
existing medical services or technologies. An EUA authorizes a product
for emergency use when it is determined that it is reasonable to
believe that a product is effective in treating a condition, and, when
used under the conditions described in the EUA, the known and potential
benefits outweigh the known and potential risks for the product.\755\
As the safety and effectiveness of therapies under an EUA continue to
be evaluated, \756\ we are therefore unable to consider EUA as FDA
marketing authorization for the purposes of new technology add-on
payments.
---------------------------------------------------------------------------
\755\ U.S. Food and Drug Administration. (2020, November 19).
Coronavirus (COVID-19) Update: FDA Authorizes Drug Combination for
Treatment of COVID-19. U.S. Food and Drug Administration. https://www.fda.gov/news-events/press-announcements/coronavirus-covid-19-update-fda-authorizes-drug-combination-treatment-covid-19.
\756\ Ibid.
---------------------------------------------------------------------------
8. Extension of the New COVID-19 Treatments Add-On Payment (NCTAP)
Through the End of the FY in Which the PHE Ends
In response to the COVID-19 PHE, we established the New COVID-19
Treatments Add-on Payment (NCTAP) under the IPPS for COVID-19 cases
that meet certain criteria (85 FR 71157-71158). We believe that as
drugs and biological products become available and are authorized for
emergency use or approved by FDA for the treatment of COVID-19 in the
inpatient setting, it is appropriate to increase the current IPPS
payment amounts to mitigate any potential financial disincentives for
hospitals to provide new COVID-19 treatments during the PHE. Therefore,
effective for discharges occurring on or after November 2, 2020 and
until the end of the PHE for COVID-19, we established the NCTAP to pay
hospitals the lesser of: (1) 65 percent of the operating outlier
threshold for the claim; or (2) 65 percent of the amount by which the
costs of the case exceed the standard DRG payment, including the
adjustment to the relative weight under section 3710 of the Coronavirus
Aid, Relief, and Economic Security (CARES) Act, for certain cases that
include the use of a drug or biological product currently authorized
for emergency use or approved for treating COVID-19.
We stated in the proposed rule that we anticipated that there might
be inpatient cases of COVID-19, beyond the end of the PHE, for which
payment based on the assigned MS-DRG may not adequately reflect the
additional cost of new COVID-19 treatments. In order to continue to
mitigate potential financial disincentives for hospitals to provide
these new treatments, and to minimize any potential payment disruption
immediately following the end of the PHE, we stated that we believed
that the NCTAP should remain available for cases involving eligible
treatments for the remainder of the fiscal year in which the PHE ends
(for example, if the PHE were to end in FY 2022, until September 30,
2022).\757\ At the same time, we stated that we also believed that any
new technology add-on payments that may be approved for a COVID-19
treatment would also serve to mitigate any potential financial
disincentives for hospitals to provide that new COVID-19 treatment,
such that the NCTAP would no longer be needed for that same product. We
noted that a COVID-19 treatment that is the subject of an application
for FY 2022 new technology add-on payments and which receives FDA
approval or clearance by July 1, 2021 would be eligible for
consideration for new technology add-on payments for FY 2022.
---------------------------------------------------------------------------
\757\ On January 22, 2021, former Acting HHS Secretary Norris
Cochran sent a letter to governors announcing that HHS has
determined that the public health emergency will likely remain in
place for the entirety of 2021, and when a decision is made to
terminate the declaration or let it expire, HHS will provide states
with 60 days' notice prior to termination.
---------------------------------------------------------------------------
Therefore, we proposed to extend the NCTAP for eligible products
that are not approved for new technology add-on payments through the
end of the fiscal year in which the PHE ends (for example, September
30, 2022). We also proposed to discontinue the NCTAP for discharges on
or after October 1, 2021 for a product that is approved for new
technology add-on payments beginning FY 2022.
We stated that we believed the proposal to extend NCTAP for
eligible products would allow some form of add-on payment (that is,
NCTAP or new technology add-on payment) to continue uninterrupted for
some period of time following the conclusion of the COVID-19 PHE, as we
anticipated that there will continue to be inpatient cases of COVID-19
after the PHE ends. For example, if a drug or biological product with
an EUA to treat COVID-19 does not receive FDA approval by July 1, 2021,
and the PHE ends on December 31, 2021, the proposal would allow
discharges involving that product to continue to be eligible for the
NCTAP through September 30, 2022 (the end of FY 2022). We stated that
if that same product receives FDA approval by July 1, 2022, it would be
eligible for consideration of new technology add-on
[[Page 45161]]
payments beginning FY 2023, and new technology add-on payments, if
approved, would begin on October 1, 2022 (the beginning of FY 2023).
We invited public comment on our proposals to continue the NCTAP
for eligible products that are not approved for new technology add-on
payments through the end of the fiscal year in which the PHE ends and
to discontinue the NCTAP for products that are approved for new
technology add-on payments.
Comment: Commenters overwhelmingly supported our proposal to
continue the NCTAP for eligible products that are not approved for new
technology add-on payments through the end of the fiscal year in which
the PHE ends. Commenters stated that extending NCTAPs through the end
of the fiscal year in which the PHE ends will enable providers to
continue to treat COVID-19 patients without incurring excess losses.
Many commenters recommended that CMS remain flexible and consider
further extending NCTAP to ensure the payment serves its intended
purposes of supporting providers treating COVID-19 patients, even after
the PHE, until such a time as the data used to establish payment for
the applicable MS-DRGs reflects the cost of new COVID-19 treatments. A
commenter specifically requested that if the PHE were to end less than
three months prior to the end of the current fiscal year, CMS would
allow NCTAP to continue for the remainder of the calendar year.
Some commenters supported our proposal to discontinue the NCTAP for
products that are approved for new technology add-on payments beginning
FY 2022. Another commenter recommended that CMS should not extend the
NCTAP beyond its current expiration date for the existing treatments
that had an opportunity to apply for new technology add-on payments.
The commenter also stated that CMS should consider whether any
treatments for which authorization is newly granted this calendar year
should receive the NCTAP until the treatment may apply for and be
granted new technology add-on payment status. The commenter asserted
that CMS should evaluate safety, cost, and utilization data gathered
since the NCTAP's inception to assess the financial impact and clinical
outcomes of this policy to inform the decision on whether to grant new
technology add-on payment status.
A commenter, the applicant for Veklury, supported paying NCTAP
until it expires and then paying the new technology add-on payment once
the NCTAP is no longer paid. The commenter provided the following table
demonstrating that the NCTAP is more effective than a potential new
technology add-on payment at mitigating the potential financial
disincentives for a hospital to provide new COVID-19 treatments. The
commenter identified relevant MS-DRGs using Veklury ICD-10 codes from
FY 2020 MedPAR data and modeled estimated average payment rates using
FY 2019 MedPAR data across a variety of scenarios.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.227
BILLING CODE 4120-01-C
The commenter stated that the NCTAP provides appropriate levels of
support to reduce disincentives to use COVID-19 therapeutics,
particularly when compared to new technology add-on payments. The
commenter also stated that the NCTAP may be particularly useful to
hospitals as a means to smooth the transition in payment once the 20%
COVID-19 DRG add-on payment ends at the conclusion of the PHE, as
mandated by the CARES Act. Therefore, the commenter suggested that
instead of discontinuing the NCTAP when a new technology add-on payment
is approved as we proposed, that CMS grant a conditional new technology
add-on payment that would not take effect until the expiration of the
NCTAP. They believed that this approach would be similar to the
conditional new technology add-on payment established for certain
antimicrobial products and would provide clear guidance for providers
and more consistent access to NCTAP across COVID-19 treatment options.
They suggested that once the NCTAP period has expired at the end of the
fiscal year, the new technology add-on payment would immediately
initiate and extend through the remainder of the new technology add-on
payment's 2-3-year newness period, with the beginning of the newness
period tied to the FDA approval date of the new technology and
inclusive of the period where a conditional new technology add-on
payment was in place and a product was eligible for NCTAP.
[[Page 45162]]
A commenter noted that in many instances, NCTAP would result in
higher payment than the new technology add-on payment for the same
product. The commenter recommended that CMS provide the add-on payment,
either NCTAP or new technology add-on payment, whichever results in the
highest total case-level Medicare payment for current NCTAP products
that are approved for new technology add-on payment status. The
commenter believes that this policy would encourage the use of these
treatments and mitigate sudden declines in payment and should remain in
effect through the fiscal year in which the PHE ends. Another commenter
stated that it was concerned that for a product currently eligible for
NCTAP that is approved for new technology add-on payment, Medicare
payment may be inadequate if the NCTAP is discontinued, making it more
difficult for providers to sustainably care for patients in the same
manner as when the NCTAP was in place. The commenter encouraged CMS to
consider allowing the payment structure for the NCTAP to continue even
if a product has been approved for new technology add-on payments
beginning in FY 2022.
A commenter recommended that CMS should consider NCTAP and new
technology add-on payments to run consecutively and not concurrently so
that these payment statuses do not overlap. Another commenter supported
paying both NCTAP and new technology add-on payments for a single
technology if the technology is eligible for both add on payments.
Response: We appreciate the commenters' feedback and support for
the proposed extension of the NCTAP. After consideration of the
comments received, and for the reasons discussed previously, we are
finalizing our proposed extension of the NCTAP through the end of the
fiscal year in which the PHE ends. We also appreciate the commenters'
recommendations to further extend the NCTAP beyond this timeframe.
Since we cannot predict the timing or circumstances around the end of
the PHE, we will consider these for future rulemaking.
After consideration of the comments, we believe technologies
eligible for new technology add-on payments should also be eligible for
NCTAP. While we received some comments supporting our proposal to
discontinue NCTAP for a product that is approved for new technology
add-on payments, we agree with the other commenters that the NCTAP is
more effective than a potential new technology add-on payment at
mitigating the potential financial disincentives for a hospital to
provide new COVID-19 treatments. By making an NCTAP for technologies
also eligible for new technology add-on payment, we believe this will
mitigate any financial disincentives for treatments for COVID-19
depending on whether the treatment is eligible for new technology add-
on payment or NCTAP only. Specifically, as demonstrated by the
commenter above, the NCTAP without new technology add-on payment can
result in a higher add-on payment than the new technology add-on
payment without NCTAP. We do not believe technologies approved for new
technology add-on payment should be disadvantaged and receive a lower
add-on payment than those technologies eligible for NCTAP. Allowing for
both NCTAP and new technology add-on payments for technologies eligible
to receive both will result in the products receiving an equivalent
payment in the amount of the NCTAP.
Therefore, after review of the comments received, we are not
finalizing our proposal to discontinue NCTAP for discharges on or after
October 1, 2021 for a product that is approved for new technology add-
on payments beginning FY 2022, but are instead finalizing to extend
NCTAP through the end of the FY in which the PHE ends for all eligible
products, including those approved for new technology add-on payments
for FY 2022. However, we are also finalizing that we will reduce the
NCTAP for an eligible case by the amount of any new technology add-on
payments so that we do not create a financial disincentive between
technologies eligible for both the new technology add-on payment and
NCTAP compared to technologies eligible for NCTAP only. This will
ensure that the add-on payment for a technology eligible for both new
technology add-on payments and NCTAP is equivalent to that of a
technology only eligible for the NCTAP.
As discussed in section F.5.t., we are approving Veklury for FY
2022 new technology add on payments. Veklury is the only COVID-19
treatment eligible for new technology add-on payments in FY 2022.
Therefore, cases involving the use of Veklury in FY 2022 are eligible
for both new technology add-on payments and NCTAP, with any new
technology add-on payment reducing the amount of any NCTAP for the same
treatment. Accordingly, cases of Veklury will receive a total add-on
payment that will be equal to the payment it would receive if it were
only eligible for NCTAP.
As discussed above, we are finalizing our proposal to extend the
NCTAP for eligible products through the end of the fiscal year in which
the PHE ends, with modifications. Specifically, we are finalizing to
extend the NCTAP through the end of the fiscal year in which the PHE
ends for all eligible products, including those approved for new
technology add-on payments for FY 2022. We are not finalizing our
proposal to discontinue the NCTAP for discharges on or after October 1,
2021 for a product that is approved for new technology add-on payments
beginning FY 2022. Instead, we are finalizing that we will continue to
allow NCTAP for cases eligible for the new technology add-on payment,
through the end of the fiscal year in which the PHE ends, with the new
technology add-on payment reducing the amount of the NCTAP, as
discussed previously.
III. 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 2022 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 2022 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
[[Page 45163]]
accordance with sections 1886(d)(8)(B) and 1886(d)(10) of the Act when
calculating IPPS payment amounts. Under section 1886(d)(8)(D) of the
Act, the Secretary is required to adjust the standardized amounts so as
to ensure that aggregate payments under the IPPS after implementation
of the provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and
1886(d)(10) of the Act are equal to the aggregate prospective payments
that would have been made absent these provisions. The budget
neutrality adjustment for FY 2022 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 2022 wage index appears under sections III.E. and F. of the
preamble of this final rule.
2. Core-Based Statistical Areas (CBSAs) for the FY 2022 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 and 49973 through 49982)) for a full discussion of our
implementation of the OMB statistical 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 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
provided detailed information on the update to statistical areas since
July 15, 2015, and were 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. In the
FY 2020 IPPS/LTCH PPS final rule (84 FR 42300 through 42301), we
continued 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.
On April 10, 2018 OMB issued OMB Bulletin No. 18-03 which
superseded the August 15, 2017 OMB Bulletin No. 17-01. On September 14,
2018, OMB issued OMB Bulletin No. 18-04 which superseded the April 10,
2018 OMB Bulletin No. 18-03. Historically OMB bulletins issued between
decennial censuses have only contained minor modifications to CBSA
delineations based on changes in population counts. However, OMB's 2010
Standards for Delineating Metropolitan and Micropolitan Standards
created a larger mid-decade redelineation that takes into account
commuting data from the American Commuting Survey. As a result, the
September 14, 2018 OMB Bulletin No. 18-04 included more modifications
to the CBSAs than are typical for OMB bulletins issued between
decennial censuses.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58743 through 58755)
we adopted the updates set forth in OMB Bulletin No. 18-04 effective
October 1, 2020, beginning with the FY 2021 wage index. For a complete
discussion of the adoption of the updates set forth in OMB Bulletin No.
18-04, we refer readers to the FY 2021 IPPS/LTCH PPS final rule.
On March 6, 2020, OMB issued Bulletin No. 20-01, which provided
updates to and superseded OMB Bulletin No. 18-04 that was issued on
September 14, 2018. The attachments to OMB Bulletin No. 20-01 provided
detailed information on the update to statistical areas since September
14, 2018, and were based on the application of the 2010 Standards for
Delineating Metropolitan and Micropolitan Statistical Areas to Census
Bureau population estimates for July 1, 2017 and July 1, 2018. (For a
copy of this bulletin, we refer readers to the following website:
https://www.whitehouse.gov/wp-content/uploads/2020/03/Bulletin-20-01.pdf). In OMB Bulletin No. 20-01, OMB announced one new Micropolitan
Statistical Area, one new component of an existing Combined Statistical
Area and changes to New England City and Town Area (NECTA)
delineations. In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58744), we
stated that if appropriate, we would propose any necessary wage area
updates based on OMB Bulletin No. 20-01 in the FY 2022 IPPS/LTCH PPS
proposed rule. After reviewing OMB Bulletin No. 20-01, we have
determined that the changes in Bulletin 20-01 encompassed delineation
changes that would not affect the Medicare wage index for FY 2022.
Specifically, the updates consisted of changes to NECTA delineations
and the creation of a new Micropolitan Statistical Area which was then
added as a new component to an existing Micropolitan Statistical Area.
The Medicare wage index does not utilize NECTA definitions, and, as
most recently discussed in FY 2021 IPPS/
[[Page 45164]]
LTCH PPS final rule (85 FR 58746), we include hospitals located in
Micropolitan Statistical areas in each State's rural wage index.
Therefore, while we are adopting the updates set forth in OMB Bulletin
No. 20-01 consistent with our general policy of adopting OMB
delineation updates, we note that specific wage index updates would not
be necessary for FY 2022 as a result of adopting these OMB updates. In
other words, these OMB updates would not affect any hospital's
geographic area for purposes of the wage index calculation for FY 2022.
For FY 2022, 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, 17-01, 18-04 and
20-01, although as noted above the latter Bulletin did not require any
wage area updates.
We note that, in connection with our adoption in FY 2021 of the
updates in OMB Bulletin 18-04, we adopted a policy to place a 5 percent
cap, for FY 2021, on any decrease in a hospital's wage index from the
hospital's final wage index in FY 2020 so that a hospital's final wage
index for FY 2021 would not be less than 95 percent of its final wage
index for FY 2020. We refer the reader to the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58753 through 58755) for a complete discussion of
this transition. As finalized in the FY 2021 IPPS/LTCH PPS final rule,
this transition is set to expire at the end of FY 2021. However, given
the unprecedented nature of the ongoing COVID-19 public health
emergency (PHE), we also sought comment on whether it would be
appropriate to continue to apply a transition to the FY 2022 wage index
for hospitals negatively impacted by our adoption of the updates in OMB
Bulletin 18-04. For example, such an extended transition could
potentially take the form of holding the FY 2022 wage index for those
hospitals harmless from any reduction relative to their FY 2021 wage
index. If we were to apply a transition to the FY 2022 wage index for
hospitals negatively impacted by our adoption of the updates in OMB
Bulletin 18-04, we also sought comment on making this transition budget
neutral, as is our usual practice, in the same manner that the FY 2021
transition was made budget neutral as discussed in the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58755).
Comment: We received several comments strongly recommending CMS
extend a transition policy similar to that implemented in FY 2020 and
FY 2021. Several commenters, citing the severity and continuing impact
of changes related to the OMB updates, the low wage index policy, and
the lingering financial burden caused by the COVID-19 PHE, urged CMS to
add an additional year of transition, applied in a budget neutral
manner. These commenters stated that given the wide-ranging factors
impacting wage index values, it would not be equitable to limit the
transition adjustment only to the effects of the revised labor market
delineations. The commenters requested the transition be implemented
more broadly to all hospitals experiencing large declines in wage index
values. Many of these commenters recommended CMS consider making a
permanent 5 percent maximum reduction policy to protect hospitals from
large year-to-year variations in wage index values as a means to reduce
overall volatility.
Other commenters requested that CMS extend a hold harmless policy
for all hospitals negatively affected by CMS' adoption of revised
delineations until OMB releases further revisions predicated on the
results of the 2020 decennial census. A commenter recommended a hold-
harmless transition be applied specifically to hospitals in CBSAs that
were negatively affected by the FY 2021 adoption of revised CBSAs,
citing specific CBSAs they believed warranted an additional transition
adjustment.
Several commenters, while supporting some form of transition
adjustment for negatively affected hospitals, requested any such
adjustment be made in a non-budget neutral manner. These commenters
expressed their preference that any such adjustment should not come at
the expense of the providers themselves. Some commenters stated that
such a budget neutrality adjustment would disadvantage providers who
have increased their wage index values due to a variety of factors.
Response: After consideration of the comments, we are applying an
extended transition to the FY 2022 wage index for hospitals.
Specifically, for hospitals that received the transition in FY 2021, we
are continuing a wage index transition for FY 2022 under which we will
apply a 5 percent cap on any decrease in the hospital's wage index
compared to its wage index for FY 2021 to mitigate significant negative
impacts of, and provide additional time for hospitals to adapt to, the
CMS decision to adopt the revised OMB delineations. Also, as discussed
in the FY 2021 IPPS/LTCH final rule, we believe applying a 5-percent
cap on any decrease in a hospital's wage index from the hospital's
final wage index from the prior fiscal year is an appropriate
transition as it provides predictability in payment levels from FY 2021
to the upcoming FY 2022 as well as effectively mitigating any
significant decreases in the wage index for FY 2022.
We considered comments requesting that we apply the transition
adjustment in FY 2022 to all hospitals with significant reductions in
wage index values (not just those that received the transition
adjustment in FY 2021). Specifically, the policy commenters recommended
would extend not only to specific changes in wage index policy (such as
the introduction of the low wage policy or CMS's adoption of revised
OMB labor market delineations), but would address any significant
reductions in hospitals' wage index values, including changes in
hospital average hourly wage values and changes in various
reclassification statuses. We also considered comments recommending a
5-percent cap become a permanent policy for future fiscal years. We
considered how best to address these potential scenarios in a
consistent and thoughtful manner, and we reiterate that our policy
principles with regard to the wage index include generally using the
most current data and information available and providing that data and
information, as well as any approaches to addressing any significant
effects on Medicare payments resulting from these potential scenarios,
in notice and comment rulemaking. In FY 2020 and FY 2021, CMS
implemented two separate transition policies limiting any hospital to a
5 percent year-to-year reduction in wage index values. In FY 2020, the
purpose of the transition was to address potential impacts due to
implementation of the low wage policy. In FY 2021, the purpose was to
address the impact of CMS's adoption of the revised OMB labor market
delineations. Both the low wage policy and the adoption of revised OMB
delineations had wide ranging wage index implications; some of which
could not be readily isolated in order to target the negative impacts,
such as individual hospital reclassification considerations. CMS
determined it would be appropriate to apply the transition to all
hospitals experiencing significant reductions in wage index values.
There is no specific wage index policy finalized in FY 2022 that
warrants a similar application of a transition cap to all hospitals.
For FY 2022, we are limiting the transition policy only to hospitals
that received a transition adjustment in FY 2021 in order to
[[Page 45165]]
provide additional time for these hospitals to adapt to the FY 2021
changes.
We considered the comments recommending we not apply this continued
transition in a budget neutral manner. We believe limiting the
transition in FY 2022 to a 5 percent cap on any decrease in the
hospital's wage index compared to its wage index for FY 2021 rather
than holding the hospital's FY 2022 wage index harmless from any
reduction relative to its FY 2021 wage index balances the commenters'
concerns by limiting the impact of the budget neutrality factor applied
to the standardized amount while mitigating any continued significant
decreases in the wage index for FY 2022. Therefore, for FY 2022,
similar to FY 2021, we are applying a budget neutrality adjustment to
the standardized amount so that our transition, as previously
described, is implemented in a budget neutral manner under our
authority in section 1886(d)(5)(I) of the Act. Implementing the
transition wage index in a budget neutral manner is consistent with
past practice (for example, 79 FR 50372 and 84 FR 42338) 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 believe, 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 never applied these transition
policies (79 FR 50372 and 84 FR 42337 through 42338).
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 2020. The Census Bureau maintains a complete list of
changes to counties or county equivalent entities on the website at:
https://www.census.gov/programs-surveys/geography/technical-documentation/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 cross
walking 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 2022, we are continuing to use only the FIPS county codes
for purposes of cross walking counties to CBSAs. For FY 2022, 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 the latest FIPS code updates.
B. Worksheet S-3 Wage Data for the FY 2022 Wage Index
The FY 2022 wage index values are based on the data collected from
the Medicare cost reports submitted by hospitals for cost reporting
periods beginning in FY 2018 (the FY 2021 wage indexes were based on
data from cost reporting periods beginning during FY 2017).
1. Included Categories of Costs
The FY 2022 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)); and
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 2021, the wage
index for FY 2022 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 2022 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.
[[Page 45166]]
We did not receive any comments on the discussion in this section.
C. Verification of Worksheet S-3 Wage Data
The wage data for the FY 2022 wage index were obtained from
Worksheet S-3, Parts II and III of the Medicare cost report (Form CMS-
2552-10, OMB Control Number 0938-0050 with expiration date March 31,
2022) for cost reporting periods beginning on or after October 1, 2017,
and before October 1, 2018. For wage index purposes, we refer to cost
reports during this period as the ``FY 2018 cost report,'' the ``FY
2018 wage data,'' or the ``FY 2018 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 2022 wage
index includes FY 2018 data submitted to us as of the end of June 2021.
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 suggested our MACs to revise or verify data elements that result
in specific edit failures. For the proposed FY 2022 wage index, we
identified and excluded 86 providers with aberrant data that should not
be included in the wage index. However, we stated that if data elements
for some of these providers are corrected, we intended to include data
from those providers in the final FY 2022 wage index. We also adjusted
certain aberrant data and included these data in the 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 19, 2021. For the final FY 2022 wage index, we restored 28
hospitals to the wage index because their data was either verified or
improved, but we also removed the data of 5 hospital for the first time
after the proposed rule due to its data being aberrant or due to
conversion to CAH status. Thus, 63 hospitals with aberrant data remain
excluded from the FY 2022 wage index (86-28 + 5 = 63).
In constructing the proposed FY 2022 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2018, 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 (86 FR 25398)
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 FY 2022 wage index, we removed 3 hospitals that
converted to CAH status on or after January 24, 2020, the cut-off date
for CAH exclusion from the FY 2021 wage index, and through and
including January 24, 2021, the cut-off date for CAH exclusion from the
FY 2022 wage index. Since the proposed rule, we learned of 2 more
hospital that converted to CAH status on or after January 24, 2020, and
through and including January 24, 2021, the cut-off date for CAH
exclusion from the FY 2022 wage index, for a total of 5 hospitals that
were removed from the FY 2022 wage index due to conversion to CAH
status. In summary, we calculated the FY 2022 wage index using the
Worksheet S-3, Parts II and III wage data of 3,182 hospitals.
For the FY 2022 wage index, we allotted the wages and hours data
for a multicampus hospital among the different labor market areas where
its campuses are located 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 FY 2022 wage index
associated with this final rule (available via the internet on the CMS
website), includes separate wage data for the campuses of 21
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:
BILLING CODE 4120-01-P
[[Page 45167]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.228
BILLING CODE 4120-01-C
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
hospitals' wage 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.
A commenter stated that several of the 86 hospitals CMS identifies
as having ``aberrant'' data are California hospitals whose wages are
higher than their core-based statistical average (CBSA) average. The
commenter stated that in the proposed rule CMS does not cite specific
reasons why the agency believes the data from these hospitals are
``aberrant.'' Therefore, the commenter stated that the excluded
hospitals and other stakeholders are left to infer that CMS is
excluding these hospitals because their wages are higher than those of
other hospitals in the CBSA. The commenter explained that in the
absence of explanation from the agency, stakeholders are left to make
educated guesses as to why CMS has deemed the wage data aberrant,
limiting their ability to fully comment on the exclusion of individual
hospitals. The commenter alleged that CMS is using arbitrary and
undisclosed criteria to exclude these hospitals.
The commenter continued that the FFY 2022 wage data from worksheet
S-3 of cost reports filed during FFY 2018 for the excluded hospitals
with average hourly wages that are higher than the CBSA average have
been reviewed by CMS and its MAC as part of the well-established
Medicare wage index review process (just like all other hospitals). The
commenter indicated that, in accordance with the wage index review
process, as defined in CMS' Wage Index Development Timetable, at least
one of the hospitals in question submitted corrected data in a timely
manner that was reviewed and accepted by the MAC. The commenter stated
that, in accordance with Medicare's wage index review process, the
excluded hospitals' FFY 2018 worksheet S-3 wage data
[[Page 45168]]
were determined by the MAC to be accurate.
Commenters specifically raised the following concerns about
lawfulness of excluding wage data for these hospitals: 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 notice-and-comment rulemaking in accordance with the
Administrative Procedure 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.
Commenters also expressed concern regarding the effects of
excluding the hospitals' wage data. A few commenters stated that
excluding the wage data for the 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 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.
Response: We received similar comments in FY 2016 and reiterate the
points we made in the FY 2016 IPPS/LTCH final rule (80 FR 49490-49491).
Section 1886(d)(3)(E) of the Act requires the Secretary to adjust
the proportion of hospitals' costs attributable to wages and wage-
related costs for area differences reflecting the relative hospital
wage level in the geographic area of the hospital compared to the
national average hospital wage level. We believe that, under this
section of the Act, we have discretion to exclude aberrant hospital
data from the wage index PUFs to help ensure that the costs
attributable to wages and wage-related costs in fact reflect the
relative hospital wage level in the hospitals' geographic area.
Since the origin of the IPPS, the wage index has been subject to
its own annual review process, first by the MACs, and then by CMS.
Hospitals are aware that both the MACs (via instructions issued by CMS)
and CMS evaluate the accuracy and reasonableness of hospitals' wage
index data, and hospitals may appeal to CMS as part of the April and
June appeals processes. 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 the MACs and,
if necessary, hospitals provide additional documentation, adjustments,
or corrections to the data. Each year in the IPPS/LTCH PPS proposed
rule, we discuss the process wherein CMS suggested the MACs to ``revise
or verify data elements that result in specific edit failures'' (86 FR
25398). In the FY 2022 IPPS/LTCH PPS proposed rule, similar to the
proposed rules of prior years, we stated that we included the wage data
for facilities that were IPPS hospitals in FY 2012, inclusive of those
facilities that have since terminated their participation in the
program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is appropriate, in general, to reflect 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 (80 FR 24464). That is, a
hospital is included in the wage index if its data are reasonable,
regardless of whether the hospital is open or whether it has terminated
after the relevant past period, because the wage index is constructed
to represent the relative average hourly wage for each labor market
area in that past period. Thus, reasonableness and relativity to each
area's average hourly wages have been longstanding tenets of the wage
index development process that CMS has articulated in rulemaking.
We disagree with the commenters that removing hospitals from the FY
2022 wage index PUFs was arbitrary and undermined the MAC desk review
process because, as discussed above, as a standard part of the
refinement of the annual wage index, CMS evaluates the wage data for
both accuracy and reasonableness to ensure that the wage index is a
relative measure of the labor value provided to a typical hospital in a
particular labor market area. As part of this evaluation process, it is
CMS, not the MACs, that makes the decisions to include or exclude a
hospital's data from the wage index, and it would not be appropriate
for CMS to make such decisions prior to a desk review being performed.
The commenters seem to indicate that only hospitals with high average
hourly wages were removed from the PUFs. In the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25398), we stated that ``For the proposed FY 2022
wage index, we identified and excluded 86 providers with aberrant data
that should not be included in the wage index. If data elements for
some of these providers are corrected, we intend to include data from
those providers in the final FY 2022 wage index''. We note that we
never anticipated that the data of all 86 hospitals would be corrected;
we only anticipated that the data of some of those hospitals would be
corrected. This is because approximately 42 hospitals were deleted from
the FY 2022 proposed wage index for reasons that would make their data
unresolvable, including, but not limited to, termination (during or
since the relevant past period), low/no Medicare utilization, being a
CAH, or not reporting any wage data. Thus, ``aberrant'' hospitals are
not limited to only hospitals that fail edits for reasonableness, but
also include hospitals whose data are unresolvable. In fact, the number
of hospitals deleted from the January or April 2021 PUFs due to having
an extraordinarily high average hourly wage (and no other significant
edit failures) was a small percentage of the 86 excluded hospitals
(11.6 percent). Approximately 45 hospitals excluded from the January
2022 PUF had the potential to improve their data and be included in the
April 2015 PUF and/or the final rule wage index. As we stated earlier,
we received corrected data or improved documentation for 28 hospitals.
Therefore, we are including these 28 hospitals in the final FY 2022
wage index. This demonstrates the effectiveness of our process--
hospitals were included in final wage index because these hospitals
were responsive to the MACs' and CMS' requests for sufficient
documentation to improve their data. Consequently, the majority of
hospitals whose data were excluded from the proposed wage index but had
the potential to improve their data are included in the FY 2022 final
wage index. We believe the final wage index is all the more accurate as
a result.
Regarding the hospitals in California to which a commenter
referred, without knowing the specific provider numbers we are left to
assume which providers the commenter is referring to. In any case, we
use the following example of
[[Page 45169]]
a hospital in California removed from the FY 2022 wage index. The
hospital is located in CBSA 23420 (Fresno, California) and had a very
high average hourly wage and was removed from the wage data even though
the hospital's wage data was properly documented. However, the hospital
does not merely have the highest average hourly wage in the CBSA; its
average hourly wage is extremely and unusually high, significantly
higher than the next highest average hourly wage in that CBSA and in
the surrounding areas. While we believe this is a result of the unique
salary structure and business model of the hospital's owner, not from a
lack of reliability in its wage data, we believe the data is
nonetheless aberrant and we therefore have authority to remove it. We
do not believe that the average hourly wage of this particular hospital
accurately reflects the economic conditions in its labor market area
during the FY 2018 cost reporting period. Therefore, its inclusion in
the wage index would not ensure that the FY 2022 wage index represents
the labor market area's current wages as compared to the national
average of wages. Rather, its inclusion would distort the average
hourly wage of its labor market area. Accordingly, we have exercised
our discretion to remove this hospital's wage data from the FY 2022
wage index.
Furthermore, just as CMS has excluded certain hospitals from the
wage index with extraordinarily high average hourly wages relative to
their labor market areas, CMS also has excluded hospitals with
extraordinarily low average hourly wages relative to their labor market
areas. An objective comparison of the hospitals included in the FY 2022
preliminary PUF to the hospitals included in the January and April 2022
PUFs demonstrates CMS' ``fairness'' in evaluating the appropriateness
and relativity of the wage data of hospitals with both extraordinarily
low and extraordinarily high average hourly wages. While some hospitals
with high extraordinarily high average hourly wages remain excluded
from the FY 2022 final wage index, some hospitals with extraordinarily
low average hourly wages also remain excluded from the FY 2022 final
wage index. Therefore, we disagree with commenters' assertions that we
have been ``arbitrary and capricious'' and have ``abused'' our
discretion in excluding hospitals from the wage index.
We also note that each time a PUF is posted, CMS instructs the MACs
to send letters to each of their hospitals notifying and instructing
them to review their wage index data that were just posted. Hospitals
that review each PUF and observe that they are excluded may then submit
an April appeal to CMS, and/or contact CMS and the MAC to discuss
possible ways to revise or verify their data for inclusion in the wage
index. We believe the established annual wage index timetable grants
sufficient time for hospitals to review, appeal, and/or correct their
data. We also welcome State hospital associations to be more proactive
in the process of urging their constituents to be responsive to the
MACs' and CMS' requests for documentation and to become more involved
in resolving issues related to aberrant data. We note that it has never
been CMS' policy to disclose audit protocol. However, we may consider a
limited proposal regarding criteria for excluding a hospital's data
from the wage index due to its overall average hourly wage being either
too high or too low, as well as utilizing additional methods of
communicating with stakeholders regarding the adequacy of their wage
data.
Finally, we provide an impact of the overall impact of the wage
index with regard to the IPPS. We do not provide an impact for each
hospital excluded from the wage data. The cost report data of the
providers deleted from the wage index is provided with each public use
file and commenters can conduct an analysis of any change to the wage
index if we were to restore the data of a hospital deleted from the
wage index. With regard to the other PPSs, we refer commenters to the
rulemaking of those PPSs for comments on the wage index and any impact
analysis.
Comment: Commenters expressed concern that the wage data collected
during the PHE will be less reflective of regional wages. Commenters
suggest CMS consider not using the 2020 and 2021 data to set future
wage indices. A few commenters stated that additional responsibilities
on hospital staff that were also due September 2020, such as the
triennial Occupational Mix Survey, created opportunities for errors
into the FY 2022 wage indexes.
Response: FY 2022 uses wage data from 2018 which is not affected by
the COVID-19 PHE. FYs 2023, 2024 and 2025 would typically use wage data
from 2020 and 2021 since the wage index is on a four-year lag with
regard to the data. We will consider comments on the 2020 and 2021 wage
data in future rulemaking, as applicable.
D. Method for Computing the FY 2022 Unadjusted Wage Index
As we stated in the proposed rule (86 FR 25400), the method used to
compute the FY 2022 wage index without an occupational mix adjustment
follows the same methodology that we used to compute the wage indexes
without an occupational mix adjustment in the FY 2021 IPPS/LTCH PPS
final rule (see 85 FR 58758 through 58761, September 18, 2020), and we
did not propose any changes to this methodology. We have restated our
methodology in this section of this rule.
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 wage index (in this case, for FY 2022,
these were data from cost reports for cost reporting periods beginning
on or after October 1, 2017, and before October 1, 2018). In addition,
we included data from some hospitals that had cost reporting periods
beginning before October 2017 and reported a cost reporting period
covering all of FY 2018. 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 2018 data. We note that, if a
hospital had more than one cost reporting period beginning during FY
2018 (for example, a hospital had two short cost reporting periods
beginning on or after October 1, 2017, and before October 1, 2018), 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
[[Page 45170]]
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 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 the excluded areas by
multiplying, the previously discussed 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 the excluded areas using three steps:
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) is 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)).
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.
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, 2017 through April 15, 2019,
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 of the
ECI for FY 2022. The factors used to adjust the hospital's data are
based on the midpoint of the cost reporting period, as indicated in
this 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.
[[Page 45171]]
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 finalized in the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42305) 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 (see 84 FR 42305 and 42306)
August 16, 2019). We stated that we believe that, in the absence of
wage data for an urban labor market area, it is reasonable 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 FY 2022 wage
index, we note there is one urban CBSA for which we do not have IPPS
hospital wage data. In Table 3 (which is available via the internet on
the CMS website) which contains the area wage indexes, we include a
footnote to indicate to which CBSAs this policy applies. These CBSAs'
wage indexes would be equal to total urban salaries plus wage-related
costs (from Step 5) in the respective State, divided by the total urban
hours (from Step 4) in the respective State, divided by the national
average hourly wage (from Step 8) (see 84 FR 42305 and 42306) August
16, 2019). Under this step, we also apply our policy with regard to how
dollar amounts, hours, and other numerical values in the wage index
calculations are rounded, as discussed in this section of this rule.
We refer readers to section II. of the Appendix of the final 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 are
identified in Table 2 listed in section VI. of the Addendum to the
final rule and available via the internet on the CMS website.
Following is our policy with regard to rounding of the wage data
(dollar amounts, hours, and other numerical values) in the calculation
of the unadjusted and adjusted wage index, as finalized in the FY 2020
IPPS/LTCH final rule (84 FR 42306; August 16, 2019). 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 use
such data ``as is,'' and do 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 round the dollar amounts to 2
decimals. For any hour amounts within the wage index calculations, we
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 round
such numbers to 5 decimals. However, we 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, 2017, through April 15,
2019, 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 2022. 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.
[[Page 45172]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.229
For example, the midpoint of a cost reporting period beginning
January 1, 2018, and ending December 31, 2018, is June 30, 2018. An
adjustment factor of 1.01780 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, 2017, 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 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 2022, there is no Puerto Rico-
specific overall average hourly wage or wage index.
Based on the methodology, as previously discussed, we stated in the
proposed rule (86 FR 25402) that the proposed FY 2022 unadjusted
national average hourly wage was $46.42.
We did not receive any comments regarding the discussion of our
method for computing the FY 2022 unadjusted wage index. Based on the
previously described methodology, the final FY 2022 unadjusted national
average hourly wage is the following:
[GRAPHIC] [TIFF OMITTED] TR13AU21.230
E. Occupational Mix Adjustment to the FY 2022 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather
[[Page 45173]]
than geographic differences in the costs of labor.
1. Use of 2019 Medicare Wage Index Occupational Mix Survey for the FY
2022 Wage Index
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. As discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR
19903) and final rule (82 FR 38137), we collected data in 2016 to
compute the occupational mix adjustment for the FY 2019, FY 2020, and
FY 2021 wage indexes. A new measurement of occupational mix is required
for FY 2022.
The FY 2022 occupational mix adjustment is based on a new calendar
year (CY) 2019 survey. Hospitals were required to submit their
completed 2019 surveys (Form CMS-10079, OMB number 0938-0907,
expiration date September 31, 2022) to their MACs by September 3, 2020.
The preliminary, unaudited CY 2019 survey data were posted on the CMS
website on September 8, 2020. As with the Worksheet S-3, Parts II and
III cost report wage data, as part of the FY 2022 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 2022
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25403), for FY
2022, 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 2022 wage index. In the FY 2020
IPPS/LTCH PPS final rule (84 FR 42308), we modified 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. According to the policy
finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42308 and
42309), 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 continue 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 wage (both the unadjusted and adjusted for occupational mix), we
round such dollar amounts to 2 decimals. We round any hour amounts
within the wage index calculations to the nearest whole number. We
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 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 2022 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 2022 wage index. For the proposed FY 2022 wage index, we used
the Worksheet S-3, Parts II and III wage data of 3,159 hospitals, and
we used the occupational mix surveys of 2,955 hospitals for which we
also had Worksheet S-3 wage data, which represented a ``response'' rate
of 94 percent (2,955/3,159). For the proposed FY 2022 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 2022 occupational mix adjusted national
average hourly wage was $46.37.
We did not receive any comments on our proposed calculation of the
occupational mix adjustment to the FY 2022 wage index. Thus, for the
reasons discussed in this final rule and in the FY 2022 IPPS/LTCH PPS
proposed rule, we are finalizing our proposal, without modification to
calculate the occupational mix adjustment factor using the same
methodology that we have used since the FY 2012 wage index and to apply
the occupational mix adjustment to 100 percent of the FY 2022 wage
index.
For the final FY 2022 wage index, we are using the Worksheet S3,
Parts II and III wage data of 3,182 hospitals, and we are using the
occupational mix surveys of 3,028 hospitals for which we also have
Worksheet S-3 wage data, which is a ``response'' rate of 95 percent
(3,028/3,182). For the final FY 2022 wage index, we are applying 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 2022 occupational mix adjusted national average hourly
wage is the following:
[GRAPHIC] [TIFF OMITTED] TR13AU21.231
[[Page 45174]]
F. Analysis and Implementation of the Occupational Mix Adjustment and
the FY 2022 Occupational Mix Adjusted Wage Index
As discussed in section III.E. of the preamble of this final rule,
for FY 2022, we are applying the occupational mix adjustment to 100
percent of the FY 2022 wage index. We calculated the occupational mix
adjustment using data from the 2019 occupational mix survey data, using
the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76
FR 51582 through 51586).
The FY 2022 national average hourly wages for each occupational mix
nursing subcategory as calculated in Step 2 of the occupational mix
calculation are as follows:
[GRAPHIC] [TIFF OMITTED] TR13AU21.232
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 2019 occupational mix survey data, we determined (in
Step 7 of the occupational mix calculation) the following:
[GRAPHIC] [TIFF OMITTED] TR13AU21.233
We compared the FY 2022 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] TR13AU21.234
These results indicate that a smaller percentage of urban areas
(53.6 percent) would benefit from the occupational mix adjustment than
would rural areas (57.4 percent).
[[Page 45175]]
We also compared the FY 2022 wage data adjusted for occupational
mix from the 2019 survey to the FY 2022 wage data adjusted for
occupational mix from the 2016 survey. This analysis illustrates the
effect on area wage indexes of using the 2019 survey data compared to
the 2016 survey data; that is, it shows whether hospitals' wage indexes
will increase or decrease under the 2019 survey data as compared to the
prior 2016 survey data. Applying the occupational mix adjustment to the
wage data, based on the 2019 survey, resulted in the following:
[GRAPHIC] [TIFF OMITTED] TR13AU21.235
BILLING CODE 4120-01-C
These results indicate that the wage indexes of 52.9 percent of
CBSAs overall will decrease due to application of the 2019 occupational
mix survey data as compared to the 2016 occupational mix survey data.
Further, a larger percentage of urban areas (48.1 percent) will benefit
from the use of the 2019 occupational mix survey data as compared to
the 2016 occupational mix survey data than will rural areas (38.3
percent).
G. Application of the Rural Floor, Application of the State Frontier
Floor, Continuation of the Low Wage Index Hospital Policy, and Budget
Neutrality Adjustment
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.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42332 through
42336), we removed urban to rural reclassifications from the
calculation of the rural floor to prevent inappropriate payment
increases under the rural floor due to rural reclassifications, 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). The rural floor for this FY 2022
proposed rule continues to be calculated without the wage data of
hospitals that have reclassified as rural under Sec. 412.103. We did
not propose any changes to the rural floor policy for FY 2022. Also,
for the purposes of applying the provisions of section
1886(d)(8)(C)(iii) of the Act, effective beginning in FY 2020, we
remove the data of hospitals reclassified from urban to rural under
section 1886(d)(8)(E) of the Act (as implemented in the regulations at
Sec. 412.103) from the calculation of ``the wage index for rural areas
in the State in which the county is located'' as referred to in section
1886(d)(8)(C)(iii) of the Act. We did not propose any changes to this
policy for FY 2022.
Based on the FY 2022 wage index associated with this final rule
(which is available via the internet on the CMS website) and 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
269 hospitals would receive an increase in their FY 2022 wage index due
to the application of the rural floor.
Comment: Some commenters expressed their support for the
application of the rural floor policy which included support for the
continued exclusion of the wage data of hospitals that have
reclassified as rural under Sec. 412.103 when calculating the wage
index for the rural floor.
Response: We appreciate the commenters' support for the application
of the rural floor policy.
Comment: A commenter urged CMS to treat hospitals that classify as
rural per the MGCRB, as rural for all instances including the rural
floor calculation.
Response: We thank the commenter for their comment about the MGCRB
as it relates to the rural floor calculation. According to current
policy, hospitals that classify as rural per the MGCRB, may be included
in the rural floor calculation.
Comment: Some commenters opposed the continued application of a
nationwide rural floor budget neutrality adjustment, noting that the
policy does nothing more than benefit a few hospitals and exacerbate a
downward spiral of the wage index for low-wage-index hospitals.
Response: We appreciate the commenters' concerns about application
of the nationwide rural floor budget neutrality policy. However, as
stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56920), for
discharges occurring on or after October 1, 2010, for purposes of
applying the rural floor, section 3141 of the Affordable Care Act
replaced the statewide budget neutrality adjustment policy with the
national budget neutrality adjustment policy that was in
[[Page 45176]]
place during FY 2008. That is, section 3141 required that budget
neutrality for the rural floor be applied ``through a uniform, national
adjustment to the area wage index'' instead of within each State
beginning in FY 2011 (75 FR 50160). Accordingly, we do not have the
authority to calculate rural floor budget neutrality in a State-
specific manner.
2. Imputed Floor
In the FY 2005 IPPS final rule (69 FR 49109 through 49111), we
adopted the imputed floor policy as a temporary 3-year regulatory
measure to address concerns from hospitals in all-urban States that
have argued that they are disadvantaged by the absence of rural
hospitals to set a wage index floor for those States. We extended the
imputed floor policy eight times since its initial implementation, the
last of which was adopted in the FY 2018 IPPS/LTCH PPS final rule and
expired on September 30, 2018. (We refer readers to further discussions
of the imputed floor in the IPPS/LTCH PPS final rules from FYs 2014
through 2019 (78 FR 50589 through 50590, 79 FR 49969 through 49971, 80
FR 49497 through 49498, 81 FR 56921 through 56922, 82 FR 38138 through
38142, and 83 FR 41376 through 41380, respectively) and to the
regulations at 42 CFR 412.64(h)(4).) For FYs 2019, 2020, and 2021,
hospitals in all-urban states received a wage index that was calculated
without applying an imputed floor, and we no longer included the
imputed floor as a factor in the national budget neutrality adjustment.
In computing the imputed floor for an all-urban State under the
original methodology established beginning in FY 2005, we calculated
the ratio of the lowest-to-highest CBSA wage index for each all-urban
State as well as the average of the ratios of lowest-to-highest CBSA
wage indexes of those all-urban States. We then compared the State's
own ratio to the average ratio for all-urban States and whichever was
higher was multiplied by the highest CBSA wage index value in the
State--the product of which established the imputed floor for the
State.
We adopted a second, alternative methodology beginning in FY 2013
(77 FR 53368 through 53369) to address the concern that the original
imputed floor methodology guaranteed a benefit for one all-urban State
with multiple wage indexes (New Jersey) but could not benefit another
all-urban State, Rhode Island, which had only one CBSA. Under the
alternative methodology, we first determined the average percentage
difference between the post-reclassified, pre-floor area wage index and
the post-reclassified, rural floor wage index (without rural floor
budget neutrality applied) for all CBSAs receiving the rural floor. The
lowest post-reclassified wage index assigned to a hospital in an all-
urban State having a range of such values then was increased by this
factor, the result of which established the State's alternative imputed
floor. Under the updated OMB labor market area delineations adopted by
CMS beginning in FY 2015, Delaware became an all-urban State, along
with New Jersey and Rhode Island, and was subject to an imputed floor
as well. In addition, we adopted a policy, as reflected at Sec.
412.64(h)(4)(vi), that, for discharges on or after October 1, 2012, and
before October 1, 2018, the minimum wage index value for a State is the
higher of the value determined under the original methodology or the
value determined under the alternative methodology. The regulations
implementing the imputed floor wage index, both the original
methodology and the alternative methodology, were set forth at Sec.
412.64(h)(4).
Section 9831 of the American Rescue Plan Act of 2021 (Pub. L. 117-
2) enacted on March 11, 2021, amended section 1886(d)(3)(E)(i) of the
Act (42 U.S.C. 1395ww(d)(3)(E)(i)) and added section 1886(d)(3)(E)(iv)
of the Act to establish a minimum area wage index for hospitals in all-
urban States for discharges occurring on or after October 1, 2021.
Specifically, section 1886(d)(3)(E)(iv)(I) and (II) of the Act provides
that for discharges occurring on or after October 1, 2021, the area
wage index applicable to any hospital in an all-urban State may not be
less than the minimum area wage index for the fiscal year for hospitals
in that State established using the methodology described in Sec.
412.64(h)(4)(vi) as in effect for FY 2018. Thus, effective beginning
October 1, 2021 (FY 2022), section 1886(d)(3)(E)(iv) of the Act
reinstates the imputed floor wage index policy for all-urban States,
with no expiration date, using the methodology described in 42 CFR
412.64(h)(4)(vi) as in effect for FY 2018. As discussed previously,
under Sec. 412.64(h)(4)(vi), the minimum wage index value for
hospitals in an all-urban State is the higher of the value determined
using the original methodology (as set forth at Sec. 412.64(h)(4)(i)
through (v)) or the value determined using alternative methodology (as
set forth at Sec. 412.64(h)(4)(vi)(A) and (B)) for calculating an
imputed floor. Therefore, as provided in Sec. 412.64(h)(vi), we would
apply the higher of the value determined under the original or
alternative methodology for calculating a minimum wage index, or
imputed floor, for all-urban States effective beginning with FY 2022.
We note that the rural floor values used in the alternative methodology
at Sec. 412.64(h)(4)(vi)(A) and (B) would not include the wage data of
hospitals reclassified under Sec. 412.103, because we currently
calculate the rural floor without the wage data of such hospitals.
Unlike the imputed floor that was in effect from FYs 2005 through
2018, section 1886(d)(3)(E)(iv)(III) of the Act provides that the
imputed floor wage index shall not be applied in a budget neutral
manner. Specifically, section 9831(b) of Public Law 117-2 amends
section 1886(d)(3)(E)(i) of the Act to exclude the imputed floor from
the budget neutrality requirement under section 1886(d)(3)(E)(i) of the
Act. In other words, the budget neutrality requirement under section
1886(d)(3)(E)(i) of the Act, as amended, must be applied without taking
into account the imputed floor adjustment under section
1886(d)(3)(E)(iv) of the Act. When the imputed floor was in effect from
FY 2005 through FY 2018, to budget neutralize the increase in payments
resulting from application of the imputed floor, we calculated the
increase in payments resulting from the imputed floor together with the
increase in payments resulting from the rural floor and applied an
adjustment to reduce the wage index. By contrast, for FY 2022 and
subsequent years, we proposed to apply the imputed floor after the
application of the rural floor and to apply no reductions to the
standardized amount or to the wage index to fund the increase in
payments to hospitals in all-urban States resulting from the
application of the imputed floor required under section
1886(d)(3)(E)(iv) of the Act.
We note, given the recent enactment of section 9831 of Public Law
117-2 on March 11, 2021, there was not sufficient time available to
incorporate the changes required by this statutory provision (which
provides for the application of the imputed floor adjustment in a non-
budget neutral manner beginning in FY 2022) into the calculation of the
provider wage index for the proposed rule. We will include the imputed
floor adjustment in the calculation of the provider wage index in the
FY 2022 final rule. We note that CMS has posted, concurrent with the
issuance of the proposed rule, estimated imputed floor values by state
in a separate data file on the FY 2022 IPPS Proposed Rule web page on
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-
Service-
[[Page 45177]]
Payment/AcuteInpatientPPS/index, and an aggregate payment impact for
the imputed floor in the Appendix to the proposed rule.
The imputed floor under section 1886(d)(3)(E)(iv) of the Act
applies to all-urban States, as defined in new subclause (IV). Section
1886(d)(3)(E)(iv)(IV) provides that, for purposes of the imputed floor
wage index under clause (iv), the term all-urban State means a State in
which there are no rural areas (as defined in section 1886(d)(2)(D) of
the Act) or a State in which there are no hospitals classified as rural
under section 1886 of the Act. Under this definition, given that it
applies for purposes of the imputed floor wage index, we believe it
would be appropriate to consider a hospital to be classified as rural
under section 1886 of the Act if it is assigned the State's rural area
wage index value. Therefore, under the definition at section
1886(d)(3)(E)(iv)(IV) of the Act, ``a State in which there are no
hospitals classified as rural under this section'' would include a
State that has a rural area but no hospitals that receive the rural
area wage index under section 1886(d) of the Act. For purposes of this
definition, hospitals redesignated as rural under section 1886(d)(8)(E)
of the Act (412.103 rural reclassifications) would be considered
classified as rural if they receive the rural wage index; however,
hospitals that are deemed urban under section 1886(d)(8)(B) of the Act
(in Lugar counties), or are reclassified to an urban area under section
1886(d)(10) of the Act (MGCRB reclassifications) would not be
considered classified as rural because they do not receive the rural
wage index. In contrast, we note that in the imputed floor policy in
effect from FY 2005 through FY 2018, we did not consider a State to
qualify for ``all urban status'' if there were one or more hospitals
geographically located in the rural area of the State, even if all such
hospitals subsequently reclassified to receive an urban area wage
index. There is currently one State, Connecticut, that would be
eligible for the imputed floor under this aspect of the proposed rule
because there are currently no hospitals in Connecticut that are
classified as rural under section 1886(d) for purposes of the wage
index--in other words, there are no hospitals that receive the rural
wage index.
There is currently one rural county in Connecticut. All hospitals
in this county are either deemed urban under section 1886(d)(8)(B) of
the Act or receive an MGCRB reclassification under section 1886(d)(10)
of the Act. While several Connecticut hospitals were approved for rural
reclassification under section 1886(d)(8)(E) of the Act, at this point
all have received a subsequent urban reclassification under section
1886(d)(10) of the Act.
Additionally, under section 1861(x) of the Act, the term State has
the meaning given to it in section 210(h) of the Act. Because section
210(h) of the Act defines the word State to also include the District
of Columbia and the Commonwealth of Puerto Rico, Washington, DC and
Puerto Rico may also qualify as all-urban States for purposes of the
imputed floor if the requirements of section 1886(d)(3)(E)(iv)(IV) of
the Act are met. Based on data available for the proposed rule, the
following States would be all-urban States as defined in section
1886(d)(3)(E)(iv)(IV) of the Act, and thus hospitals in such States
would be eligible to receive an increase in their wage index due to
application of the imputed floor for FY 2022: New Jersey, Rhode Island,
Delaware, Connecticut, and Washington, DC.
We proposed to revise the regulations at Sec. 412.64(e)(1) and (4)
and (h)(4) and (5) to implement the imputed floor required by section
1886(d)(3)(E)(iv) of the Act for discharges occurring on or after
October 1, 2021. First, we proposed to make the following revisions to
the regulation text to specify that the imputed floor required under
section 1886(d)(3)(E)(iv) of the Act would not be applied in a budget
neutral manner:
We proposed to revise the introductory language at Sec.
412.64(e)(4) to state that the budget neutrality adjustment for the
imputed floor under paragraph (h)(4) applies only to discharges on or
after October 1, 2004 and before October 1, 2018.
We proposed a conforming revision to Sec.
412.64(e)(1)(ii) to refer to Sec. 412.64(h)(4)(vii) (proposed in the
proposed rule) in the introductory phrase that excepts certain
provisions from the budget neutrality requirement specified in
paragraph (e)(1)(ii).
We proposed to revise Sec. 412.64(h)(4) to add a new
clause (vii) stating that, for discharges on or after October 1, 2021,
the minimum wage index computed under this paragraph may not be applied
in a budget neutral manner.
In addition, we proposed to revise the introductory language at
Sec. 412.64(h)(4) to specify that the minimum wage index and
methodology described in that paragraph also apply for discharges on or
after October 1, 2021. Further, we proposed to revise Sec.
412.64(h)(4)(vi) to specify that this clause also applies to discharges
on or after October 1, 2021.
Finally, we proposed to make the following revisions to Sec.
412.64(h)(5). First, we proposed to redesignate the current language at
Sec. 412.64(h)(5) as Sec. 412.64(h)(5)(i) and to revise this language
to reflect that it applies for purposes of applying the imputed floor
for discharges on or after October 1, 2004 and before October 1, 2018.
Second, we proposed to add a new clause (ii) to Sec. 412.64(h)(5) to
reflect the proposed definition of all-urban State for purposes of
applying the imputed floor for discharges on or after October 1, 2021,
as previously discussed. Specifically, we proposed at Sec.
412.64(h)(5)(ii) that, for purposes of applying the imputed floor for
discharges on or after October 1, 2021, an all-urban State is a State
with no rural areas, as defined in Sec. 412.64, or a State in which
there are no hospitals classified as rural under section 1886 of the
Act. We are further proposing at Sec. 412.64(h)(5)(ii) that a hospital
would be considered classified as rural under section 1886 of the Act
if it is assigned the State's rural area wage index value.
Comment: Several commenters supported the proposed implementation
of the imputed floor wage index policy to benefit all-urban states. A
commenter opposed the reinstatement of the imputed floor, stating that
it exacerbates wage index disparities, but acknowledged that CMS
followed legislation enacted by Congress. This commenter requested CMS
include details by state of the effects of the imputed rural floor.
Commenters both in support and in opposition of the imputed floor
policy applauded its implementation without the application of budget
neutrality, per section 9831 of the American Rescue Plan Act of 2021. A
commenter specifically concurred with CMS' interpretation that the
definition of an all-urban state according to section 9831 of the
American Rescue Plan Act of 2021 is one in which no hospital receives
the rural area wage index.
Response: We appreciate the commenters' support of our proposed
implementation of the imputed floor. Responding to the commenter
opposed to this policy, we underscore that, as the commenter itself
pointed out, the imputed floor has been enacted into law via section
9831 of the American Rescue Plan Act of 2021. Accordingly, CMS does not
have discretion to not adopt this policy. In response this commenter's
request for details by state of the effects of the imputed rural floor,
we direct the commenter to the data file that CMS posted concurrent
with the proposed rule with estimated imputed floor value by state at
https://
[[Page 45178]]
www.cms.gov/files/zip/fy2022-ipps-nprm-imputed-state-floors.zip.
Finally, we agree with the commenter that CMS' implementation of the
imputed floor is consistent with the exemption from budget neutrality
and the definition of an all-urban state according to section 9831 of
the American Rescue Plan Act of 2021.
Comment: A commenter requested that CMS clarify whether a hospital
that is assigned the imputed floor wage index value would be treated as
if the hospital is physically located in a geographically rural area.
The commenter requested that CMS confirm that receipt of the imputed
floor wage index would confer rural status for provisions such as RRC
qualification, GME, DSH, and MGCRB reclassification.
Response: A hospital that receives the imputed floor wage index is
not considered rural. In fact, the imputed floor policy by definition
applies only to all-urban states. The commenter might be referring to
Sec. 412.103 urban to rural reclassifications, which does confer rural
status for certain purposes; the imputed floor simply sets a minimum
wage index in an all-urban state, but does not change the status of the
hospital. Accordingly, the imputed floor wage index would not confer
rural status for the aforementioned provisions.
After consideration of the public comments, we are finalizing
without modification our proposed revisions to the regulations at Sec.
412.64(e)(1) and (4) and (h)(4) and (5) to implement the imputed floor
required by section 1886(d)(3)(E)(iv) of the Act for discharges
occurring on or after October 1, 2021.
3. State Frontier Floor for FY 2022
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 2022 IPPS/
LTCH PPS proposed rule (86 FR 25407), we did not propose any changes to
the frontier floor policy for FY 2022. In the proposed rule, we stated
that 44 hospitals would receive the frontier floor value of 1.0000 for
their FY 2022 proposed wage index. These hospitals are located in
Montana, North Dakota, South Dakota, and Wyoming.
We did not receive any public comments on the application of the
State frontier floor for FY 2022. In this final rule, 44 hospitals will
receive the frontier floor value of 1.0000 for their FY 2022 wage
index. These hospitals are located in Montana, North Dakota, South
Dakota, and Wyoming. We note that while Nevada meets the criteria of a
frontier State, all hospitals within the State currently receive a wage
index value greater than 1.0000.
The areas affected by the rural and frontier floor policies for the
final FY 2022 wage index are identified in Table 2 associated with this
final rule, which is available via the internet on the CMS website.
4. Continuation of the Low Wage Index Hospital Policy; Budget
Neutrality Adjustment
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, in the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42325 through 42339), we finalized policies 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
doing so in a budget neutral manner through an adjustment applied to
the standardized amounts for all hospitals, as well as by changing the
calculation of the rural floor. We also provided for a transition in FY
2020 for hospitals experiencing significant decreases in their wage
index values as compared to their final FY 2019 wage index, and made
these changes in a budget neutral manner.
We increase 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 (the low wage index hospital
policy). We stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42326
through 42328) that 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. Therefore, the policy will continue in FY 2022.
In order to offset the estimated increase in IPPS payments to hospitals
with wage index values below the 25th percentile wage index value, for
FY 2022 and for subsequent fiscal years during which the low wage index
hospital policy is in effect, we proposed to apply a budget neutrality
adjustment in the same manner as we applied it in FY 2021, as a uniform
budget neutrality factor applied to the standardized amount. We refer
readers to section II.A.4.b. of the addendum to this final rule for
further discussion of the budget neutrality adjustment for FY 2022. For
purposes of the low wage index hospital policy, based on the data for
the final rule, the table displays the 25th percentile wage index value
across all hospitals for FY 2022.
------------------------------------------------------------------------
------------------------------------------------------------------------
FY 2022 25th Percentile Wage Index Value................ 0.8437
------------------------------------------------------------------------
Comment: Many commenters thanked CMS for continuing the low wage
index policy to significantly help struggling low-wage hospitals and
promote equity among providers. These commenters specifically applauded
CMS increasing the wage index values of low-wage hospitals. Several
commenters requested that CMS extend the policy beyond four years as
originally stated in the FY 2020 IPPS final rule when the policy was
finalized, with a commenter specifically requesting the policy be
finalized for a ten-year period. Other commenters similarly supported
the policy but maintained that CMS needs to do more to address wage
index disparities facing rural and low-wage providers, particularly
considering the devastating effects of the COVID-19 pandemic on
hospitals. Alternative solutions suggested by the commenters included a
national rural wage index; an urban wage index floor of 1.0000; and
wage data audits to verify local labor prices.
Response: We appreciate the many comments received in support of
our policy to provide an increase in the wage index for hospitals with
wage index values below the 25th percentile wage index value for a year
(referred to as the low wage index hospital policy). We note that we
did not propose any changes to this policy in the FY 2022 IPPS/LTCH PPS
proposed rule. We appreciate the commenters' requests to extend this
policy beyond four years as well as other suggested alternatives.
Because we consider these comments to be outside the scope of the FY
2022 IPPS/LTCH PPS proposed rule, we are not addressing them in this
final rule but may consider them in future rulemaking.
Comment: We also received many comments opposing the continuation
of the low wage index hospital policy. The commenters expressed that
the policy fails to recognize legitimate differences in geographic
labor markets. A commenter questioned CMS' statutory authority to
promulgate this policy under 42 U.S.C. 1395ww(d)(3)(E) because
inflating the wage index for the lowest quartile creates a wage index
system not based on actual wages paid
[[Page 45179]]
by these hospitals. A few commenters maintained that the low wage
policy is not well targeted and is ineffective. A commenter pointed to
a recent OIG report that suggests a complicated set of issues in local
labor markets determines hospital wages in addition to Medicare payment
rates. The commenter requested that CMS repeal the low wage index
policy for FY 2022 while it pursues the OIG's recommendation for CMS to
study the reasons some hospitals in a particular area were able to pay
higher wages than others in the same area prior to the implementation
of the low wage index hospital policy.
Response: We believe we addressed the commenters' concerns in our
response to comments when we first promulgated the policy, and we refer
readers to that discussion (84 FR 42325 through 42328). Specifically,
in response to the commenters opposing our policy because they assert
the policy fails to recognize differences in geographic labor markets,
we continue to believe, for the reasons stated in the FY 2020 IPPS/LTCH
PPS final rule (84 FR 42327-42328), that by preserving the rank order
in wage index values, our policy continues to reflect meaningful
distinctions between the employee compensation costs faced by hospitals
in different geographic areas. Furthermore, as stated in the FY 2020
IPPS/LTCH PPS final rule (84 FR 42327 through 42328), we believe that
the low wage index hospital policy increases the accuracy of the wage
index as a relative measure of wages across different geographic
regions 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. Thus, under
the low wage index hospital policy, we believe the wage index for low
wage index hospitals appropriately reflects the relative hospital wage
level in those areas compared to the national average hospital wage
level. As explained in the FY 2020 IPPS/LTCH PPS final rule (84 FR
42331), because the low wage index hospital policy results in a wage
index that is based on the actual wage data we collect from hospitals,
it falls within the scope of the authority in section 1886(d)(3)(E) of
the Act, which requires that the wage index be constructed ``on the
basis of'' that data.
Relying in part on an OIG report about the policy, some commenters
stated that our policy is mis-targeted and ineffective. We believe,
however, that the numerous comments received in support of this policy
indicate that many low wage hospitals are indeed helped by this policy.
More importantly, refining our criteria to target a subset of low-wage
hospitals as the commenter suggests, such as low-wage hospitals that
are rural or that have negative profit margins, would not maintain the
rank order in wage index values. As we stated earlier, we believe that
maintaining the rank order of wage index values is important to reflect
meaningful distinctions between the employee compensation costs faced
by hospitals in different geographic areas. Even several commenters
that disagreed with our policy stressed the need for the wage index to
be an accurate measure of the relative level of wages in different
areas. A highly targeted approach that selected individual hospitals
for relief would not maintain the rank order of wage index values and
thus would be inconsistent with the construction of a relative measure
of area wage levels. While it might be possible to refine our criteria
for a more targeted approach, we believe it is reasonable to conclude
that our current policy will have the intended effect of providing the
opportunity for low wage hospitals to increase compensation. As we
stated in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42327), the
future wage data from those hospitals will help us assess our
reasonable expectation that hospitals will increase their employee
compensation as a result of wage index increases under this policy.
Once the 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.
Commenters that referenced the OIG report pointed out that the
report indicates that Medicare payment is only one factor contributing
to hospitals' low wages. While we recognize that Medicare payment is
not the only factor driving hospital wages, Medicare payment is a
contributing factor to hospital wage levels that is within the purview
of CMS, unlike factors such as local housing markets. Therefore, we
continue to believe it is appropriate to keep this policy in place
while we evaluate its effectiveness. As we stated earlier in response
to this comment, while the OIG report indicates that there may be ways
to refine our policy, it does not show that our current policy approach
is unreasonable or suggest the policy goal we are hoping to achieve is
unworthy. Nor does the OIG report suggest we lack authority to pursue
that goal. At most the OIG report suggests there might be alternative
approaches to the problem. Therefore, we disagree with the commenter's
suggestion that we repeal the low wage index hospital policy currently
in place to study the OIG's recommendations. Due to the four year data
lag until a hospital's wages are reflected in the wage index, we
believe that keeping the policy in place for the full four year period
that was finalized in the FY 2020 IPPS/LTCH PPS final rule will enable
us to evaluate whether the policy achieved its intended effects.
Prematurely pausing this policy, as the commenter suggests, could
hamper the potential effectiveness of this policy in providing low wage
hospitals an opportunity to increase compensation, which may in turn
raise their wage index.
In response to the comment suggesting that CMS study the reasons
hospitals are able to pay higher wages, we note that CMS has
extensively studied wage disparities and contributing factors to low
wage indexes in the past. In the FY 2019 IPPS LTCH/PPS proposed rule
(83 FR 20372), CMS issued a request for information engaging multiple
stakeholders on wage index disparities. As summarized in the FY 2020
IPPS/LTCH PPS proposed and final rules (84 FR 19394 and 84 FR 42326-
42332, respectively) many stakeholders expressed that circularity,
where low wage hospitals remain locked in a downward spiral due to low
wage indexes that prevent them from raising their wages, was the most
important wage index issue facing the system and it needed to be
addressed quickly. The low wage index hospital policy was developed as
a result of extensive analysis and engagement with multiple
stakeholders. We refer readers to the FY 2020 IPPS/LTCH PPS final rule
(84 FR 42326-42332) for further discussion of the low wage index
hospital policy and our responses to similar comments.
Therefore, while the OIG report suggests that we do further study
before implementing any policy regarding low wage hospitals, we note
that we had already promulgated the policy by the time of the OIG
report, and that we have been studying this issue for several years. We
believe there was more than a sufficient basis on which to conclude
that it was appropriate to take immediate action in the form of the
policy we finalized and to continue to assess the results of that
policy and to otherwise continue to analyze the issue. Doing further
study might have resulted in a policy some might have preferred being
implemented sometime in the future, but we concluded that the problem
needed addressing now. Again, we believe the many comments we
[[Page 45180]]
received in favor of the policy support this judgment. We agree with
the OIG that the issue deserves more study, and we will continue to
engage in that, but we believe the best course was to implement our
policy now while we engage in that study.
Comment: Many commenters supported increasing the wage index values
of low-wage hospitals, but urged CMS to do so in a non-budget-neutral
manner. Commenters asserted that this redistribution forces high-wage,
mostly urban hospitals to bear the cost of supporting lower-wage
hospitals. Commenters who opposed the low wage index hospital policy
also disagreed with the budget neutrality adjustment, stating that the
budget neutrality adjustment penalizes many hospitals, including rural
hospitals. Some commenters stated that 42 U.S.C. 1395ww(d)(5)(I) does
not authorize budget neutrality adjustments to the national
standardized amount, except for transfer cases. Other commenters
requested that CMS ensure that the budget neutrality adjustment factor
not apply to hospitals falling below the 25th percentile or revert to
its FY 2020 proposal to decrease the wage index for hospitals with
values above the 75th percentile. A few commenters stated that the wage
index increase for hospitals between the 22nd and the 25th percentile
is negated by the reduction to the standardized rate.
Response: We disagree with the commenters that the low wage index
hospital policy should be implemented in a non-budget neutral manner.
As we stated in response to similar comments in the FY 2020 IPPS/LTCH
PPS final rule, (84 FR 42331 and 42332), 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 we stated in the FY 2020 IPPS/LTCH
PPS final rule (84 FR 42331), the wage index is 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. As a result,
as we explained in the FY 2020 IPPS/LTCH PPS final rule, if it were
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 section
1886(d)(5)(I) of the Act in support of such a budget neutrality
adjustment. We have considered the commenters' suggestion that we do
not have authority under section 1886(d)(5)(I) of the Act to implement
a budget neutrality adjustment to the national standardized amount,
including the argument that such authority exists only with respect to
transfer cases. Contrary to the commenters' suggestion, and consistent
with our response to a similar comment in the FY 2020 and FY 2021 IPPS/
LTCH PPS final rules, we believe that we have broad authority under
section 1886(d)(5)(I) of the Act to promulgate a budget neutrality
adjustment to the national standardized amount and that this authority
is not limited to transfer cases. We refer readers to the full
discussion of budget neutrality for the low wage index hospital policy
in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42328-42332).
With regard to the commenter's assertion about a possible reduction
to overall payment if the amount of benefit received from the wage
index boost is less than the reduction to the standardized rate, we
believe we have applied both the quartile policy and the budget
neutrality policy appropriately. The quartile adjustment is applied to
the wage index, which resulted in an increase to the wage index for
hospitals below the 25th percentile. The budget neutrality adjustment
is applied to the standardized amount in order to ensure that the low
wage index hospital policy is implemented in a budget neutral manner.
Thus, consistent with our current methodology for implementing wage
index budget neutrality under section 1886(d)(3)(E) of the Act and with
how we implemented budget neutrality for the low wage index hospital
policy in FY 2020, we believe it is appropriate to continue to apply a
budget neutrality adjustment to the national standardized amount for
all hospitals so that the low wage index hospital policy is implemented
in a budget neutral manner for FY 2022.
After consideration of the public comments we received, for the
reasons discussed in this final rule and in the FY 2022 IPPS/LTCH PPS
proposed rule, we are finalizing our proposal, without modification, to
apply a budget neutrality adjustment for our low wage index hospital
policy in the same manner as we applied it in FY 2020 and FY 2021, as a
uniform budget neutrality factor applied to the standardized amount.
As we stated in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25407 through 25409), we will continue to apply the policies we
finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 32715) to
address wage index disparities--that is, the low wage index hospital
policy, and the exclusion of the wage data of hospitals reclassified
under section 1886(d)(8)(E) of the Act (as implemented in Sec.
412.103) from the rural floor and from the calculation of ``the wage
index for rural areas in the State in which the county is located'' as
referred to in section 1886(d)(8)(C)(iii) of the Act. For purposes of
the low wage index hospital policy, based on the data for this final
rule, for FY 2022, the 25th percentile wage index value across all
hospitals is 0.8437.
H. FY 2022 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. 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). In this FY 2022 IPPS/LTCH PPS final rule, as
provided beginning with the FY 2021 IPPS/LTCH PPS final rule, we have
included Table 4A which is titled ``List of Counties Eligible for the
Out-Migration Adjustment under Section 1886(d)(13) of the Act'' and
Table 4B titled ``Counties redesignated under section 1886(d)(8)(B) of
the Act (Lugar Counties).'' We refer readers to section VI. of the
Addendum to this final rule for a discussion of the wage index tables
for FY 2022.
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). We note that this deadline was
extended for applications for FY 2022 reclassifications to 15 days
after the public display date of the FY 2021 IPPS/LTCH final rule at
the Office of the Federal Register, using our authority under section
1135(b)(5) the Act due to the COVID-19 Public Health Emergency.
Generally, hospitals must be proximate to the labor market area to
which they are seeking reclassification and must demonstrate
characteristics
[[Page 45181]]
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). We note that rural hospitals reclassifying under the MGCRB to
another State's rural area are not eligible for the rural floor,
because the rural floor may apply only to urban, not rural, hospitals.
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. In the FY 2020 IPPS/LTCH PPS final rule (84
FR 42332 through 42336), we finalized a policy to exclude the wage data
of urban hospitals reclassifying to rural areas under 42 CFR 412.103
from the calculation of the rural floor. 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.
For a discussion on the effects of reclassifications under Sec.
412.103 on the rural area wage index and the calculation of the rural
floor, we refer readers to the FY 2020 IPPS/LTCH PPS final rule (84 FR
42332 through 42336).
We refer readers to the interim final rule with comment period
(IFC) (CMS-1762-IFC) simultaneously submitted for public inspection
with the proposed rule implementing the court's decision in Bates
County Memorial Hospital v. Azar, 464 F. Supp. 3d 43 (D.D.C. 2020)
(``Bates'') for further changes to the treatment of Sec. 412.103
hospitals reclassifying under the MGCRB.
Comment: A commenter disagreed with CMS' treatment of hospitals
with dual Sec. 412.103 and MGCRB reclassifications. The commenter
stated that CMS' policy of considering the hospital's geographic CBSA
and the urban CBSA to which the hospital is reclassified under the
MGCRB for the wage index calculation violates the statutory requirement
to treat Sec. 412.103 hospitals as located in the rural area of the
state. The commenter specifically requested that CMS include the wages
of Sec. 412.103 hospitals that also have an active MGCRB
reclassification in calculating the rural wage of the state if not
doing so would reduce the wage index for that area, in the same manner
that geographically rural hospitals with a MGCRB reclassification are
treated according to Sec. 1886(d)(8)(C)(ii).
Response: We appreciate the commenter's input. We note that CMS
includes the wage data of Sec. 412.103 hospitals that do not have an
MGCRB reclassification in the rural area wage index, consistent with
the statutory requirement to treat Sec. 412.103 hospitals as rural.
CMS continues to treats Sec. 412.103 hospitals as rural even if such
hospitals have an additional MGCRB reclassification by according the
hospital the benefits of rural status, such as 340B program and RRC
eligibility. However, in developing our policies for how hospitals with
dual reclassifications would be treated in wage index calculations
following our April 21, 2016 IFC (81 FR 23428 through 23438), CMS
discussed the effect of simultaneous Sec. 412.103 and MGCRB
reclassifications. We stated that when there is both a Sec. 412.103
reclassification and an MGCRB reclassification, the MGCRB
reclassification would control for wage index calculation and payment
purposes. We explained that ``In these circumstances, we believe it is
appropriate to rely on the urban MGCRB reclassification to include the
hospital's wage data in the calculation of the urban CBSA wage index.
Further, we believe it is appropriate to rely on the urban MGCRB
reclassification to ensure that the hospital be paid based on its urban
MGCRB wage index. While rural reclassification confers other rural
benefits besides the wage index under section 1886(d) of the Act, a
hospital that chooses to pursue reclassification under the MGCRB (while
also maintaining a rural reclassification under Sec. 412.103) would do
so solely for wage index payment purposes.'' (81 FR 23434). We continue
to believe that that policy, developed through rulemaking, is
appropriate. Since we did not propose to change our current policy in
the FY 2022 IPPS/LTCH PPS proposed rule, we are not making any changes
to this policy in this final rule.
With regard to the application of the hold harmless policy that the
commenter referenced at Sec. 1886(d)(8)(C)(ii), the statute requires
that a rural area be held harmless from the effects of hospitals
reclassifying under Lugar or the MGCRB. Specifically, Sec.
1886(d)(8)(C)(ii) states: ``If the application of subparagraph (B) or a
decision of the Medicare Geographic Classification Review Board or the
Secretary under paragraph (10), by treating hospitals located in a
rural county or counties as not being located in the rural area in a
State, reduces the wage index for that rural area (as applied under
this subsection), the Secretary shall calculate and apply such wage
index under this subsection as if the hospitals so treated had not been
excluded from calculation of the wage index for that rural area.''
The commenter suggests CMS include the wage data of hospitals with
Sec. 412.103 reclassifications in the rural area of the State
referenced in
[[Page 45182]]
Sec. 1886(d)(8)(C)(ii). The rural area wage index, which according to
the commenter should include Sec. 412.103 hospitals, would be compared
to a wage index with the effect of MGCRB reclassifications and Lugar
hospital statuses applied, in order to possibly hold the rural area
harmless from the effect of MGCRB reclassifications and Lugar hospital
statuses. There would be numerous downstream effects of such a policy
across IPPS ratesetting that might harm hospitals, contrary to the
commenter's intent. For example, using the data associated with this
final rule, some states would experience a decline of up to 4.8 percent
in their rural wage index if we were to treat hospitals with dual Sec.
412.103 and MGCRB reclassifications no differently than geographically
rural hospitals with MGCRB reclassifications, as the commenter
suggests. In another example, such a policy would potentially create
barriers to MGCRB reclassification for rural and Sec. 412.103
hospitals. If CMS were to treat Sec. 412.103 hospitals in the manner
the commenter requests by considering such hospitals' data in the rural
area prior to reclassification, then Sec. 412.103 hospitals would have
the state's rural area listed as their geographic CBSA in the Three
Year Average Hourly Wage (AHW) File used for MGCRB reclassification. As
commenters expressed in comments responding to our May 10, 2021 interim
final rule with comment period (CMS-1762-IFC) and summarized in section
III.K.3. of the preamble of this final rule, assigning the rural CBSA
as the geographic CBSA for Sec. 412.103 hospitals in the Three Year
AHW File would potentially hamper geographically rural and Sec.
412.103 hospitals' ability to reclassify. Many geographically rural and
Sec. 412.103 hospitals would no longer be able to satisfy the wage
comparison criteria at Sec. 412.230(d)(1)(iii)(C) (requiring a
hospital's average hourly wage to be at least 106 percent of the
average hourly wage of all other hospitals in the area in which the
hospital is located) if the wages of high-wage Sec. 412.103 hospitals
are included in the area in which the hospital is located prior to
reclassification. Notably, commenters unanimously requested CMS require
Sec. 412.103 hospitals to compare their AHW to the AHW of only
hospitals actually located in the rural area, exclusive of hospitals
with Sec. 412.103 rural redesignations, for simplicity because
hospitals may obtain a Sec. 412.103 reclassification at any time and
would change the rural area's AHW and because including Sec. 412.103
reclassifications will change the rural areas AHW.
We did not propose the policy the commenter suggests, and it would
constitute a significant change with numerous effects on the IPPS wage
index, as enumerated above. We do not think it would be appropriate to
adopt such a policy without describing it in a proposed rule and
obtaining public comments from all relevant stakeholders. Therefore, in
this final rule we are not adopting the policy the commenter suggested,
but will consider further addressing the issue in future rulemaking.
2. MGCRB Reclassification and Redesignation Issues for FY 2022
a. FY 2022 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 2022 reclassification requests. Based on
such reviews, there are 406 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2022. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2022,
hospitals reclassified beginning in FY 2020 or FY 2021 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 243 hospitals approved for wage index reclassifications in
FY 2020 that will continue for FY 2022, and 291 hospitals approved for
wage index reclassifications in FY 2021 that will continue for FY 2022.
Of all the hospitals approved for reclassification for FY 2020, FY
2021, and FY 2022, based upon the review at the time of the proposed
rule, 940 hospitals are in a MGCRB reclassification status for FY 2022
(with 140 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).
Finally, we note that in the FY 2021 IPPS/LTCH final rule (85 FR
58771--58778), CMS finalized an assignment policy for hospitals
reclassified to CBSAs from which one or more counties moved to a new or
different urban CBSA under the revised OMB delineations based on OMB
Bulletin 18-04. We provided a table in that rule (85 FR 58777 and
58778) which described the assigned CBSA for all the MGCRB cases
subject to this policy. For such reclassifications that continue to be
active or are reinstated for FY 2022 (and FY 2023, if applicable), the
CBSAs assigned in the FY 2021 IPPS/LTCH final rule continue to be in
effect.
b. Revisions to the Regulations at Sec. 412.278 for Administrator's
Review
The regulation at Sec. 412.278(b) addresses the procedure for a
hospital's request for the Administrator's review of an MGCRB decision.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58788), we eliminated
the prohibition on submitting a request by facsimile or other
electronic means so that hospitals may also submit requests for
Administrator review of MGCRB decisions electronically. In addition, we
updated the regulation at Sec. 412.278(b)(1) to require the hospital
to submit an electronic copy of its request for review to CMS' Hospital
and Ambulatory Policy Group. We specified that copies to CMS' Hospital
and Ambulatory Policy Group should be submitted via email to wage
[email protected]. In the proposed rule, we proposed to further revise
the regulation at Sec. 412.278(b)(1) to specify that the hospital's
request for review must be in writing and sent to the Administrator, in
care of the Office of the Attorney Advisor, in the manner directed by
the
[[Page 45183]]
Office of the Attorney Advisor. We believe that this additional
language would provide clarity and specificity by addressing any
changes to the future technology platform for submission of the
hospital's request for Administrator review. Hospitals will continue to
be notified of the procedure for requesting Administrator review in the
decision letters issued by the MGCRB.
The regulation at Sec. 412.278(f)(2) addresses the timing for the
Administrator's decision. Specifically, the Administrator issues a
decision in writing to the party with a copy to CMS not later than 90
calendar days following the receipt of the party's request for review
(Sec. 412.278(f)(2)(i)), or not later than 105 calendar days following
issuance of the MGCRB decision in the case of review at the discretion
of the Administrator (Sec. 412.278(f)(2)(ii)). While the regulation at
Sec. 412.278(f)(2)(i) allows the Administrator to toll the 90-day
timeframe for good cause, the regulation at Sec. 412.278(f)(2)(ii)
does not expressly provide for tolling the 105 day timeframe in the
case of review at the discretion of the Administrator. We believe the
policy regarding tolling should be the same regardless of whether the
Administrator exercises review at the request of the hospital or at her
discretion. Therefore, we proposed to also provide for tolling of the
105-day timeframe at Sec. 412.278(f)(2)(ii). Specifically, we proposed
to revise Sec. 412.278(f)(2)(ii) to state that the Administrator
issues a decision in writing to the party with a copy to CMS not later
than 105 days following issuance of the MGCRB decision in the case of
review at the discretion of the Administrator, except the Administrator
may, at his or her discretion, for good cause shown, toll such 105
days. We received no comments on this proposal and therefore are
finalizing the proposed revisions to Sec. Sec. 412.278(b)(1) and
412.278(f)(2)(ii) without modification.
3. Redesignations Under Section 1886(d)(8)(B) of the Act (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 outmigration 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 wage[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 wage[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.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42314 and 42315), we
clarified that in circumstances where an eligible hospital elects to
receive the outmigration 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 outmigration 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. We stated that 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 outmigration adjustment under section
1886(d)(13)(G) of the Act.
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 outmigration 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
[[Page 45184]]
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 prior IPPS/LTCH PPS final rules, most recently in the FY 2021 IPPS/
LTCH PPS final rule (85 FR 58787), we have applied the same policies,
procedures, and computations since FY 2012. We proposed to use them
again for FY 2022, as we believe they continue to be appropriate for FY
2022. 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 2022, 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 2022, 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).)
Comment: A teaching hospital located in a rural area explained that
itis disadvantaged by the current wage index policy because other
hospitals in its state are able to benefit from higher wage areas due
to the out-migration adjustment, which the commenter stated is
currently unavailable to it. According to the commenter, despite being
ineligible for an out-migration adjustment, it continues to complete
for labor with hospitals located in urban areas. As such, the commenter
would like CMS to consider the impact that the current wage index
policies has on it and other teaching hospitals like it that are
located in rural areas, are ineligible for the out-migration adjustment
and serve a sparsely populated patient service area but compete for
labor with an urban area with a high concentration of similar
institutions.
Response: We appreciate the commenter's concerns. Wage index
policy, specifically the out-migration adjustment based on commuting
patterns of hospital employees, is applied according to the statute
described at section 1886(d)(13) of the Act. As described earlier in
this section, the out-migration adjustment is 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 the reasons set forth in this final rule and in the FY 2022
IPPS/LTCH PPS proposed rule, for FY 2022, we are finalizing our
proposal, without modification, to continue using the same policies,
procedures, and computations that were used for the FY 2012 out-
migration adjustment and that were applicable for FYs 2016 through
2021.
Table 2 associated with this final rule (which is available via the
internet on the CMS website) includes the proposed out-migration
adjustments for the FY 2022 wage index. In addition, Table 4A
associated with this final rule, ``List of Counties Eligible for the
Out-Migration Adjustment under Section 1886(d)(13) of the Act'' (also
available via the internet on the CMS website) consists of the
following: A list of counties that are eligible for the out-migration
adjustment for FY 2022 identified by FIPS county code, the final FY
2022 out-migration adjustment, and the number of years the adjustment
will be in effect.
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. We refer readers to the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42332 through 42336) for a discussion on our current
policy to calculate the rural floor without the wage data of urban
hospitals reclassifying to rural areas under 42 CFR 412.103.
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 must
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, 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 add a lock-in date by which a hospital's application
for rural status must be filed in order to be treated as rural in the
wage index and budget neutrality calculations for payment rates for the
next Federal fiscal year. 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. 412.64(e)(1)(ii), (e)(2)
and (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
[[Page 45185]]
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.
2. Changes to Cancellation Requirements at Sec. 412.103(g)
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42322), we noted
that if an 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. Therefore, we noted that 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-in date.' We stated in the FY 2020 IPPS/
LTCH PPS final rule that we planned 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.
We stated in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58788)
that hospitals in certain states were indeed timing their rural
reclassifications and applications to exploit the rural
reclassification process in order to obtain higher wage index values.
For example, for FY 2020, at least twenty-one hospitals in one State
obtained Sec. 412.103 rural reclassifications after the FY 2020 lock-
in date, effectively receiving their State's rural wage index without
having their wage data included, which would have lowered their State's
rural wage index. These hospitals then requested to cancel their Sec.
412.103 rural reclassifications effective for FY 2021, in accordance
with Sec. 412.103(g)(3). Similarly, five hospitals in another State,
hospitals with wage data that would have lowered their State's FY 2021
rural wage index, requested to cancel their Sec. 412.103 rural
reclassifications for FY 2021, so that the rural wage index would be
set using the data of one geographically rural hospital and two
hospitals reclassified under Sec. 412.103 that withdrew their MGCRB
reclassifications for FY 2021. All five of these hospitals that
withdrew their rural reclassification effective October 1, 2021 have
since reapplied and been approved for rural reclassification. At least
a dozen additional hospitals in this State were also approved for rural
reclassification during FY 2021. By timing their applications to be
approved after the lock-in date, these hospitals are receiving a higher
rural wage index without having their own data included in the rural
wage index calculation. We believe this practice of applying for and
canceling rural reclassification to manipulate a State's rural wage
index is detrimental to the stability and the accuracy of the Medicare
wage index system.
In the FY 2008 IPPS/LTCH final rule (72 FR 47371 through 47373),
CMS addressed an issue of hospitals applying for rural reclassification
and then requesting cancelation soon after approval. Certain hospitals
were using rural reclassifications to obtain RRC status, then canceling
their rural reclassification so they could obtain an MGCRB
reclassification, and using their prior RRC status in order to benefit
from favorable MGCRB reclassification rules. To address this, CMS
finalized a policy that required such hospitals to maintain rural
status for one full cost reporting year before their rural
reclassification could be canceled (cancellation was not effective
until the hospital had been paid as rural for at least one 12-month
cost-reporting period, and not until the beginning of the FY following
the request for cancellation and the 12-month cost reporting period
(Sec. 412.103(g)(2)(ii)). As discussed in the FY 2008 IPPS/LTCH
proposed rule (72 FR 24812), we stated that we believed this policy was
reasonable, given that acquired rural status for IPPS hospitals should
be a considered decision for hospitals that truly wish to be considered
as rural, and not purely as a mechanism for reclassifying. In the April
21, 2016 interim final rule with comment period (81 FR 23428 through
23438)), CMS implemented provisions amending our regulations to allow
hospitals nationwide to have simultaneous Sec. 412.103 and MGCRB
reclassifications. In the FY 2020 IPPS/LTCH final rule (42320 through
42321), CMS removed the requirement that RRCs must be paid as rural for
one cost reporting year before canceling rural reclassification, as
there no longer was an incentive to obtain and then cancel rural
reclassification status to obtain an MGCRB reclassification. However,
given our observations over the past two fiscal years of a new form of
wage index gaming, as described in the previous paragraph, we believe
it is necessary and appropriate to adopt a similar measure to prevent
rural reclassifications from being used purely as a mechanism for
statewide wage index manipulation.
Specifically, we proposed that requests to cancel rural
reclassifications must be submitted to the CMS Regional Office not
earlier than one calendar year after the reclassification effective
date. For example, a hospital that was approved to receive a rural
reclassification effective October 1, 2021 would not be eligible to
request cancellation until October 1, 2022. We also proposed an
additional modification to the effective date of these cancellation
requests. Currently, all rural reclassification cancellation requests
must be submitted not less than 120 days before the end of a fiscal
year (that is, assuming the fiscal year ends on September 30th, no
cancellation requests may be submitted after June 2nd and before
October 1st). This timeframe typically aligns closely with the rural
reclassification lock-in date under Sec. 412.103(b)(6) (the hospital's
rural reclassification application must be approved by the CMS Regional
Office no later than 60 days after the public display date of the IPPS/
LTCH PPS proposed rule at the Office of the Federal Register in order
for a hospital to be treated as rural in the wage index and budget
neutrality calculations for the next Federal fiscal year). The lock-in
date and the 120 day cancellation deadline provide timeframes within
which a hospital must be approved for rural reclassification (to have
its rural status included in the wage index and budget neutrality
calculations for the next fiscal year) or request cancellation of rural
status, respectively, and also give CMS adequate time to incorporate
these changes in the wage index and budget neutrality calculations
under Sec. 412.64(e)(1)(ii), (e)(2) and (4), and (h) for payment rates
for the next Federal fiscal year. Rural reclassifications are effective
as of the date the application is received (Sec. 412.103(b)(5), (d)),
and CMS Regional Offices are required to render a determination within
60 days of receipt of the application (Sec. 412.103(c)). We believe
that even with the proposed one-year minimum reclassification period
before cancellation can be requested, there still would be a
possibility that hospitals could time their applications around the
lock-in date and 120 day deadline to continue to manipulate the State's
rural wage index calculation. For example, assuming the lock-in date
for a given year was May 30th (that is, the date by which the Regional
Office must approve the application in order for the rural
reclassification to be included in the wage index and budget neutrality
calculations for the upcoming fiscal year), a hospital may choose to
apply for rural reclassification on May 25th, virtually assuring that
it could not be approved in time to be considered for wage index
development purposes for the upcoming fiscal year. Assuming our
[[Page 45186]]
one-year minimum reclassification period proposal is finalized, the
hospital could request cancellation on May 25th the following year.
Since that date would be prior to 120 day cancellation deadline, a
hospital could once again cancel its rural reclassification, then
reapply for rural reclassification status, and once again receive the
rural wage index for the upcoming fiscal year while excluding its own
wage data from the calculation. To address this rural wage index
manipulation, we proposed to eliminate the current rule at Sec.
412.103(g)(3) (that cancellation must be requested 120 days prior to
the end of the fiscal year and is effective beginning with the next
fiscal year) and replace it with a policy that ensures that a hospital
approved for rural reclassification (and that does not receive an
additional reclassification) would have its data included in the
calculation of the rural wage index for at least one Federal fiscal
year before the rural reclassification status could be canceled.
Specifically, we proposed to make cancellation requests effective for
the Federal fiscal year that begins in the calendar year after the
calendar year in which the cancellation request is submitted. For
example, we proposed that a cancellation request submitted on December
31, 2021 would be effective October 1, 2022. But a cancellation request
submitted one day later on January 1, 2022 would not become effective
until October 1, 2023.
Specifically, we proposed to add 412.103(g)(4) to state that for
all written requests submitted by hospitals on or after October, 1,
2021 to cancel rural reclassifications, a hospital may cancel its rural
reclassification by submitting a written request to the CMS Regional
Office not less than 1 calendar year after the effective date of the
rural reclassification. The hospital's cancellation of its rural
reclassification would be effective beginning the Federal fiscal year
that begins in the calendar year following the calendar year in which
the cancellation request is submitted. We proposed to make conforming
revisions to Sec. 412.103(g)(3) to reflect that the rule in Sec.
412.103(g)(3) applies to requests for cancellation of rural
reclassification submitted on or after October 1, 2019 and before
October 1, 2021.
We considered an alternative policy to increase the current 120 day
cancellation deadline to a sufficient number of days to ensure that
hospitals could not time applications and cancellations to straddle the
lock-in date. Given the floating nature of the lock-in date due to the
publication of the proposed rule varying year to year, it is difficult
to determine how long that period would need to be in order to ensure
our policy goals of preventing rural wage index manipulation are met.
We acknowledge that our proposals would increase the amount of time a
hospital must retain rural reclassification before it could cancel that
status. However, we do not believe these proposed changes would have an
undue impact on hospitals. In the FY 2021 final rule, 81 percent of
hospitals with rural reclassifications were assigned a wage index based
on an MGCRB or ``Lugar'' reclassification, and would not receive a wage
index based on their rural reclassification.\758\ Another 11 percent
received a rural wage index value that was greater than or equal to
their geographically urban area. Since these hospitals are typically
benefiting by maintaining rural reclassification status, we do not
believe they would be negatively affected by our proposals. More than
half of the remaining 9 percent of hospitals with rural
reclassifications do so to maintain MDH or SCH status. These special
statuses convey additional financial benefits to hospitals and are not
typically or routinely canceled by hospitals. We note that in the FY
2008 IPPS/LTCH final rule (72 FR 47372), we addressed a comment that
expressed concern that the proposed requirement that a hospital must
maintain rural status for at least a full 12 months could adversely
affect hospitals with SCH status since the payment rate as a rural SCH
may be only slightly higher than the urban Federal rate. Since the form
of wage index manipulation addressed by the proposed policy in FY 2008
specifically involved hospitals acquiring rural status to become RRCs,
CMS opted to limit the policy finalized in FY 2008 to RRCs only. By
contrast, the form of wage index manipulation we addressed in the
proposed rule was not limited to any specific hospital type. Therefore,
we believe it is appropriate to apply it to all hospitals with rural
reclassification status. We believe the proposed policy of requiring
that rural reclassification be in effect for at least 1 year before
cancellation can be requested, and the proposed policy to make rural
reclassification cancellations effective beginning the Federal fiscal
year that begins in the calendar year after the calendar year in which
the cancellation request is submitted will reduce the instances of wage
index manipulation described previously, as well as reduce volatility
and promote accuracy in overall wage index values by ensuring that
hospitals that are being paid a State's rural wage index are eventually
included, when applicable, in that rural wage index calculation. We
note that this form of manipulation (hospitals canceling rural status
to remove their wage data from the rural wage index calculation)
resulted in the rural wage index for one state increasing by over 4
percent between the FY 2020 proposed rule and the FY 2020 final rule.
Based on our analysis, that figure could have been significantly
greater (as high as 10 percent) in certain States. We further believe
these proposed policies provide adequate time for hospitals to review
their reclassification status and make appropriate decisions for future
fiscal years. Hospitals that meet the proposed 1-year minimum
requirement in proposed Sec. 412.103(g)(4) would have opportunity
between the publication date of the final rule (and potential
correction notices) and the end of the calendar year to evaluate
whether to cancel or maintain their rural status for the next fiscal
year.
---------------------------------------------------------------------------
\758\ ``Lugar'' hospitals may reclassify as rural and retain the
urban wage index deemed under section 1886(d)(8)(B) of the Act, as
discussed in the FY 2017 IPPS/LTCH final rule (81 FR 56929).
---------------------------------------------------------------------------
Comment: We received a comment stating strong support for CMS'
actions to prevent hospitals from using 412.103 as a mechanism for
statewide wage index manipulation. However, the commenter requested
that this policy be limited only to hospitals that obtained rural
reclassification after October 1, 2020. The commenter stated that CMS
should allow hospitals with longstanding rural reclassification status
to maintain an appropriate level of flexibility while appropriately
restricting cancellations for hospitals that may engage in the form of
wage index manipulation discussed in the proposed rule. Other
commenters, while acknowledging CMS' policy motivations, suggested
alternative revisions to the rural reclassification cancellation policy
to avoid unfairly penalizing hospitals that are not motivated by the
form of wage index manipulation discussed in the proposed rule.
Specifically, a commenter requested CMS, rather than further limit a
hospital's ability to cancel rural reclassification status, instead
limit a hospital's ability to reapply for rural reclassification for a
period of time following an approved for cancellation.
Another commenter requested CMS exclude hospitals from the proposed
cancellation policies if they meet a variety of conditions that would
indicate they are not attempting to obtain their State's rural wage
index while avoiding the inclusion of their hospital's data in the wage
index calculations. This commenter stated the
[[Page 45187]]
proposed policies were too onerous, and should be modified to
specifically target the behavior that CMS is addressing. The commenter
also recommended excluding hospitals that maintained rural
reclassification status for at least 2 consecutive years from the newly
imposed restrictions of the proposed cancellation policy, and also
suggested CMS explore a policy of making mid-year corrections to wage
index values to ensure that hospitals that obtain rural
reclassifications have their data included in its State's rural wage
index calculations.
Response: We appreciate the input from commenters. We believe that
the comments received were generally supportive of CMS' action to limit
the ability for hospitals to time rural reclassification and
cancellations in order to receive a higher rural wage index without
having their own data included in the rural wage index calculation. We
have reviewed and taken into consideration the suggested modifications
to our proposed policies. Certain suggestions, such as limiting a
hospital's ability to reapply for rural reclassification status after
recently cancelling a prior rural reclassification, may not be
consistent with the statutory requirements regarding the effective date
and approval criteria for rural reclassification applications. In our
proposal to require a cancellation be submitted in the calendar year
prior to the fiscal year it would become effective, we acknowledged
this would add a significant amount of time to the current requirement
at Sec. 412.103(g)(3). Currently, a cancellation request must be
submitted at least 120 days prior to the end of a fiscal year to be
effective for the upcoming fiscal year. Under our proposal, requests
must be submitted approximately 152 days earlier (by December 31st). We
understand that hospitals wish to have an opportunity to review data in
the proposed rule to determine whether to maintain or cancel any
particular reclassification status, including rural reclassifications
under section Sec. 412.103. However, as discussed in the proposed rule
(86 FR 25412) there may exist the potential for wage index manipulation
by timing cancellation requests and new applications around the ``lock-
in'' date and the current 120 day deadline to submit rural
reclassification cancellation requests. We proposed the policy of
requiring rural reclassification cancellation requests to be submitted
in the calendar year prior to the fiscal year it would become
effective. However, if finalized, our proposal to require rural
reclassification be held for one full year would mean that any hospital
that requested cancellation effective for FY 2022 (that is, submitted a
cancellation request on or before the June 2, 2021 deadline), and
reapplied for rural reclassification after October 1, 2021, would not
be eligible to cancel that new reclassification status until FY 2024 at
the earliest, reducing the urgency to implement the additional
revisions to the cancellation policy in FY 2022.
In response to comments received, we believe it would be
appropriate to delay and potentially revise our proposal to require
cancellation requests be effective for the Federal fiscal year that
begins in the calendar year after the calendar year in which the
cancelation request is submitted in order to assure the policy
effectively targets the form of wage index manipulation discussed
previously.
The current policy of requiring cancellation requests be submitted
not less than 120 day prior to the end of the Federal fiscal year will
remain in place while we evaluate alternative methods to obtain our
policy goals. However, to address the potential for rural wage index
manipulation in FY 2022 and future years, we are finalizing the
proposed policy that rural reclassification be in effect for at least 1
year before cancellation can be requested. Specifically, we are adding
Sec. 412.103(g)(4) to state that for all written requests submitted by
hospitals on or after October, 1, 2021 to cancel rural
reclassifications, a hospital may cancel its rural reclassification by
submitting a written request to the CMS Regional Office not less than 1
calendar year after the effective date of the rural reclassification
and not less than 120 days prior to the end of a Federal fiscal year.
The hospital's cancellation of the classification is effective
beginning with the next Federal fiscal year. We believe this policy
will not affect hospitals with longstanding rural reclassification
status, would not unduly burden hospitals that obtained rural
reclassification status for reasons not involving the rural wage index
calculations, and will effectively address the wage index manipulation
issue in the upcoming fiscal years.
We will continue to monitor rural reclassification applications and
cancellation requests. We will take into consideration the comments we
have so far received and, if necessary, make additional proposals to
address this issue further in future fiscal years.
3. Finalization of Interim Final Rule With Comment Period on Provisions
Related To Modification of Limitations on Redesignation by the Medicare
Geographic Classification Review Board Interim Final Rule (CMS-1762-
IFC)
In the interim final rule with comment period (IFC) (CMS-1762-IFC)
simultaneously submitted for public inspection with the proposed rule,
CMS made regulatory changes in order to align our policy with the
decision in Bates. Specifically, the IFC revised the regulations at
Sec. 412.230 to allow hospitals with a rural redesignation under
section 1886(d)(8)(E) of the Act to reclassify under the MGCRB using
the rural reclassified area as the geographic area in which the
hospital is located effective with reclassifications beginning with FY
2023. We stated we would also apply the policy in the IFC when deciding
timely appeals before the Administrator of applications for
reclassifications beginning with FY 2022 that were denied by the MGCRB
due to the policy in effect prior to the IFC, which did not permit
hospitals with rural redesignations to use the rural area's wage data
for purposes of reclassifying under the MGCRB. In this section of this
final rule, we are responding to the public comments that we received
on these provisions in the May 10, 2021 IFC and finalizing the interim
policies.
a. Background
i. Wage Index for Acute Care Hospitals Paid Under the Hospital
Inpatient Prospective Payment System (IPPS)
Under section 1886(d) of the Social Security Act (the Act),
hospitals are paid based on prospectively set rates. To account for
geographic area wage level differences, section 1886(d)(3)(E) of the
Act requires that the Secretary of the Department of Health and Human
Services (the Secretary) adjust the standardized amounts by a factor
(established by the Secretary) reflecting the relative hospital wage
level in the geographic area of the hospital, as 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). 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, with updates as reflected in OMB Bulletins Nos. 15-
01, 17-01, and 18-04. We refer readers to the FY 2015 IPPS/LTCH PPS
final rule (79 FR 49951 through 49963) for a full
[[Page 45188]]
discussion of our implementation of the new OMB labor market area
delineations beginning with the FY 2015 wage index, and to the FY 2021
IPPS/LTCH PPS final rule (85 FR 58743 through 58755) for a discussion
of the latest updates to these delineations.
Section 1886(d)(3)(E) of the Act requires the Secretary to update
the wage index of hospitals annually, and to base the update on a
survey of wages and wage-related costs of short-term, acute care
hospitals. Under section 1886(d)(8)(D) of the Act, the Secretary is
required to adjust the standardized amounts so as to ensure that
aggregate payments under the IPPS, after implementation of the
provisions of sections 1886(d)(8)(B), 1886(d)(8)(C), and 1886(d)(10) of
the Act, regarding geographic reclassification of hospitals, are equal
to the aggregate prospective payments that would have been made absent
these provisions.
ii. Hospital Reclassifications Under Sections 1886(d)(8)(E) and
1886(d)(10) of the Act
Hospitals may seek to have their geographic designation
reclassified. Under section 1886(d)(8)(E) of the Act, a qualifying
prospective payment hospital located in an urban area may apply for
rural status. Specifically, section 1886(d)(8)(E) of the Act states
that ``[f]or purposes of this subsection, 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 described in clause (ii), 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.'' The regulations governing these geographic redesignations
are codified in Sec. 412.103, and such hospitals are therefore
commonly referred to as ``Sec. 412.103 hospitals.''
In a separate process, hospitals may also reclassify for purposes
of the wage index under the IPPS under section 1886(d)(10) of the Act
by applying to the Medicare Geographic Classification Review Board
(MGCRB). Hospitals must apply to the MGCRB to reclassify not later than
13 months prior to the start of the fiscal year for which
reclassification is sought, generally by September 1. (However, we note
that this deadline has been extended for applications for FY 2022
reclassifications to 15 days after the public display date of the FY
2021 IPPS/LTCH final rule at the Office of the Federal Register, using
our authority under section 1135(b)(5) the Act due to the COVID-19
Public Health Emergency.) 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 Sec. Sec. 412.230 through 412.280.
Prior to a court decision in Geisinger Community Medical v.
Secretary, United States Department of Health and Human Services, 794
F.3d 383 (3d Cir. 2015) (``Geisinger''), hospitals were only able to
hold one reclassification at a time: Either under Sec. 412.103 or
through the MGCRB under section 1886(d)(10) of the Act. The Court of
Appeals in Geisinger ruled that CMS' prohibition of dual Sec. 412.103
and MGCRB reclassifications was unlawful, since section
1886(d)(8)(E)(i) of the Act requires that ``the Secretary shall treat
the hospital as being located in the rural area,'' inclusive of MGCRB
reclassification purposes. Therefore, on April 21, 2016, we published
an interim final rule with comment period (the April 21, 2016 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.
b. Provisions of the Interim Final Rule With Comment Period
Pursuant to our April 21, 2016 IFC, 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 the distance and average hourly wage criteria designated for
rural hospitals. Hospitals with a Sec. 412.103 redesignation seeking
additional reclassification under the MGCRB use the rural distance and
average hourly wage criteria under Sec. 412.230(b)(1), (d)(1)(iii)(C),
and (d)(1)(iv)(E). For example, under our policy prior to the issuance
of the May 10, 2021 IFC, a Sec. 412.103 hospital geographically
located in the urban CBSA of Buffalo-Cheektowaga, NY seeking to
reclassify under the MGCRB would demonstrate that their wages are at
least 106 percent (and not 108 percent, as urban hospitals must
demonstrate) of the average hourly wage of Buffalo-Cheektowaga, NY, to
meet the criteria at Sec. 412.230(d)(1)(iii)(C).
However, our policy prior to the issuance of the May 10, 2021 IFC
compared the average hourly wage of a Sec. 412.103 hospital to its
geographic urban location, rather than the rural reclassified area, for
purposes of satisfying certain wage comparison criteria. In response to
a comment on our April 21, 2016 IFC (81 FR 56925), we stated: ``The
commenter is correct that the rural distance and average hourly wage
criteria will be used for hospitals with a Sec. 412.103 redesignation.
However, the commenter's statement that the average hourly wage of a
hospital with a Sec. 412.103 redesignation is compared to the average
hourly wage of hospitals in the State's rural area under Sec.
412.230(d)(1)(iii)(C) is incorrect. Instead, the hospital's average
hourly wage would be compared to the average hourly wage of all other
hospitals in its urban geographic location using the rural distance and
average hourly wage criteria.''
On May 14, 2020, the United States District Court for the District
of Columbia issued a decision in Bates. Bates County Memorial Hospital
and five other geographically urban hospitals were reclassified to
rural under Sec. 412.103. They also applied for reclassification under
the MGCRB, but were denied because their wages were not at least 106
percent of the geographic urban area in which the hospitals were
located. Each of the hospitals' average hourly wages were at least 106
percent of the 3-year average hourly wage of all other hospitals in the
rural area of the state in which the hospitals are located.
The court agreed with the Plaintiffs that the statute at section
1886(d)(8)(E)(i) of Act requires that CMS treat qualifying hospitals as
being located in the rural area for purposes of section 1886(d) of the
Act, including MGCRB reclassification. The Bates decision requires that
CMS consider the rural area to be the area in which the hospital is
located for the wage comparisons required for MGCRB reclassifications.
For example, pursuant to Bates, a Sec. 412.103 hospital geographically
located in the urban CBSA of Buffalo-Cheektowaga, NY seeking to
reclassify under the MGCRB would demonstrate that their wages are at
least 106 percent of the average hourly wage of rural NY, rather than
that of Buffalo-Cheektowaga.
As a result of the Bates court's decision, we revised our policy in
the May 10, 2021 IFC so that the redesignated rural area, and not the
hospital's geographic urban area, are considered the area a Sec.
412.103 hospital is located in for purposes of meeting MGCRB
reclassification criteria. Similarly, we revised the regulations to
consider the redesignated rural area, and not the geographic urban
area, as
[[Page 45189]]
the area a Sec. 412.103 hospital is located in for the prohibition at
Sec. 412.230(a)(5)(i) on reclassifying to an area with a pre-
reclassified average hourly wage lower than the pre-reclassified
average hourly wage for the area in which the hospital is located.
Specifically, to align our policy with the court's decision in
Bates, we amended the regulations at Sec. 412.230(a)(1) by adding
(a)(1)(iii) to state that an urban hospital that has been granted
redesignation as rural under Sec. 412.103 is considered to be located
in the rural area of the state for the purposes of this section. We
also made conforming changes to the regulation at Sec.
412.230(a)(5)(i) because Sec. 412.230(a)(1) excepts paragraph (a)(5).
Because Sec. 412.230(a)(1) excepts paragraph (a)(5), we believed it
was necessary to make a specific conforming revision to Sec.
412.230(a)(5)(i), in addition to the general rule at Sec.
412.230(a)(1)(iii), to clarify that the general rule at Sec.
412.230(a)(1)(iii) applies to Sec. 412.230(a)(5)(i) as well. That is,
we amended the regulation at Sec. 412.230(a)(5)(i) to add language
stating that an urban hospital that has been granted redesignation as
rural under Sec. 412.103 is considered to be located in the rural area
of the state for the purposes of paragraph (a)(5)(i).
These changes implemented the Bates court's interpretation of the
requirement at section 1886(d)(8)(E)(i) of the Act that ``the Secretary
shall treat the hospital as being located in the rural area.'' That is,
effective with our in the May 10, 2021 IFC, a Sec. 412.103 hospital
would be considered to be located in the rural area of the state for
all purposes of MGCRB reclassification, including the average hourly
wage comparisons required by Sec. 412.230(a)(5)(i) and (d)(1)(iii)(C).
For example, for purposes of Sec. 412.230(d)(1)(iii)(C), the Sec.
412.103 hospital compares its average hourly wage to the average hourly
wage of all other hospitals in the state's rural area. In addition, for
purposes of Sec. 412.230(a)(5)(i), a Sec. 412.103 hospital may not be
redesignated to another area if the pre-classified average hourly wage
for that area is lower than the pre-reclassified average hourly wage of
the rural area of the state in which the hospital is located (thus, a
Sec. 412.103 hospital could potentially reclassify to any area with a
pre-reclassified average hourly wage that is higher than the pre-
reclassified average hourly wage for the rural area of the state, if it
meets all other applicable reclassification criteria).
Therefore, effective for reclassification applications due to the
MGCRB on September 1, 2021, for reclassification first effective for FY
2023, a Sec. 412.103 hospital could apply for a reclassification under
the MGCRB using the state's rural area as the area in which the
hospital is located. We stated in the May 10, 2021 IFC that we would
also apply the policy when deciding timely appeals before the
Administrator under Sec. 412.278 for reclassifications beginning in FY
2022 that were denied by the MGCRB due to existing policy, which did
not permit Sec. 412.103 hospitals to be considered located in the
state's rural area.
Comment: We received comments in support of our IFC modifying
limitations on redesignation by the MGCRB. A commenter requested
clarification regarding the CBSA column typically included in the Three
Year MGCRB Reclassification Data File that is released in August each
year. The commenter questioned if the CBSA column for hospitals with a
Sec. 412.103 reclassification will reflect the redesignated rural CBSA
that would now be used when determining if a hospital meets the MGCRB
reclassification criteria, or the hospital's geographic urban CBSA.
Similarly, another commenter questioned if the Sec. 412.103 hospital
applying for MGCRB reclassification should include other Sec. 412.103
hospitals in the rural average hourly wage for this regulation for
purposes of the home area wage test at Sec. 412.230(d)(1)(iii)(C).
This commenter suggested that CMS should require hospitals to compare
their average hourly wage against the average hourly wage calculated
only for those hospitals actually located in the rural area, exclusive
of hospitals with 412.103 rural redesignations, for simplicity of
applying this policy. The commenter explained that because hospitals
can obtain Sec. 412.103 rural redesignation at any time, it may not be
clear at the time the MGCRB is reviewing reclassification applications
which hospitals have obtained Sec. 412.103 rural reclassifications
since the publication of the most recent IPPS tables.
Response: We thank the commenters for their support. In response to
the commenter's question regarding which CBSA will be published in the
Three Year MGCRB Reclassification Data File used for MGCRB
reclassification, we are clarifying that the hospital's geographic
urban CBSA will continue to be listed. Therefore, a Sec. 412.103
hospital applying for MGCRB reclassification would not include other
Sec. 412.103 hospitals in the rural average hourly wage for this
regulation for purposes of the home area wage test at Sec.
412.230(d)(1)(iii)(C). For the reasons the second commenter suggested,
we believe this is the most clear and straightforward application of
this policy to implement the court's decision in Bates. If we were to
require that the wages and hours of all hospitals with Sec. 412.103
reclassifications be included in the rural area for purposes of the
home area wage test, we would need to list the rural CBSA as the
geographic CBSA for hospitals with Sec. 412.103 reclassifications in
the Three Year MGCRB Reclassification Data File. However, as the second
commenter noted, since Sec. 412.103 reclassifications may be obtained
at any time, it would not be clear if the Three Year MGCRB
Reclassification Data File accurately captures all hospitals with Sec.
412.103 reclassifications.
Comment: A commenter noted that the IFC states that a hospital
reclassified under Sec. 412.103 could potentially reclassify to any
area with a prereclassified average hourly wage that is higher than the
pre-reclassified average hourly wage for the rural area of the state
for purposes of the regulation at Sec. 412.230(a)(5)(i). The commenter
asserted that CMS' use of the word ``could'' in this context seems to
suggest that CMS would allow the hospital to use either its home
average hourly wage or the rural average hourly wage for purposes of
the regulation at Sec. 412.230(a)(5)(i). The commenter suggested that
CMS allow both comparison options, because the rural average hourly
wage may occasionally be higher than the hospital's home urban area's
average hourly wage, such as in the state of Massachusetts.
Response: The commenter's interpretation of our policy is correct.
While the court's decision in Bates requires CMS to permit hospitals to
reclassify to any area with a prereclassified average hourly wage that
is higher than the pre-reclassified average hourly wage for the rural
area of the state, we do not believe that we are required to limit
hospitals from using their geographic home area for purposes of the
regulation at Sec. 412.230(a)(5)(i). Therefore, we are clarifying that
we would allow hospitals to reclassify to an area with an average
hourly wage that is higher than the average hourly wage of either the
hospital's geographic home area or the rural area.
Comment: A commenter questioned whether a hospital reclassified
under Sec. 412.103 should include its own wage data and the wage data
of other hospitals reclassified under Sec. 412.103 in determining the
rural average hourly wage for purposes of the regulation at Sec.
412.230(a)(5)(i). The commenter suggested that CMS not require this,
since including hospitals reclassified under Sec. 412.103 in the rural
average
[[Page 45190]]
hourly wage would change the average hourly wage from the published
value in the final rule tables. Accordingly, the commenter requested
that CMS not include hospitals reclassified under Sec. 412.103 in the
rural average hourly wage for Sec. 412.230(a)(5)(i) for simplicity in
applying this policy.
Response: We agree with the commenter. In calculating the rural
area's average hourly wage for purposes of applying Sec.
412.230(a)(5)(i), we are clarifying that we are not requiring hospitals
to include the wage data of hospitals with Sec. 412.103 rural
reclassifications. For the reasons the commenter stated, we believe
this is the simplest and most clear application of the policy the court
required in Bates.
In this final rule, we are finalizing the provisions of the May 10,
2021 IFC without modification, including our revisions to the
regulations at Sec. 412.230 to allow hospitals with a rural
redesignation under section 1886(d)(8)(E) of the Act to reclassify
under the MGCRB using the rural reclassified area as the geographic
area in which the hospital is located effective with reclassifications
beginning with FY 2023.
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 for the
proposed FY 2022 wage index were made available on May 18, 2020 and the
preliminary CY 2019 occupational mix data files for the proposed FY
2022 wage index were made available on September 8, 2020 through the
internet on the CMS website at: https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2022-wage-index-home-page.
On January 29, 2021, we posted a public use file (PUF) at: https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2022-wage-index-home-page containing FY 2022 wage index
data available as of January 28, 2021. 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 1,
2017 through September 30, 2018; that is, FY 2018 wage data), a tab
with the occupational mix data (which includes data from the CY 2019
occupational mix survey, Form CMS-10079), a tab containing the
Worksheet S-3 wage data of hospitals deleted from the January 29, 2021
wage data PUF, and a tab containing the CY 2019 occupational mix data
of the hospitals deleted from the January 29, 2021 occupational mix
PUF. In a memorandum dated January 22, 2021, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 29, 2021 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2022 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: https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums.
In a memorandum dated April 14, 2020, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
preliminary wage index data files posted on May 18, 2020, the
requirement to submit the new CY 2019 occupational mix surveys by
August 3, 2020 and the process and timeframe for requesting revisions.
Subsequently, in a memorandum dated July 31, 2020, we revised the date
hospitals were required to submit the new CY 2019 occupational mix
surveys from August 3, 2020 to September 3, 2020, the date the
preliminary CY 2019 occupational mix survey data files were scheduled
to be posted from August 6, 2020 to September 8, 2020 and the timeframe
for requesting revisions to the new CY 2019 occupational mix survey
data.
If a hospital wished to request a change to its data as shown in
the May 18, 2020 preliminary wage data files (or September 8 2020
preliminary CY 2019 occupational mix survey data files), the hospital
had to submit corrections along with complete, detailed supporting
documentation to its MAC so that the MAC received them by September 3,
2020 (or by September 10, 2020 for preliminary CY 2019 occupational mix
survey data files). Hospitals were notified of these deadlines 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, 2020 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 5, 2020 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 2021. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
29, 2021. Hospitals had until February 16, 2021, to submit requests to
the MACs to correct errors in the January 29, 2021 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 29,
2021 PUF. Hospitals also were required to submit sufficient
documentation to support their requests. Hospitals' requests and
supporting documentation must be received by the MAC by the February
deadline (that is, by February 16, 2021 for the FY 2021 wage index).
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 19, 2021. 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 2,
2021. Data that were incorrect in the preliminary or January 29, 2021
wage index data PUFs, but for which no correction request was received
by the February 16, 2021 deadline, are not considered for correction at
this stage. In addition, April 2, 2021 was the deadline for hospitals
to dispute data corrections de by CMS of which the hospital was
notified after the January 29, 2021 PUF and at least 14 calendar days
prior to April 2, 2021 (that is, March 19, 2021), that do not arise
from a hospital's request for revisions. The hospital's request and
supporting documentation must be received by CMS (and a copy received
by the MAC) by the April deadline (that is, by April 2, 2021 for the FY
2022 wage index). 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 is listed in section VI. of the Addendum
to the proposed
[[Page 45191]]
rule and available via the internet on the CMS website at: https://www.cms.gov/medicare/acute-inpatient-pps/fy-2022-ipps-proposed-rule-home-page. 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 proposed FY 2022
wage index which was constructed from FY 2018 data. We noted in the
proposed rule 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 2021.
We posted the final wage index data PUFs on April 30, 2021 on the
CMS website at: https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy-2022-wage-index-home-page.
The April 2021 PUFs are made available solely for the limited purpose
of identifying any potential errors made by CMS or the MAC in the entry
of the final wage index data that resulted from the correction process
previously described (the process for disputing revisions submitted to
CMS by the MACs by March 19, 2021, 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 2021 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 19, 2021.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 29,
2021 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 2021 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 so that it was received no later than May
28, 2021. May 28, 2021 was also the deadline for hospitals to dispute
data corrections made by CMS of which the hospital is notified on or
after 13 calendar days prior to April 2, 2021 (that is, March 20,
2021), and at least 14 calendar days prior to May 28, 2021 (that is,
May 14, 2021), 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 28, 2021 (that is,
May 15, 2021) may be appealed to the Provider Reimbursement Review
Board (PRRB)). In accordance with the FY 2022 wage index timeline
posted on the CMS website at: https://www.cms.gov/files/document/fy-2022-hospital-wage-index-development-time-table.pdf, 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 28, 2021) by CMS and the MACs were incorporated into the
final FY 2022 wage index, which will be effective October 1, 2021.
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 2022 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 as 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 is 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 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 2021, they have an opportunity to detect any data
entry or tabulation errors made by the MAC or CMS before the
development and publication of the final FY 2022 wage index by August
2021, and the implementation of the FY 2022 wage index on October 1,
2021. 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 28,
2021, 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 28, 2021 for the FY 2022
wage index). This provision is not available to a hospital seeking to
revise another hospital's data that may be affecting the requesting
hospital's wage index for the labor market area. As indicated earlier,
because CMS makes the wage index data available to hospitals on the CMS
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.
[[Page 45192]]
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 28, 2021 deadline for the
FY 2022 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 28, 2021 deadline for the FY 2022 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; 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 29 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 29 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 29 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 review of such
corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS
final rule) promote additional transparency to instances where CMS
makes data corrections after the January 29 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 2022 Wage Index Development Time Table, as well
as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156).
[[Page 45193]]
M. Labor-Related Share for the FY 2022 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 2021 IPPS/
LTCH PPS final rule (85 FR 58793), for FY 2021, we continued to use a
labor-related share of 68.3 percent for discharges occurring on or
after October 1, 2020.
For FY 2022, as described in section IV. of the preamble of the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25416 through 25417), we
proposed to rebase and revise the IPPS market basket reflecting 2018
data. We also proposed to recalculate the labor-related share for
discharges occurring on or after October 1, 2021 using the proposed
2018-based IPPS market basket. As discussed in Appendix A of the
proposed rule, we proposed this rebased and revised labor related share
in a budget neutral manner. However, consistent with section
1886(d)(3)(E) of the Act, we did not take into account the additional
payments that would be made as a result of hospitals with a wage index
less than or equal to 1.0000 being paid using a labor-related share
lower than the labor-related share of hospitals with a wage index
greater than 1.0000. We refer readers to section IV. of the preamble of
this final rule and Appendix A for our finalized policies for the 2018-
based IPPS market basket.
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. As
described in section IV. of the preamble of the proposed rule,
beginning with FY 2022, we proposed to include in the labor-related
share the national average proportion of operating costs that are
attributable to the following cost categories in the proposed 2018-
based IPPS market basket: 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, as measured in the proposed 2018-based IPPS
market basket. Therefore, for FY 2022, we proposed to use a labor-
related share of 67.6 percent for discharges occurring on or after
October 1, 2021.
We refer readers to section IV.B.3. of the preamble of this final
rule for a discussion of our recalculation of the labor-related share
for discharges occurring on or after October 1, 2021 using the 2018-
based IPPS market basket.
As discussed in section V.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 2022, we did
not propose a Puerto Rico-specific labor-related share percentage or a
nonlabor-related share percentage.
Comment: A commenter stated that if CMS determines that a reduction
in the labor-related share is supported by data and appropriate for
either Professional Services Fees or Home Office/Related Organization
cost weight categories, they requested that--similar to other wage
index related changes--CMS phase in a reduction of the labor-related
share. The commenter requested that any phase-in be over a period of
three years and implemented in a non-budget-neutral manner in
recognition of hospital finances in the wake of the COVID-19 PHE.
Response: As noted earlier, 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 which are
attributable to wages and wage-related costs of the DRG prospective
payment rates. In section IV.B.3. of the preamble of this final rule,
we discuss our recalculation
[[Page 45194]]
of the labor-related share for discharges occurring on or after October
1, 2021, using the 2018-based IPPS market basket. We believe that the
labor-related share calculated for FY 2022 accurately and appropriately
reflects the proportion of hospitals' costs that are attributable to
wages and wage-related costs. Therefore, we do not believe it is
necessary or appropriate to phase in the effects of the labor-related
share percentage finalized in this rule. After consideration of the
public comments we received, for the reasons discussed in section
IV.B.3. of the preamble of this final rule and in the FY 2022 IPPS/LTCH
PPS proposed rule, we are finalizing our proposal to use a labor-
related share of 67.6 percent for discharges occurring on or after
October 1, 2021, 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 2022 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 2022, 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 2022, we are applying the wage
index to the labor-related share of 67.6 percent of the national
standardized amount.
IV. Rebasing and Revising of the Hospital Market Baskets for Acute Care
Hospitals
A. Background
Effective for cost reporting periods beginning on or after July 1,
1979, we developed and adopted a hospital input price index (that is,
the hospital market basket for operating costs). Although ``market
basket'' technically describes the mix of goods and services used in
providing hospital care, this term is also commonly used to denote the
input price index (that is, cost category weights and price proxies
combined) derived from that market basket. Accordingly, the term
``market basket'' as used in this document refers to the hospital input
price index.
The percentage change in the market basket reflects the average
change in the price of goods and services hospitals purchase in order
to provide inpatient care. We first used the market basket to adjust
hospital cost limits by an amount that reflected the average increase
in the prices of the goods and services used to provide hospital
inpatient care. This approach linked the increase in the cost limits to
the efficient utilization of resources.
Since the inception of the IPPS, the projected change in the
hospital market basket has been the integral component of the update
factor by which the prospective payment rates are updated every year.
An explanation of the hospital market basket used to develop the
prospective payment rates was published in the Federal Register on
September 1, 1983 (48 FR 39764). We also refer readers to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38158 through 38175) in which we
discussed the most recent previous rebasing of the hospital input price
index.
The hospital market basket is a fixed-weight, Laspeyres-type price
index. A Laspeyres-type price index measures the change in price, over
time, of the same mix of goods and services purchased in the base
period. Any changes in the quantity or mix of goods and services (that
is, intensity) purchased over time are not measured.
The index itself is constructed in three steps. First, a base
period is selected (in the proposed rule, we proposed to use 2018 as
the base period) and total base period expenditures are estimated for a
set of mutually exclusive and exhaustive spending categories, and the
proportion of total costs that each category represents are calculated.
These proportions are called ``cost weights'' or ``expenditure
weights.'' Second, each expenditure category is matched to an
appropriate price or wage variable, referred to as a ``price proxy.''
In almost every instance, these price proxies are derived from publicly
available statistical series that are published on a consistent
schedule (preferably at least on a quarterly basis). Finally, the
expenditure weight for each cost category is multiplied by the level of
its respective price proxy. The sum of these products (that is, the
expenditure weights multiplied by their price index levels) for all
cost categories yields the composite index level of the market basket
in a given period. Repeating this step for other periods produces a
series of market basket levels over time. Dividing an index level for a
given period by an index level for an earlier period produces a rate of
growth in the input price index over that timeframe.
As previously noted, the market basket is described as a fixed-
weight index because it represents the change in price over time of a
constant mix (quantity and intensity) of goods and services needed to
provide hospital services. The effects on total expenditures resulting
from changes in the mix of goods and services purchased subsequent to
the base period are not measured. For example, a hospital hiring more
nurses to accommodate the needs of patients would increase the volume
of goods and services purchased by the hospital, but would not be
factored into the price change measured by a fixed-weight hospital
market basket. Only when the index is rebased would changes in the
quantity and intensity be captured, with those changes being reflected
in the cost weights. Therefore, we rebase the market basket
periodically so that the cost weights reflect recent changes in the mix
of goods and services that hospitals purchase (hospital inputs) to
furnish inpatient care between base periods.
We last rebased the hospital market basket cost weights effective
for FY 2018 (82 FR 38158 through 38175), with 2014 data used as the
base period for the construction of the market basket cost weights. For
the FY 2022 IPPS/LTCH PPS proposed rule, we proposed to rebase the IPPS
operating market basket to reflect the 2018 cost structure for IPPS
hospitals and to revise applicable cost categories and price proxies
used to determine the IPPS market basket, as discussed in this final
rule. We also proposed to rebase and revise the Capital Input Price
Index (CIPI) as described in section IV.D. of the preamble of this
final rule.
B. Rebasing and Revising the IPPS Market Basket
The terms ``rebasing'' and ``revising,'' while often used
interchangeably, actually denote different activities. ``Rebasing''
means moving the base year for the structure of costs of an input price
index (for example, in the proposed rule, we proposed to shift the base
year cost structure for the IPPS hospital index from 2014 to 2018).
``Revising'' means changing data sources or price proxies used in the
input price index. As published in the FY 2006 IPPS final rule (70 FR
47403), in accordance with section 404 of Public Law 108-173, CMS
determined a new frequency for rebasing the hospital market basket. We
established a rebasing frequency of every 4 years and, therefore, for
the FY 2022 IPPS update, we proposed to rebase and revise the IPPS
market basket from 2014 to 2018. We invited public comments on our
proposed methodology.
Comment: A few commenters supported the rebasing of the market
basket. A commenter stated they were in agreement to utilize 2018 data
for the
[[Page 45195]]
rebased market basket. A commenter stated that they appreciated the
update of the market basket from 2014 to 2018 as well as the update of
the labor-related share.
Response: We appreciate the commenters' support to rebase and
revise the IPPS market basket from a 2014 base year to a 2018 base
year. We note that we proposed to use the rebased and revised market
baskets for FY 2022 in compliance with section 404 of the MMA, which
required us to established a frequency for updating the IPPS market
basket cost weights and labor-related share. In compliance with that
statute, we established a frequency of every 4 years (70 FR 47403). We
last rebased the hospital market basket cost weights effective for FY
2018 (82 FR 38158 through 38175), with 2014 data used as the base
period for the construction of the market basket cost weights.
1. Development of Cost Categories and Weights
a. Use of Medicare Cost Report Data
The major source of expenditure data for developing the proposed
rebased and revised hospital market basket cost weights is the 2018
Medicare cost reports. These 2018 Medicare cost reports are for cost
reporting periods beginning on and after October 1, 2017 and before
October 1, 2018. We proposed to use 2018 as the base year because we
believe that the 2018 Medicare cost reports represent the most recent,
complete set of Medicare cost report data available to develop cost
weights for IPPS hospitals at the time of rulemaking. We believe it is
important to regularly rebase and revise the IPPS market basket to
reflect more recent data. Historically, the cost weights change
minimally from year to year as they represent percent of total
operating costs rather than cost levels; however, given the COVID-19
public health emergency we will continue to monitor the upcoming
Medicare cost report data to see if a more frequent rebasing schedule
is necessary than our current schedule of every 4 years. As was done in
previous rebasings, these cost reports are from IPPS hospitals only
(hospitals excluded from the IPPS and CAHs are not included) and are
based on IPPS Medicare-allowable operating costs. IPPS Medicare-
allowable operating costs are costs that are eligible to be paid under
the IPPS. For example, the IPPS market basket excludes home health
agency (HHA) costs as these costs would be paid under the HHA PPS and,
therefore, these costs are not IPPS Medicare-allowable costs.
The current set of instructions for the Medicare cost reports for
hospitals (Form 2552-10, OMB Control Number 0938-0050) can be found in
Chapter 40 at the following website (https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Paper-Based-Manuals-Items/CMS021935,
accessed February 17, 2021). As described in these instructions,
effective for cost reporting periods beginning on or after October 1,
2015, Worksheet S-3, Part II was revised to add lines 14.01, 14.02,
25.50, 25.51, 25.52, and 25.53, to enhance the wage index data
collection. This modification was made for Transmittal 10 and is
specifically highlighted in the instructions, which can be found at the
following website: (https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R10P240.pdf, accessed February 17,
2021). Therefore, as noted later in this section, for the 2018-based
IPPS market basket, we proposed to use these more detailed lines for
the development of the market basket cost categories. These detailed
lines were not available at the time we finalized the 2014-based IPPS
market basket.
We proposed to derive costs for eight major expenditures or cost
categories for the 2018-based IPPS market basket from the CMS Medicare
cost reports (Form 2552-10, OMB Control Number 0938-0050): Wages and
Salaries, Employee Benefits, Contract Labor, Pharmaceuticals,
Professional Liability Insurance (Malpractice), Blood and Blood
Products, Home Office/Related Organization Contract Labor, and a
residual ``All Other'' category. The residual ``All Other'' category
reflects all remaining costs that are not captured in the other seven
cost categories. These are the same major cost categories from the
Medicare cost reports that were derived for the 2014-based IPPS market
basket. In this rule, we describe the detailed methodology for
obtaining costs for each of the seven cost categories directly
determined from the Medicare cost reports.
In order to create a market basket that is representative of IPPS
hospitals serving Medicare patients and to help ensure accurate major
cost weights (which is the percent of total Medicare-allowable
operating costs, as defined in this final rule), we proposed to apply
edits to remove reporting errors and outliers. Specifically, the IPPS
Medicare cost reports used to calculate the market basket cost weights
exclude any providers that reported costs less than or equal to zero
for the following categories: Total Medicare inpatient costs (Worksheet
D, Part I, column 1, line 49); Medicare PPS payments (Worksheet E, Part
A, column 1, line 59); Total salary costs (Worksheet S-3, Part II,
column 2, line 1). We also limited our sample to providers that had a
Medicare cost reporting period that was between 10 and 14 months. The
final sample used included roughly 3,200 Medicare cost reports (about
94 percent of the universe of IPPS Medicare cost reports for 2018). The
sample of providers is representative of the national universe of
providers by ownership-type (proprietary, nonprofit, and government)
and by urban/rural status.
First, we proposed to calculate total Medicare-allowable operating
costs for each hospital. We proposed that total Medicare-allowable
operating costs are equal to noncapital costs (Worksheet B, Part I,
column 26 less Worksheet B, Part II, column 26) that are attributable
to the Medicare-allowable cost centers of the hospital. We proposed
that Medicare-allowable cost centers are lines 30 through 35, 50
through 60, 62 through 76, 90, 91, 92.01, 93, 96 and 97. This is the
same general methodology that was used for the 2014-based IPPS market
basket. However, we note that for the development of the 2018-based
IPPS market basket, we conducted a detailed review of the cost centers
and now proposed to include lines 52, 96, and 97 when deriving total
Medicare-allowable operating costs as these reflect Medicare-allowable
services that are reimbursed under the IPPS.
(1) Wages and Salaries Costs
To derive wages and salaries costs for the Medicare-allowable cost
centers, we proposed to first calculate total unadjusted wages and
salaries costs as reported on Worksheet S-3, Part II, column 4, line 1.
We then proposed to remove the wages and salaries attributable to non-
Medicare-allowable cost centers (that is, excluded areas) as well as a
portion of overhead wages and salaries attributable to these excluded
areas. This is the same general methodology that was used to derive
wages and salaries costs for the 2014-based IPPS market basket.
However, we note that we proposed minor changes to the Medicare cost
report lines that are used to derive excluded area wages and salaries
as well as overhead wages and salaries attributable to these areas as
described in this rule as we believe these represent a technical
improvement to the Medicare cost report lines used for the 2014-based
IPPS market basket. The description of the detailed methodology used
for the 2014-based IPPS market basket was provided in the FY 2018 IPPS/
LTCH final rule (82 FR 38159).
[[Page 45196]]
Specifically, we proposed to calculate excluded area wages and
salaries as equal to the sum of Worksheet S-3, Part II, column 4, lines
3, 4.01, 5, 6, 7, 7.01, 8, 9, and 10 less Worksheet A, column 1, lines
20 and 23. Overhead wages and salaries are attributable to the entire
IPPS facility. Therefore, we proposed to only include the proportion
attributable to the Medicare-allowable cost centers. Specifically, we
proposed to estimate the proportion of overhead wages and salaries that
are not attributable to Medicare-allowable costs centers (that is,
excluded areas) by first calculating the ratio of total Medicare-
allowable operating costs as previously defined to total facility
operating costs (Worksheet B, Part I, column 26, line 202 less
Worksheet B, Part I, column 0, lines 1 and 2). We then proposed to
multiply this ratio by total overhead wages and salaries (Worksheet S-
3, Part II, column 4, lines 26, 27, 29 through 32, 34, and 36 through
43).
Therefore, the proposed wages and salaries costs are equal to total
wages and salaries costs less: (a) Excluded area wages and salaries
costs; and (b) overhead wages and salaries costs attributable to the
excluded areas.
(2) Employee Benefits Costs
We proposed to derive employee benefits costs using a similar
methodology as the wages and salaries costs; that is, reflecting
employee benefits costs attributable to the Medicare-allowable cost
centers. First, we calculate total unadjusted employee benefits costs
as the sum of Worksheet S-3, Part II, column 4, lines 17, 18, 20, 22,
and 25.52. The 2014-based IPPS market basket used Worksheet S-3, Part
II, column 4, lines 17, 18, 20 and 22 to derive the costs for this
category. As described previously, line 25.52 reflects a newly added
line to Worksheet S-3, Part II since the development of the 2014-based
IPPS market basket.
We then exclude those employee benefits attributable to the
overhead wages and salaries for the non-Medicare-allowable cost centers
(that is, the excluded areas). Employee benefits attributable to the
non-Medicare-allowable cost centers are derived by multiplying the
ratio of total employee benefits (equal to the sum of Worksheet S-3,
Part II, column 4, lines 17, 18, 19, 20, 21, 22, 22.01, 23, 24, 25,
25.50, 25.51, 25.52, and 25.53) to total wages and salaries (Worksheet
S-3, Part II, column 4, line 1) by excluded overhead wages and salaries
(as previously described in section IV.B.1.a.(1). of the preamble of
this final rule for wages and salaries costs). A similar methodology
was used in the 2014-based IPPS market basket.
(3) Contract Labor Costs
Contract labor costs are primarily associated with direct patient
care services. Contract labor costs for services such as accounting,
billing, and legal are estimated using other government data sources as
described in this final rule. We proposed to derive contract labor
costs for the 2018-based IPPS market basket as the sum of Worksheet S-
3, Part II, column 4, lines 11, 13, and 15. A similar methodology was
used in the 2014-based IPPS market basket.
(4) Professional Liability Insurance Costs
We proposed that professional liability insurance (PLI) costs
(often referred to as malpractice costs) be equal to premiums, paid
losses, and self-insurance costs reported on Worksheet S-2, Part I,
columns 1 through 3, line 118.01. A similar methodology was used for
the 2014-based IPPS market basket.
(5) Pharmaceuticals Costs
We proposed to calculate pharmaceuticals costs as total costs
reported for the Pharmacy cost center (Worksheet B, Part I, column 0,
line 15) and Drugs Charged to Patients cost center (Worksheet B, Part
I, column 0, line 73) less wages and salaries attributable to these two
cost centers (Worksheet S-3, Part II, column 4, line 40 and Worksheet
A, column 1, line 73) less estimated employee benefits attributable to
these two cost centers. We proposed to estimate the employee benefits
costs by multiplying the ratio of total employee benefits (equal to the
sum of Worksheet S-3, Part II, column 4, lines 17, 18, 19, 20, 21, 22,
22.01, 23, 24, 25, 25.50, 25.51, 25.52, and 25.53) to total wages and
salaries (Worksheet S-3, Part II, column 4, line 1) by total wages and
salaries costs for the Pharmacy and Drugs Charged to Patients cost
centers (equal to the sum of Worksheet S-3, Part II, column 4, line 40
and Worksheet A, column 1, line 73). The same general methodology was
used for the 2014-based IPPS market basket. However, we note that for
the 2014-based IPPS market basket, for calculating the total nonsalary
costs we used Worksheet A, column 2 for each cost center instead of our
proposed method of using Worksheet B, Part I, column 0, less salary
costs. We proposed to use Worksheet B, Part I, column 0 as this would
reflect reclassifications and adjustments (which are made on columns
subsequent to Worksheet A columns 1 and 2).
(6) Blood and Blood Products Costs
We proposed to calculate blood and blood products costs as total
costs reported for the Whole Blood & Packed Red Blood Cells cost center
(Worksheet B, Part I, column 0, line 62) and the Blood Storing,
Processing, & Transfusing cost center (Worksheet B, Part I, column 0,
Line 63) less wages and salaries attributable to these two cost centers
(Worksheet A, column 1, lines 62 and 63) less estimated employee
benefits attributable to these two cost centers. We estimate these
employee benefits costs by multiplying the ratio of total employee
benefits (equal to the sum of Worksheet S-3, Part II, column 4, lines
17, 18, 19, 20, 21, 22, 22.01, 23, 24, 25, 25.50, 25.51, 25.52, and
25.53) to total wages and salaries (Worksheet S-3, Part II, column 4,
line 1) by total wages and salaries for the Whole Blood & Packed Red
Blood Cells and Blood Storing, Processing, & Transfusing cost centers
(equal to the sum of Worksheet A, Column 1, lines 62 and 63). The same
general methodology was used for the 2014-based IPPS market basket.
However, we note that for the 2014-based IPPS market basket, for
calculating the total nonsalary costs we used Worksheet A, column 2 for
lines 62 and 63 instead of our proposed method of using Worksheet B,
Part I, column 0, lines 62 and 63, less salary costs. Similar to our
proposed method for Pharmaceuticals costs, we proposed to use Worksheet
B, Part I, column 0 as this would reflect reclassifications and
adjustments (which are made on columns subsequent to Worksheet A
columns 1 and 2).
(7) Home Office Contract Labor/Related Organization Costs
We proposed to determine home office/related organization contract
labor costs using data reported on Worksheet S-3, Part II, column 4,
lines 14.01, 14.02, 25.50, and 25.51. Home office/related organization
contract labor costs in the 2014-based IPPS market basket were
calculated using a similar method except we used data reported on
Worksheet S-3, Part II, column 4, line 14. As described previously,
effective for cost reporting periods beginning on or after October 1,
2015 (Transmittal 10), Worksheet S-3, Part II was revised to add lines
14.01, 14.02, 25.50, 25.51, 25.52, and 25.53, to enhance the wage index
data collection. Therefore, for the 2018-based IPPS market basket, we
proposed to use these more detailed lines; however, the expenses
captured on these lines would
[[Page 45197]]
be similar to the expenses originally reported on line 14, prior to the
break out of the expenses on these new more detailed lines.
In addition, for the 2014-based IPPS market basket, we then
multiplied the home office/related organization contract labor costs by
the ratio of total Medicare-allowable operating costs to total
operating costs. However, for the 2018-based IPPS market basket, we
proposed to no longer apply this adjustment since the Medicare cost
report instructions effective for Transmittal 10 now state that the
costs reported on these lines should reflect costs associated with
Medicare-allowable cost centers. Therefore, we no longer believe this
adjustment is necessary.
b. Final Major Cost Category Computation
After we derived costs for the seven major cost categories for each
provider using the Medicare cost report data as previously described,
we proposed to address data outliers using the following steps. First,
we divide the costs for each of the seven categories (calculated as
previously described in this section) by total Medicare-allowable
operating costs for the provider (calculated as previously described in
this section) to obtain cost weights for each PPS hospital.
For each of the major cost weights except the Home Office/Related
Organization Contract Labor cost weight, we proposed to trim the data
to remove outliers (a standard statistical process) by: (1) Requiring
that major expenses (such as Wages and Salaries costs) and total
Medicare-allowable operating costs be greater than zero; and (2)
excluding the top and bottom five percent of the major cost weight (for
example, Wages and Salaries costs as a percent of total Medicare-
allowable operating costs). We note that missing values are assumed to
be zero consistent with the methodology for how missing values were
treated in the 2014-based IPPS market basket. After the outliers have
been removed, we sum the costs for each category across all remaining
providers. We then divide this by the sum of total Medicare-allowable
operating costs across all remaining providers to obtain a cost weight
for the 2018-based IPPS market basket for the given category.
For the Home Office/Related Organization Contract Labor cost
weight, we proposed to apply a trim that excludes those reporters above
the 99th percentile. This allows all providers' Medicare-allowable
costs to be included, even if their home office/related organization
contract labor costs were reported to be zero. The Medicare cost report
data (Worksheet S-2, Part I, line 140) indicate that not all hospitals
have a home office. IPPS hospitals without a home office would report
administrative costs that might typically be associated with a home
office in the Wages and Salaries and Employee Benefits cost weights, or
in the residual ``All Other'' cost weight if they purchased these types
of services from external contractors. We believe the trimming
methodology that excludes those who report a Home Office/Related
Organization Contract Labor cost weight above the 99th percentile is
appropriate as it removes extreme outliers while also allowing
providers with zero home office/related organization contract labor
costs to be included in the Home Office/Related Organization Contract
Labor cost weight calculation. Next, similar to the other cost weights,
after the outliers have been removed, we sum the costs across all
remaining providers. We then divide this by the sum of total Medicare-
allowable operating costs across all remaining providers to obtain a
cost weight for the 2018-based IPPS market basket.
The trimming process is done individually for each cost category so
that providers excluded from one cost weight calculation are not
automatically excluded from another cost weight calculation. We note
that these proposed trimming methods are the same types of edits
performed for the 2014-based IPPS market basket, as well as other PPS
market baskets (including but not limited to SNF market basket and HHA
market basket). We believe this trimming process improves the accuracy
of the data used to compute the major cost weights by removing possible
misreported data. We note that for each of the cost weights we
evaluated the distribution of providers and costs by ownership-type,
and by urban/rural status. For all of the cost weights, the trimmed
sample was nationally representative.
Finally, we calculate the residual ``All Other'' cost weight that
reflects all remaining costs that are not captured in the seven cost
categories listed. Table IV-01 shows the major cost categories and
their respective cost weights as derived from the Medicare cost
reports.
[GRAPHIC] [TIFF OMITTED] TR13AU21.237
From 2014 to 2018, the Wages and Salaries and Employee Benefits
cost weights as calculated directly from the Medicare cost reports
decreased by approximately 2.4 percentage points and 0.7 percentage
point, respectively, while the Contract Labor cost weight increased
slightly by 0.2 percentage point.
[[Page 45198]]
As we did for the 2014-based IPPS market basket (82 FR 38162), we
proposed to allocate contract labor costs to the Wages and Salaries and
Employee Benefits cost weights based on their relative proportions for
employed labor under the assumption that contract labor costs are
comprised of both wages and salaries and employee benefits. The
contract labor allocation proportion for wages and salaries is equal to
the Wages and Salaries cost weight as a percent of the sum of the Wages
and Salaries cost weight and the Employee Benefits cost weight. Using
the 2018 Medicare cost report data, this percentage is 78 percent.
Therefore, we proposed to allocate approximately 78 percent of the
Contract Labor cost weight to the Wages and Salaries cost weight and 22
percent to the Employee Benefits cost weight. The 2014-based IPPS
market basket also allocated 78 percent of the Contract Labor cost
weight to the Wages and Salaries cost weight.
Table IV-02 shows the Wages and Salaries and Employee Benefits cost
weights after contract labor allocation for the 2014-based IPPS market
basket and the proposed 2018-based IPPS market basket. In aggregate,
the Compensation cost weight (calculated using more detailed decimal
places) decreased from 55.8 percent to 53.0 percent, or 2.8 percentage
points.
[GRAPHIC] [TIFF OMITTED] TR13AU21.238
We received one comment on our proposed methodology for developing
the major cost weights in the 2018-based IPPS market basket.
Comment: A commenter supported CMS' proposal to derive costs for
blood and blood products for the 2018-based IPPS market basket from the
CMS Medicare cost reports. However, they also encouraged CMS to develop
and release additional educational materials that instruct hospitals on
how to appropriately report blood products and services on the CMS
Medicare cost reports. They further stated that blood products and
services are captured in a wide variety of MS-DRGs, and providers may
inadvertently exclude them from their cost reports. They stated they
were committed to working with CMS to educate hospitals on appropriate
billing for blood products.
Response: We appreciate the commenter's support of deriving blood
and blood product costs using the Medicare cost report data. As
previously stated, the blood and blood products cost weight is based on
data reported in the Whole Blood & Packed Red Blood Cells cost center
(line 62) and Blood Storing, Processing & Transfusion cost center (line
63) of the hospital Medicare cost reports. The instructions state these
costs should include the direct expenses incurred: In obtaining blood
directly from donors, in obtaining whole blood and packed red blood
cells from suppliers and for processing, storing, and transfusing whole
blood, packed red blood cells, and blood derivatives. We encourage
hospitals to report these expenses consistent with the Medicare cost
report instructions. We also welcome any specific suggestions that
stakeholders may have on these instructions.
After consideration of the public comments we received, we are
finalizing the methodology for deriving the major cost weights of the
2018-based IPPS market basket as proposed.
c. Derivation of the Detailed Cost Weights
To further divide the ``All Other'' residual cost weight estimated
from the 2018 Medicare cost report data into more detailed cost
categories, we proposed to use the 2012 Benchmark I-O ``Use Tables/
Before Redefinitions/Purchaser Value'' for NAICS 622000, Hospitals,
published by the BEA. These data are publicly available at the
following website: http://www.bea.gov/industry/io_annual.htm. The BEA
Benchmark I-O data are generally scheduled for publication every 5
years on a lagged basis, with the most recent data available for 2012.
The 2012 Benchmark I-O data are derived from the 2012 Economic Census
and are the building blocks for BEA's economic accounts. Therefore,
they represent the most comprehensive and complete set of data on the
economic processes or mechanisms by which output is produced and
distributed.\759\ BEA also produces Annual I-O estimates. However,
while based on a similar methodology, these estimates reflect less
comprehensive and less detailed data sources and are subject to
revision when benchmark data become available. Instead of using the
less detailed Annual I-O data, we proposed to inflate the detailed 2012
Benchmark I-O data forward to 2018 by applying the annual price changes
from the respective price proxies to the appropriate market basket cost
categories that are obtained from the 2012 Benchmark I-O data. In our
calculations for the proposed rule, we repeated this practice for each
year. We then calculated the cost shares that each cost category
represents of the 2012 data inflated to 2018. These resulting 2018 cost
shares were applied to the ``All Other'' residual cost weight to obtain
the detailed cost weights for the proposed 2018-based IPPS market
basket. For example, the cost for Food: Direct Purchases represents 4.8
percent of the sum of the ``All Other'' 2012 Benchmark I-O Hospital
Expenditures inflated to 2018. Therefore, the Food: Direct Purchases
cost weight represents 4.8 percent of the proposed 2018-based IPPS
market basket's ``All Other'' cost category (32.4 percent), yielding a
Food: Direct Purchases proposed cost weight of 1.6 percent in the
proposed 2018-based IPPS market basket (0.048 x 32.4 percent = 1.6
percent). For the 2014-based IPPS market basket (82 FR 38162), we used
the same methodology utilizing the 2007 Benchmark I-O data (aged to
2014).
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\759\ http://www.bea.gov/papers/pdf/IOmanual_092906.pdf.
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Using this methodology, we proposed to derive 17 detailed cost
categories
[[Page 45199]]
from the proposed 2018-based IPPS market basket residual cost weight
(32.4 percent). These categories are: (1) Fuel: Oil and Gas; (2)
Electricity and Other Non-Fuel Utilities; (3) Food: Direct Purchases;
(4) Food: Contract Services; (5) Chemicals; (6) Medical Instruments;
(7) Rubber and Plastics; (8) Paper and Printing Products; (9)
Miscellaneous Products; (10) Professional Fees: Labor-Related; (11)
Administrative and Facilities Support Services; (12) Installation,
Maintenance, and Repair Services; (13) All Other: Labor-Related
Services; (14) Professional Fees: Nonlabor-Related; (15) Financial
Services; (16) Telephone Services; and (17) All Other: Nonlabor-Related
Services.
The 2014-based IPPS market basket had a separate cost category for
Water and Sewerage. Due to the size of the estimated cost weight
(approximately 0.1 percent), we proposed that these costs be included
in the Electricity and Other Non-Fuel Utilities cost category.
We received no comments on our proposed methodology for deriving
the detailed cost weights of the 2018-based IPPS market basket and
therefore are finalizing this methodology as proposed without
modification.
2. Selection of Proposed Price Proxies
After computing the proposed 2018 cost weights for the IPPS market
basket, it was necessary to select appropriate wage and price proxies
to reflect the rate of price change for each expenditure category. With
the exception of the proxy for professional liability insurance (PLI),
all the proxies we proposed are based on Bureau of Labor Statistics
(BLS) data and are grouped into one of the following BLS categories:
Producer Price Indexes--Producer Price Indexes (PPIs)
measure the average change over time in the selling prices received by
domestic producers for their output. The prices included in the PPI are
from the first commercial transaction for many products and some
services (https://www.bls.gov/ppi/).
Consumer Price Indexes--Consumer Price Indexes (CPIs)
measure the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs are only used when the purchases are similar to
those of retail consumers rather than purchases at the producer level,
or if no appropriate PPIs are available.
Employment Cost Indexes--Employment Cost Indexes (ECIs)
measure the rate of change in employee wage rates and employer costs
for employee benefits per hour worked. These indexes are fixed-weight
indexes and strictly measure the change in wage rates and employee
benefits per hour. ECIs are superior to Average Hourly Earnings (AHE)
as price proxies for input price indexes because they are not affected
by shifts in occupation or industry mix, and because they measure pure
price change and are available by both occupational group and by
industry. The industry ECIs are based on the NAICS and the occupational
ECIs are based on the Standard Occupational Classification System
(SOC).
We evaluated the price proxies using the criteria of reliability,
timeliness, availability, and relevance:
Reliability. Reliability indicates that the index is based
on valid statistical methods and has low sampling variability. Widely
accepted statistical methods ensure that the data were collected and
aggregated in a way that can be replicated. Low sampling variability is
desirable because it indicates that the sample reflects the typical
members of the population. (Sampling variability is variation that
occurs by chance because only a sample was surveyed rather than the
entire population.)
Timeliness. Timeliness implies that the proxy is published
regularly, preferably at least once a quarter. The market basket levels
are updated quarterly, and therefore, it is important for the
underlying price proxies to be up-to-date, reflecting the most recent
data available. We believe that using proxies that are published
regularly (at least quarterly, whenever possible) helps to ensure that
we are using the most recent data available to update the market
basket. We strive to use publications that are disseminated frequently,
because we believe that this is an optimal way to stay abreast of the
most current data available.
Availability. Availability means that the proxy is
publicly available. We prefer that our proxies are publicly available
because this will help ensure that our market basket updates are as
transparent to the public as possible. In addition, this enables the
public to be able to obtain the price proxy data on a regular basis.
Relevance. Relevance means that the proxy is applicable
and representative of the cost category weight to which it is applied.
We believe the proposed PPIs, CPIs, and ECIs selected meet these
criteria. Therefore, we believe that they continue to be the best
measure of price changes for the cost categories to which they would be
applied.
In this final rule, we present a detailed explanation of the price
proxies that we proposed for each cost category weight. We note that
many of the proxies that we proposed to use for the proposed 2018-based
IPPS market basket are the same as those used for the 2014-based IPPS
market basket.
(1) Wages and Salaries
We proposed to use the ECI for Wages and Salaries for All Civilian
Workers in Hospitals (BLS series code CIU1026220000000I) to measure the
price growth of this cost category. This is the same price proxy used
in the 2014-based IPPS market basket.
(2) Employee Benefits
We proposed to use the ECI for Total Benefits for All Civilian
Workers in Hospitals to measure the price growth of this cost category.
This ECI is calculated using the ECI for Total Compensation for All
Civilian Workers in Hospitals (BLS series code CIU1016220000000I) and
the relative importance of wages and salaries within total
compensation. This is the same price proxy used in the 2014-based IPPS
market basket.
(3) Fuel: Oil and Gas
Similar to the 2014-based IPPS market basket, we proposed to use a
blend of the PPI Industry for Petroleum Refineries and the PPI
Commodity for Natural Gas. Our analysis of the Bureau of Economic
Analysis' 2012 Benchmark I-O data (use table before redefinitions,
purchaser's value for NAICS 622000 [Hospitals]), shows that
approximately 96 percent of hospital Fuel: Oil, and Gas expenses are
for Petroleum Refineries (NAICS 324110) and Natural Gas (NAICS 221200)
expenses, with Petroleum Refineries expenses accounting for
approximately 90 percent and Natural Gas expenses accounting for
approximately 10 percent of this sum. We proposed to create blended
index of these expenses based on each NAICS' expenses as share of their
sum. Therefore, we proposed to use a blend of 90 percent of the PPI
Industry for Petroleum Refineries (BLS series code PCU324110324110) and
10 percent of the PPI Commodity Index for Natural Gas (BLS series code
WPU0531) as the price proxy for this cost category. The 2014-based IPPS
market basket used a 70/30 blend of these price proxies, reflecting the
2007 I-O data (82 FR 38163). We believe that these two price proxies
continue to be the most technically appropriate indices available to
measure the price growth of the Fuel: Oil, and Gas cost category in the
proposed 2018-based IPPS market basket.
[[Page 45200]]
(4) Electricity and Other Non-Fuel Utilities
We proposed to use the PPI Commodity for Commercial Electric Power
(BLS series code WPU0542) to measure the price growth of this cost
category, as Electricity costs account for 93 percent of these
expenses. This is the same price proxy used for the Electricity cost
category in the 2014-based IPPS market basket. As previously noted, we
proposed to include Water and Sewerage costs within the Electricity and
Other Non-Fuel Utilities cost category, and to no longer use the CPI
for Water and Sewerage Maintenance as we did for the 2014-based IPPS
market basket, due to the small size of this estimated cost weight
(approximately 0.1 percent).
(5) Professional Liability Insurance
We proposed to proxy price changes in hospital professional
liability insurance premiums (PLI) using percentage changes as
estimated by the CMS Hospital Professional Liability Index. To generate
these estimates, we collect commercial insurance medical liability
premiums for a fixed level of coverage while holding nonprice factors
constant (such as a change in the level of coverage). This is the same
price proxy used in the 2014-based IPPS market basket.
(6) Pharmaceuticals
We proposed to use the PPI Commodity for Pharmaceuticals for Human
Use, Prescription (BLS series code WPUSI07003) to measure the price
growth of this cost category. This is the same price proxy used in the
2014-based IPPS market basket.
(7) Food: Direct Purchases
We proposed to use the PPI Commodity for Processed Foods and Feeds
(BLS series code WPU02) to measure the price growth of this cost
category. This is the same price proxy used in the 2014-based IPPS
market basket.
(8) Food: Contract Services
We proposed to use the CPI for Food Away From Home (All Urban
Consumers) (BLS series code CUUR0000SEFV) to measure the price growth
of this cost category. This is the same price proxy used in the 2014-
based IPPS market basket.
(9) Chemicals
Similar to the 2014-based IPPS market basket, we proposed to use a
four-part blended PPI as the proxy for the chemicals cost category in
the proposed 2018-based IPPS market basket. The proposed blend is
composed of the PPI Industry for Industrial Gas Manufacturing, Primary
Products (BLS series code PCU325120325120P), the PPI Industry for Other
Basic Inorganic Chemical Manufacturing (BLS series code PCU32518-32518-
), the PPI Industry for Other Basic Organic Chemical Manufacturing (BLS
series code PCU32519-32519-), and the PPI Industry for Other
Miscellaneous Chemical Product Manufacturing (BLS series code
PCU325998325998). We note that the four part blended PPI used in the
2014-based IPPS market basket is composed of the PPI Industry for
Industrial Gas Manufacturing (BLS series code PCU325120325120P), the
PPI Industry for Other Basic Inorganic Chemical Manufacturing (BLS
series code PCU32518-32518-), the PPI Industry for Other Basic Organic
Chemical Manufacturing (BLS series code PCU32519-32519-), and the PPI
Industry for Soap and Cleaning Compound Manufacturing (BLS series code
PCU32561-32561-). For the 2018-based IPPS market basket, we proposed to
derive the weights for the PPIs using the 2012 Benchmark I-O data. The
2014-based IPPS market basket used the 2007 Benchmark I-O data to
derive the weights for the four PPIs (82 FR 38164). We note that in the
2012 I-O data, the share of total chemicals expenses that the Soap and
Cleaning Compound Manufacturing (NAICS 325610) represents decreased
relative to the 2007 I-O data (from 5 percent to 2 percent), while the
share of the total chemicals expenses that the All Other Chemical
Product and Preparation manufacturing (NAICS 3259A0) categories
represents increased (from 5 percent to 7 percent). As a result, we
proposed to remove the PPI Industry for Soap and Cleaning Compound
Manufacturing from the proposed blend for the proposed 2018-based IPPS
market basket and replace it with the PPI Industry for Other
Miscellaneous Chemical Product Manufacturing (BLS series code
PCU325998325998).
Table IV-03 shows the proposed weights for each of the four PPIs
used to create the blended index compared to those used for the 2014-
based IPPS market basket.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR13AU21.239
(10) Blood and Blood Products
We proposed to use the PPI Industry for Blood and Organ Banks (BLS
series code PCU621991621991) to measure the price growth of this cost
category. This is the same price proxy used in the 2014-based IPPS
market basket.
(11) Medical Instruments
We proposed to use a blended price proxy for the Medical
Instruments category, as shown in Table IV-04. The 2012 Benchmark I-O
data shows the majority of medical instruments and supply costs are for
NAICS 339112--Surgical and medical instrument manufacturing costs
(approximately 56 percent) and NAICS 339113--Surgical appliance and
supplies manufacturing costs (approximately 43 percent). Therefore, we
proposed to use a blend of these two price proxies. To proxy the price
changes associated with NAICS 339112, we proposed using the PPI--
Commodity--Surgical and medical instruments (BLS series code
[[Page 45201]]
WPU1562). This is the same price proxy we used in the 2014-based IPPS
market basket. To proxy the price changes associated with NAICS 339113,
we proposed to use a 50/50 blend of the PPI--Commodity--Medical and
surgical appliances and supplies (BLS series code WPU1563) and the
PPI--Commodity--Miscellaneous products--Personal safety equipment and
clothing (BLS series code WPU1571). We proposed to include the latter
price proxy as it would reflect personal protective equipment including
but not limited to face shields and protective clothing. The 2012
Benchmark I-O data does not provide specific expenses for these
products; however, we recognize that this category reflects costs faced
by IPPS hospitals.
[GRAPHIC] [TIFF OMITTED] TR13AU21.240
(12) Rubber and Plastics
We proposed to use the PPI Commodity for Rubber and Plastic
Products (BLS series code WPU07) to measure the price growth of this
cost category. This is the same price proxy used in the 2014-based IPPS
market basket.
(13) Paper and Printing Products
We proposed to use the PPI Commodity for Converted Paper and
Paperboard Products (BLS series code WPU0915) to measure the price
growth of this cost category. This is the same price proxy used in the
2014-based IPPS market basket.
(14) Miscellaneous Products
We proposed to use the PPI Commodity for Finished Goods Less Food
and Energy (BLS series code WPUFD4131) to measure the price growth of
this cost category. This is the same price proxy used in the 2014-based
IPPS market basket.
(15) Professional Fees: Labor-Related
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. It
includes occupations such as legal, accounting, and engineering
services. This is the same price proxy used in the 2014-based IPPS
market basket.
(16) Administrative and Facilities Support Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Office and Administrative Support (BLS series code
CIU2010000220000I) to measure the price growth of this category. This
is the same price proxy used in the 2014-based IPPS market basket.
(17) Installation, Maintenance, and Repair Services
We proposed to use the ECI for Total Compensation for All Civilian
Workers in Installation, Maintenance, and Repair (BLS series code
CIU1010000430000I) to measure the price growth of this cost category.
This is the same proxy used in the 2014-based IPPS market basket.
(18) All Other: Labor-Related Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Service Occupations (BLS series code
CIU2010000300000I) to measure the price growth of this cost category.
This is the same price proxy used in the 2014-based IPPS market basket.
(19) Professional Fees: Nonlabor-Related
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Professional and Related (BLS series code
CIU2010000120000I) to measure the price growth of this category. This
is the same price proxy that we proposed to use for the Professional
Fees: Labor-Related cost category and the same price proxy used in the
2014-based IPPS market basket.
(20) Financial Services
We proposed to use the ECI for Total Compensation for Private
Industry Workers in Financial Activities (BLS series code
CIU201520A000000I) to measure the price growth of this cost category.
This is the same price proxy used in the 2014-based IPPS market basket.
(21) Telephone Services
We proposed to use the CPI for Telephone Services (BLS series code
CUUR0000SEED) to measure the price growth of this cost category. This
is the same price proxy used in the 2014-based IPPS market basket.
(22) All Other: Nonlabor-Related Services
We proposed to use the CPI for All Items Less Food and Energy (BLS
series code CUUR0000SA0L1E) to measure the price growth of this cost
category. We believe that using the CPI for All Items Less Food and
Energy avoids double counting of changes in food and energy prices as
they are already captured elsewhere in the market basket. This is the
same price proxy used in the 2014-based IPPS market basket.
We received no comments on the proposed price proxies in the 2018-
based IPPS market basket and therefore are finalizing this proposal
without modification.
Table IV-05 sets forth the 2018-based IPPS market basket, including
the cost categories and their respective weights and price proxies. For
comparison purposes, the corresponding 2014-based IPPS market basket
cost weights also are listed.
[[Page 45202]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.241
[[Page 45203]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.242
Table IV-06 compares both the historical and forecasted percent
changes in the 2014-based IPPS market basket and the 2018-based IPPS
market basket. The forecasted growth rates in Table IV-06 are based on
IHS Global
[[Page 45204]]
Inc.'s (IGI's) second quarter 2021 forecast with historical data
through first quarter 2021.
[GRAPHIC] [TIFF OMITTED] TR13AU21.243
There is no difference between the average percent change in the
2014-based and the 2018-based IPPS market basket over the FY 2017
through FY 2020 time period. For FY 2022, the increase is projected to
be 2.7 percent for both the 2014-based and 2018-based IPPS market
baskets.
3. Labor-Related Share
Under section 1886(d)(3)(E) of the Act, the Secretary estimates
from time to time the proportion of payments that are labor-related.
Section 1886(d)(3)(E) of the Act states that the Secretary shall adjust
the proportion, (as estimated by the Secretary from time to time) of
hospitals' costs which are attributable to wages and wage-related
costs, of the DRG prospective payment rates. We refer to the proportion
of hospitals' costs that are attributable to wages and wage-related
costs as the ``labor-related share.''
The labor-related share is used to determine the proportion of the
national PPS 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. For the FY 2022
IPPS/LTCH PPS proposed rule, we proposed to include in the labor-
related share the national average proportion of operating costs that
are attributable to the following cost categories in the proposed 2018-
based IPPS market basket: 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, as we did in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38167).
Similar to the 2014-based IPPS market basket, we proposed that the
Professional Fees: Labor-Related cost category includes expenses
associated with advertising and a proportion of legal services,
accounting and auditing, engineering, and management consulting. As was
done in the 2014-based IPPS market basket rebasing, we proposed to
determine the proportion of legal, accounting and auditing,
engineering, and management consulting services that meet our
definition of labor-related services based on a survey of hospitals
conducted by CMS in 2008 (OMB Control Number 0938-1036). We notified
the public of our intent to conduct this survey on December 9, 2005 (70
FR 73250) and received no comments (71 FR 8588).
A discussion of the composition of the survey and
poststratification can be found in the FY 2010 IPPS/LTCH PPS final rule
(74 FR 43850 through 43856). Based on the weighted results of the
survey, we determined that hospitals purchase, on average, the
following portions of contracted professional services outside of their
local labor market:
34 percent of accounting and auditing services.
30 percent of engineering services.
33 percent of legal services.
42 percent of management consulting services.
We proposed to apply each of these percentages to its respective
Benchmark I-O cost category underlying the professional fees cost
category. This is the methodology that we used to separate the 2014-
based IPPS market basket professional fees cost category into
Professional Fees: Labor-Related and Professional Fees: Nonlabor-
Related cost categories. We proposed to use the same methodology and
survey results to separate the professional fees costs for the proposed
2018-based IPPS market basket into Professional Fees: Labor-Related and
Professional Fees: Nonlabor-Related cost categories. We stated that we
believe these survey results are appropriate to use for the proposed
2018-based IPPS market basket as they empirically determine the
proportion of contracted professional services purchased by the
industry that is attributable to local firms and the proportion that is
purchased from national firms.
In the proposed 2018-based IPPS market basket, nonmedical
professional
[[Page 45205]]
fees that were subject to allocation based on these survey results
represent approximately 6.4 percent of total operating costs (and are
limited to those fees related to Accounting & Auditing, Legal,
Engineering, and Management Consulting services). Based on our survey
results, we proposed to apportion 4.1 percentage points of the 6.4
percentage point figure into the Professional Fees: Labor-Related share
cost category and designate the remaining approximately 2.3 percentage
points into the Professional Fees: Nonlabor-Related cost category.
In addition to the professional services listed earlier, we also
classify a proportion of the Home Office/Related Organization cost
weight into the Professional Fees: Labor-Related cost category as was
done in the previous rebasing. We believe that many of these costs are
labor-intensive and vary with the local labor market. However, data
indicate that not all IPPS hospitals with home offices have home
offices located in their local labor market. Therefore, we proposed to
include in the labor-related share only a proportion of the Home
Office/Related Organization cost weight based on the methodology
described in this final rule.
For the proposed 2018-based IPPS market basket, based on Medicare
cost report data, we found that approximately 65 percent of IPPS
hospitals reported some type of home office information on their
Medicare cost report for 2018 (for example, city, State, and zip code).
Using the data reported on the Medicare cost report, we compared the
location of the hospital with the location of the hospital's home
office. We then determined the proportion of costs that should be
allocated to the labor-related share based on the percent of total
hospital home office/related organization contract labor costs for
those hospitals that had home offices located in their respective local
labor markets--defined as being in the same MSA. We determined a
hospital's and home office's MSAs using their zip code information from
the Medicare cost report.
Based on these data, we determined the proportion of costs that
should be allocated to the labor-related share based on the percent of
hospital home office/related organization contract labor costs (equal
to the sum of Worksheet S-3, Part II, column 4, lines 14.01, 14.02,
25.50, and 25.51). Using this methodology, we determined that 60
percent of hospitals' home office compensation costs were for home
offices located in their respective local labor markets. Therefore, we
proposed to allocate 60 percent of Home Office/Related Organization
cost weight to the labor-related share. This is the same proportion we
used for the 2014-based IPPS market basket, which was based on 2014
Medicare cost report data.
In the proposed 2018-based IPPS market basket, the Home Office/
Related Organization cost weight that is subject to allocation based on
the home office allocation methodology represent 5.9 percent of total
operating costs. Based on the results of the home office analysis, as
previously discussed, we apportioned approximately 3.5 percentage
points of the 5.9 percentage points figure into the Professional Fees:
Labor-Related cost category and designated the remaining approximately
2.4 percentage points into the Professional Fees: Nonlabor-Related cost
category. In summary, based on the two previously mentioned
allocations, we apportioned 7.6 percentage points of the professional
fees and home office cost weights into the Professional Fees: Labor-
Related cost category. This amount is added to the portion of
professional fees that we already identified as labor-related using the
I-O data such as contracted advertising and marketing costs
(approximately 1.0 percentage point of total operating costs) resulting
in a Professional Fees: Labor-Related cost weight of 8.6 percent.
Table IV-07 presents a comparison of the proposed 2018-based labor-
related share and the 2014-based labor-related share. As discussed in
section IV.B.1.b. of the preamble of this final rule, the Wages and
Salaries and Employee Benefits cost weights reflect contract labor
costs.
[GRAPHIC] [TIFF OMITTED] TR13AU21.244
BILLING CODE 4120-01-C
Using the cost category weights from the 2018-based IPPS market
basket, we calculated a labor-related share of 67.6 percent,
approximately 0.7 percentage point lower than the current labor-related
share of 68.3 percent. This downward revision to the labor-related
share is the net effect of two impacts. First, we updated the base year
cost weights from 2014 to 2018 (-1.8 percentage points), which reflects
a -2.8 percentage point revision from the compensation cost weight and
a +1.0 percentage point revision from the labor-related portion of Home
Office/Related Organization Contract Labor cost weight (60 percent of
total cost weight). Second, there is an upward revision of 1.1
percentage points from the impact of updating the detailed cost
[[Page 45206]]
weights to reflect 2012 Input-Output data.
Therefore, we proposed to use a labor-related share of 67.6 percent
for discharges occurring on or after October 1, 2021. We continue to
believe, as we have stated in the past, that these operating cost
categories are related to, influenced by, or vary with the local
markets. Therefore, our definition of the labor-related share continues
to be consistent with section 1886(d)(3) of the Act. We note that
section 403 of Public Law 108-173 amended sections 1886(d)(3)(E) and
1886(d)(9)(C)(iv) of the Act to provide that the Secretary must employ
62 percent as the labor-related share unless 62 percent would result in
lower payments to a hospital than would otherwise be made.
We received several comments regarding our calculation of the
proposed labor-related share based on the 2018-based IPPS market
basket.
Comment: Many commenters opposed the proposed change to the labor-
related share from 68.3 percent to 67.6 percent. Several commenters
stated that this is in large part because they disagree with some of
the assumptions underlying this proposal. They stated that they are
concerned that the methodology CMS uses to rebase and revise the labor-
related share is premised on the flawed assumption that some categories
of labor costs are not subject to geographic variation.
Several commenters disagreed with CMS' proposal to exclude from the
labor-related share the proportion of non-medical professional services
fees presumed to have been purchased outside of the hospital's labor
market. The commenters disagreed with CMS' assertion/assumption that
services purchased from national firms are not affected by the local
labor market. In the commenters' experience, national firms adjust
their rates for different reasons, including reasons that are largely
dictated by local labor costs. The commenters stated that when
hospitals seek professional services, the services they are seeking
(for example accounting, engineering, management consulting) typically
are not so unique that they could only be provided by regional or
national firms. The commenters stated that CMS' own survey data support
this conclusion, as approximately 60 percent of these services are
sourced from firms in the local market. The commenters stated that
costs of services purchased from firms outside the hospital's labor
market should be included with the labor-related share of costs.
Response: We disagree with the commenters and believe it is
appropriate that a proportion of Accounting & Auditing, Legal,
Engineering, and Management Consulting services costs purchased by
hospitals should be excluded from the labor-related share. Section
1886(d)(3)(E)(i) of the Act directs the Secretary to adjust the
proportion of hospitals' costs which are attributable to wages and
wage-related costs, of the DRG prospective payment rates computed under
subparagraph (D) 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. It also directs the Secretary to
estimate from time to time this proportion of hospital costs that are
labor-related.
The purpose of the labor-related share is to reflect the proportion
of the national PPS base payment rate that is adjusted by the
hospital's wage index (representing the relative costs of their local
labor market to the national average). Therefore, we include a cost
category in the labor-related share if the costs are labor intensive
and vary with the local labor market.
As acknowledged by the commenter and confirmed by the survey of
hospitals conducted by CMS in 2008 (as stated above), professional
services can be purchased from local firms as well as national and
regional professional services firms. It is not necessarily the case,
as asserted by the commenter, that these national and regional firms
have fees that match those in the local labor market even though
providers have the option to utilize those firms. That is, fees for
services purchased from firms outside the local labor market may differ
from those that would be purchased in the local labor market for any
number of reasons (including but not limited to, the skill level of the
contracted personnel, higher capital costs, etc.). The approximately 64
percent of the Professional Fees cost weight allocated to the
Professional Fees: Labor-related cost weight based on the survey
results reflect the commenter's assertion that not all Professional
Fees services are purchased in the local labor market. We believe it is
reasonable to conclude that those services purchased directly within
the local labor market are directly related to local labor market
conditions and, thus, should be included in the labor-related share.
The remaining 36 percent would reflect different and additional factors
outside the local labor market and, thus, should be excluded from the
labor related share.
The 64 percent is based on a survey conducted by CMS in 2008 as
detailed in the FY 2010 IPPS/LTCH PPS final rule (74 FR 43850 through
43856). This was also used to determine the Professional Fees: Labor-
related cost weight in the 2014-based IPPS market basket. We would note
that CMS is in the process of proposing an additional question to the
hospital Medicare cost reports (CMS Form 2552-2010; OMB Number 0938-
0050) to help better determine which proportion of Accounting &
Auditing, Legal, Engineering, and Management Consulting services costs
are purchased from the local labor market (85 FR 71654). We encourage
hospitals to fill out this question (if finalized) in future Medicare
cost report submissions.
Therefore, for the reasons discussed, we believe our proposed
methodology of allocating only a portion of Professional Fees to the
Professional Fees: Labor-Related cost category is appropriate.
Comment: Several commenters disagreed with the assumption that home
office compensation costs that occur outside of a hospital's labor
market are not subject to geographic wage variation, and stated that
they do not believe that the proposed reclassification to the
Professional Fees: Non-Labor-Related cost category is justified. The
commenters stated that the proposed methodology fails to consider that
the home office is essentially a part of the hospital, and thus the
hospital, along with its home office, is operating in multiple labor
markets. The commenters stated that the home office's portion of the
hospital's labor costs should not be excluded from the labor-related
share simply because they are not in the same labor market as the
hospital.
The commenters stated that even if the wage-index adjustment
applied to hospital payments is not sufficiently refined to recognize
this multi-labor-market circumstance, that is no reason to completely
eliminate the recognition of these costs under the IPPS as being
affected by local labor market forces. The commenters stated that the
proposed methodology seems particularly unfair to independent hospitals
in high-wage areas with no home office costs that will see their
reimbursement lowered through a reduction in the labor-related share
because a portion of other hospitals' administrative costs have been
removed. Therefore, the commenters requested that CMS treat 100 percent
of home office labor costs as being ``labor related.''
A commenter conducted their own analysis of the FY 2018 Medicare
cost report data showing that providers with
[[Page 45207]]
a home office outside of their local labor market were located in areas
with a wage index below 1 as well as greater than 1. The commenter
stated that those hospitals in a labor market with a wage index greater
than 1 had a mean home office average hourly wage costs that were
greater than the mean home office average hourly wage costs of those
hospitals in a labor market with a wage index less than 1. The
commenter claimed that these data indicate that, contrary to CMS'
assertion, home office salary, wage, and benefit costs for hospitals
with home offices outside of their labor market are subject to
geographic wage variation.
The commenter stated that the agency is not adjusting the full
proportion of hospitals' wages and wage-related costs subject to
geographic variation by excluding a cumulative 4.7 percentage points of
the Non-Medical Professional Fees (2.3 percentage points) and Home
Office/Related Organization (2.4 percentage points) cost weights from
the labor-related share.
Response: As previously stated, the purpose of the labor-related
share is to determine the proportion of the national PPS base payment
rate that is adjusted by the hospital's wage index (representing the
relative costs of their local labor market to the national average).
Therefore, we include a cost category in the labor-related share if the
costs are labor intensive and vary with the local labor market.
As the commenter stated and as validated with the Medicare cost
report, a hospital's home office can be located outside the hospital's
local labor market. The proposed methodology for allocating 60 percent
of the Home Office/Related Organization cost weight (reflecting
compensation costs) is consistent with the intent of the statute to
identify the proportion of costs likely to directly vary with the
hospital's local labor market. Our methodology relies on the Medicare
cost report data for hospitals reporting home office information to
determine whether their home office is located in the same local labor
market (which we define as the hospital's Metropolitan Statistical
Area). Similar to our rationale as previously discussed, for
professional fees, we believe it is reasonable to conclude that those
home office services purchased directly within the local labor market
are directly related to local labor market conditions while the
remaining 40 percent would reflect different and additional factors
and, thus, should be excluded from the labor related share.
Therefore, we believe our proposed methodology of only allocating a
portion of the Home Office/Related Organization cost weight into the
Professional Fees: Labor-related cost weight is appropriate.
Comment: A commenter stated that as with the adoption of OMB
Bulletin 18-04, which revises the core-based statistical areas (CBSAs)
that drive the Medicare wage index, CMS is relying upon 2018 data for
its proposal to reduce the labor-related component. The commenter
stated that they believe this 2018 data has been made stale by the
onset of the current COVID-19 pandemic, which caused significant shifts
in the labor markets, particularly with regard to wages and fringe
benefits.
The commenter stated that the reduction in the labor-related share
has a disproportionate and significant impact on hospitals in the
greater New York metropolitan area. The commenter estimated that the
impact of this proposal for Suburban Hospital Alliance members is
another $9.6 million in reduced reimbursements. The commenter stated
that for these reasons, they urge CMS to postpone adjustments to the
labor component until 2020 Census data can be fully analyzed and
incorporated into the rates.
A commenter noted that CMS last rebased the hospital market basket
cost weights effective for FY 2018, with 2014 data for the base period.
For FY 2022, CMS proposes to rebase the IPPS operating market basket to
reflect the 2018 cost structure for IPPS hospitals. The commenter is
concerned that the data may not be as generalizable to FY 2022 like
previous years given the effects of COVID-19 on both hospitals and
other providers directly and to the economy more broadly. They agree
with CMS that it should continue to monitor the upcoming Medicare cost
report data to see if a more frequent rebasing schedule is necessary.
To the extent CMS is already aware of, or is made aware of, cost
increases due to COVID-19 (for example, staffing, creating new/
alternative care sites), they recommend the agency consider temporary
modifications to better account for such changes in determining the
market basket.
A few commenters stated that although Federal law requires the
Secretary to update market basket weights, including the labor share,
more frequently than every five years, it does not dictate the
methodology for doing so. The commenters stated that the COVID-19
emergency has had an unusual and unexpected impact on hospital wages in
many places, and especially in urban areas with already higher-than-
average wages (that is, wage indexes greater than 1.0). The commenters
stated that the proposed reduction of the labor-related share would
apply only to geographic areas with a wage index greater than 1.0 and
would therefore reduce reimbursement to those very hospitals that
already faced the highest labor costs just as those costs are further
increasing in response to the public health emergency. The commenters
stated that it is too soon to measure that impact and impose this type
of cut on so many hospitals.
Response: We appreciate the commenters' concerns regarding how
operating expenses for hospitals may have been impacted by the PHE.
However, we disagree with the commenters that the update of the labor-
related share should be postponed. As published in the FY 2006 IPPS
final rule (70 FR 47403), in accordance with section 404 of Public Law
108-173, CMS determined a new frequency for rebasing the hospital
market basket, including the labor-related share, of every four years.
Therefore, our proposal is consistent with this finalized policy to
update the labor-related share to reflect the rebased and revised IPPS
market basket, which is now based on 2018 data. Additionally, it is a
technical improvement for the labor related share to reflect more
current data (2018) than maintain a share based on older (2014) data.
The market basket cost share weights are based on the relative
shares of expenses by category. In order to evaluate the impact of the
PHE on the market basket cost weights, CMS would need to have a
complete dataset that would provide expenditure levels for all
categories of expenses to determine the relative shares of each cost
category. However, there is not a comprehensive set of 2020 cost data
for hospitals available at this time. As stated previously, we plan to
review the Medicare cost report data as soon as complete information is
available and evaluate these data for future rulemaking.
After consideration of the public comments we received, we are
finalizing the 2018-based IPPS market basket and labor-related share as
proposed.
C. Market Basket for Certain Hospitals Presently Excluded From the IPPS
In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43857), we
adopted the use of the FY 2006-based IPPS operating market basket
percentage increase to update the target amounts for children's
hospitals, PPS-excluded cancer hospitals and religious nonmedical
health care institutions (RNHCIs). Children's hospitals and PPS-
[[Page 45208]]
excluded cancer hospitals and RNHCIs are still reimbursed solely under
the reasonable cost-based system, subject to the rate-of-increase
limits. Under these limits, an annual target amount (expressed in terms
of the inpatient operating cost per discharge) is set for each hospital
based on the hospital's own historical cost experience trended forward
by the applicable rate-of-increase percentages.
In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50603), under the
broad authority in sections 1886(b)(3)(A) and (B), 1886(b)(3)(E), and
1871 of the Act and section 4454 of the BBA, consistent with our use of
the IPPS operating market basket percentage increase to update target
amounts, we adopted the use of the FY 2010-based IPPS operating market
basket percentage increase to update the target amounts for children's
hospitals, PPS-excluded cancer hospitals, and RNHCIs that are paid on
the basis of reasonable cost subject to the rate-of-increase limits
under Sec. 413.40. In addition, as discussed in the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50156 through 50157), consistent with Sec. Sec.
412.23(g), 413.40(a)(2)(ii)(A), and 413.40(c)(3)(viii), we also used
the percentage increase in the FY 2010-based IPPS operating market
basket to update the target amounts for short-term acute care 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). These hospitals also are
paid on the basis of reasonable cost, subject to the rate-of-increase
limits under Sec. 413.40. In the FY 2018 IPPS/LTCH PPS final rule, we
finalized the use of the 2014-based IPPS operating market basket for FY
2018 and subsequent fiscal years to update the target amounts for
children's hospitals, PPS-excluded cancer hospitals, RNHCIs, and short-
term acute care 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)
that are paid on the basis of reasonable cost subject to the rate-of-
increase limits under Sec. 413.40. We refer the reader to the FY 2018
IPPS/LTCH PPS final rule (82 FR 38170) for discussion of why we believe
it is appropriate to use the percentage increase in the IPPS operating
market basket to update the target amounts for these excluded
facilities.
As discussed in this section IV. of the preamble of the FY 2022
IPPS/LTCH PPS proposed rule, we proposed to rebase and revise the IPPS
operating market basket to a 2018 base year. We continue to believe
that it is appropriate to use the increase in the IPPS operating market
basket to update the target amounts for these excluded facilities, as
discussed in prior rulemaking. Therefore, we proposed to use the
percentage increase in the proposed 2018-based IPPS operating market
basket to update the target amounts for children's hospitals, the PPS-
excluded cancer hospitals, RNHCIs, and short-term acute care 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) for FY 2022 and
subsequent fiscal years. Accordingly, for FY 2022, the rate-of increase
percentage to be applied to the target amount for these hospitals would
be the FY 2022 percentage increase in the 2018-based IPPS operating
market basket.
We received no comments on this proposal and therefore are
finalizing this proposal without modification.
D. Rebasing and Revising the Capital Input Price Index (CIPI)
The CIPI was originally described in the FY 1993 IPPS final rule
(57 FR 40016). There have been subsequent discussions of the CIPI
presented in the IPPS proposed and final rules. The FY 2018 IPPS/LTCH
PPS final rule (82 FR 38170 through 38175) described the most recent
rebasing and revising of the CIPI to a 2014 base year, which reflected
the capital cost structure of IPPS hospitals available at that time.
For the FY 2022 IPPS update, we proposed to rebase and revise the
CIPI to a 2018 base year to reflect a more current structure of capital
costs for IPPS hospitals. This proposed 2018-based CIPI was derived
using 2018 cost reports for IPPS hospitals, which includes providers
whose cost reporting period began on or after October 1, 2017, and
prior to September 30, 2018. We also proposed to start with the same
subset of Medicare cost reports from IPPS hospitals as previously
described in section IV.B.1.a. of the preamble of this rule. As with
the 2014-based index, we proposed to develop two sets of weights to
derive the proposed 2018-based CIPI. The first set of weights
identifies the proportion of hospital capital expenditures attributable
to each expenditure category, while the second set of weights is a set
of relative vintage weights for depreciation and interest. The set of
vintage weights is used to identify the proportion of capital
expenditures within a cost category that is attributable to each year
over the useful life of the capital assets in that category. A more
thorough discussion of vintage weights is provided later in this
section.
Using 2018 Medicare cost reports, we are able to obtain capital
costs for the following categories: Depreciation, Interest, Lease, and
Other. Specifically, we proposed to determine what proportion of total
capital costs that each category represents using the data reported by
IPPS hospitals on Worksheet A-7, Part III. As shown in the left column
of Table IV-08, in 2018 depreciation expenses accounted for 67.5
percent of total capital costs, interest expenses accounted for 14.6
percent, leasing expenses accounted for 13.3 percent, and other capital
expenses accounted for 4.7 percent.
We also proposed to allocate lease costs across each of the
remaining capital cost categories as was done in the 2014-based CIPI.
We proposed to proportionally distribute leasing costs among the cost
categories of Depreciation, Interest, and Other, reflecting the
assumption that the underlying cost structure of leases is similar to
that of capital costs in general. As was done for the 2014-based CIPI,
we proposed to assume that 10 percent of the lease costs as a
proportion of total capital costs represents overhead and to assign
those costs to the Other capital cost category accordingly. Therefore,
we assumed that approximately 1.3 percent (13.3 percent x 0.1) of total
capital costs represent lease costs attributable to overhead, and we
proposed to add this 1.3 percent to the 4.7 percent Other cost category
weight. We then proposed to distribute the remaining lease costs (12.0
percent, or 13.3 percent-1.3 percent) proportionally across the three
cost categories (Depreciation, Interest, and Other) based on the
proportion that these categories comprise of the sum of the
Depreciation, Interest, and Other cost categories (excluding lease
expenses). For example, the Other cost category represented 5.4 percent
of all three cost categories (Depreciation, Interest, and Other) prior
to any lease expenses being allocated. This 5.4 percent is applied to
the 12.0 percent of remaining lease expenses so that another 0.6
percent of lease expenses as a percent of total capital costs is
allocated to the Other cost category. Therefore, the resulting proposed
Other cost weight is 6.6 percent (4.7 percent + 1.3 percent + 0.6
percent). This is the same methodology used for the 2014-based CIPI.
The resulting cost weights of the proposed allocation of lease expenses
are shown in the right column of Table IV-08.
BILLING CODE 4120-01-P
[[Page 45209]]
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Finally, we proposed to further divide the Depreciation and
Interest cost categories. We proposed to separate the Depreciation cost
category into the following two categories: (1) Building and Fixed
Equipment and (2) Movable Equipment. We also proposed to separate the
Interest cost category into the following two categories: (1)
Government/Nonprofit; and (2) For-profit.
To disaggregate the depreciation cost weight, we needed to
determine the percent of total depreciation costs for IPPS hospitals
(after the allocation of lease costs) that are attributable to building
and fixed equipment, which we hereafter refer to as the ``fixed
percentage.'' Based on Worksheet A-7, Part III data from the 2018 IPPS
Medicare cost reports, we have determined that depreciation costs for
building and fixed equipment account for approximately 51 percent of
total depreciation costs, while depreciation costs for movable
equipment account for approximately 49 percent of total depreciation
costs. As was done for the 2014-based CIPI, we proposed to apply this
fixed percentage to the depreciation cost weight (after leasing costs
are included) to derive a Depreciation cost weight attributable to
Building and Fixed Equipment and a Depreciation cost weight
attributable to Movable Equipment.
To disaggregate the interest cost weight, we needed to determine
the percent of total interest costs for IPPS hospitals that are
attributable to government and nonprofit facilities, which we hereafter
refer to as the ``nonprofit percentage,'' because interest price
pressures tend to differ between nonprofit and for-profit facilities.
We proposed to use interest costs data from Worksheet A-7, Part III of
the 2018 Medicare cost reports for IPPS hospitals, which is the same
methodology used for the 2014-based CIPI. The nonprofit percentage
determined using this method is 90 percent. Table IV-09 in the proposed
rule provided a comparison of the 2014-based CIPI cost weights and the
proposed 2018-based CIPI cost weights. This table is also included
below and reflects the final 2018-based CIPI cost weights.
We received no comments on the methodology to derive the cost
weights of the proposed 2018-based CIPI and therefore are finalizing
this methodology without modification.
After the capital cost category weights were computed, it was
necessary to select appropriate price proxies to reflect the rate-of-
increase for each expenditure category. With the exception of the For-
profit interest cost category, we proposed to apply the same price
proxies as were used in the 2014-based CIPI, which are listed in Table
IV-09. We also proposed to continue to vintage weight the capital price
proxies for Depreciation and Interest to capture the long-term
consumption of capital. This vintage weighting method is the same
method that was used for the 2014-based CIPI and is described later in
this section of this rule.
We proposed to continue to proxy the Depreciation--Building and
Fixed Equipment cost category by the BEA Chained Price Index for
Private Fixed Investment in Structures, Nonresidential, Hospitals and
Special Care (BEA Table 5.4.4. Price Indexes for Private Fixed
Investment in Structures by Type). As stated in the FY 2010 IPPS/LTCH
final rule (74 FR 43860), for the FY 2006-based CIPI we finalized the
use of this index to measure the price growth of this cost category.
This BEA index is intended to capture prices for construction of
facilities such as hospitals, nursing homes, hospices, and
rehabilitation centers. For the Depreciation--Movable Equipment cost
category, we proposed to continue to measure the price growth using the
PPI Commodity for Machinery and Equipment (BLS series code WPU11). This
price index reflects price inflation associated with a variety of
machinery and equipment that would be utilized by hospitals including
but not limited to communication equipment, computers, and medical
equipment. For the Nonprofit Interest cost category, we proposed to
continue to measure the price growth using the average yield on
domestic municipal bonds (Bond Buyer 20-bond index).
For the For-profit Interest cost category, we proposed to use the
iBoxx AAA Corporate Bond Yield index instead of the Moody's AAA
Corporate Bond Yield index that was used for the 2014-based IPPS market
basket. Effective for December 2020, the Moody's AAA Corporate Bond
series is no longer available for use under license to IGI, the
nationally-recognized economic and financial forecasting firm with
which we contract to forecast the components of the market baskets and
MFP. Therefore, we proposed to replace the price proxy for the For-
profit Interest cost category. We compared the iBoxx AAA Corporate Bond
Yield index with the Moody's AAA Corporate Bond Yield index and found
that the average growth rates in the two series were similar. Over the
historical time period of FY 2000 to FY 2020, the 4-quarter percent
change moving average growth in the iBoxx series was approximately 0.1
percentage point higher, on average, than the Moody's AAA corporate
Bond Yield index.
For the Other capital cost category (including insurances, taxes,
and other capital-related costs), we proposed to continue to measure
the price growth using the CPI for Rent of Primary Residence (All Urban
Consumers) (BLS series code CUUS0000SEHA), which would reflect the
price growth of these costs. We believe that these price proxies
continue to be the most appropriate proxies for IPPS capital costs that
meet our selection criteria of relevance, timeliness, availability, and
reliability.
We received no comments on our proposed price proxies for the 2018-
[[Page 45210]]
based CIPI and therefore are finalizing without modification.
[GRAPHIC] [TIFF OMITTED] TR13AU21.246
Because capital is acquired and paid for over time, capital
expenses in any given year are determined by both past and present
purchases of physical and financial capital. The vintage-weighted 2018-
based CIPI is intended to capture the long-term consumption of capital,
using vintage weights for depreciation (physical capital) and interest
(financial capital). These vintage weights reflect the proportion of
capital purchases attributable to each year of the expected life of
building and fixed equipment, movable equipment, and interest.
Vintage weights are an integral part of the CIPI. Capital costs are
inherently complicated and are determined by complex capital purchasing
decisions, over time, based on such factors as interest rates and debt
financing. In addition, capital is depreciated over time instead of
being consumed in the same period it is purchased. By accounting for
the vintage nature of capital, we are able to provide an accurate and
stable annual measure of price changes. Annual nonvintage price changes
for capital are unstable due to the volatility of interest rate changes
and, therefore, do not reflect the actual annual price changes for IPPS
capital costs. The CIPI reflects the underlying stability of the
capital acquisition process.
To calculate the vintage weights for depreciation and interest
expenses, we first needed a time series of capital purchases for
building and fixed equipment and movable equipment. We found no single
source that provides an appropriate time series of capital purchases by
hospitals for all of the previously noted components of capital
purchases. The early Medicare cost reports did not have sufficient
capital data to meet this need. Data we obtained from the American
Hospital Association (AHA) did not include annual capital purchases.
However, we were able to obtain data on total expenses back to 1963
from the AHA. Consequently, we proposed to use data from the AHA Panel
Survey and the AHA Annual Survey to obtain a time series of total
expenses for hospitals. We then proposed to use data from the AHA Panel
Survey supplemented with the ratio of depreciation to total hospital
expenses obtained from the Medicare cost reports to derive a trend of
annual depreciation expenses for 1963 through 2018. We proposed to
separate these depreciation expenses into annual amounts of building
and fixed equipment depreciation and movable equipment depreciation as
determined earlier. From these annual depreciation amounts, we derived
annual end-of-year book values for building and fixed equipment and
movable equipment using the expected life for each type of asset
category. We used the AHA data and similar methodology to derive the
2014-based IPPS capital market basket.
To continue to calculate the vintage weights for depreciation and
interest expenses, we also needed to account for the expected lives for
building and fixed equipment, movable equipment, and interest for the
proposed 2018-based CIPI. We proposed to calculate the expected lives
using Medicare cost report data. The expected life of any asset can be
determined by dividing the value of the asset (excluding fully
depreciated assets) by its current year depreciation amount. This
calculation yields the estimated expected life of an asset if the rates
of depreciation were to continue at current year levels, assuming
straight-line depreciation. Using this proposed method, we determined
the average expected life of building and fixed equipment to be equal
to 27 years, and the average expected life of movable equipment to be
equal to 12 years. For the expected life of interest, we believe that
vintage weights for interest should represent the average expected life
of building and fixed equipment because, based on previous research
described in the FY 1997 IPPS final rule (61 FR 46198), the expected
life of hospital debt instruments and the expected life of buildings
and fixed equipment are similar. We note that the 2014-based CIPI was
also based on an expected average life of building and fixed equipment
of 27 years and an expected average life of movable equipment of 12
years.
Multiplying these expected lives by the annual depreciation amounts
results in annual year-end asset costs for building and fixed equipment
and movable equipment. We then calculated a time series, beginning in
1964, of annual capital purchases by subtracting the previous year's
asset costs from the current year's asset costs.
For the building and fixed equipment and movable equipment vintage
[[Page 45211]]
weights, we proposed to use the real annual capital-related purchase
amounts for each asset type to capture the actual amount of the
physical acquisition, net of the effect of price inflation. These real
annual capital-related purchase amounts are produced by deflating the
nominal annual purchase amount by the associated price proxy as
provided earlier in this final rule. For the interest vintage weights,
we proposed to use the total nominal annual capital-related purchase
amounts to capture the value of the debt instrument (including, but not
limited to, mortgages and bonds). Using these capital purchases time
series specific to each asset type, we proposed to calculate the
vintage weights for building and fixed equipment, for movable
equipment, and for interest.
The vintage weights for each asset type are deemed to represent the
average purchase pattern of the asset over its expected life (in the
case of building and fixed equipment and interest, 27 years, and in the
case of movable equipment, 12 years). For each asset type, we proposed
to use the time series of annual capital purchases amounts available
from 2018 back to 1964. These data allow us to derive twenty-nine 27-
year periods of capital purchases for building and fixed equipment and
interest, and forty-four 12-year periods of capital purchases for
movable equipment. For each 27-year period for building and fixed
equipment and interest, or 12-year period for movable equipment, we
proposed to calculate annual vintage weights by dividing the capital-
related purchase amount in any given year by the total amount of
purchases over the entire 27-year or 12-year period. This calculation
was done for each year in the 27-year or 12-year period and for each of
the periods for which we have data. We then calculated the average
vintage weight for a given year of the expected life by taking the
average of these vintage weights across the multiple periods of data.
We received no comments on our proposed vintage weights and
therefore are finalizing without modification.
The vintage weights for the 2018-based CIPI and the 2014-based CIPI
are presented in Table IV-10.
[[Page 45212]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.247
The process of creating vintage-weighted price proxies requires
applying the vintage weights to the price proxy index where the last
applied vintage weight in Table IV-10 is applied to the most recent
data point. We have provided on the CMS website an example of how the
vintage weighting price proxies are calculated, using example vintage
weights and example price indices. The example can be found under the
following CMS website link: http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html in the zip file
titled ``Weight Calculations as described in the IPPS FY 2010 Proposed
Rule.''
As noted, we did not receive any public comments on our methodology
for deriving the proposed 2018-based CIPI. Accordingly, in this final
rule and for the reasons discussed, we are finalizing the 2018-based
CIPI as proposed. Table IV-11 in this section of this final rule
compares both the historical and forecasted percent changes in the
2014-based CIPI and the 2018-based CIPI based on IGI's second quarter
2021 forecast with historical data through first quarter 2021.
[[Page 45213]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.248
IHS Global, Inc. forecasts a 1.1 percent increase in the 2018-based
CIPI for FY 2022, as shown in Table IV-11. The underlying vintage-
weighted price increases for depreciation (including building and fixed
equipment and movable equipment) and interest (including government/
nonprofit and for-profit) based on the 2018-based CIPI are included in
Table IV-12.
[GRAPHIC] [TIFF OMITTED] TR13AU21.249
Rebasing the CIPI from 2014 to 2018 did not have an impact on the
percent change in the forecasted update for FY 2022 when rounded, as
shown in Table IV-11.
V. Other Decisions and Changes to the IPPS for Operating Costs
A. Changes in the Inpatient Hospital Update for FY 2022 (Sec.
412.64(d))
1. FY 2022 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 2022, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2021. (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
[[Page 45214]]
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 2022 is equal to the rate-of-increase in the hospital market
basket for IPPS hospitals in all areas, subject to all of the
following:
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.
An adjustment based on changes in economy-wide multifactor
productivity (MFP) (the productivity 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 productivity
adjustment may result in the applicable percentage increase being less
than zero.
We note, in compliance with section 404 of the MMA, in the proposed
rule, we proposed to replace the 2014-based IPPS operating and capital
market baskets with the rebased and revised 2018-based IPPS operating
and capital market baskets for FY 2022.
We proposed to base the proposed FY 2022 market basket update used
to determine the applicable percentage increase for the IPPS on IHS
Global Inc.'s (IGI's) fourth quarter 2020 forecast of the proposed
2018-based IPPS market basket rate-of-increase with historical data
through third quarter 2020, which was estimated to be 2.5 percent. We
also proposed that if more recent data subsequently became available
(for example, a more recent estimate of the market basket update and
the productivity adjustment), we would use such data, if appropriate,
to determine the FY 2022 market basket update and the productivity
adjustment in this final rule. We received public comments regarding
the rebasing and revising of the IPPS operating market basket and refer
readers to section IV.B. of this final rule for a complete discussion
on the rebasing and revising of the market basket. In section IV.B., we
are finalizing our proposals without modification and, therefore, are
using the finalized rebased and revised 2018- based IPPS market basket
rate-of increase for FY 2022.
Based on more recent data available for this FY 2022 IPPS/LTCH PPS
final rule (that is, IGI's second quarter 2021 forecast of the 2018-
based IPPS market basket rate-of-increase with historical data through
the first quarter of 2021), we estimate that the FY 2022 market basket
update used to determine the applicable percentage increase for the
IPPS is 2.7 percent.
For FY 2022, 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, 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
productivity 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. 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. We note
that beginning with this FY 2022 final rule, we refer to this
adjustment as the productivity adjustment rather than the MFP
adjustment to more closely track the statutory language in section
1886(b)(3)(B)(xi)(II) of the Act. We note that the adjustment continues
to rely on the same underlying data and methodology.
For FY 2022, we proposed a productivity adjustment of 0.2
percentage point. Similar to the market basket update, for the proposed
rule, we used IGI's fourth quarter 2020 forecast of MFP to compute the
proposed FY 2022 productivity 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 2022 market
basket update and the productivity adjustment for this final rule.
Based on more recent data available for this FY 2022 IPPS/LTCH PPS
final rule (that is, IGI's second quarter 2021 forecast), the current
estimate of the productivity adjustment for FY 2022 is 0.7 percentage
point.
We did not receive any public comments on our proposal to use more
recent available data to determine the final market basket update and
the productivity adjustment. Therefore, for this final rule, we are
finalizing a market basket update of 2.7 percent and a productivity
adjustment of 0.7 percentage point based on the more recent available
data.
Based on these more recent data available, for this final rule, we
have determined four applicable percentage increases to the
standardized amount for FY 2022, as specified in the following table:
[[Page 45215]]
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BILLING CODE 4120-01-C
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42344), we revised
our 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 added paragraph
(d)(1)(viii) to Sec. 412.64 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 a productivity
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.)
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).)
For FY 2022, we proposed the following updates to the hospital-
specific rates applicable to SCHs and MDHs: a proposed update of 2.3
percent for a hospital that submits quality data and is a meaningful
EHR user; a proposed update of 0.425 percent for a hospital that
submits quality data and is not a meaningful EHR user; a proposed
update of 1.675 percent for a hospital that fails to submit quality
data and is a meaningful EHR user; and a proposed update of -0.2
percent for a hospital that fails to submit quality data and is not an
meaningful EHR user. As noted previously, for the FY 2022 IPPS/LTCH PPS
proposed rule, we used IGI's fourth quarter 2020 forecast of the
proposed 2018-based IPPS market basket update with historical data
through third quarter 2020. Similarly, we used IGI's fourth quarter
2020 forecast of the productivity adjustment. We proposed that if more
recent data subsequently became available (for example, a more recent
estimate of the market basket update and the productivity 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,
we are finalizing the proposal to determine the update to the hospital
specific rates for SCHs and MDHs in this final rule using the more
recent available data, as previously discussed.
For this final rule, based on more recent available data, we are
finalizing the following updates to the hospital specific rates
applicable to SCHs and MDHs: An update of 2.0 percent for a hospital
that submits quality data and is a meaningful EHR user; an update of
1.325 percent for a hospital that fails to submit quality data and is a
meaningful EHR user; an update of -0.025 percent for a hospital that
submits quality data and is not a meaningful EHR user; and an update of
-0.7 percent for a hospital that fails to submit quality data and is
not a meaningful EHR user.
2. FY 2022 Puerto Rico Hospital Update
Section 602 of Public Law 114-113 amended section 1886(n)(6)(B) of
the Act to specify that subsection (d) Puerto Rico hospitals are
eligible for incentive payments for the meaningful use of certified EHR
technology, effective beginning FY 2016. In addition, section
1886(n)(6)(B) of the Act was amended to specify that the adjustments to
the applicable percentage increase under section 1886(b)(3)(B)(ix) of
the Act apply to subsection (d) Puerto Rico hospitals that are not
meaningful EHR users, effective beginning FY 2022. Accordingly, for FY
2022, section 1886(b)(3)(B)(ix) of the Act in conjunction with section
602(d) of Public Law 114-113 requires that any subsection (d) Puerto
Rico hospital that
[[Page 45216]]
is not a meaningful EHR user as defined in section 1886(n)(3) of the
Act and not subject to an exception under section 1886(b)(3)(B)(ix) of
the Act will have ``three-quarters'' of the applicable percentage
increase (prior to the application of other statutory adjustments), or
three-quarters of the applicable market basket rate-of-increase,
reduced by 33\1/3\ percent. The reduction to three-quarters of the
applicable percentage increase for subsection (d) Puerto Rico hospitals
that are not meaningful EHR users increases to 66\2/3\ percent for FY
2023, and, for FY 2024 and subsequent fiscal years, to 100 percent. (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.) The regulations at 42 CFR 412.64(d)(3)(ii) reflect the current
law for the update for subsection (d) Puerto Rico hospitals for FY 2022
and subsequent fiscal years. In the FY 2019 IPPS/LTCH PPS final rule,
we finalized the payment reductions (83 FR 41674).
For FY 2022, consistent with section 1886(b)(3)(B) of the Act, as
amended by section 602 of Public Law 114-113, we are setting the
applicable percentage increase for Puerto Rico hospitals by applying
the following adjustments in the following sequence. Specifically, the
applicable percentage increase under the IPPS for Puerto Rico hospitals
will be equal to the rate of-increase in the hospital market basket for
IPPS hospitals in all areas, subject to a 33\1/3\ percent reduction to
three-fourths of the applicable percentage increase (prior to the
application of other statutory adjustments; also referred to as the
market basket update or rate-of-increase (with no adjustments)) for
Puerto Rico hospitals not considered to be meaningful EHR users in
accordance with section 1886(b)(3)(B)(ix) of the Act, and then subject
to the productivity adjustment at section 1886(b)(3)(B)(xi) of the Act.
As noted previously, section 1886(b)(3)(B)(xi) of the Act states that
application of the productivity adjustment may result in the applicable
percentage increase being less than zero.
Based on IGI's fourth quarter 2020 forecast of the proposed 2018-
based IPPS market basket update with historical data through third
quarter 2020, in the FY 2022 IPPS/LTCH PPS proposed rule, in accordance
with section 1886(b)(3)(B) of the Act, as discussed previously, for
Puerto Rico hospitals we proposed a market basket update of 2.5 percent
and a productivity adjustment of 0.2 percent. Therefore, for FY 2022,
depending on whether a Puerto Rico hospital is a meaningful EHR user,
we stated that there are two possible applicable percentage increases
that can be applied to the standardized amount. Based on these data, we
determined the following proposed applicable percentage increases to
the standardized amount for FY 2022 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
we proposed an applicable percentage increase to the FY 2022 operating
standardized amount of 2.3 percent (that is, the FY 2022 estimate of
the proposed market basket rate-of-increase of 2.5 percent less an
adjustment of 0.2 percentage point for the proposed productivity
adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, we proposed an applicable percentage increase to the operating
standardized amount of 1.675 percent (that is, the FY 2022 estimate of
the proposed market basket rate-of-increase of 2.5 percent, less an
adjustment of 0.625 percentage point (the proposed market basket rate
of-increase of 2.5 percent x 0.75)/3) for failure to be a meaningful
EHR user, less an adjustment of 0.2 percentage point for the proposed
productivity adjustment.
As noted previously, we proposed that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2022 market basket update and the productivity
adjustment for the FY 2022 IPPS/LTCH PPS final rule.
We did not receive any public comment on our proposal with respect
to the Puerto Rico hospital update.
As previously discussed in section V.A.1, based on more recent data
available for this FY 2022 IPPS/LTCH PPS final rule (that is, IGI's
second quarter 2021 forecast of the 2018-based IPPS market basket rate-
of-increase with historical data through the first quarter of 2021), we
estimate that the FY 2022 market basket update used to determine the
applicable percentage increase for the IPPS is 2.7 percent and a
productivity adjustment of 0.7 percent. Therefore, in accordance with
section 1886(b)(3)(B) of the Act, for this final rule, for Puerto Rico
hospitals the more recent update of the market basket update is 2.7
percent and a productivity adjustment of 0.7 percent. For FY 2022,
depending on whether a Puerto Rico hospital is a meaningful EHR user,
there are two possible applicable percentage increases that can be
applied to the standardized amount. Based on these data, we determined
the following applicable percentage increases to the standardized
amount for FY 2022 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
an applicable percentage increase to the FY 2022 operating standardized
amount of 2.0 percent (that is, the FY 2022 estimate of the market
basket rate-of-increase of 2.7 percent less an adjustment of 0.7
percentage point for the productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, an applicable percentage increase to the operating standardized
amount of 1.325 percent (that is, the FY 2022 estimate of the market
basket rate-of-increase of 2.7 percent, less an adjustment of 0.675
percentage point (the market basket rate of-increase of 2.7 percent x
0.75)/3) for failure to be a meaningful EHR user, less an adjustment of
0.7 percentage point for the productivity adjustment.
B. Rural Referral Centers (RRCs) Annual Updates to Case-Mix Index (CMI)
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 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
[[Page 45217]]
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 (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. Amendment to Timeframe used for Case-Mix Index (CMI) Under Sec.
412.96(c)(1) and Sec. 412.96(h) and Discharges Under Sec. 412.96(i)
for RRC Classification
a. Case-Mix Index (CMI)
As previously noted, in addition to meeting other criteria, to
qualify for initial RRC status for cost reporting periods beginning on
or after October 1 of a given fiscal year, under Sec. 412.96(c)(1), a
hospital must meet the minimum case-mix index (CMI) value during the
most recent Federal fiscal year that ended at least one year prior to
the beginning of the cost reporting period for which the hospital is
seeking RRC status. We typically use the data from the Federal fiscal
year that is two years prior to the Federal fiscal year for which a
hospital is seeking RRC status to compute the national and regional
median CMI values, as these are generally the best available data at
the time of the development of the proposed and final rules. For
example, in the FY 2021 IPPS/LTCH PPS final rule, we calculated the
national and regional median CMIs using discharges occurring during FY
2019 (October 1, 2018 through September 30, 2019).
However, as discussed in the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25437), the best available data to use for certain purposes of
this FY 2022 rulemaking may not be the FY 2020 data that we would
ordinarily use, due to the impact of the COVID-19 PHE. We stated in the
proposed rule that we believe that the differences in utilization for
certain types of services in FY 2020 as compared to what would have
been expected in the absence of the PHE also affects the calculation of
the CMI values used for purposes of determining RRC status. We noted
that the CMI values calculated using the FY 2020 data are significantly
different from the CMI values calculated using the FY 2019 data. As
such, while we would normally have proposed to use data from FY 2020 to
calculate CMI values, we instead proposed to use values that are based
on discharges occurring during FY 2019 (October 1, 2018 through
September 30, 2019), and include claims posted to CMS' records through
March 2020. We made available for public comment the CMI values
calculated using the FY 2020 data that we would ordinarily propose to
use (86 FR 25784).
Accordingly, we proposed to amend Sec. 412.96(c)(1) with regard to
the data to be used in identifying the CMI value for an individual
hospital that is used to determine whether the hospital meets the CMI
criteria for purposes for RRC classification. Specifically, we proposed
to amend Sec. 412.96(c)(1) to indicate that the individual hospital's
CMI value for discharges during the same Federal fiscal year used to
compute the national and regional CMI values is used for purposes of
determining whether a hospital qualifies for RRC classification. We
also proposed to amend Sec. 412.96(h)(1) to provide for the use of the
best available data rather than the latest available data in
calculating the national and regional CMI criteria.
Commenters supported these proposals. We are therefore finalizing
these proposals, including the proposed amendments, without
modification.
b. Discharges
As previously noted, in addition to meeting other criteria, to
qualify for initial RRC status for cost reporting periods beginning on
or after October 1 of a given fiscal year, under Sec. 412.96(c)(2), a
hospital must meet the minimum number of discharges during its cost
reporting period that began during the same fiscal year as the cost
reporting periods used to compute the regional median discharges. We
typically use the cost reporting periods that are 3 years prior to the
fiscal year for which a hospital is seeking RRC status to compute the
regional median discharges, as these are generally the latest cost
report data available at the time of the development of the proposed
and final rules. For example, in the FY 2021 IPPS/LTCH PPS final rule,
we calculated the regional standards based on discharges for urban
hospitals' cost reporting periods that began during FY 2018.
However, as discussed in section I.F. of the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25437), the best available data to use for certain
purposes of this FY 2022 rulemaking may not be the FY 2019 cost report
data that we would ordinarily use, due to the impact of the COVID-19
PHE. We stated that we believe that the differences in utilization for
certain types of services in FY 2019 cost reporting periods that
spanned the PHE as compared to what would have been expected in the
absence of the PHE also affects the calculation of the regional median
discharges used for purposes of determining RRC status. We noted that
the regional median discharges calculated using the FY 2019 cost report
data are different from the regional median discharges values
calculated using the FY 2018 data. As such, while we ordinarily would
have proposed to calculate the regional median discharges based on cost
reports with cost reporting periods beginning in FY 2019 (October 1,
2018 through September 30, 2019), we instead proposed to calculate the
regional median discharges based on cost reports with cost reporting
periods beginning in FY 2018 (October 1, 2017 through September 30,
2018). We made available for public comment the regional median
discharges calculated using FY 2019 cost report data that we would
ordinarily propose to use (86 FR 25784).
Accordingly, we proposed to amend the regulations at Sec.
412.96(i)(1) and (2), which describe the methodology for calculating
the number of discharges criteria, to provide for the use of the best
available data rather than the latest available or most recent data
when calculating the regional discharges for RRC classification.
Commenters supported these proposals. We are therefore finalizing
these proposals, including the proposed amendments, without
modification.
[[Page 45218]]
2. 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), in conjunction with the
amendment to provide for the use of the best available data rather than
the use of the latest available data. The national median CMI value for
FY 2022 is based on the CMI values of all urban hospitals nationwide,
and the regional median CMI values for FY 2022 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). For the reasons discussed previously, the values are
based on discharges occurring during FY 2019 (October 1, 2018 through
September 30, 2019), and include claims posted to CMS' records through
March 2020.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25438), 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,
2021, they must have a CMI value for FY 2019 that is at least--
1.7049 (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 (86 FR 25439). We stated in the proposed rule that
we may update the proposed CMI values in the FY 2022 final rule to
reflect finalized policies for FY 2022, including the best available
data.
Commenters supported these proposals. Therefore, based on the best
available data (FY 2019 claims received through March 2020), 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, 2021, they must have a CMI
value for FY 2019 that is at least:
1.7049 (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.
[GRAPHIC] [TIFF OMITTED] TR13AU21.251
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.
3. 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 2022 IPPS/LTCH
PPS proposed rule (86 FR 25438), for FY 2022, consistent with our
proposed amendments to Sec. 412.96(i)(1) and (2) to provide for the
use of the best available data rather than the latest available or most
recent data, we proposed to update the regional standards based on
discharges for urban hospitals' cost reporting periods that began
during FY 2018 (that is, October 1, 2017 through September 30, 2018).
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, 2021, must have, as the number
of discharges for its cost reporting period that began during FY 2018,
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 2022 IPPS/LTCH PPS
proposed rule at 86 FR 25439). We note, that for this final rule, we
calculated the median number of discharges for urban hospitals using
the latest update of FY 2018 HCRIS data. There was no change in the
median number of discharges from the proposed rule. Commenters
supported these proposals.
Therefore, based on the best available discharge data at this time,
that is, for cost reporting periods that began during FY 2018, the
final median number of discharges for urban hospitals by census region
are set forth in the following table.
[[Page 45219]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.252
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.
C. 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 of Pub. L. 115-123
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.) Currently, the low-volume hospital
qualifying criteria provide that a hospital must have fewer 3,800 total
discharges during the fiscal year, and the hospital must be located
more than 15 road miles from the nearest ``subsection (d)'' hospital.
These criteria will remain in effect through FY 2022. 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. Therefore, in order for a hospital to continue
to qualify as a low-volume hospital on or after October 1, 2022, it
must have fewer than 200 total discharges during the fiscal year and be
located more than 25 road miles from the nearest ``subsection (d)''
hospital (see Sec. 412.101(b)(2)(i)). (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 April 26, 2018 Federal Register (83
FR 18301 through 18308).)
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
[[Page 45220]]
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).
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 (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 (iii) for the
fiscal year. Specifically, to meet the mileage criterion to qualify for
the low-volume hospital payment adjustment for FY 2022, as was the case
for FYs 2019, 2020 and 2021, 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).\760\ 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.
---------------------------------------------------------------------------
\760\ We note that for FY 2021, we established a deadline of
September 15, 2020 for receipt of a hospital's written request its
MAC in order for the low-volume hospital payment adjustment to be
applied to payments for a hospital's discharges beginning on or
after October 1, 2020, as discussed in the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58803).
---------------------------------------------------------------------------
Consistent with this previously established process, for FY 2022,
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 2022, we proposed that a hospital's written
request must be received by its MAC no later than September 1, 2021 in
order for the low-volume hospital payment adjustment to be applied to
payments for its discharges beginning on or after October 1, 2021. If a
hospital's written request for low-volume hospital status for FY 2022
is received after September 1, 2021, 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 2022 discharges, effective
prospectively within 30 days of the date of the MAC's low-volume
hospital status determination. We noted that this proposal is generally
consistent with the process for requesting and obtaining the low-volume
hospital payment adjustment for FY 2021 (85 FR 58802 through
58803).\761\
---------------------------------------------------------------------------
\761\ As noted, CMS established a deadline of September 15, 2020
for receipt of the hospital's written request for FY 2021, as
discussed in the FY 2021 IPPS/LTCH PPS final rule.
---------------------------------------------------------------------------
Under this process, a hospital receiving the low-volume hospital
payment adjustment for FY 2021 may continue to receive a low-volume
hospital payment adjustment for FY 2022 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 2021). In this case, a hospital's request can include a
[[Page 45221]]
verification statement that it continues to meet the mileage criterion
applicable for FY 2022. (Determination of meeting the discharge
criterion is discussed earlier in this section.) We note 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, and in accordance with the timeline described
earlier.
Comment: We received comments expressing continued support of the
low-volume hospital payment adjustment changes included in the
Bipartisan Budget Act of 2018.
Response: We appreciate commenters' support.
We received no public comments on our proposals related to the
process for requesting and obtaining the low-volume hospital payment
adjustment, therefore, we are finalizing our proposals as previously
described, without modification.
D. 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
2022, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2022 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.
We did not receive any comments regarding the IME adjustment
factor, which, as noted earlier, is statutorily required. Accordingly,
for discharges occurring during FY 2022, the IME formula multiplier is
1.35.
E. Payment Adjustment for Medicare Disproportionate Share Hospitals
(DSHs) for FY 2022 (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 patients with low
incomes. This method is commonly referred to as the ``Pickle method.''
The second method for qualifying for the DSH payment adjustment, which
is the most common, is based on a complex statutory formula under which
the DSH payment adjustment is based on the hospital's geographic
designation, the number of beds in the hospital, and the level of the
hospital's disproportionate patient percentage (DPP). A hospital's DPP
is the sum of two fractions: The ``Medicare fraction'' and the
``Medicaid fraction.'' The Medicare fraction (also known as the ``SSI
fraction'' or ``SSI ratio'') is computed by dividing the number of the
hospital's inpatient days that are furnished to patients who were
entitled to both Medicare Part A and Supplemental Security Income (SSI)
benefits by the hospital's total number of patient days furnished to
patients entitled to benefits under Medicare Part A. The Medicaid
fraction is computed by dividing the hospital's number of inpatient
days furnished to patients who, for such days, were eligible for
Medicaid, but were not entitled to benefits under Medicare Part A, by
the hospital's total number of inpatient days in the same period.
Because the DSH payment adjustment is part of the IPPS, the
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.
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.
[[Page 45222]]
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 a
statutory adjustment of 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 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 a
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. For the FY 2022 IPPS/LTCH PPS proposed rule, we
proposed to determine eligibility for interim uncompensated care
payments based on each hospital's estimated DSH status for the
applicable fiscal year using the best available data, as discussed in
section V.E. of the preamble of the proposed rule. In the proposed
rule, we also referred readers to a discussion of the inpatient
Provider Specific File in section II.A.4 of the Addendum of the
proposed rule (86 FR 25725). In the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25443 and 25444), we discussed our specific policies regarding
eligibility to receive empirically justified Medicare DSH payments and
uncompensated care payments for FY 2022 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
[[Page 45223]]
began on January 1, 2019. Under the Maryland TCOC Model, Maryland
hospitals will not be paid under the IPPS in FY 2022, 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 proposed to
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 best available data).
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 Factor 3 and an uncompensated care
payment amount for all MDHs, regardless of whether they are projected
to be eligible for Medicare DSH payments during the fiscal year, but
the denominator of Factor 3 of the uncompensated care payment
methodology will be based only 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 (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 participate 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. In the FY 2022
IPPS/LTCH PPS proposed rule, we referred readers to the interim final
rule with request for comments that appeared in the November 6, 2020
Federal Register for a discussion of the Model (85 FR 71167 through
71173). In that interim final rule, we extended the Model's Performance
Year 5 to September 30, 2021. In a subsequent final rule that appeared
in the May 3, 2021 Federal Register (86 FR 23496), we further extended
the Model for an additional three performance years. The Model's
Performance Year 8 will end on December 31, 2024.
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, 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 (Public
Law 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 Pub. L. 114-255 also required a
solicitation for applications for additional hospitals to participate
in the demonstration program. The Consolidated Appropriations Act of
2020 (Pub. L. 116-260) amended section 410A of Pub. L. 108-173 to
extend the Rural Community Hospital Demonstration Program for an
additional 5-year period. At the time of issuance of the proposed rule,
we believed 27 hospitals might participate in the demonstration program
at the start of FY 2022. At the time of development of this final rule,
there are 26 hospitals that will be participating in the demonstration
program in FY 2022. Under the payment methodology that applies during
the third 5-year extension period for 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 no comments on our proposal to continue the policy of
using the best available data regarding a hospital's estimated DSH
status for purposes of determining eligibility for interim
uncompensated care payments for FY 2022. Therefore, we are finalizing
as proposed without modifications. Our final determination of a
hospital's eligibility for uncompensated care payments will continue to
be based on the hospital's actual DSH status at cost report settlement
for that payment year.
We received public comments that were outside the scope of this
proposed rule. Specifically, commenters expressed concerns related to
Section 340B eligibility. Because we consider these public comments to
be outside the scope of the proposed rule, we are not addressing them
in this final rule.
[[Page 45224]]
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 the Medicare
Administrative Contractors (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
As we discussed earlier, section 1886(r)(2) of the Act provides
that, for each eligible hospital in FY 2014 and subsequent years, the
uncompensated care payment is the product of three factors. These three
factors represent our estimate of 75 percent of the amount of Medicare
DSH payments that would otherwise have been paid, an adjustment to this
amount for the percent change in the national rate of uninsurance
compared to the rate of uninsurance in 2013, and each eligible
hospital's estimated uncompensated care amount relative to the
estimated uncompensated care amount for all eligible hospitals. In this
section of this final rule, we discuss the data sources and
methodologies for computing each of these factors, our final policies
for FYs 2014 through 2021, and the policies we are finalizing for FY
2022.
a. Calculation of Factor 1 for FY 2022
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.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25444 through
25447), in order to determine Factor 1 in the uncompensated care
payment formula for FY 2022, 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 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. Consistent with the policy that has
applied in previous years, we proposed that these estimates will not be
revised or updated subsequent to the publication of our final
projections in this FY 2022 IPPS/LTCH PPS final rule.
Therefore, in order to determine the two elements of proposed
Factor 1 for FY 2022 (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 this
final rule, we used the most recently available projections of Medicare
DSH payments for the fiscal year, as calculated by CMS' Office of the
Actuary (OACT) 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 OACT'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
2019 through FY 2022 are discussed in the table titled ``Factors
Applied for FY 2019 through FY 2022 to Estimate Medicare DSH
Expenditures Using FY 2018 Baseline.''
For purposes of calculating Factor 1 and modeling the impact of the
FY 2022 IPPS/LTCH PPS proposed rule, we used the Office of the
Actuary's January 2021 Medicare DSH estimates, which were based on data
from the September 2020 update of the Medicare Hospital Cost Report
Information System (HCRIS) and the FY 2021 IPPS/LTCH PPS final rule
IPPS Impact File, published in conjunction with the publication of the
FY 2021 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 January 2021 Medicare DSH estimates. Furthermore,
because section 1886(r) of the Act specifies that the uncompensated
care payment is in addition to the empirically justified
[[Page 45225]]
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 January 2021 Medicare DSH estimates. The 27
hospitals that were anticipated to participate in the Rural Community
Hospital Demonstration Program in FY 2022 were also excluded from these
estimates, because under the payment methodology that applies during
the third 5-year 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 as previously
discussed, the Office of the Actuary's January 2021 estimate of
Medicare DSH payments for FY 2022 without regard to the application of
section 1886(r)(1) of the Act, was approximately $14.098 billion.
Therefore, also based on the January 2021 estimate, the estimate of
empirically justified Medicare DSH payments for FY 2022, with the
application of section 1886(r)(1) of the Act, was approximately $3.524
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for FY 2022). Under Sec. 412.106(g)(1)(i) of the regulations,
Factor 1 is the difference between these two OACT estimates. Therefore,
in the proposed rule, we proposed that Factor 1 for FY 2022 would be $
10,573,368,841.28, which is equal to 75 percent of the total amount of
estimated Medicare DSH payments for FY 2021 ($14,097,825,121.71 minus
$3,524,456,280.43). In the FY 2022 IPPS/LTCH PPS proposed rule, we
noted that consistent with our approach in previous rulemakings, OACT
intended to use more recent data that may become available for purposes
of projecting the final Factor 1 estimates for this FY 2022 IPPS/LTCH
PPS final rule.
As we noted in the FY 2022 IPPS/LTCH PPS proposed rule, 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 final rules 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. Consistent with historical
practice, we indicated that we expected the Midsession Review would
have updated economic assumptions and actuarial analysis, which would
be used for the development of Factor 1 estimates in the final rule. At
the time of developing this final rule, the Midsession Review was not
yet available, therefore the estimates in this final rule are generally
consistent with the economic assumptions and actuarial analysis used to
develop the forthcoming Medicare Trustees Report.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the ``2020 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?redirect=/reportstrustfunds/ 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 readers to the 2018 Actuarial Report on the Financial
Outlook for Medicaid for a discussion of general issues regarding
Medicaid projections. (available at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/MedicaidReport).
Comment: As in previous years, a common concern and/or request
expressed by some commenters was the need for greater transparency in
the methodology used by CMS and OACT to calculate Factor 1; several
commenters specifically requested that a detailed description of the
methodology and the data behind the assumptions be made public.
Commenters requested that this information be provided in advance of
the publication of the final rule and in the IPPS proposed rule each
year going forward, in order that the data be available to replicate
CMS' DSH calculation and comment sufficiently in future years.
Similarly, another commenter requested that CMS provide hospitals and
other stakeholders with a supplementary table and additional commentary
on the year-to-year changes from the FY 2021 final rule to the FY 2022
proposed rule for the variables that comprise the ``Other'' factor. The
commenter requested that CMS provide this information and allow for a
brief supplemental comment period prior to finalizing the FY 2022 rule.
The commenter stated that if CMS is unable to provide additional
information in such a manner, then it should use the ``Other'' factor
from the FY 2021 final rule for the FY 2022 final rule. Another
commenter suggested that the methodology and assumptions in projecting
DSH costs be reviewed by independent experts.
Additionally, a commenter asserted that the lack of opportunity
afforded to hospitals to review the data used in rulemaking is in
violation of the Administrative Procedure Act and expressed concerns
about the lack of transparency in how Factor 1 is calculated, arguing
that hospitals cannot meaningfully comment on the methodology given the
lack of details. In particular, this commenter asserted that the
proposed rule neither explained the assumption that Medicaid expansion
would draw enrollees who are healthier than the average Medicaid
beneficiary and, by extension, would have fewer hospital visits, nor
described the data CMS used in making this assumption.
Response: We thank the commenters for their input. We disagree with
commenters' assertion regarding the lack of transparency with respect
to the methodology and assumptions used in the calculation of Factor 1.
As explained in the FY 2022 IPPS/LTCH PPS proposed rule, and in this
section of this final rule, we have been and continue to be transparent
about the methodology and data used to estimate Factor 1. 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
2022 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 final estimate. Accordingly, we believe commenters
were able to meaningfully comment on our proposed estimate of Factor 1.
To provide context, we note that Factor 1 is not estimated in
isolation from other projections made by OACT. The Factor 1 estimates
for proposed
[[Page 45226]]
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 in this final rule are
generally consistent with those used for the forthcoming ``2021 Annual
Report of the Boards of Trustees of the Federal Hospital Insurance and
Federal Supplementary Medical Insurance Trust Funds'' which will be
made available on the CMS website at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html under ``Downloads.'' For additional
information on the development of the President's Budget, we refer
readers to the OMB website at: https://www.whitehouse.gov/omb/budget.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the forthcoming 2021 Medicare Trustees Report. 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 readers to the 2018 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/MedicaidReport2018.pdf for a discussion of
general issues regarding Medicaid projections. Additionally, as
described in more detail later in this section, in the FY 2022 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, we explained that the most recent Medicare DSH payment
adjustments provided in the IPPS Impact File were used, and we provided
the components of all 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, as well as additional information regarding
how we address the Medicaid and CHIP expansion.
Regarding the commenters' requests for further information on our
assumptions regarding the effect of Medicaid expansion on the Medicaid
population, we provide a discussion of more recent estimates and
assumptions regarding Medicaid expansion as part of the discussion of
the final Factor 1 for FY 2022, which also incorporates the estimated
impact of the COVID-19 pandemic.
Comment: Many commenters requested that CMS calculate estimated DSH
payments for purposes of Factor 1 without adjusting for the impact of
the COVID-19 PHE, which the commenters believed would align with other
CMS proposals regarding COVID-19 PHE data (for example, IPPS and LTCH
ratesetting proposal to use FY 2019 claims data). Many other commenters
urged CMS to consider freezing data prior to the PHE for purposes of
the Factor 1 methodology. Commenters stated that excluding PHE impacts
from Factor 1 methodology would allow more time to evaluate national
Medicare uncompensated care funding and the ongoing impacts of the
COVID-19 pandemic on beneficiaries and hospitals providing care.
Some commenters requested that CMS revisit the estimate for Factor
1 and provide greater transparency regarding its calculations, as they
disagree with CMS' proposed 7.1% decrease from FY 2021. For example,
according to a commenter, the September 2020 extract of HCRIS cost
report files used in OACT's Factor 1 methodology for purposes of the
proposed rule reflected providers that had minimal COVID-19 data (that
is, March 2020 and earlier data), and this commenter requested that CMS
revisit the estimates and provide greater transparency. Some commenters
believed that CMS should work to mitigate the effect of the pandemic
and associated anomalies in FY 2020 and 2021 cost report data that will
have an adverse on uncompensated care payments in future years.
Many commenters asserted that there was a much higher Medicaid
enrollment in 2020-2021 during the pandemic than CMS estimated for
purposes of Factor 1. A commenter referred to a New York Times article
from June 21, 2021, which indicated that nearly 10 million Americans
enrolled in Medicaid and CHIP during the pandemic. This same commenter
also disagreed with OACT's assumption of lower utilization by newly
eligible Medicaid enrollees, and the commenter believed that lower
utilization was caused by patients' reluctance to seek care and instead
opting to delay care and elective procedures during the PHE. The
commenter urged CMS to be transparent in how the ``Other'' factor was
determined and share the data behind its assumptions.
Another commenter cited survey data from the Kaiser Family
Foundation that show a 7.7 million (or 10.8%) increase in Medicaid/CHIP
enrollment from February 2020 to November 2020. Further, they noted
that the 0.9 percentage point increase in the estimated increase in
Medicaid enrollment for FY 2021 (FY 2021 Final Rule, 0.3%, FY 2022
Proposed Rule, 1.2%) does not explain the reduction in the estimate of
the ``other'' factor for FY 2021--as such they can only infer there was
a significant decrease in one or more of the ``other'' variables that
negated the increased estimate of Medicaid eligibility. To this end,
commenters requested additional explanation for the proposed decrease
to the ``other'' factor for FY 2021. Some commenters believed the 20%
add-on to payments for COVID-10 discharges would have contributed to an
increase in the ``other'' factor, rather than a decrease.
Many commenters questioned the proposed rule's estimate of the
``Discharges'' factor, in particular. Some commenters referenced a
Kaufman Hall study, which showed that the year-to-date adjusted
discharges were up 5.9% and the year-over-year and adjusted discharges
were up 66.4% as of April 2021. A commenter also referred to national
utilization data from Strata Decision Technology and stated that total
inpatient admissions began to increase starting in February 2021,
consistent with declines in COVID-19 inpatient volumes. The commenter
stated that, although, FY 2021 volumes will remain lower than historic,
pre-pandemic levels, the trends indicate that FY 2021 volumes will
continue to increase. These comments urged CMS to carefully monitor
changes in discharge volume when estimating Factor 1 for FY 2022. A
commenter urged CMS to use a later update to the claims data consistent
with the data that CMS otherwise uses to model IPPS impacts and set
relative weights in a typical year. While some commenters believed that
using the latest available data when finalizing Factor 1 might capture
more of the increases in utilization that are
[[Page 45227]]
anticipated for FY 2022, a commenter noted that the use of more recent
data alone may not fully account for the increase in discharges during
the second half of FY 2021. Another commenter noted that OACT's
estimate of the ``Discharges'' factor was based on preliminary FY 2021
claims data, given the lack of time for ``claims run out.''
Additionally, commenters requested further explanation regarding
the estimate of the ``Other'' factor used to estimate Medicare DSH
payments, and in particular an analysis of the difference between total
inpatient hospital discharges and IPPS discharges, along with the
agency's quantitative analysis of the interplay between the various
factors grouped together as ``Other'' factors impacting estimated DSH
payments. Specifically, commenters requested that OACT address the
expected increase in IPPS discharges as a percentage of total inpatient
hospital discharges in the latter half of FY 2021 and the impact of
these FY 2021 data trends on the ``Other'' factors impacting estimated
DSH Medicare payments for FY 2021. A commenter mentioned that,
according to their own analysis, total inpatient discharges and IPPS
discharges have changed in a similar manner. Another commenter stated
that CMS has not adequately measured the impact of the shift away from
direct patient care to telehealth care, in terms of hospital volumes
and payments. A commenter also suggested that CMS use OACT's estimate
of FY 2021 Medicare discharges from the FY 2021 Final Rule to estimate
discharges for FY 2022 ``Discharge'' factor. Similarly, another
commenter suggested that CMS use estimates of the ``Other'' factor
variables from the FY 2021 Final Rule for FY 2022, because of the
commenter's concerns with the transparency of the Factor 1 estimates in
the FY 2022 proposed rule.
Other commenters believed that as vaccination rates increase and
infection rates decline, people can be expected to begin addressing
their deferred medical needs in the year ahead. As a result, these
commenters indicated that the historical data used to estimate
inpatient hospital utilization among Medicare and Medicaid-covered
individuals understates the actual amount of inpatient care hospitals
are likely to provide in the coming year.
Response: We thank the commenters for their input on impact
projections, such as the impact on Medicaid enrollment from the COVID-
19 PHE, and have taken into consideration the concerns commenters have
raised in making our projection of Factor 1 for this FY 2022 IPPS/LTCH
PPS final rule. In updating our estimate of Factor 1, we considered, as
appropriate, the same set of factors that we used in the proposed rule,
as updated to account for the unique economic situation presented by
the COVID-19 PHE. We note that the estimated increases in new Medicaid
enrollees used for the ``Other'' factor are generally consistent with
the updated Factor 2 calculation described in the next section. The
updated estimates for the ``Discharges'' and ''Case Mix'' factors
incorporate the latest estimates from OACT of the impact of COVID-19 on
the Medicare program. We provide further details on the updated Factor
1 estimate and data sources as part of the discussion of the final
Factor 1 estimate for FY 2022 in this section of the rule.
Regarding the comments requesting further explanation of the
difference between total inpatient hospital discharges and IPPS
discharges, we note that the ``Discharges'' factor used to estimate
Medicare DSH expenditures relates to IPPS discharges for DSH eligible
hospitals. As discussed further in this section, the ``Other'' factor
includes an estimate of the effect of the difference between total
inpatient hospital discharges compared to discharges at IPPS hospitals
(particularly those in DSH hospitals). Based on the data sources and
modeling that are used for Factor 1, we do not break down this effect
to the level that commenters are requesting additional information. In
other words, we do not project each individual effect that is part of
``Other'' factor. We note that the OACT's FY 2022 estimate of 1.0038
for the ``Other'' factor is an increase relative to the FY 2021
estimate of 0.9662 for the ``Other'' factor.
Regarding the comments requesting that we exclude and/or mitigate
the impacts of the pandemic when estimating Factor 1 for FY 2022, we
note that the statute specifies that Factor 1 is based on the amount of
disproportionate share payments that would otherwise be made to a
subsection (d) hospital for the fiscal year. As discussed further in
this section, OACT's estimates of Medicare DSH payments used in the
development of Factor 1, reflect the estimated impact of the COVID-19
pandemic on DSH payments. We do not believe that excluding and/or
mitigating the impact of the pandemic through adjustments to Factor 1
calculation would be consistent with the statute.
After consideration of the public comments we received, we are
finalizing, as proposed, the methodology for calculating Factor 1 for
FY 2022. We discuss the resulting Factor 1 amount for FY 2022 in this
section. For this final rule, OACT used the most recently submitted
Medicare cost report data from the March 31, 2021 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 publication of the FY 2021 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 July 2021 OACT estimate for Medicare DSH payments for FY
2022, without regard to the application of section 1886(r)(1) of the
Act, was approximately $13.985 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 July 2021 estimate, the estimate of empirically justified Medicare
DSH payments for FY 2022, with the application of section 1886(r)(1) of
the Act, was approximately $3.496 billion (or 25 percent of the total
amount of estimated Medicare DSH payments for FY 2022). Under Sec.
412.106(g)(1)(i) of the regulations, Factor 1 is the difference between
these two OACT estimates. Therefore, the final Factor 1 for FY 2022 is
$10,488,564,546.74, which is equal to 75 percent of the total amount of
estimated Medicare DSH payments for FY 2022 ($13,984,752,728.99 minus
$3,496,188,182.25). OACT's final estimates for FY 2022 began with a
baseline of $13.882 billion in Medicare DSH expenditures for FY 2018.
The following table shows the factors applied to update this baseline
through the current estimate for FY 2022:
[[Page 45228]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.253
In this table, the discharges column shows the changes in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The figures for FY 2019 and FY 2020 are based on Medicare claims data
that have been adjusted by a completion factor to account for
incomplete claims data. The discharge figure for FY 2021 is based on
preliminary data. The discharge figure for FY 2022 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 discharge figures for FY 2020 to FY
2022 reflect the estimated impact of the COVID-19 pandemic. The case-
mix column shows the estimated change in case-mix for IPPS hospitals.
The case-mix figures for FY 2019 and FY 2020 are based on actual data
adjusted by a completion factor. The case-mix figure for FY 2021 is
based on preliminary data. The case-mix factor figures for FY 2020 and
FY 2021 have been adjusted for the estimated impact of the COVID-19
pandemic. The FY 2022 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 and the 20
percent add-on for COVID-19 discharges). 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 the information available
at the time of development of this final rule, it is assumed that
approximately 55 percent of all individuals who were potentially newly
eligible Medicaid enrollees in 2018, 2019, and 2020 resided in States
that had elected to expand Medicaid eligibility, and approximately 60
percent of all individuals who were potentially newly eligible Medicaid
enrollees in 2021 and thereafter, resided in States that had elected to
expand Medicaid eligibility. In the future, these assumptions may
change based on actual participation by States. The ''Other'' column
also includes the estimated impacts on Medicaid enrollment due to the
COVID-19 pandemic. In the proposed rule, we noted that, based on the
most recent available data at that time, it was estimated that Medicaid
enrollment increased by 2.9 percent in FY 2020 and would increase by an
additional 1.2 percent in FY 2021. For this final rule, we have used
updated assumptions of Medicaid enrollment. For a further discussion,
we refer readers to the OACT's Memorandum on Factor 1, available at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.
For a discussion of general issues regarding Medicaid projections,
we refer readers to the 2018 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 the
most recent available data, OACT assumed per capita spending for
Medicaid beneficiaries who enrolled due to the expansion to be 78
percent of the average per capita expenditures for a pre-expansion
Medicaid beneficiary due to the better health of these beneficiaries.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25446), we noted that
this is an updated assumption based on more recent data compared to the
data available at the time of the FY 2021 IPPS/LTCH PPS final rule.
This same assumption was used for the new Medicaid beneficiaries who
enrolled in 2020 and thereafter due to the COVID-19 pandemic. This
assumption is consistent with recent internal estimates of Medicaid per
capita spending pre-expansion and post-expansion.
The following table shows the factors that are included in the
``Update'' column of the previous table:
[[Page 45229]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.254
b. Calculation of Factor 2 for FY 2022
(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. We proposed to use a
methodology similar to the one that was used in FY 2018 through FY 2021
to determine Factor 2 for FY 2022.
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 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 information is integral to
the well-established NHEA methodology. A full description of the
methodology used to develop the NHEA is available on the CMS website
at: https://www.cms.gov/files/document/definitions-sources-and-methods.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 U.S., plus a
small (typically less than 0.2 percent of population) adjustment to
reflect Census undercounts. For fiscal years 2014 through 2017, 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
[[Page 45230]]
of uninsurance in the U.S. 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 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 2019, 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 2019. 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
2019, OACT extrapolates from the 2009 CPS data through 2018 using data
from the National Health Interview Survey (NHIS) and then, for 2019,
OACT extrapolates using the American Community Survey (ACS). 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). For both the NHIS and ACS, the U.S.
Census Bureau is the data collection agent. The results from these data
sources 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. For further information regarding the ACS, we refer readers
to the Census Bureau's website at: https://www.census.gov/programs-surveys/acs/. In deriving the number of uninsured for the most recent
release of the national health expenditure accounts, there were two
concerns related to the data sources typically used. The NHIS underwent
a redesign in 2019 and cautioned its users against comparing the year-
over-year trend from 2018-2019 as a result. Also, the Census Bureau
indicated that it experienced data collection issues for the 2019 CPS,
which may have been affected by the COVID-19 pandemic, and similarly
cautioned its users to be aware of the potential impact on trend
analysis between 2018 and 2019. Consequently, the ACS data were used
for estimating 2019.
The next metrics needed to compute Factor 2 are projections of the
rate of uninsurance in both CY 2021 and CY 2022. On an annual basis,
OACT projects enrollment and spending trends for the coming 10-year
period. Those projections use the latest NHEA historical data,
available at the time of their construction. 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.
We refer readers to OACT's Memorandum on Certification of Rates of
Uninsured prepared for the FY 2022 IPPS/LTCH proposed rule for further
details on the methodology and assumptions that were used in the
projection of the uninsurance rate.\762\
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\762\ OACT Memorandum on Certification of Rates of Uninsured.
March 12, 2021. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh.html.
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(2) Factor 2 for FY 2022
As discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25448 and 25449), using these data sources and the previously described
methodologies, OACT estimated that the uninsured rate for the
historical, baseline year of 2013 was 14 percent and for CYs 2021 and
2022 is 10.2 percent and 10.1 percent, respectively. The projected
rates of uninsurance for CY 2021 and 2022 reflect the estimated impact
of the COVID-19 pandemic. As required by section 1886(r)(2)(B)(ii) of
the Act, the Chief Actuary of CMS has certified these estimates.
However, for purposes of this final rule, we note that the OACT has
added an addendum to the memo to reflect an updated estimate of
projected rates of uninsurance for CY
[[Page 45231]]
2021 and 2022, as discussed in our responses to comments.
As with the CBO estimates on which we based Factor 2 for fiscal
years before FY 2018, the NHEA estimates are for a calendar year. Under
the approach originally adopted in the FY 2014 IPPS/LTCH PPS final
rule, we have used a weighted average approach to project the rate of
uninsurance for each fiscal year. We continue to believe that, in order
to estimate the rate of uninsurance during a fiscal year 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 2022.
As part of the development of the proposed Factor 2 for FY 2021,
OACT certified the estimate of the rate of uninsurance for FY 2022
determined using this weighted average approach to be reasonable and
appropriate for purposes of section 1886(r)(2)(B)(ii) of the Act.
However, in the proposed rule, we noted that we might also consider the
use of more recent data that may become available for purposes of
estimating the rates of uninsurance used in the calculation of the
final Factor 2 for FY 2022. In particular, we noted that any potential
impacts from the American Rescue Plan Act were not reflected in our
estimates for the proposed rule, due to the timing for the development
and publication of the FY 2022 IPPS/LTCH proposed rule.
In the proposed rule, we outlined the calculation of the proposed
Factor 2 for FY 2022 as follows:
Percent of individuals without insurance for CY 2013: 14 percent.
Percent of individuals without insurance for CY 2021: 10.2 percent.
Percent of individuals without insurance for CY 2022: 10.1 percent.
Percent of individuals without insurance for FY 2022 (0.25 times
0.0102) + (0.75 times 0.0101): 10.1 percent.
1- [verbar]((0.101-0.14)/0.14)[verbar] = 1-0.2786 = 0.7214 (72.14
percent).
For FY 2020 and subsequent fiscal years, section 1886(r)(2)(B)(ii)
of the Act no longer includes any reduction to the previous calculation
in order to determine Factor 2. Therefore, we proposed that Factor 2
for FY 2022 would be 72.14 percent.
The proposed FY 2022 uncompensated care amount was
$10,573,368,841.28 * 0.7214 = $7,627,628,282.10.
[GRAPHIC] [TIFF OMITTED] TR13AU21.255
We invited public comments on the proposed Factor 2 for FY 2022.
Comment: As with the comments received on proposed Factor 1, a
majority of commenters discussed the proposed Factor 2 in the context
of the COVID-19 PHE. Many commenters urged CMS to be transparent in the
calculation of Factor 2 and stated that agency assumptions and data
sources should be accurate and publicly available. Many commenters
urged OACT to update its projections of the rates of uninsurance to
reflect changes in the rate of uninsurance due to the COVID-19 PHE, and
in particular, current economic conditions. A commenter also
recommended that the agency account for regulatory or legislative
changes that could drive up uninsured rates as well as external
factors, such as shifts in economic conditions.
Many commenters requested that CMS consider the shifts from
commercial insurance to Medicaid when calculating Factor 2. A commenter
stated that the writers of the Affordable Care Act could not have
foreseen that such a drastic shift in insurance patterns would occur in
a short amount of time, as a result of a pandemic.
Many commenters highlighted the proposed decrease of approximately
$660 million in total uncompensated care payments in the FY 2022
proposed rule compared to estimated total uncompensated care payments
for FY 2021, which, according to a commenter, conflicts with CMS' goal
of advancing health equity and reducing healthcare disparities.
Commenters referred to the significant increase in unemployment due
to the pandemic and stated that it seems counterintuitive that the
percentage of uninsured decreased. Another commenter stated that the
reduction in uncompensated care payments, in part because of a
projected reduction in the number of uninsured individuals, is
inconsistent with the increase in care that hospitals have provided to
uninsured patients during the past year. Therefore, many commenters
requested that for FY 2022 CMS maintain total uncompensated care
payments at the current level for FY 2021, due to the pandemic. Some
commenters recommended that CMS follow a similar path as in other IPPS
policies proposed for FY 2022 and use FY 2019 data again in place of FY
2020 data when calculating the uninsured rates for Factor 2.
A commenter indicated that other government reports have
contradicted many of the most important assumptions made concerning
Factor 2. For example, the CBO issued a report on nationwide health
insurance levels, which concluded that the Affordable Care Act had
insured fewer individuals than previously estimated. Additionally, they
noted that in the President's 2018 Economic Report, the Administration
noted that not only was the overall coverage expansion less than
initially expected, but it was also due more to Medicaid expansion than
was initially projected.
A commenter also noted that in projecting coverage levels for FY
2022, the proposed rule assumed an under-reporting of Medicaid coverage
``due to a perceived stigma associated with being enrolled in the
Medicaid program or confusion about the source of their health
insurance,'' yet there is nothing in the proposed rule to indicate that
the agency has applied this same presumption of under reporting in
calculating Factor 1, where increased Medicaid coverage would serve to
increase expected DSH payments. The commenter concluded that it appears
that the agency has applied internally inconsistent assumptions on
Medicaid expansion between Factors 1 and 2 with no explanation.
Many commenters recommended using the latest available data when
finalizing Factor 2. Commenters believed that using more timely and
accurate data would reflect an increase in the uninsured population in
FY 2021 and FY 2022. A commenter requested that CMS revisit its
approach to calculating uncompensated care funding, as current data
likely includes too much noise.
Response: We thank the commenters for their input and their
recommendations regarding the estimate of Factor 2 included in the
proposed rule. We refer readers to the Addendum to the OACT memo for
further details on the methodology and updated assumptions used in the
calculation of
[[Page 45232]]
the projection of the uninsurance rate for this final rule. In brief,
using the past estimates from NHEA from earlier this year as a
baseline, OACT estimated the impacts of employment changes on insurance
coverage to update the estimate of the rates of uninsurance for CY 2021
and CY 2022. We note that this approach takes into account relevant
developments since publication of the proposed rule, including faster-
than-anticipated employment growth, an improving economic outlook based
on a consensus of the Blue Chip forecasters, and substantial recent and
anticipated, temporary increases in Medicaid enrollment (associated in
part with the Maintenance of Effort requirement under the FFCRA for
states to qualify to receive higher Medicaid payments during the PHE).
In response to the comments concerning transparency, we reiterate
that we have been and continue to be transparent with respect to the
methodology and data used to estimate Factor 2. The FY 2022 IPPS/LTCH
PPS proposed rule included a detailed discussion of our proposed Factor
2 methodology as well as the data sources that would be used in making
our final estimate. For purposes of this final rule, we are using an
updated projected rate of uninsurance to better reflect the impact of
the PHE for the COVID-19 pandemic. A detailed description of the
methodology used to update our estimates can be found in the
accompanying memo (available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh). Section
1886(r)(2)(B)(ii) of the Act permits us to use a data source other than
the CBO estimates to determine the percent change in the rate of
uninsurance beginning in FY 2018. We continue to believe that the NHEA
data and methodology that were used to estimate Factor 2 for this final
rule are transparent and best meet all of our considerations for
ensuring reasonable estimates for the rate of uninsurance that are
available in conjunction with the IPPS rulemaking cycle. We also
believe it is appropriate to update the NHEA-based projection of the FY
2022 rate of uninsurance that appeared in the proposed rule using
recent unemployment data from BLS, and associated projections of that
metric as published in the Blue Chip Economic Indicators report.
Many commenters requested that CMS consider the shifts from
commercial insurance to Medicaid when calculating Factor 2. The
projections utilized here capture shifts between insurance categories
such as from commercial insurance to Medicaid and any resulting impact
on the uninsured population. Regarding the comments recommending that
we maintain total uncompensated care payments at the FY 2021 level, we
note that section 1886(r)(2)(B)(ii) provides that Factor 2 should be
determined by comparing the percent of individuals who are uninsured in
2013 with the number of individuals ``who are uninsured in the most
recent period for which data is available.'' Because data are available
to permit OACT to estimate the rate of uninsurance for CY 2021 and CY
2022, we believe using these data to estimate Factor 2 for FY 2022 is
appropriate and consistent with the statute. In particular, maintaining
total uncompensated care payments at the FY 2021 level would fail to
reflect updated expectations regarding the level of uninsurance during
FY 2022 associated with changing economic conditions, newly available
data on Medicaid and Marketplace enrollment, the estimated impacts from
the Families First Coronavirus Response Act (FFCRA), including the
provision requiring a Medicaid Maintenance of Effort, the CARES Act,
and the American Rescue Plan Act.
After consideration of the public comments we received, we are
updating the calculation of Factor 2 for FY 2022 to incorporate more
recent data, as we proposed. The final estimates of the percent of
uninsured individuals have been certified by the Chief Actuary of CMS.
The calculation of the final Factor 2 for FY 2022 using a weighted
average of OACT's updated projections for CY 2021 and CY 2022 is as
follows:
Percent of individuals without insurance for CY 2013: 14
percent.
Percent of individuals without insurance for CY 2021: 9.8
percent.
Percent of individuals without insurance for CY 2022: 9.5
percent.
Percent of individuals without insurance for FY 2022 (0.25
times 0.098) + (0.75 times 0.095): 9.6 percent.
1- [verbar]((0.096-0.14)/0.14)[verbar] = 1-0.3143 = 0.6857 (68.57
percent). Therefore, the final Factor 2 for FY 2022 is 68.57 percent.
The final FY 2022 uncompensated care amount is $10,488,564,546.74 *
0.6857 = $7,192,008,709.70.
[GRAPHIC] [TIFF OMITTED] TR13AU21.256
c. Calculation of Factor 3 for FY 2022
(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
[[Page 45233]]
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 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 for which section
1886(r) of the Act 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 would potentially provide 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 used alternative data on the utilization of insured low-
income patients, as measured by patient days, which we believed 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 to use proxy data 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 and
submitted on or after May 1, 2010, when the new Worksheet S-10 went
into effect. However, 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 reported 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.
We also recognized commenters' concerns that, in continuing to use
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
for 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. In the FY 2018 IPPS/LTCH
PPS final rule, we finalized a methodology under which we calculated
Factor 3 for all eligible hospitals, with the exception of Puerto Rico
hospitals and Indian Health Service (IHS) and Tribal hospitals, using
Worksheet S-10 data from FY 2014 cost reports in conjunction with low-
income insured days proxy data based on Medicaid days and SSI days. The
time period for the Medicaid days data was FY 2012 and FY 2013 cost
reports (82 FR 38208 through 38213).
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 could 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 were no alternative
data to the Worksheet S-10 data currently available for FY 2015 that
would be a better proxy for the costs of subsection (d) hospitals for
treating uninsured individuals. Accordingly, in the FY 2019 IPPS/LTCH
PPS final rule (83 FR 41428), we advanced the time period of the data
used in the calculation of Factor 3 forward by 1 year and used
Worksheet S-10 data from FY 2014 and FY 2015 cost reports in
combination with the low income insured days proxy for FY 2013 to
determine Factor 3 for FY 2019. We note that, as discussed in the FY
2020 IPPS/LTCH PPS final rule (84 FR 42366), the use of three years of
data to determine Factor 3 for FY 2018 and FY 2019 had the effect of
smoothing the transition from the use of low-income insured days to the
use of Worksheet S-10 data.
As discussed in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41424),
we received overwhelming feedback from commenters emphasizing the
[[Page 45234]]
importance of audits in ensuring the accuracy and consistency of data
reported on the Worksheet S-10. 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 IPPS/LTCH PPS proposed rule. The audits began
with 1 year of data (that is, FY 2015 cost reports) in order to
maximize the available audit resources and not spread those audit
resources over multiple years, potentially diluting their
effectiveness. We chose to begin the audits with 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 in
preparation for the FY 2019 rulemaking. We also considered that we had
used the FY 2015 data as part of the calculation of the FY 2019
uncompensated care payments; therefore, the data had been subject to
public comment and scrutiny.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368), we finalized
our proposal to use a single year of Worksheet S-10 cost report data
from FY 2015 in the methodology for determining Factor 3 for FY 2020.
Although some commenters expressed support for the alternative policy
of using the FY 2017 Worksheet S-10 data to determine each hospital's
share of uncompensated care costs in FY 2020, given the feedback from
commenters in response to both the FY 2019 and FY 2020 IPPS/LTCH PPS
proposed rules, emphasizing the importance of audits in ensuring the
accuracy and consistency of data reported on the Worksheet S-10, we
concluded that the FY 2015 Worksheet S-10 data were the best available
audited data to be used in determining Factor 3 for FY 2020. We also
noted that we had begun auditing the FY 2017 data in July 2019, with
the goal of having the FY 2017 audited data available for future
rulemaking.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58823 through
58825), we finalized our proposal to use the most recent available
single year of audited Worksheet S-10 data to determine Factor 3 for FY
2021 and subsequent fiscal years. We explained our belief that using
the most recent audited data available before the applicable Federal
fiscal year, will more accurately reflect a hospital's uncompensated
care costs, as opposed to averaging multiple years of data. We noted
that if a hospital has relatively different data between cost report
years, we potentially would be diluting the effect of our considerable
auditing efforts and introducing unnecessary variability into the
calculation if we were to use multiple years of data to calculate
Factor 3. Therefore, we also believed using a single year of audited
cost report data is an appropriate methodology to determine Factor 3
for FY 2021 and subsequent years, except for IHS and Tribal hospitals
and hospitals located in Puerto Rico. For IHS and Tribal hospitals and
Puerto Rico hospitals, we finalized the use of a low-income insured
days proxy to determine Factor 3 for FY 2021. We did not finalize a
methodology to determine Factor 3 for IHS and Tribal hospitals and
Puerto Rico hospitals for FY 2022 and subsequent years because we
believed further consideration and review of these hospitals' Worksheet
S-10 data was necessary (85 FR 58825).
In the FY 2021 IPPS/LTCH PPS final rule, we finalized the
definition ``uncompensated care'' for FY 2021 and subsequent fiscal
years, for purposes of determining uncompensated care costs and
calculating Factor 3 (85 FR 58825 through 58828). We are continuing to
use the definition that we had initially adopted in the FY 2018 IPPS/
LTCH PPS final rule. Specifically, ``uncompensated care'' is 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). We refer readers to the FY
2021 IPPS/LTCH PPS rule (85 FR 58825 through 58828) for a discussion of
additional topics related to the definition of uncompensated care. We
noted in the FY 2021 IPPS/LTCH PPS final rule that the Paper Reduction
Act (PRA) package for Form CMS-2552-10 (OMB Control Number 0938-0050,
expiration date March 31, 2022) would offer an additional opportunity
to comment on the cost reporting instructions. A PRA package with
comment period appeared in the November 10, 2020 Federal Register (85
FR 71653). We thank stakeholders for their comments on the PRA package
and we will respond to those comments in a separate Federal Register
document.
(2) Background on the Methodology Used To Calculate Factor 3 for FY
2021 and Subsequent Fiscal Years
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 a
subsection (d) 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 2021 IPPS/LTCH PPS final rule, we applied the following
policies as part of the Factor 3 methodology: (1) The policy regarding
newly merged hospitals that was initially adopted in the FY 2015 IPPS/
LTCH PPS final rule; (2) the policies regarding annualization and long
cost reports that were adopted in the FY 2018 and FY 2019 IPPS/LTCH PPS
final rules, including a modified policy for the rare cases where a
provider has no cost report for the fiscal year that is used in the
Factor 3 methodology because the cost report for the previous fiscal
year spans both years; (4) the modified new hospital policy that was
finalized in the FY 2020 IPPS/LTCH PPS final rule; (5) the new merger
policy adopted in the FY 2021 IPPS/LTCH PPS final rule that accounts
for the merger effective date; and (6) the policies regarding the
application of statistical trim methodologies to potentially aberrant
CCRs and potentially aberrant uncompensated care costs reported on the
Worksheet S-10.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58829), we continued
to treat hospitals that merge after the development of the final rule
for the applicable fiscal year similar to new hospitals. As explained
in the FY 2015 IPPS/LTCH PPS final rule, for these newly merged
hospitals, we do not have data currently available to calculate a
Factor 3 amount that accounts for the merged hospital's uncompensated
care
[[Page 45235]]
burden (79 FR 50021). In the FY 2015 IPPS/LTCH PPS final rule, we
finalized a policy under which Factor 3 for hospitals that we do not
identify as undergoing a merger until after the public comment period
and additional review period following the publication of the final
rule or that undergo a merger during the fiscal year would be
recalculated similar to new hospitals (79 FR 50021 and 50022).
Consistent with past policy, interim uncompensated care payments for
newly merged hospitals are based only on the data for the surviving
hospital's CCN available the time of the development of the final rule.
However, at cost report settlement, we will determine the newly merged
hospital's final uncompensated care payment based on the uncompensated
care costs reported on its FY 2021 cost report. That is, we will revise
the numerator of Factor 3 for the newly merged hospital to reflect the
uncompensated care costs reported on the newly merged hospital's FY
2021 cost report.
In FY 2021 IPPS/LTCH PPS final rule (85 FR 58829), we continued 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, except in
the case of mergers, which would be subject to the modified merger
policy adopted for FY 2021. In addition, we continued the policies that
were finalized in the FY 2019 IPPS/LTCH PPS final rule (83 FR 41415)
regarding the use of the longest cost report available within the
Federal fiscal year. However, we adopted a modified policy for those
rare situations where a hospital has a cost report that starts in one
fiscal year but spans the entirety of the following fiscal year such
that the hospital has no cost report starting in that subsequent fiscal
year. Under this modified policy, we use the cost report that spans
both fiscal years for purposes of calculating Factor 3 when data from
the latter fiscal year are used in the Factor 3 methodology.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58829 and 58830), we
continued the modified new hospital policy for new hospitals that did
not have data for the cost reporting period(s) used in the Factor 3
calculation for FY 2021. Under the modified policy originally adopted
for FY 2020, new hospitals that have a preliminary projection of being
eligible for Medicare DSH based on their most recent available
disproportionate patient percentages may receive interim empirically
justified DSH payments. However, because these hospitals did not have a
FY 2017 cost report to use in the Factor 3 calculation and the
projection of eligibility for DSH payments was still preliminary, the
MAC will make a final determination concerning whether the hospital is
eligible to receive Medicare DSH payments at cost report settlement
based on its FY 2021 cost report. If the hospital is ultimately
determined to be eligible for Medicare DSH payments for FY 2021, the
hospital will 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 2021 cost report, and the
denominator is the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2017 cost reports for all DSH-eligible
hospitals.
In the FY 2021 IPPS/LTCH PPS final rule, we finalized a new merger
policy that accounts for the merger effective date (85 FR 58828 through
58829). To more accurately estimate UCC for the hospitals involved in a
merger when the merger effective date occurs partway through the
surviving hospital's cost reporting period, we finalized a policy of
not annualizing the acquired hospital's data. Under this policy, we use
only the portion of the acquired hospital's unannualized UCC data that
reflects the UCC incurred prior to the merger effective date, but after
the start of the surviving hospital's current cost reporting period. To
do this, we calculate a multiplier to be applied to the acquired
hospital's UCC. This multiplier represents the portion of the UCC data
from the acquired hospital that should be incorporated with the
surviving hospital's data to determine UCC for purposes of determining
Factor 3 for the surviving hospital. This multiplier is obtained by
calculating the number of days between the start of the applicable cost
reporting period for the surviving hospital and the merger effective
date, and then dividing this result by the total number of days in the
reporting period of the acquired hospital. Applying this multiplier to
the acquired hospital's unannualized UCC data will determine the final
portion of the acquired hospital's UCC that should be added to that of
the surviving hospital for purposes of determining Factor 3 for the
merged hospital.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58831 and 58832), we
continued to apply a CCR trim methodology similar to the CCR trim
methodology policy that has been used for purposes of determining
uncompensated care payments since FY 2018. This CCR trim methodology is
consistent with the approach used in the outlier payment methodology
under Sec. 412.84(h)(3)(ii), which states that the Medicare contractor
may use a statewide average CCR for hospitals whose operating or
capital CCR is in excess of 3 standard deviations above the
corresponding national geometric mean. We refer readers to the
discussion in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58831) for a
detailed description of the steps used to determine the applicable CCR.
In addition, we continued the UCC data trim methodology for rare
situations where a hospital has potentially aberrant data that are
unrelated to its CCR (85 FR 58832). However, because we had audited the
FY 2017 Worksheet S-10 data for a number of hospitals, we explained
that we no longer believe it is necessary to apply the trim methodology
for hospitals whose cost report has been audited. Accordingly, for FY
2021 we finalized a policy under which we exclude hospitals that were
part of the audits from the trim methodology for potentially aberrant
UCC. In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58831), we also
modified the potentially aberrant UCC trim methodology when it is
applied to all-inclusive rate providers (AIRPs). Under this modified
trim methodology, when an AIRP's total UCC are greater than 50 percent
of its total operating costs when calculated using the CCR included on
its FY 2017 cost report, we will recalculate the AIRP's UCC using the
CCR reported on Worksheet S-10, line 1 of the hospital's most recent
available prior year cost report that does not result in UCC of over 50
percent of total operating costs.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58824 and 58825), 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 for IHS and Tribal hospitals and subsection
(d) Puerto Rico hospitals that have a FY 2013 cost report. 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 for Puerto Rico
hospitals 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).
[[Page 45236]]
We refer readers to the FY 2021 IPPS/LTCH PPS final rule (85 FR
58817) for a discussion of the approach that we continued in FY 2021 to
determine Factor 3 for new Puerto Rico hospitals. In brief, Puerto Rico
hospitals that do not have a FY 2013 cost report are considered new
hospitals and subject to the new hospital policy, as discussed
previously. Specifically, the numerator of the Factor 3 calculation
will be the uncompensated care costs reported on Worksheet S-10 of the
hospital's cost report for the applicable fiscal year and the
denominator is the same denominator that is determined prospectively
for purposes of determining Factor 3 for all DSH-eligible hospitals.
Therefore, for FY 2021, we finalized the following methodology to
compute Factor 3 for each hospital:
Step 1: Selecting the provider's longest cost report from its
Federal fiscal year (FFY) 2017 cost reports. (Alternatively, in the
rare case when the provider has no FFY 2017 cost report because the
cost report for the previous Federal fiscal year spanned the FFY 2017
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 adjusted and/or annualized uncompensated care
costs for hospitals that merged.
Step 4: Calculating Factor 3 for IHS and Tribal hospitals and
Puerto Rico hospitals that have a FY 2013 cost report 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). (Alternatively, in
the rare case when a 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.) The denominator is calculated using the low-income insured
days proxy data from all DSH eligible hospitals. Consistent with the
policy adopted in the FY 2019 IPPS/LTCH PPS final rule, if a hospital
did not have both Medicaid days for FY 2013 and SSI days for FY 2018
available for use in the calculation of Factor 3 in Step 4, we
considered 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 2017 cost report data (from Step 1, 2, or 3). The
hospitals for which Factor 3 was calculated in Step 4 are excluded from
this calculation.
We also stated that the methodology adopted in the FY 2021 IPPS/
LTCH PPS final rule for purposes of determining Factor 3 for FY 2021
would apply for FY 2022 and subsequent years, using Worksheet S-10 data
from the most recent cost reporting year for which audits have been
conducted. However, we did not finalize a methodology to determine
Factor 3 for FY 2022 and subsequent years for IHS and Tribal hospitals
and Puerto Rico hospitals that have a FY 2013 cost report because we
believed further consideration and review of these hospitals' Worksheet
S-10 data is necessary.
We amended the regulations at Sec. 412.106(g)(1)(iii)(C) by adding
a new paragraph (7) to reflect the methodology for computing Factor 3
for FY 2021. We also added a new paragraph (8) to reflect the policy
adopted for all subsequent fiscal years of using the most recent
available single year of audited Worksheet S-10 data to calculate
Factor 3 for all eligible hospitals, except IHS and Tribal hospitals
and Puerto Rico Hospitals.
(3) Methodology for Calculating Factor 3 for FY 2022
(a) Use of Audited FY 2018 Data To Calculate Factor 3 for FY 2022
Audits of FY 2018 cost reports began in 2020 and those audited
reports were available, in time for the development of the proposed
rule. Feedback from the audits of the FY 2015 and FY 2017 reports and
lessons learned were incorporated into the audit process for the FY
2018 reports. We again chose to audit 1 year of data (that is, FY 2018)
in order to maximize the available audit resources and not spread those
audit resources over multiple years, potentially diluting their
effectiveness.
Given that the FY 2018 Worksheet S-10 data are the most recent
available audited data, in the FY 2022 IPPS/LTCH PPS proposed rule, we
stated that we believe, on balance, that the FY 2018 Worksheet S-10
data are the best available data to use for calculating Factor 3 for FY
2022. As discussed in the FY 2020 IPPS/LTCH PPS proposed and final
rules (84 FR 19419 and 84 FR 42364), we continue to believe that mixing
audited and unaudited data for individual hospitals by averaging
multiple years of data could potentially lead to a less smooth result.
To the extent that the audited FY 2018 data for a hospital may be
relatively different from its FY 2017 data (whether audited or
unaudited), we potentially would be diluting the effect of the
revisions to the cost reporting instructions and our considerable
auditing efforts, while introducing unnecessary variability into the
calculation if we were to use multiple years of data to calculate
Factor 3 for FY 2022. In the FY 2022 IPPS/LTCH proposed rule, we
recognized that the FY 2017 reports also include audited data for some
hospitals. However, the FY 2018 cost reports are the most recent year
of audited data and, and reflect the revisions to the Worksheet S-10
cost report instructions that were effective on October 1, 2017.
Accordingly, consistent with the policy adopted in the FY 2021
IPPS/LTCH PPS final rule and codified in the regulations at Sec.
412.106(g)(8), in the FY 2022 IPPS/LTCH PPS proposed rule we used a
single year of Worksheet S-10 data from FY 2018 cost reports to
calculate Factor 3 for FY 2022 for all eligible hospitals with the
exception of IHS and Tribal hospitals and Puerto Rico hospitals that
have a cost report for 2013. As discussed in a later section, we
proposed to continue to use the low-income insured days proxy to
calculate Factor 3 for these hospitals for one more year. In the
proposed rule, we noted that the proposed uncompensated care payments
to hospitals whose FY 2018 Worksheet S-10 data have been audited
represent approximately 99.6 percent of the proposed total
uncompensated care payments for FY 2022. For purposes of the FY 2022
IPPS/LTCH PPS proposed rule, we used a HCRIS extract updated through
February 19, 2021. We also noted that we intended to use the March 2021
update of HCRIS for the FY 2022 final rule and the respective March
updates for all future final rules. However, we also indicated that we
might consider the use of more recent data that may become available
after March 2021, but prior to the development of the final rule, if
appropriate, for purposes of calculating the final Factor 3 for the FY
2022 IPPS/LTCH PPS final rule. We invited public comments on our
proposed methodology for calculating Factor 3 for FY 2022, including,
but not limited to, our proposed use of FY 2018 Worksheet S-10 data (86
FR 25457).
Comment: Several commenters expressed general support for the use
of audited Worksheet S-10 data to estimate each hospital's share of
uncompensated care costs in FY 2022 and/or in future years. Commenters
commended CMS for its efforts to
[[Page 45237]]
ensure the accuracy and consistency of the data reported through
revised instructions and ongoing refinements to the audit process.
A commenter expressed concerns about the validity and comparability
of Worksheet S-10 data, especially in the absence of auditing all DSH-
eligible hospitals. Another commenter asserted that using Worksheet S-
10 data to calculate Factor 3 could result in an inequitable
distribution because Worksheet S-10 does not ``offset hospital UC
[uncompensated care] losses with non-Medicare sources of subsidies such
as Medicaid DSH and related Medicaid waiver [uncompensated care] pool
funds.'' A commenter recommended that CMS eliminate the reliance on
Worksheet S-10 data as a measure of uncompensated care because
Worksheet S-10 methodology does not account for hospitals with high
levels of uncompensated care from patients on public insurance. The
commenter noted that these hospitals with high uncompensated care are
unable to offset their charity care and bad debt losses with additional
sources such as direct taxes or state and local appropriations. They
recommended that CMS develop a measure that acknowledges those inherent
problems or make exceptions and provide specific protections for
hospitals that serve very low-income and medically complex populations.
Another commenter requested that CMS ensure its methodology for
determining UC payments accurately captures the full range of UC costs
that hospitals incur when treating low-income and uninsured individuals
to ensure safety net hospitals receive adequate support.
Response: We appreciate the support for our policy of using the
most recent year of audited Worksheet S-10 data for the computation of
Factor 3. We also appreciate the input from those commenters who are
opposed to the use of data from Worksheet S-10 in the calculation of
Factor 3. Regarding those comments that expressed concerns that
Worksheet S-10 data lack validity and are not comparable across
hospitals, we note that consistent with the policy adopted in the FY
2021 IPPS/LTCH PPS final rule, we are continuing to use audited
Worksheet S-10 cost report data to determine Factor 3 for FY 2022. Our
decision to adopt a policy of using audited Worksheet S-10 data to
determine Factor 3 was based upon the results of analyses of Worksheet
S-10 data conducted both internally and by stakeholders which
demonstrate that Worksheet S-10 accuracy has improved over time. As
part of our ongoing quality control and data improvement measures, we
have revised the cost report instructions (Transmittal 11).
Additionally, we have conducted audits of the FY 2018 Worksheet S-10
data for an expanded number of hospitals, and we have begun auditing
the FY 2019 Worksheet S-10 data to further improve provider reporting
and overall accuracy. Moreover, as hospitals gain more experience with
completing the Worksheet S-10 and build upon lessons learned from the
audits, we believe the data obtained from these cost reports will
continue to improve and become more consistent. Therefore, we continue
to believe that the Worksheet S-10 data is the best available source
for the uncompensated care costs of subsection (d) hospitals.
Comment: Many commenters supported the use of a single year of FY
2018 Worksheet S-10 data for the calculation of Factor 3 for FY 2022.
Commenters noted that the FY 2018 cost reports are the most recent
reports which have been subject to audit and that these audits have
continued to improve the accuracy and reliability of Worksheet S-10
data over time. Commenters supporting the continued use of Worksheet S-
10 data also indicated that the FY 2018 cost reports are the most
extensive as significantly more hospitals underwent Worksheet S-10
audits. In addition, some commenters indicated that the FY 2018 cost
reports reflect the improvements called for under the most recent
revised Worksheet S-10 instructions.
However, many other commenters expressed opposition to using a
single year of Worksheet S-10 data in the calculation of uncompensated
care payments for FY 2022 and future years. The primary concern
expressed by these commenters was the possibility that such an approach
would lead to significant variation in year-to-year uncompensated care
payments, especially in light of external factors that may affect a
hospital's finances on a one-time basis. These commenters pointed to
CMS' historical practice of using data from multiple years to determine
uncompensated care payments and argued that such an approach would
mitigate year-to-year fluctuations and avoid a skewed distribution of
uncompensated care payments, while also ensuring accuracy, stability,
and predictability for providers. Some stakeholders indicated that CMS
will no longer have to be concerned about mixing audited and unaudited
data from multiple years as the agency continues to audit Worksheet S-
10 data each year.
The most common alternative recommended by commenters who opposed
the use of a single year of FY 2018 data for the calculation of Factor
3 in FY 2022 was the use of two years of historical Worksheet S-10
data. Several commenters recommended a transitional period where FY
2017 and FY 2018 Worksheet S-10 data would be used to determine Factor
3 for FY 2022, because both years have been subject to audits. These
commenters also suggested the use of FY 2017, FY 2018, and FY 2019 data
to determine FY 2023 uncompensated care payments, followed by the
continued use of three years of audited Worksheet S-10 data thereafter.
As an alternative, a commenter suggested the use of audited FY 2018 and
FY 2019 data to determine Factor 3 for FY 2023, and a subsequent
transition to using three years of audited data for the FY 2024
uncompensated care payments, if using data from more than one year's
cost report for FY 2022 was not feasible.
Some commenters acknowledged the efforts CMS has taken to improve
the accuracy of Worksheet S-10 data through the audit process. Yet,
several commenters expressed concerns about the accuracy and
reliability of using a single year of Worksheet S-10 audited data. Some
commenters requested that CMS further monitor uncompensated care
payments over time for potential anomalies and fluctuations. Other
commenters recommended CMS consider omitting or making appropriate
adjustments to cost report data due to the effects of the COVID-19
public health emergency (PHE) when calculating Factor 3 and determining
the distribution of uncompensated care payments in future years. In
addition, a commenter suggested that CMS regularly assess the cost
report data for irregular trends and their potential impact on the
allocation of uncompensated care payments.
Response: We are grateful to those commenters who expressed their
support for using the FY 2018 Worksheet S-10 data to determine each
hospital's share of uncompensated care costs in FY 2022. As noted in
the FY 2022 IPPS/LTCH PPS proposed rule, we believe, that, on balance,
the FY 2018 Worksheet S-10 data are the best available data to use for
calculating Factor 3 for FY 2022.
Regarding the commenters' suggestion of using multiple years of
audited Worksheet S-10 data, we will consider using multiple years of
data when the vast majority of providers have been audited for more
than one fiscal year under the revised reporting instructions. We
expect that the number of audits will continue to increase from
previous years. Further, we continue to believe
[[Page 45238]]
that mixing audited and unaudited data for individual hospitals by
averaging multiple years of data could potentially lead to a less
smooth result. To the extent that the audited FY 2018 Worksheet S-10
data for a hospital are relatively different from its audited or
unaudited FY 2017 Worksheet S-10 data (for example, as a general
statement, audits can materially impact a hospital's data), we
potentially would be diluting the effect of the revisions to the cost
reporting instructions and our considerable auditing efforts, while
introducing unnecessary variability into the calculation if we were to
use multiple years of data to calculate Factor 3 for FY 2022. For
example, there are some unaudited FY 2017 reports that have a larger
than $5 million absolute difference in uncompensated care costs between
a hospital's unaudited FY 2017 report and a hospital's audited FY 2018
report. We believe using the most recent year of audited data is an
appropriate methodology for DSH uncompensated care payments.
As explained in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58820),
we also note that if a blend of multiple years of cost report data (for
example, FY 2017, FY 2018, and/or FY 2019) were to be used, some
hospitals in states that expanded Medicaid eligibility during this time
period may have experienced significant reductions in uncompensated
care costs following the expansion due to increased Medicaid coverage
of many previously uninsured individuals. In this situation, if an
average that included pre-expansion uncompensated care cost data were
used, the Factor 3 calculated for the hospital may be a less accurate
reflection of the relative uncompensated care burden of the hospital.
Thus, we believe using only the FY 2018 cost report data will result in
a more accurate and more updated reflection of each hospital's
proportion of uncompensated care costs. We also agree with those
commenters that noted FY 2018 cost reports reflect the first year of
data reported under the revised to Worksheet S-10 instructions that
were effective on October 1, 2017, and have further improved the data
quality. Accordingly, consistent with the regulation at Sec.
412.106(g)(1)(iii)(C)(8), we will calculate Factor 3 for FY 2022 using
FY 2018 Worksheet S-10 data, which is the most recent cost reporting
year for which audits have been conducted and which we continue to
believe is the best available data for purposes of calculating Factor 3
for FY 2022.
For the same reasons, we also continue to have confidence that the
best available data in future years will be the Worksheet S-10 data for
cost reporting years for which audits have been conducted under the
revised reporting instructions. Regarding the commenters' suggestions
for FY 2023 and FY 2024, we are not making any modifications to our
existing policy on calculating Factor 3 for future fiscal years at this
time. We will continue to monitor uncompensated care payments for
fluctuations and evaluate any anomalies as we move forward with using
only one year of audited Worksheet S-10 data for Factor 3 calculations.
Regarding commenters' concerns about and suggestions for addressing
the impact of the COVID-19 PHE in future years, we believe it would be
premature to attempt in this rulemaking to modify the methodology for
calculating Factor 3 or determining uncompensated care payments for a
future fiscal year. We will consider this issue further in future
rulemaking when the FY 2020 and FY 2021 cost reporting data are more
fully available to be analyzed.
The following comments relate to the definition of uncompensated
care costs:
Comment: With regard to the definition of uncompensated care,
several commenters urged CMS to include unreimbursed costs (shortfalls)
from Medicaid, CHIP, and State and local indigent care programs.
According to commenters, these shortfalls represent substantial losses
as those programs often do not fully cover the cost of providing care.
Several commenters also argued that including Medicaid shortfalls as
uncompensated care in Worksheet S-10 is especially important for
hospitals in states that have expanded Medicaid. According to the
commenters, these hospitals tend to be worse off under the current
definition of uncompensated care, as compared to hospitals in states
that did not expand. Some commenters provided CMS with methodologies
for how to account for Medicaid shortfalls, including a recommendation
that CMS develop a measure similar in nature to the Medicaid low-income
utilization rate (LIUR) formula that includes Medicaid shortfalls and
uninsured care rates to calculate uncompensated care costs for purposes
of Factor 3. Another commenter suggested specific revisions to
Worksheet S-10 to better reflect the actual Medicaid shortfalls
incurred by hospitals. These revisions included allowing hospitals to
include all GME-related costs and to reduce their Medicaid revenue by
the amount of any contributions to funding the nonfederal share of the
Medicaid program, whether through provider taxes, intergovernmental
transfers (IGTs), or certified public expenditures (CPEs).
Response: We appreciate commenters' suggestions for revisions and/
or modifications to Worksheet S-10. We will consider the concerns
raised by commenters as part of future cost report clarifications, and
will make modifications as necessary to further improve and refine the
information that is reported on Worksheet S-10 to support collection of
the information necessary to implement section 1886(r)(2) of the Act.
With regard to the comments requesting that payment shortfalls from
Medicaid and state and local indigent care programs be included in
uncompensated care cost calculations, we continue to believe there are
compelling arguments for excluding such shortfalls from the definition
of uncompensated care. First, we note that we did not propose any
changes to the definition of uncompensated care costs, which was
finalized in the FY 2021 IPPS/LTCH PPS final rule 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). Additionally, and as noted in past rulemaking, several
key stakeholders, including MedPAC, do not consider Medicaid shortfalls
in their definition of uncompensated care. Furthermore, we continue to
believe 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. We also note that even if we agreed that it would
be appropriate 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 and
receive supplemental payments in return (along with the Federal match),
making the computation of ``shortfalls'' even more complex.
[[Page 45239]]
Comment: Commenters also suggested that CMS include all patient
care costs when calculating the cost to charge ratio (CCR) used in
Worksheet S-10, including costs associated with training medical
residents, supporting physician and professional services, and paying
provider taxes, so as to determine uncompensated care costs more
accurately for purposes of the Worksheet S-10. A commenter also
suggested that CMS incorporate the costs of organ transplant programs
into the CCR calculation as hospitals incur significant costs related
to uninsured and underinsured populations that are not addressed
through payments for organ acquisition costs.
Response: As we have consistently stated in past final rules (84 FR
42378 and 85 FR 58826) in response to similar comments, we believe that
the purpose of uncompensated care payments is to provide additional
payment to hospitals for treating the uninsured, not for other costs
incurred, including costs associated with supporting and training
physicians and other professionals or paying provider taxes associated
with Medicaid, as commenters have suggested.
Additionally, because the CCR on Line 1 of Worksheet S-10 is
obtained from Worksheet C, Part I, and is also used in other IPPS rate
setting contexts (such as high-cost outliers and the calculation of the
MS-DRG relative weights) from which it is appropriate to exclude the
costs associated with organ transplant programs, supporting physician
and professional services and GME, we remain hesitant to adjust CCRs in
the narrower context of calculating uncompensated care costs.
Therefore, as stated in past final rules, we continue to believe that
it is not appropriate, at this time, to modify the calculation of the
CCR on Line 1 of Worksheet S-10 to include any additional costs in the
numerator of the CCR calculation.
For issues related to the cost report instruction, which are beyond
the scope of this rulemaking, we refer commenters to the forthcoming
Paper Reduction Act (PRA) package comment period for Form 2552-10 (OMB
Control Number 0938-0050), which will be the appropriate forum for
recommending modifications to Worksheet S-10.
Comment: Some stakeholders offered suggestions regarding the
uncompensated care payment calculation that appear to be outside the
scope of the policies discussed in the proposed rule. One such comment
included a recommendation that CMS change the distribution of
uncompensated care payments and set a cap on uncompensated care
payments, for instance, by implementing a statistical trim threshold on
uncompensated care costs reported on the Worksheet S-10 costs that are
greater than 40% of Worksheet A expenses. These commenters also
suggested that uncompensated care payments in excess of the cap could
be redistributed to all other eligible hospitals. Another commenter
suggested that hospitals that report aberrant uncompensated care costs
on their Worksheet S-10 be penalized by receiving a Factor 3 of 0,
rather than a Factor 3 determined using our trim methodology.
In addition, some commenters requested that CMS consider policies
to mitigate the effect of the COVID-19 PHE on FY 2020 and FY 2021 cost
reports, which will impact future uncompensated care distributions for
FY 2024 and FY 2025. In relation to this recommendation, several
commenters suggested that CMS consider and/or finalize a policy that
would preclude using FY 2020 and FY 2021 Worksheet S-10 data to
calculate Factor 3, as these data will likely be affected by COVID-19
PHE and are likely to be unrepresentative of other years, given the
unique pressures that hospitals faced during that time.
Response: We thank commenters for their continued concern regarding
the distribution of uncompensated care payments and the impact of the
COVID-19 PHE on future uncompensated care payments distributions.
Regarding commenters' recommendation that we implement a cap on
uncompensated care payments, we believe that our policy for trimming
uncompensated care costs that are an extremely high ratio, greater than
50 percent, of a hospital's total operating costs for the same year as
described the FY 2021 final rule (85 FR 58832), balances our desire to
exclude potentially aberrant data with our concern regarding
inappropriately reducing uncompensated care payments to a hospital that
may have a legitimately high ratio as determined through an audit of
their Worksheet S-10 data. Additionally, we note that the statutory
language governing Factor 3 does not specify any upper limit to a
hospital's uncompensated care payment.
Regarding the commenter's suggestion that hospitals with aberrant
cost report data get penalized with a Factor 3 of 0, we note that
consistent with the policies adopted in the FY 2021 IPPS/LTCH final
rule we intend to continue our policy of trimming potentially aberrant
CCRs by applying the state-wide average CCR for providers with a CCR
above the proposed ceiling. As discussed previously, we will also
continue to implement the trim methodology for potentially aberrant UCC
for purposes of determining Factor 3. In addition, for FY 2022, we
proposed to trim potentially aberrant charity care cost data for
hospitals that are currently not projected to be DSH eligible and do
not have audited FY 2018 Worksheet S-10 data by excluding the hospital
from the prospective Factor 3 calculation if that hospital's insured
patient's charity care costs exceed a threshold of 60 percent of total
uncompensated care costs and a dollar threshold of $7 million. We
believe these policies appropriately address potentially aberrant data
in UCC distribution for the purposes of calculating Factor 3.
The commenters' suggestion that we adjust the methodology for
determining uncompensated care costs in this rulemaking to reflect the
impact of the COVID-19 PHE is premature. Moreover, it is not clear at
this time what methodology would be used to determine any such an
adjustment and what data source could be used. Because cost reporting
data for the period covered by the COVID-19 PHE is not yet available to
be analyzed, we believe it would be premature to attempt in this
rulemaking to modify the methodology for determining uncompensated care
payments for a future year specifically to address the impact of the
COVID-19 PHE. We intend to consider the potential impact of the COVID-
19 PHE on the determination of uncompensated care costs in future
rulemaking, as appropriate.
The following comments relate to the Worksheet S-10 audit process:
Comment: As in previous years, the auditing process for the FY 2018
Worksheet S-10 was a common topic among many commenters. Several
commenters agreed that the data from audited FY 2018 Worksheet S-10s
have improved in accuracy when compared to previous years of data and
cover a larger share of DSH-eligible hospitals. Other commenters also
commended CMS' efforts to improve the Worksheet S-10 data through the
audit process and revised instructions. Some commenters agreed that the
use of audited Worksheet S-10 data is the most appropriate for
calculating Factor 3 and determining DSH payments. A commenter
supported CMS' approach of focusing its limited audit resources on the
hospitals receiving the highest amounts of uncompensated care payments.
Still, many commenters expressed concerns with the Worksheet S-10
audits. Several commenters
[[Page 45240]]
recommended that CMS implement a comprehensive audit process and expand
the Worksheet S-10 audits to include all DSH-eligible hospitals
receiving uncompensated care payments. In contrast, a commenter
recommended that CMS audit a reasonable fraction of providers each
year, such as one-third of DSH hospitals, and implement a three year
rotation to audit all DSH hospitals over the course of three rulemaking
cycles.
Some commenters requested that CMS decrease the provider burden
associated with Worksheet S-10 audits, such as by minimizing the
significant investment of time and resources required to prepare the
necessary audit documentation for auditors. Stakeholders also urged CMS
to conduct consistent and equitable audits across providers. Others
suggested that CMS revisit the scope of the audits to target specific
data elements, which would decrease provider burden.
Additionally, a few commenters suggested that CMS ensure
transparency and consistency in the audit process by making the audit
materials and protocols publicly available. A commenter also requested
that CMS promulgate the audit policy and protocols through notice and
comment rulemaking. Some commenters suggested that the Medicare Wage
Index audit process could be a model for Worksheet S-10 audits. A
commenter referred to the IRS Form 990 audits as separate example. This
commenter asserted that the IRS Form 990 audits have been completely
different from the Worksheet S-10 audits of uncompensated costs, and
stated that the hospitals' IRS audits have not resulted in
disallowance.
Other commenters urged CMS to develop a transparent timeframe for
the audit process, with communication to providers about expectations
and adequate lead time to avoid short response times. A commenter urged
CMS to complete audits well in advance of future rulemaking to ensure
that cost report data are accurate and available to be used in
determining Factor 3. They also requested that CMS establish a
standardized and streamlined process across auditors, which would
include clear timelines for information submission and guidance on
acceptable documentation to meet audit requirements. A commenter also
requested that CMS select hospitals for audits in an equitable way and
disclose the criteria used to identify hospitals subject to audits.
Commenters noted the need for a timely review and appeals process
for any adverse findings or inconsistent audit disallowances.
Additionally, commenters urged CMS to consider seeking input from
hospitals and working with MACs in developing the Worksheet S-10 audit
process to further promote clarity and consistency. To this end, a
commenter requested that CMS review audit findings to ensure MACs and
their subcontractors are applying audit protocols consistently across
hospitals nationwide. A commenter urged CMS to implement fatal edits to
ensure that the Worksheet S-10 is submitted completely and is
internally consistent, and to instruct MACs to audit negative, missing,
or suspicious information.
As part of requesting stability in the Worksheet S-10 audit
process, a commenter expressed their concerns with the inconsistent and
different sampling and extrapolation techniques employed by MACs during
Worksheet S-10 audits. They highlighted the different sampling methods
and error rate thresholds used to justify extrapolation, which the
commenter believes have produced varied outcomes for hospitals and
could impact uncompensated care payments. In addition, this commenter
requested that CMS apply the same audit criteria that are used for
retrospective audits of empirically justified DSH payments, which are
determined using SSI/Medicare and Medicaid eligible days. The commenter
also stated that hospitals should have the same protections afforded by
the appeal rights available for empirically justified DSH payments.
Response: We thank commenters for their feedback on the audits of
the FY 2018 Worksheet S-10 data and their recommendations for future
audits. As we have stated previously in response to comments regarding
audit protocols, these are provided to the MACs in advance of the
audit, in order to assure consistency during the audit process. We
began auditing the FY 2018 Worksheet S-10 data for selected hospitals
last year so that the audited uncompensated care data for these
hospitals would be available in time for use in the FY 2022 IPPS/LTCH
PPS proposed rule. We chose to focus the audit on the FY 2018 cost
reports in order to maximize the available audit resources. We also
note that FY 2018 data are the most recent year of audited data
reported under the revised cost report instructions that were effective
on October 1, 2017.
In response to the consistent feedback from commenters emphasizing
the importance of audits in ensuring the accuracy and consistency of
data reported on the Worksheet S-10, we have also started the process
of auditing FY 2019 Worksheet S-10 data. We recognize that a number of
commenters have suggested we audit all hospitals. However, as discussed
in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25453), we note that
the proposed uncompensated care payments to hospitals whose FY 2018
Worksheet S-10 data have been audited represent approximately 99.6
percent of the proposed total uncompensated care payments for FY 2022,
which is an increase from the 65 percent captured in the FY 2017
audits. While our limited audit resources mean that it is not feasible
to commit to auditing all hospitals every year, we will continue to
expand the number of audited providers captured in the FY 2019 audits,
as was done in the FY 2018 audits. We expect the number of audits will
continue to increase over time, resulting in improved Worksheet S-10
data over the years.
We appreciate all commenters' input and recommendations on how to
improve our audit process and reiterate our commitment to continue
working with the MACs and providers on audit improvements, including
changes to increase the efficiency of the audit process and build on
the lessons learned in previous audit years. Regarding commenters'
requests for a standard audit timeline, we do not intend to establish a
fixed timeline for audits across MACs at this time so that we can
retain the flexibility to use our limited audit resources to address
and prioritize audit needs across all CMS programs each year. We note
that MACs work closely with providers regarding scheduling dates during
the Worksheet S-10 audit process.
Regarding commenters' requests that we make public the audit
instructions and criteria, as we previously stated in the FY 2021 IPPS/
LTCH final rule (85 FR 58822) and prior rules, we do not make review
protocols public as CMS desk review and audit protocols are
confidential and are for CMS and MAC use only. Concerning the request
that we promulgate the Worksheet S-10 audit policy and protocols
through notice and comment rulemaking, we do not believe it would be
appropriate to seek comment on audit protocols that are confidential.
Rather, it is sufficient that we provide stakeholders with notice of
our proposed methodology for determining uncompensated care payments
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.
[[Page 45241]]
Regarding commenters' recommendations that we establish a timely
review and appeals process for the Worksheet S-10 audits, we do not
intend on introducing such a process at this time in order to maximize
limited audit resources. However, we will continue to work with
stakeholders to address their concerns regarding the accuracy and
consistency of data reported on Worksheet S-10. We will also continue
to work with the MACs each year to further improve the consistency of
the audit process across providers and MACs.
Concerning the suggestion to implement a fatal edit on Worksheet S-
10, we note that we did not propose any additional edits to Worksheet
S-10 data in the FY 2022 IPPS/LTCH PPS proposed rule. Furthermore, we
continue to believe that the ongoing MAC reviews of hospitals'
Worksheet S-10 data coupled with our efforts to improve reporting
through revised instructions, as well as providers' growing experience
with reporting uncompensated care costs outweigh the value of any
``fatal'' edits to the Worksheet S-10 data.
Concerning the commenter's request that we apply the same audit
criteria that are used for empirically justified DSH payments, those
audit protocols are also confidential and are for CMS and MAC use only.
As explained previously, we continue to believe that audit protocols
(for example, criteria) should be confidential, so we disagree with the
commenter about making public any audit protocols. To the extent that
the commenter is implying that the confidentiality of the audit
protocols causes inconsistency in auditing across the MACs, we also
disagree and will continue to work with the MACs each year to ensure a
consistent audit process across providers and MACs.
The following comments relate to the Worksheet S-10 cost report
instructions:
Comment: With regard to Worksheet S-10 instructions, a commenter
appreciated the effort CMS has undertaken to improve the clarity of the
Worksheet S-10 instructions. Some commenters also offered suggestions
for CMS' calculation of uncompensated care costs, including possible
changes to Worksheet S-10. Specifically, a commenter mentioned that
multiplying the CCR by copayment amounts written off as charity care
significantly understates the cost of charity care as these amounts
have already been reduced through rate negotiation with the payor.
Accordingly, the commenter requested that CMS instruct hospitals to
report copayments for insured patients that are to be written off as
charity care in Column 2, line 20, thereby excluding them from costs
reduced by the CCR. Another commenter requested that CMS clarify the
instructions for line 29 of the Worksheet S-10 regarding non-Medicare
bad debt for insured patients and urged the agency not to apply the CCR
to these amounts, adding that making this change would be consistent
with the way CMS treats non-reimbursed Medicare bad debt.
Another commenter observed that Worksheet S-10 fails to account for
all patient care costs when determining uncompensated care costs by
ignoring the costs hospitals incur in training residents, supporting
physicians and professional services, and provider taxes related to
Medicaid revenue. The commenter requested that the agency refine
Worksheet S-10 to include these costs. In particular, the commenter
suggested that in calculating the CCR, the agency ``use total of
Worksheet A, column 3 lines 1 through 17, reduced by the amount of
worksheet A-9, line 10, as the cost component; and use worksheet C,
column 8, line 200, as the charge component.'' According to the
commenter, implementing this change would incorporate additional
patient care costs incurred by hospitals, such as Graduate Medical
Education (GME). Similarly, another commenter requested that CMS
include teaching costs in determining uncompensated care costs on line
30 of Worksheet S-10 because excluding these costs disproportionately
affects teaching hospitals and academic medical centers.
In addition, a commenter suggested that just as unreimbursed costs
for charity care patients are recognized as uncompensated care costs,
so should the shortfall of state or local indigent care programs,
adding that CMS should also refine Worksheet S-10 data on Medicaid
shortfalls to better resemble actual shortfalls incurred by hospitals.
To this end, the commenter recommended that a more accurate measure of
Medicaid shortfalls could include the incorporation of GME costs in the
CCR. Another recommendation was that CMS allow hospitals to reduce
Medicaid revenues by intergovernmental transfers (IGTs), provider
reimbursement taxes, or certified public expenditures (CPEs). While the
commenter agreed that Medicaid shortfalls, as currently reported on
Worksheet S-10, should not be included in the uncompensated care cost
estimation, they added that these data will be increasingly useful for
informational purposes as more individuals gain access to Medicaid
coverage. Similarly, a couple of other commenters requested that CMS
undertake additional efforts to include a hospital's Medicaid
shortfalls by incorporating line 31 of Worksheet S-10 into the
calculation of a hospital's uncompensated care costs in Factor 3.
A commenter stated that CMS should afford providers with ample
opportunities to provide feedback and receive education on Worksheet S-
10 instructions and requested that CMS clearly communicate regarding
revisions to cost report instructions and cost report submission
deadlines. The commenter further recommended that CMS provide
additional outreach and educational materials to hospitals about
Worksheet S-10. Another commenter encouraged CMS to postpone the
implementation of revisions to form CMS-2552-10, Hospital and Health
Care Complex Cost Report, to allow providers more time to implement the
required operational changes that the revisions would entail.
Response: We appreciate commenters' concerns regarding the need for
clarification of the Worksheet S-10 instructions, as well as their
suggestions for form revisions to improve reporting. We reiterate our
commitment to continuing to work with stakeholders to address their
concerns regarding Worksheet S-10 instructions and reporting through
provider education and further refinement of the instructions as
appropriate. We also encourage providers to discuss with their
respective MACs any questions regarding clarifications of instructions
and/or reporting.
We continue to believe that our efforts to refine the instructions
have improved provider understanding of the Worksheet S-10 and added
clarity to the instructions, as noted by a commenter. We also recognize
that there are continuing opportunities to further improve the accuracy
and consistency of the information that is reported on the Worksheet S-
10, and to the extent that commenters have raised new questions and
concerns regarding the reporting requirements, we will attempt to
address them through future rulemaking and/or provider outreach.
However, as stated in previous rules, we continue to believe that the
Worksheet S-10 instructions are sufficiently clear and allow hospitals
to accurately complete Worksheet S-10.
Regarding the comments requesting specific structural changes to
Worksheet S-10 and/or further clarification of the reporting
instructions, as well as the recommendation that we postpone the
implementation of revisions to Form CMS-2552-10 (OMB Control Number
0938-0050, expiration date March 31,
[[Page 45242]]
2022), we note that these comments fall outside the scope of this final
rule. We therefore refer commenters to the forthcoming Paper Reduction
Act (PRA) package comment period for the Worksheet S-10, which will be
the appropriate forum to raise specific questions about or suggestions
for modifications and clarifications to Worksheet S-10, including the
reporting instructions.
For commenters' reference, additional materials regarding
clarifications to the Worksheet S-10 instructions are contained in the
MLN article titled ``Updates to Medicare's Cost Report Worksheet S-10
to Capture Uncompensated Care Data'', available at https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/se17031.pdf, as well as the Worksheet S-10
Q&As on the CMS DSH website in the download section, available at:
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Downloads/Worksheet-S-10-UCC-QandAs.pdf.
IHS and Tribal Hospitals
For the reasons discussed in the FY 2018 IPPS/LTCH PPS final rule
(82 FR 38209), we continue to recognize that the use of data from
Worksheet S-10 to calculate the uncompensated care amount for IHS and
Tribal hospitals may jeopardize these hospitals' payments due to their
unique funding structure. Prior to the proposed rulemaking for FY 2022,
CMS consulted with IHS and Tribal hospitals regarding uncompensated
care reporting. We are considering the input received through this
consultation with IHS and Tribal hospitals for future rulemaking.
Therefore, for IHS and Tribal hospitals, we proposed to continue
the policy first adopted in the FY 2018 rulemaking regarding the low-
income patient proxy. Specifically, for FY 2022 we proposed to
determine Factor 3 for these hospitals based on Medicaid days for FY
2013 and the most recent available year of data on 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. As we explained in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 24543), we continue to 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. We also note that all IHS and Tribal hospitals
have a FY 2013 cost report that can be used for purposes of determining
Factor 3. At the time of development of the proposed rule, for modeling
purposes, we computed Factor 3 for these hospitals using FY 2013
Medicaid days from a HCRIS extract updated through February 19, 2021,
and the FY 2018 SSI days.
Comment: Commenters expressed support for CMS' proposal to continue
using low-income patient days as a proxy to calculate Factor 3 IHS and
Tribal hospitals for FY 2022, with a commenter suggesting the use of
the proxy in future years as well. Another commenter recommended that
in subsequent years CMS allow Indian Health Care Provider (IHCP)
hospitals the option of continuing to use the low-income days proxy
measure or data from Worksheet S-10 to calculate uncompensated care
amounts for the purposes of determining uncompensated care payments.
Several commenters reiterated their support for a modified policy of
paying Tribal and IHS hospitals 100% of Medicare DSH and requested that
CMS explain why they did not propose this policy again.
A commenter also expressed dismay that CMS has yet to address the
concerns previously mentioned with regard to the application of the
uncompensated care cost policy to IHS and Tribal hospitals. The
commenter requested that at a minimum, CMS give stakeholders one year
to provide comments on a proposed policy and allow an additional three
years as an implementation phase for the newly developed methodology.
The commenter indicated that, in the event uncompensated care
payments for IHS and Tribal hospitals were to be determined using
Worksheet S-10 data, 26 facilities with less than 100 beds would stand
to collectively lose $7.5 million in DSH payments, while the two
largest facilities would stand to gain $6.9 million. The commenter also
noted that only two IHS and Tribal hospitals, both of which have more
than 100 beds, would not be subject to the 12 percent cap on DSH
payments. They recommended that CMS remove the 12 percent cap as this
``would advance the intent of the Congress to maximize Federal
resources for the Indian health system.'' The commenter added that if
the 12 percent cap cannot be addressed via a statutory fix, CMS should
work with hospitals to adopt changes to the methodology for calculating
uncompensated care and charity care that address the unique
circumstances of the Indian health system so that the disproportionate
impact of the cap is offset. Further, while the commenter recognized
that the cap ``is statutorily imposed by the MMA [Medicare
Modernization Act] and that CMS cannot act unilaterally to change it,''
they proposed that the agency work with Congress to remove the cap from
all IHS and Tribal hospitals.
The commenter also noted that IHS and Tribal Hospitals also face a
unique legal standing such that they do not ``fit well into the
framework that CMS is proposing to adjust for uncompensated care
payments.'' The commenter added that the inability to charge any Indian
for services, including copays, and the provisions contained within
treaties with the Federal Government and judicial rulings, mean that
these hospitals are subject to a very unique method of calculating
uncompensated care costs. The commenter maintained that the calculation
of uncompensated care payments should be done in such a way as to
maximize these hospitals' access to Federal resources. The commenter
suggested that CMS work with IHS and Tribal facilities as well as the
consortium to provide guidance on how these facilities should report
uncompensated care on Worksheet S-10. In this regard, another commenter
expressed that a significant challenge for IHS and Tribal hospitals is
that CMS may be interpreting that ``IHCPs do not have uncompensated
care costs under Worksheet S-10, because base funding for the costs of
patient care is provided through Congressional appropriations and might
construe this as all care being considered compensated.'' However,
commenters state that IHS appropriations do not fully fund the costs of
care and that many tribal health programs invest non-Federal resources
``to furnish care that could easily be classified as uncompensated care
since IHCPs may not charge beneficiaries to receive care and, thus, may
not have the accounting methods to track these costs.'' In summary, the
commenter stated that IHCP hospitals are currently unable to report
charity care and non-Medicare bad debt in a way that is consistent with
the definition of uncompensated care in the regulation.
Additionally, a commenter stated that the information technology
systems used by IHS and Tribal hospitals are not equipped to collect
the necessary data for the Worksheet S-10, noting that while IHS
recently received funding to upgrade its information technology system,
it will take some time, potentially years, before it is fully
functional. The commenter urged CMS to work and consult with IHS to
develop any new proposed methodology for
[[Page 45243]]
calculating uncompensated and charity care for IHS and Tribal hospitals
that would be used as an alternative to Worksheet S-10 to ensure that
it accurately captures uncompensated and charity care provided by these
facilities. Another commenter requested that CMS take additional time
to work with the Tribal Technical Advisory Group and IHS and Tribal
hospitals in the event it transitions these facilities to a new payment
methodology for the calculation of Medicare DSH payments.
Response: We also appreciate the concerns raised and the input
offered by commenters regarding the methodology for calculating
uncompensated care payments for IHS and Tribal hospitals. We continue
to recognize the unique nature of these hospitals and the special
circumstances IHS and Tribal hospitals face, and we reiterate our
commitment to continue working with stakeholders, including through
tribal consultation, as we revisit the issue of Medicare uncompensated
care payments to these hospitals for the FY 2023 rulemaking. We are not
making any changes to the current policy for calculating uncompensated
care payments for IHS and Tribal hospitals at this time, and we look
forward to continuing to collaborate on methodological approaches in
the future.
After consideration of the comments received, we are finalizing our
proposal to use the low-income insured days proxy to determine Factor 3
for IHS and Tribal hospitals for FY 2022.
Puerto Rico Hospitals
In the FY 2021 IPPS/LTCH PPS proposed rule, we proposed to
determine Factor 3 for Puerto Rico hospitals using Worksheet S-10 data
starting in FY 2022. We did not finalize this proposal in the FY 2021
IPPS/LTCH PPS final rule (85 FR 58825) because we believed further
consideration was necessary. However, we noted that we continued to
believe Worksheet S-10 data is the appropriate long-term source for
information on uncompensated care for hospitals located in Puerto Rico.
As explained in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25453), we are continuing to consider the reporting challenges in
Puerto Rico that may negatively impact the ability of Puerto Rico
hospitals to report uncompensated care. Accordingly, for FY 2022 we
proposed to determine Factor 3 for Puerto Rico hospitals that have a FY
2013 cost report based on the low-income patient proxy. We would
determine Factor 3 for these hospitals based on Medicaid days for FY
2013 and the most recent available year of data on 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. At the time of development of the proposed rule,
for modeling purposes, we computed Factor 3 for these hospitals using
FY 2013 Medicaid days from a recent HCRIS extract and the most recent
available data on SSI days, which was the FY 2018 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).
Comment: Several commenters supported CMS' proposal to continue the
use of low-income days as a proxy for hospitals located in Puerto Rico
for FY 2022. Commenters also supported the use of 14 percent of a
hospital's Medicaid days to determine SSI days for hospitals in Puerto
Rico, as finalized in the 2017 Inpatient IPPS/LTCH PPS final rule. A
commenter noted that using the Worksheet S-10 to calculate
uncompensated care costs for hospitals located in Puerto Rico would
have a severe, unfavorable economic effect, which would exacerbate the
already precarious financial conditions these hospitals face. This
commenter suggested that CMS consider allowing a period of at least
four to five years under the low-income days proxy to evaluate the
``advancement done in the accounting methodology and reimbursement
factor for PR [Puerto Rico].''
According to the commenter, a transition to the Worksheet S-10
would risk the financial stability of 40 percent of hospitals in Puerto
Rico, which have already incurred significant losses as a result of the
COVID-19 pandemic. The commenter expressed concern that the Worksheet
S-10 has an ``implied penalty'' for Puerto Rico hospitals due to their
low-cost structure as compared to higher cost hospitals located in the
mainland US., adding that using Worksheet S-10 to calculate Factor 3
would not account for the deficiency in Medicaid reimbursement for
Puerto Rico Hospitals. The commenter also stated that Puerto Rico's
government health program, known as VITAL, covers approximately 1.2
million inhabitants of the total 3 million population of Puerto Rico.
The commenter stated that ``several services not paid by the insurance
companies contracted by the Puerto Rico Government to provide services
to VITAL's beneficiaries are absorbed by the hospital because the
coverage provided by VITAL does not allow the hospital to collect such
unpaid services from the patient.'' Additionally, the commenter stated
that currently some hospitals in Puerto Rico do not have a charity care
policy, even though they provide charity care services. Instead, these
services are often inappropriately accounted for as a ``contractual
adjustment.'' The commenter further explained that those hospitals in
Puerto Rico with a charity care policy in place do not know how to
optimize their accounting systems to accommodate such policies, adding
that hospitals may also be inappropriately accounting for bad debts.
The commenter concluded that all of these factors understate the
components of uncompensated care costs, and that technical education is
needed to address the challenges Puerto Rico hospitals have regarding
charity care and bad debt reporting, which would take years to address.
Response: We appreciate the concerns raised by commenters regarding
the calculation of Factor 3 for hospitals in Puerto Rico. Regarding the
recommendation that we provide Puerto Rico hospitals a 4- to 5-year
continuation of the current policy before the transition to the use of
Worksheet S-10, we continue to invite commenters to provide further
input as we revisit the use of Worksheet S-10 data from Puerto Rico
hospitals in the Factor 3 methodology in future rulemaking and assess
the results of FY 2019 audits for these hospitals. We will consider the
commenters' concerns regarding the unique financial circumstances and
challenges faced by Puerto Rico hospitals related to uncompensated care
cost reporting on Worksheet S-10 in future rulemaking as appropriate.
After consideration of the comments received, we are finalizing the
use of low-income insured days proxy to determine Factor 3 for Puerto
Rico hospitals for FY 2022.
(b) Methodology for Calculating Factor 3 for FY 2022
As we explained in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25454), for purposes of determining Factor 3 for FY 2022, we are
applying the methodology adopted in the FY 2021 IPPS/LTCH PPS final
rule. Specifically, we are applying the following policies: (1) The
merger policies that were
[[Page 45244]]
initially adopted in the FY 2015 IPPS/LTCH PPS final rule (79 FR
50021), as modified in the FY 2021 IPPS/LTCH PPS final rule to
incorporate the use of a multiplier to account for merger effective
date; (2) the policy for providers with multiple cost reports,
beginning in the same fiscal year, of 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; (3) the policy, as
modified in the FY 2021 IPPS/LTCH PPS final rule, for the rare case
where a hospital has a cost report that starts in one fiscal year and
spans the entirety of the following fiscal year, such that the hospital
has no cost report for that subsequent fiscal year, of using the cost
report that spans both fiscal years for the latter fiscal year; (4) the
new hospital policy, as modified in the FY 2020 IPPS/LTCH PPS final
rule; (5) the newly merged hospital policy; and (6) the policies
regarding the application of statistical trim methodologies to
potentially aberrant CCRs and potentially aberrant uncompensated care
costs reported on the Worksheet S-10.
Comment: A commenter noted that CMS' policy of annualizing the data
for the longest cost report period for a hospital in a fiscal year
disadvantages providers who have undergone a change in ownership
(CHOW). According to the commenter, there are cases when the hospital
undergoes a CHOW in the later part of their 12-month cost reporting
period, and in such cases the first stub-period's uncompensated care
costs would be annualized for purposes of calculating Factor 3. The
commenter notes that this approach poses a problem because the
annualized stub-period would understate the hospital's uncompensated
care as compared to the full combination of pre- and post- CHOW reports
due to ``significant presumptive charity write-offs occurring in the
last month of the 2nd stub period [not annualized].'' The commenter
provided an example of such case, where a hospital's Factor 3 was
understated by 20 percent under the current policy of annualizing the
longest cost report.
The commenter also noted that the use of annualization may
understate or overstate a hospital's uncompensated care due to seasonal
fluctuations, and that in the event of a CHOW, such annualization would
not be needed if both cost report stubs, pre- and post- CHOW, would
equal 12 months. The commenter also provided analysis that demonstrated
significant uncompensated care payment impacts, both positive and
negative, due to the current policy (only the longest cost report stub
would be utilized for hospitals that underwent a CHOW) as compared to
combining stub-period cost reports that account for all 12 months.
To address these issues, the commenter requested that CMS utilize a
combined stub-period cost report that accounts for all 12 months of
uncompensated care data for hospitals that have undergone CHOWs but
maintained their fiscal year ends when calculating Factor 3.
Response: We thank the commenter for expressing their concerns and
suggestions. We believe that the current policy of using the longest
cost report available in a fiscal year for a hospital and annualizing
its data meets, in practice, the policy goals of adjusting
uncompensated care costs for purposes of the Factor 3 calculation. In
addition, given that CHOWs are not mergers, we do not, at this time,
consider it necessary to combine data across cost reports. There are
also inherent issues in combining cost reports for CHOW hospitals in
that, as the commenter noted, the true annual volume of uncompensated
care for some providers could be overestimated or underestimated as a
result. We believe CHOWs and the timing of charity write-offs are
hospital business decisions. We also note that we did not propose any
changes to the policy for providers with multiple cost reports; and, we
would want to collect additional input and suggestions from
stakeholders before considering making any potential modifications or
refinements to the current policy for hospitals with multiple cost
reports in future rulemaking. Therefore, we are not adopting the
commenter's recommendation at this time.
New Hospital for Purposes of Factor 3
We are continuing to apply the new hospital policy that was
initially adopted in the FY 2020 IPPS/LTCH PPS final rule to determine
Factor 3 for new hospitals that do not have an FY 2018 cost report to
use in the Factor 3 calculation (that is, hospitals with CCNs
established on or after October 1, 2018). In the FY 2020 IPPS/LTCH PPS
final rule, we modified the new hospital policy that was initially
adopted in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50643) and
continued to apply through FY 2019 (83 FR 41417). Under this modified
policy, if a new hospital has a preliminary projection of being
eligible for DSH payments based on its most recent available
disproportionate patient percentage, it may receive interim empirically
justified DSH payments. However, new hospitals will not receive interim
uncompensated care payments during FY 2022 because we will have no FY
2018 uncompensated care data on which to determine what those interim
payments should be. The MAC will make a final determination concerning
whether the hospital is eligible to receive Medicare DSH payments at
cost report settlement based on its FY 2022 cost report. If the
hospital is ultimately determined to be eligible for Medicare DSH
payments for FY 2022, the hospital will 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 2022 cost report, and the denominator is the sum of the
uncompensated care costs reported on Worksheet S-10 of the FY 2018 cost
reports for all DSH-eligible hospitals. This denominator will be the
same denominator that is determined prospectively for purposes of
determining Factor 3 for all DSH-eligible hospitals, with the exception
of Puerto Rico hospitals and IHS and Tribal hospitals.
Newly Merged Hospitals
We are continuing to treat hospitals that merge after the
development of the final rule for the applicable fiscal year similar to
new hospitals. As explained in the FY 2015 IPPS/LTCH PPS final rule,
for these newly merged hospitals, we do not have data currently
available to calculate a Factor 3 amount that accounts for the merged
hospital's uncompensated care burden (79 FR 50021). In the FY 2015
IPPS/LTCH PPS final rule, we finalized a policy under which Factor 3
for hospitals that we do not identify as undergoing a merger until
after the public comment period and additional review period following
the publication of the final rule or that undergo a merger during the
fiscal year will be recalculated similar to new hospitals (79 FR 50021
and 50022). Consistent with the policy adopted in the FY 2015 IPPS/LTCH
PPS final rule, we will continue to treat newly merged hospitals in a
similar manner to new hospitals, such that the newly merged hospital's
final uncompensated care payment will be determined at cost report
settlement. The numerator of the newly merged hospital's Factor 3 will
be based on the cost report of only the surviving hospital (that is,
the newly merged hospital's cost report) for the current fiscal year.
However, if the hospital's cost reporting period includes less than 12
months of data, the data from the newly merged hospital's cost
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report will be annualized for purposes of the Factor 3 calculation.
Consistent with past policy, interim uncompensated care payments
for the newly merged hospital will be based only on the data for the
surviving hospital's CCN available at the time of the development of
the final rule. In other words, the eligibility of a newly merged
hospital to receive interim uncompensated care payments for FY 2022 and
the amount of any interim uncompensated care payments, will be based
only on the FY 2018 cost report available for the surviving CCN at the
time the final rule is developed. However, at cost report settlement,
we will determine the newly merged hospital's final uncompensated care
payment based on the uncompensated care costs reported on its FY 2022
cost report. That is, we will revise the numerator of Factor 3 for the
newly merged hospital to reflect the uncompensated care costs reported
on the newly merged hospital's FY 2022 cost report.
Comment: A commenter supported the policy of making interim
uncompensated care payments to newly merged hospitals based on the
surviving hospital's cost report for FY 2018 and then determining the
final uncompensated care payment for these hospitals at cost report
settlement based on the FY 2022 cost report for the merged hospital.
The commenter also supported the continuation of our current policy for
determining uncompensated care payments for new hospitals.
Response: We appreciate the commenter's support for these policies.
We are not making modifications to our existing policy regarding newly
merged hospitals.
CCR Trim Methodology
The calculation of a hospital's total uncompensated care costs on
Worksheet S-10 requires the use of the hospital's cost to charge ratio
(CCR). Consistent with the process for trimming CCRs used in the FY
2021 IPPS/LTCH PPS final rule (85 FR 58831 and 58832), we apply the
following steps to determine the applicable CCR:
Step 1: Remove Maryland hospitals. In addition, we remove all-
inclusive rate providers because their CCRs are not comparable to the
CCRs calculated for other IPPS hospitals.
Step 2: For FY 2018 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 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 will be
selected.) The ceiling is 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.
Step 3: Using the CCRs for the remaining hospitals in Step 2,
determine the urban and rural statewide average CCRs for FY 2018 for
hospitals within each State (including non-DSH eligible hospitals),
weighted by the sum of total hospital discharges from Worksheet S-3,
Part I, Line 14, Column 15.
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 2018 greater than 3 standard
deviations above the national geometric mean for that fiscal year (that
is, the CCR ``ceiling''). For both the proposed rule and this final
rule, the statewide average CCR was applied to 10 hospitals, of which 3
hospitals had FY 2018 Worksheet S-10 data.
Step 5: For providers that did not report a CCR on Worksheet S-10,
Line 1, we assign them the statewide average CCR as determined in step
3.
After completing the previously described steps, we re-calculate
the hospital's uncompensated care costs (Line 30) using the trimmed CCR
(the statewide average CCR (urban or rural, as applicable)).
Uncompensated Care Data Trim Methodology
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25455), we noted
that after applying the CCR trim methodology there are rare situations
where a hospital has potentially aberrant data that are unrelated to
its CCR. Therefore, under the trim methodology for potentially aberrant
UCC that was included as part of the methodology for purposes of
determining Factor 3 in the FY 2021 final rule (85 FR 58832), if the
hospital's uncompensated care costs for FY 2018 are an extremely high
ratio (greater than 50 percent) of its total operating costs, we will
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. Specifically, if the hospital's FY 2018 cost report is
determined to include potentially aberrant data, data from the FY 2019
cost report will be used for the ratio calculation. Thus, the
hospital's uncompensated care costs for FY 2018 will be trimmed by
multiplying its FY 2018 total operating costs by the ratio of
uncompensated care costs to total operating costs from the hospital's
FY 2019 cost report to calculate an estimate of the hospital's
uncompensated care costs for FY 2018 for purposes of determining Factor
3 for FY 2022.
As we noted in the proposed rule, we have audited the FY 2018
Worksheet S-10 data for a number of hospitals. Because the UCC data for
these hospitals have been subject to audit, we believe there is
increased confidence that if high uncompensated care costs are reported
by these audited hospitals, the information is accurate. Therefore,
consistent with the policy that was adopted in the FY 2021 IPPS/LTCH
PPS final rule, it is unnecessary to apply the trim methodology for
these audited hospitals.
In addition to the existing UCC trim methodology, we proposed to
apply a new trim specific to certain hospitals that do not have audited
FY 2018 Worksheet S-10 data. In the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25455), we noted that in rare cases, hospitals that are not
currently projected to be DSH eligible and that do not have audited
Worksheet S-10 data may have a potentially aberrant amount of insured
patients' charity care costs (line 23 column 2). We proposed to use a
threshold of three standard deviations from the mean ratio of insured
patients' charity care costs to total uncompensated care costs (line 23
column 2 divided by line 30) and a dollar threshold of $7 million,
which is the median total uncompensated care cost reported on FY 2018
cost reports for hospitals that are projected to be DSH eligible,
excluding IHS and Tribal hospitals and Puerto Rico hospitals.
Therefore, for FY 2022, we proposed that in the rare case that a
hospital's insured patients' charity care costs are greater than $7
million and the ratio of the hospital's cost of insured patient charity
care (line 23 column 2) to total uncompensated care costs (line 30) is
greater than 60 percent (rounded from 58 percent), we would exclude the
hospital from the prospective Factor 3 calculation. This proposed trim
would only impact hospitals that are not currently projected to be DSH
eligible;
[[Page 45246]]
and therefore, are not part of the calculation of the denominator of
Factor 3, which includes only uncompensated care costs for projected
DSH eligible hospitals. If a hospital would be trimmed under both the
existing UCC trim methodology and this proposed new trim, we proposed
to apply this new trim in place of the existing UCC trim methodology.
We explained that we believe the proposed new trim more appropriately
addresses potentially aberrant insured patient charity care costs
compared to the existing trim, because the existing trim is based
solely on the ratio of total uncompensated care costs to total
operating costs and does not consider the level of insured patients'
charity care costs.
In addition, we also proposed that, for the hospitals that would be
subject to the proposed trim, if the hospital is ultimately determined
to be DSH eligible at cost report settlement, then the MAC would
calculate a Factor 3 after reviewing the uncompensated care information
reported on Worksheet S-10 of the hospital's FY 2022 cost report. We
believe if a hospital subject to this proposed trim is ultimately
determined to be DSH eligible at cost report settlement, its
uncompensated care payment should be calculated only after the
hospital's reporting of insured charity care costs on its FY 2022
Worksheet S-10 has been reviewed. We note that this approach is
comparable to the policy for new hospitals for which we cannot
calculate a prospective Factor 3 because they do not have Worksheet S-
10 data for the relevant fiscal year.
Comment: A commenter supported the policy not to adjust
uncompensated care costs from hospitals that have been audited and
found in compliance by their MAC and encouraged CMS to work with MACs
to distinguish between inaccurate and legitimate values. Another
commenter supported the proposed policy of trimming potentially
aberrant charity care cost data from hospitals that are currently not
projected to be DSH eligible and do not have audited FY 2018 Worksheet
S-10 data by excluding the hospital from the prospective Factor 3
calculation.
Response: We appreciate the commenters' support. We reiterate our
continued efforts to work with the MACs to improve the accuracy of the
uncompensated care costs reported on Worksheet S-10. After
consideration of the comments received, we are finalizing the proposed
policy for trimming potentially aberrant charity care costs for
hospitals that are not projected to be DSH eligible and that do not
have an audited Worksheet S-10 for FY 2018.
Summary of Methodology
In summary, for FY 2022, we will compute Factor 3 for each hospital
using the following steps:
Step 1: Select the provider's longest cost report from its Federal
fiscal year (FFY) 2018 cost reports. (Alternatively, in the rare case
when the provider has no FFY 2018 cost report because the cost report
for the previous Federal fiscal year spanned the FFY 2018 time period,
the previous Federal fiscal year cost report will be used in this
step.)
Step 2: Annualize 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: Combine adjusted and/or annualized uncompensated care costs
for hospitals that merged using the merger policy.
Step 4: Calculate Factor 3 for IHS and Tribal hospitals and Puerto
Rico hospitals that have a cost report for 2013 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: Calculate Factor 3 for the remaining DSH eligible hospitals
using annualized uncompensated care costs (Worksheet S-10 Line 30)
based on FY 2018 cost report data (from Step 1, 2 or 3). New hospitals
and the hospitals for which Factor 3 was calculated in Step 4 are
excluded from this calculation.
We proposed to amend the regulation at Sec. 412.106 by adding a
new paragraph (g)(1)(iii)(C)(9) to reflect the methodology for
computing Factor 3 for FY 2022 for IHS and Tribal hospitals and for
Puerto Rico hospitals that have a 2013 cost report. We also proposed to
make a conforming change to limit the reference to Puerto Rico
hospitals in paragraph (g)(1)(iii)(C)(8) to those Puerto Rico hospitals
that have a cost report for 2013.
Comment: A couple of 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.
These commenters did not object to CMS using prospective estimates,
derived from the best data available, to calculate interim payments for
uncompensated care costs. However, the commenters stated that interim
payments should be subject to later reconciliation based on estimates
derived from actual data from the applicable Federal fiscal year. The
commenters also noted that not all FY 2018 Worksheet S-10 cost reports
were audited and that the use of a blend of audited and unaudited data
would be arbitrary and inconsistent with the statutory requirements.
These same commenters also expressed the need for meaningful engagement
on concerns raised in the rulemaking process and stated that the
statutory preclusion of review leaves intact the agency's
responsibilities, including the rulemaking requirements of the
Administrative Procedure Act and the Medicare Act.
Response: Consistent with the position that we have taken in
rulemaking for previous years, we continue to believe that applying our
best estimates of the three factors used in the calculation of
uncompensated care payments to determine payments prospectively is most
conducive to administrative efficiency, finality, and predictability in
payments (78 FR 50628; 79 FR 50010; 80 FR 49518; 81 FR 56949; 82 FR
38195; and 84 FR 42373). We continue to 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 commenter's suggestion that we should
establish a process for reconciling our estimates of uncompensated care
payments, which would be contrary to the notion of prospectively.
Furthermore, we note that this rulemaking has been conducted consistent
with the requirements of the Administrative Procedure Act and Title
XVIII of the Act. 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 2022 IPPS/LTCH PPS proposed rule included a detailed
discussion of the methodology for calculating Factor 3 for FY 2022 and
the data that would be used. All proposed modifications to the
methodology that was adopted in the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58833) for FY 2021 and subsequent fiscal years were discussed in
detail in the proposed rule, and we solicited comments on the proposed
methodology for FY 2022 (86
[[Page 45247]]
FR 25457). 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 and to submit comments,
and we have considered those comments in determining our final policies
for FY 2022.
Comment: A commenter urged CMS not to use the HCRIS extract from
March 2021 to calculate the final Factor 3 for FY 2022, mentioning that
in the proposed rule, the agency indicated it would consider using a
later HCRIS extract for the purposes of calculating the final Factor 3
for the FY 2022 IPPS/LTCH PPS final rule. According to the commenter,
it would be appropriate to use a later HCRIS extract considering the
``last minute'' Worksheet S-10 audit adjustments made by the MACs,
which were made beyond CMS' expected timeframe of using a December 2020
HCRIS extract for the FY 2022 proposed rule and a March HCRIS extract
for the FY 2022 final rule. The commenter asserted that due to these
delayed adjustments, they did not have ample time to scrutinize the
data. Additionally, the commenter provided their analysis regarding
reports with changes to Worksheet S-10 data between the December 2020
and March 2021 HCRIS extracts; specifically, the commenter stated that
15 percent of hospitals eligible for uncompensated care payments
received a negative adjustment, which the commenter believed warrants
using more recent, accurate cost report extract.
Response: We appreciate the commenter's concerns regarding the
HCRIS extract proposed for use in the FY 2022 IPPS/LTCH final rule. We
also agree with the commenter's recommendation on using a later HCRIS
extract for calculating Factor 3 for FY 2022. We recognize that at the
time of the March HCRIS extract, MACs were resolving inadvertent report
upload discrepancies, which delayed the availability of the most up-to-
date reports with audited Worksheet S-10 data for some hospitals. For
example, there was a delay in uploading some amended reports to
incorporate Worksheet S-10 audit results. Therefore, we are finalizing
the use of the June 30 HCRIS extract to calculate Factor 3 for this FY
2022 IPPS/LTCH PPS final rule. We believe on balance this is the best
available data for purposes of calculating Factor 3 for FY 2022.
Additionally, in the rare situations where a MAC mishandled a
report in the upload process (such as, by accepting an amended report,
reopening a report, and/or adjusting uncompensated care cost data on a
report, but the corrected uncompensated care cost data were
inadvertently omitted from the June 30, 2021 extract of the HCRIS), we
used the corrected version of the report after confirming the
appropriate report version with the applicable MAC.
We note that for purposes of Factor 3 calculations for future
years, we still intend to use the most recent data available for the
applicable rulemaking, which generally means the respective December
HCRIS extract for purposes of future proposed rules. We expect that the
December HCRIS extract would reflect the completed Worksheet S-10 audit
results available in time for development of the proposed rule for the
applicable fiscal year and that the respective HCRIS extract public use
files, which are posted on the CMS website quarterly, would include the
most recent audited cost report information for the applicable fiscal
year, and be available for public scrutiny. Furthermore, as noted in
the FY 2022 IPPS/LTCH PPS proposed rule, we intend to use the
respective March HCRIS for future final rules, because we believe
audited Worksheet S-10 data from FY 2019 reports will be available
before the development of the FY 2023 proposed rule and final rule.
(c) Per Discharge Amount of Interim Uncompensated Care Payments
Since FY 2014, we have made interim uncompensated care payments
during the fiscal year on a per discharge basis. We have used a 3-year
average of the number of discharges for a hospital to produce an
estimate of the amount of the hospital's uncompensated care payment per
discharge. Specifically, the hospital's total uncompensated care
payment amount for the applicable fiscal year, is divided by the
hospital's historical 3-year average of discharges computed using the
most recent available data to determine the uncompensated care payment
per discharge for that fiscal year.
We proposed to modify this calculation for FY 2022 to be based on
the average of FY 2018 and FY 2019 historical discharge data, rather
than a 3-year average that includes data from FY 2018, FY 2019, and FY
2020. We explained our belief that computing a 3-year average with the
FY 2020 discharge data would underestimate discharges, due to the
decrease in discharges during the pandemic. Under the proposed
approach, the resulting 2-year average of discharges would be used to
calculate the per discharge payment amount that will be used to make
interim uncompensated care payments to each projected DSH eligible
hospital during FY 2022. The interim uncompensated care payments made
to a 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58833 and 58834), we
finalized a voluntary process through which a hospital may submit a
request to its MAC for a lower per discharge interim uncompensated care
payment amount, including a reduction to zero, once before the
beginning of the Federal fiscal year and/or once during the Federal
fiscal year. In conjunction with this request, the hospital must
provide supporting documentation demonstrating there would likely be a
significant recoupment (for example, 10 percent or more of the
hospital's total uncompensated care payment or at least $100,000) at
cost report settlement if the per discharge amount is not lowered. For
example, a hospital might submit documentation showing a large
projected increase in discharges during the fiscal year to support
reduction of its per discharge uncompensated care payment amount. As
another example, a hospital might request that its per discharge
uncompensated care payment amount be reduced to zero midyear if the
hospital's interim uncompensated care payments during the year have
already surpassed the total uncompensated care payment calculated for
the hospital.
Under the policy we finalized in the FY 2021 IPPS/LTCH PPS final
rule, the hospital's MAC would evaluate these requests and the
supporting documentation before the beginning of the Federal fiscal
year and/or with midyear requests when the historical average number of
discharges is lower than hospital's projected FY 2022 discharges. If
following review of the request and the supporting documentation, the
MAC agrees that there likely would be significant recoupment of the
hospital's interim Medicare uncompensated care payments at cost report
settlement, the only change that will be made is to lower the per
discharge amount either to the amount requested by the hospital or
another amount determined by the MAC to be appropriate to reduce the
likelihood of a substantial recoupment at cost report settlement. If
the MAC determines it would be appropriate to reduce the interim
Medicare uncompensated care payment per discharge amount, that updated
amount
[[Page 45248]]
will be used for purposes of the outlier payment calculation for the
remainder of the Federal fiscal year. We refer readers to the Addendum
to the proposed rule for a more detailed discussion of the steps for
determining the operating and capital Federal payment rate and the
outlier payment calculation. No change would be made to the total
uncompensated care payment amount determined for the hospital on the
basis of its Factor 3. In other words, any change to the per discharge
uncompensated care payment amount will not change how the total
uncompensated care payment amount will be reconciled at cost report
settlement.
Comment: Several commenters expressed support for the proposed
policy of using the average of FY 2018 and FY 2019 discharge data,
rather than a three-year average, which would also include FY 2020
discharges. The commenters agreed that this change is appropriate in
light of the COVID-19 PHE.
Response: We thank commenters for their support. We are finalizing
our proposal to modify the methodology used to estimate a hospital's
average number of discharges to be based on FY 2018 and FY 2019
historical discharge data, rather than a 3-year average that includes
data from FY 2018, FY 2019, and FY 2020. We agree with commenters that
including FY 2020 discharge data would underestimate discharges due to
the effects of the COVID-19 PHE.
Comment: A commenter recommended that CMS apply a growth factor to
the claims average in the DSH Public Use File, in order to account for
the growth in Medicare eligible population due to aging baby boomers.
According to the commenter, the growth factor could be based on
``calculating the growth in Part A fee-for-service average monthly
enrollment'' from Congressional Budget Office (CBO) published
estimates. Based on the commenter's calculations, the growth factor
could be 1.08, which is the quotient from dividing 66 million Part A
beneficiaries in 2022 by 61 million in 2019.
The commenter also requested that the agency establish a limit on
the estimated per claim amount due to exorbitant per-claim values of up
to $117,599. The commenter stated that such amounts could produce
significantly high coinsurance charges for Medicare Advantage (MA)
beneficiaries if services are rendered out-of-network, which could
exceed an MA beneficiary's out-of-pocket maximum. The commenter also
mentioned that the approach of determining per-discharge uncompensated
care payments based on Medicare patient volumes rather than
uncompensated care volumes produces cash flow swings for hospitals with
significant amounts of uncompensated care but low Medicare patient
volumes, resulting in interim uncompensated care payments that do not
reflect the actual costs incurred by the hospital.
Regarding CMS' current policy under which hospitals may request
that their MAC adjust per-claim payment amounts, the commenter stated
that it seemed unlikely that hospitals would want to request a lower or
zero per-claim uncompensated care payments because of inherent
incentives to maximize their cash flow. To this end, the commenter
recommends that CMS place a cap on the amount of the per-discharge
interim uncompensated care payments ``within the range of $5,233-
$10,466, which represents a range of one to two standard deviations of
the Estimated Per Claim Amounts for all qualifying hospitals.''
Response: We thank the commenter for sharing their concerns and
feedback. We continue to believe that allowing hospitals the
opportunity of voluntarily requesting a decrease to the per-discharge
amount of interim uncompensated care payments may facilitate greater
payment predictability throughout the year and limit recoupment of
overpayments as part of cost report settlement. Regarding the
commenter's other suggestions, such as applying a growth factor as part
of the per discharge calculation, we may consider this input for any
potential modifications or refinements to our policy for determining
interim uncompensated care payments in future rulemaking; however, at
this time, we are not adopting any changes to the current policy.
(d) Process for Notifying CMS of Merger Updates and To Report Upload
Issues
As we have done for every proposed and final rule beginning in FY
2014, in conjunction with this final rule, we will publish on the CMS
website a table listing Factor 3 for all hospitals that we estimate
will receive empirically justified Medicare DSH payments in FY 2022
(that is, those hospitals that will receive interim uncompensated care
payments during 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. However, we note that a
Factor 3 will not be published for the hospitals that are subject to
the new trim we are adopting in this final rule, which is similar to
the approach for new hospitals, which also do not have a Factor 3
published. Although we noted in the FY2022 IPPS/LTCH PPS proposed rule,
that if more recent data become available, then we would use such data
in the final rule, at the time of development of this final rule, the
FY 2019 SSI ratios were not available. Accordingly, for purposes of
this final rule, we computed Factor 3 for IHS and Tribal hospitals and
Puerto Rico hospitals using the most recent available data regarding
SSI days from the FY 2018 SSI ratios.
We also will publish a supplemental data file containing a list of
the mergers that we are aware of and the computed uncompensated care
payment for each merged hospital. In the DSH uncompensated care
supplemental data file, we list new hospitals and the 8 hospitals that
are subject to the new trim, with a N/A in the Factor 3 column. We note
that two of the hospitals that were projected to be subject to the trim
in the proposed rule, are no longer participating in the Medicare
program.
Hospitals had 60 days from the date of public display of the FY
2022 IPPS/LTCH PPS proposed rule in the Federal Register 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
issues related to mergers and/or to report potential upload
discrepancies due to MAC mishandling of the Worksheet S-10 data during
the report submission process (for example, report not reflecting audit
results due to MAC mishandling or most recent report differs from
previously accepted amended report due to MAC mishandling). We stated
that comments raising issues 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 that we would
address comments related to mergers and/or reporting upload
discrepancies submitted to the CMS DSH inbox 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 2022 IPPS/LTCH PPS final
rule. All other comments submitted in response to our proposed policies
for determining uncompensated care payments for FY 2022 must have been
submitted in one of three ways found in the ADDRESSES section of the
proposed rule before the
[[Page 45249]]
close of the comment period in order to be assured consideration. In
addition, this CMS DSH inbox is not intended for Worksheet S-10 audit
process related emails, which should be directed to the MACs.
For FY 2022, we again proposed that hospitals would have 15
business days from the date of public display of the FY 2022 IPPS/LTCH
PPS final rule in the Federal Register to review and submit comments on
the accuracy of the table and supplemental data file published in
conjunction with the final rule. We stated that any changes to Factor 3
arising from this review would be posted on the CMS website and would
be effective beginning October 1, 2021. We also explained that we
continue to believe that hospitals have sufficient opportunity during
the comment period for the proposed rule to provide information about
recent and/or pending mergers and/or to report upload discrepancies.
Hospitals do not enter into mergers without advanced planning. A
hospital can inform CMS during the comment period for the proposed rule
regarding any merger activity not reflected in supplemental file
published in conjunction with the proposed rule. As discussed in an
earlier section of this final rule, we also stated that we expected to
use data from the March 2021 HCRIS extract for the FY 2022 final rule,
which contributed to our increased confidence that hospitals would be
able to comment on mergers and report any upload discrepancies during
the comment period for the proposed rule. However, we noted that we
might consider using more recent data that may become available after
March 2021, but before the final rule for the purpose of calculating
the final Factor 3s for the FY 2022 IPPS/LTCH PPS final rule. In the
event that there are any remaining merger updates and/or upload
discrepancies after the final rule, the 15 business days from the date
of public display of the FY 2022 IPPS/LTCH PPS final rule deadline
should allow for the time necessary to prepare and make any corrections
to Factor 3 calculations before the beginning of the Federal fiscal
year.
Comment: A commenter notified CMS that in reviewing the DSH
Supplemental File for the FY 2022 proposed rule, their merger was not
listed and only one hospital was included in the file. The commenter
requested assurance that the merger would appear in the FY 2022 final
rule. Another commenter reported what it deemed to be an erroneous
adjustment made by a MAC to copayment amounts that had been written off
and had been reported on the Worksheet S-10 as charity care. The
commenter urged CMS to reverse the adjustment made by the MAC to their
uncompensated care costs for purposes of calculating Factor 3 in FY
2022.
Response: We appreciate the commenters' diligence in checking that
their own reports and data were properly processed in DSH Public Use
File. We have accounted for the merger and the report discrepancies
identified by commenters, as appropriate, in the development of the DSH
supplemental data file published in conjunction with this FY 2022 IPPS/
LTCH PPS final rule, and we will continue to pay diligent attention to
any data issues and work internally and with our contractors to resolve
these issues in a timely manner. In regard to the merger notification,
we thank the commenter for informing CMS of the merger activity not
reflected in supplemental file published in conjunction with the
proposed rule. Regarding the commenter reporting a disagreement related
to Worksheet S-10 audit adjustments, as explained in the proposed rule,
inquiries related to the audit process should be directed to the
respective MAC.
After consideration of the comments received, we are finalizing our
proposal to afford hospitals 15 business days from the public display
of this FY 2022 IPPS/LTCH PPS final rule to submit comments on the
accuracy of the supplemental data file, including with respect to
mergers and/or report upload discrepancies. We also note that the
historical FY 2018 cost reports are publicly available on a quarterly
basis on the CMS website for analysis and additional review of cost
report data, separate from the supplemental data file published with
this final rule.
F. Counting Days Associated With Section 1115 Demonstration Projects in
the Medicaid Fraction
We continue to review the large number of comments on the proposed
revision to the regulation relating to the treatment of section 1115
waiver days for purposes of the DSH adjustment. Due to the number and
nature of the comments that we received on our proposal, we intend to
address the public comments in a separate document. We refer
individuals interested in reviewing the background information and the
discussion regarding these policies to the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25457 through 25459).
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 (IPPS)
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 (``dually eligible beneficiaries'') 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);
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);
FY 2020 IPPS/LTCH PPS final rule (84 FR 42380 through
42390); and
FY 2021 IPPS/LTCH PPS final rule (85 FR 58844 through
58847).
We have also codified certain requirements of the Hospital
Readmissions Reduction Program at 42 CFR 412.152 through 412.154. In
section V.G.15 of the preamble of this final rule, we are updating the
regulatory text at 42 CFR 412.154(f)(4) to add the phrase ``or
successor website'' in order to reflect the change in the CMS website
name
[[Page 45250]]
from Hospital Compare to Care Compare.
3. Summary of the Policies for the Hospital Readmissions Reduction
Program
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25460 through
25462), we proposed to adopt a cross-program measure suppression policy
due to the impact of the COVID-19 public health emergency (PHE) on
quality measurement and pay-for-performance programs including the
Hospital Readmissions Reduction Program. We also proposed to suppress
the Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate
(RSRR) following Pneumonia Hospitalization measure (NQF #0506) and we
provided information on technical specification updates for the
remaining five condition/procedure-specific readmission measures to
exclude COVID-19 diagnosed patients from the measure denominators
beginning in fiscal year (FY) 2023 (86 FR 25462 through 25464).
Additionally, we proposed to use the MedPAR data to determine aggregate
payments that aligns with the applicable period for FY 2022 (86 FR
25464 through 25465). We also proposed the automatic adoption of the
use of MedPAR data corresponding to the applicable period beginning
with the FY 2023 program year and all subsequent program years, unless
otherwise specified by the Secretary (86 FR 25465). In addition, we
clarified our Extraordinary Circumstances (ECE) Policy (86 FR 25466
through 25468).
In this final rule, we are finalizing our proposals as proposed. We
discuss these finalized proposals in greater detail in this final rule.
Finally, we requested public comment on possible future
stratification of results by race and ethnicity for our condition/
procedure-specific readmission measures and by expansion of
standardized data collection to additional social factors, such as
language preference and disability status (86 FR 25468 through 25469).
We also sought comment in that section on mechanisms of incorporating
other demographic characteristics into analysis that address and
advance health equity, such as the potential to include administrative
and self-reported data to measure co-occurring disability status.
4. 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 continue to believe the measures we have adopted adequately meet
the goals of the Hospital Readmissions Reduction Program. However, due
to the potentially substantial relationship between pneumonia and
COVID-19, we proposed to suppress temporarily the inclusion of the
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR)
following Pneumonia Hospitalization measure (NQF #0506) in the Hospital
Readmissions Reduction Program measure set for the FY 2023 applicable
period in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25462 through
25464). We also provided information on technical specification updates
for the remaining five condition/procedure-specific readmission
measures to exclude COVID-19 diagnosed patients from the measure
denominators, including the Hospital 30-Day All-Cause Risk-Standardized
Readmission Rate (RSRR) Following Acute Myocardial Infarction (AMI)
Hospitalization (NQF #0505), the Hospital 30-Day, All-Cause, Unplanned,
Risk-Standardized Readmission Rate (RSRR) Following Coronary Artery
Bypass Graft (CABG) Surgery (NQF #2515), the Hospital 30-Day, All-
Cause, Risk-Standardized Readmission Rate (RSRR) Following Chronic
Obstructive Pulmonary Disease (COPD) Hospitalization (NQF #1891), the
Hospital 30-Day, All-Cause, Risk-Standardized Readmission Rate (RSRR)
Following Heart Failure Hospitalization (NQF #0330), and the Hospital-
Level 30-Day, All-Cause Risk-Standardized Readmission Rate (RSRR)
Following Elective Primary Total Hip Arthroplasty (THA) and/or Total
Knee Arthroplasty (TKA) (NQF #1551) beginning in FY 2023 (86 FR 25464).
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 with value-based
purchasing to the hospital inpatient care setting through the
Meaningful Measures Framework. We refer readers to section IX.A of the
proposed rule (86 FR 25549 through 25554), where we requested
information on potential actions and priority areas that would enable
the continued transformation of our quality measurement enterprise
toward greater digital capture of data and use of the FHIR standard (as
described in that section). We also refer readers to section IX.B. of
the proposed rule (86 FR 25554 through 25561), where we requested
information on potentially expanding the scope of our methodology to
adjust outcomes measurement to recognize disparities in care, to
include statistically estimated race and ethnicity information.
5. Flexibility for Changes That Affect Quality Measures During a
Performance Period in the Hospital Readmissions Reduction Program
In previous rules, we have identified the need for flexibility in
our quality programs to account for the impact of changing conditions
that are beyond participating facilities' or practitioners' control. We
identified this need because we would like to ensure that participants
in our programs are not affected negatively when their quality
performance suffers not due to the care provided, but due to external
factors.
A significant example of the type of external factor that may
affect quality measurement is the COVID-19 public health emergency
(PHE), which has had and continues to have significant and ongoing
effects on the provision of medical care in the country and around the
world. The COVID-19 PHE impedes effective quality measurement in
several ways. Changes to clinical practices to accommodate safety
protocols for medical personnel and patients, as well as unpredicted
changes in the number of stays and facility-level case mixes, have
affected the data used in quality measurement and the resulting quality
scores. Measures used in the Hospital Readmissions Reduction Program
need to be evaluated to determine whether their specifications need to
be updated to account for new clinical guidelines, diagnoses or
procedure codes, and medications that we have observed during the PHEs.
Additionally, COVID-19 prevalence is not identical across the country,
meaning that the medical provider community has been affected
differently at different times throughout the calendar year. Under
those circumstances, we remain significantly concerned that the
Hospital Readmissions Reduction Program's quality measurement scores
are distorted, which would result in skewed payment incentives and
inequitable payments, particularly for hospitals that have treated more
COVID-19 patients than others.
It is not our intention to penalize hospitals for performance on
measures that are affected significantly by global events like the
COVID-19 PHE. As previously discussed, the COVID-19 PHE has had, and
continues to have,
[[Page 45251]]
significant and enduring effects on health care systems around the
world, and affects care decisions, including readmissions to the
hospital as measured by the Hospital Readmissions Reduction Program. As
a result of the PHE, hospitals could provide care to their patients
that meets the underlying clinical standard but results in worse
measured performance, and by extension, reduced payments in the
Hospital Readmissions Reduction Program. We are concerned that regional
and temporal differences in COVID-19 prevalence during the FY 2022 and
FY 2023 Hospital Readmissions Reduction Program applicable periods,
which includes data collected during the PHE, have directly affected
hospitals' readmissions measure performance for the FY 2022 and FY 2023
program years. Although regional and temporal differences in COVID-19
prevalence rates would not necessarily represent differences in the
quality of care furnished by hospitals, they would directly affect the
payment adjustments that these hospitals would receive and could result
in an unfair and inequitable distribution in the assessment of
penalties for excess readmissions. These inequities could be especially
pronounced for hospitals that have treated a large number of COVID-19
patients.
Therefore, we proposed to adopt a policy for the duration of the
PHE for COVID-19 that would enable us to suppress the use of quality
measures via adjustment to the Hospital Readmissions Reduction
Program's scoring methodology if we determined that circumstances
caused by the COVID-19 PHE affected those measures and the associated
``excess readmissions'' calculations significantly (86 FR 25460 through
25462). Under the proposed policy, if we determined that the
suppression of a Hospital Readmissions Reduction Program measure was
warranted for a Hospital Readmissions Reduction Program applicable
period, we would propose to calculate the measure's rates for that
program year but then suppress the use of those rates to make changes
to hospitals' Medicare payments. In the Hospital Readmissions Reduction
Program, this policy would have the effect of temporarily weighting the
affected measure at zero percent in the program's scoring methodology
until adjustments were made, the affected portion of the performance
period for the measure was made no longer applicable to program
scoring, or the measure was removed entirely through rulemaking. We
would still provide feedback reports to hospitals as part of program
activities, including to inform their quality improvement activities,
and to ensure that they were made aware of the changes in performance
rates that we observed. We would also publicly report suppressed
measures' data with appropriate caveats noting the limitations of the
data due to the PHE for COVID-19.
In developing the proposed policy, we considered what circumstances
caused by the PHE for COVID-19 would affect a quality measure
significantly enough to warrant its suppression in a value-based
purchasing program. We stated our belief that significant deviation in
measured performance that can be reasonably attributed to the PHE is a
significant indicator of changes in clinical conditions that could
affect quality measurement. Similarly, we stated our belief that a
measure may be focused on a clinical topic or subject that is proximal
to the disease, pathogen, or other health impacts of the PHE. As has
been the case during the COVID-19 PHE, we stated our belief that rapid
or unprecedented changes in clinical guidelines and care delivery,
potentially including appropriate treatments, drugs, or other protocols
could affect quality measurement significantly and should not be
attributed to the participating facility positively or negatively. We
also noted that scientific understanding of a particular disease or
pathogen may evolve quickly during an emergency, especially in cases of
new diseases or conditions. Finally, we stated our belief that, as
evidenced during the COVID-19 PHE, national or regional shortages or
changes in health care personnel, medical supplies, equipment,
diagnostic tools, and patient case volumes or facility-level case mix
could result in significant distortions to quality measurement.
Based on these considerations, we developed a number of Measure
Suppression Factors that we believed should guide our determination of
whether to suppress a Hospital Readmissions Reduction Program measure
for one or more program years that overlap with the PHE for COVID-19.
We proposed to adopt these Measure Suppression Factors for use in the
Hospital Readmissions Reduction Program, and for consistency, the
following value-based purchasing programs: Hospital VBP Program, HAC
Reduction Program, Skilled Nursing Facility Value-Based Purchasing
Program, and End-Stage Renal Disease Quality Incentive Program. We
stated our belief that these Measure Suppression Factors would help us
evaluate the Hospital Readmissions Reduction Program's measures and
that their adoption in the other value-based purchasing programs, as
previously noted, would help ensure consistency in our measure
evaluations across programs. We proposed Measure Suppression Factors as
follows:
Significant deviation in national performance on the
measure during the PHE for COVID-19, which could be significantly
better or significantly worse compared to historical performance during
the immediately preceding program years.
Clinical proximity of the measure's focus to the relevant
disease, pathogen, or health impacts of the PHE for COVID-19.
Rapid or unprecedented changes in--
++ Clinical guidelines, care delivery or practice, treatments,
drugs, or related protocols, or equipment or diagnostic tools or
materials; or
++ The generally accepted scientific understanding of the nature or
biological pathway of the disease or pathogen, particularly for a novel
disease or pathogen of unknown origin.
Significant national shortages or rapid or unprecedented
changes in--
++ Healthcare personnel;
++ Medical supplies, equipment, or diagnostic tools or materials;
or
++ Patient case volumes or facility-level case mix.
We also considered alternatives to the proposed policy that could
also fulfill our objective to not hold hospitals accountable for
measure results under the Program that are distorted due to the PHE for
COVID-19. As previously noted, the country continues to grapple with
the effects of the COVID-19 PHE, and in March 2020, CMS issued a
nationwide, blanket ECE for all hospitals and other facilities
participating in our quality reporting and value-based purchasing
programs in response to the COVID-19 PHE. This blanket ECE waived all
data reporting requirements for Q1 and Q2 2020 data, including waiving
the use of claims data and data collected through the CDC's web-based
surveillance system for this data period, and quality data collection
resumed on July 1, 2020. We considered extending this blanket ECE for
Q3 and Q4 2020. This alternative would protect providers and suppliers
from having their quality data used for quality scoring purposes in the
event that such data had been affected significantly by the COVID-19
PHE. However, this option would make providers' quality data collection
and reporting to CMS no longer mandatory and would leave no
comprehensive data available for us to
[[Page 45252]]
provide confidential performance feedback to providers nor for
monitoring and to inform decision-making for potential future
programmatic changes, particularly if the PHE were extended.
As an alternative to the proposed quality measure suppression
policy, we also considered not making any further changes to the
program and implementing it as previously specified. However, this
alternative would have meant assessing hospitals using quality measure
data that had been significantly affected by the PHE for COVID-19.
Additionally, given the geographic disparities in the COVID-19 PHE's
effects, implementation of the program as previously finalized would
place hospitals in regions that were more heavily affected by the PHE
in Q3 and Q4 of 2020 at a disadvantage compared to hospitals in regions
that were more heavily affected during the first two quarters of CY
2020.
We viewed this measure suppression proposal as a necessity to
ensure that the Hospital Readmissions Reduction Program did not reward
or penalize hospitals based on factors that the program's measures were
not designed to accommodate. We intended for the proposed policy to
provide short-term relief to hospitals if we determined that one or
more of the Measure Suppression Factors warranted the suppression of
one or more of the program's measures.
We invited public comments on this proposal for the adoption of a
measure suppression policy for the Hospital Readmissions Reduction
Program for the duration of the PHE for COVID-19, and also on the
proposed Measure Suppression Factors that we developed for purposes of
the proposed policy.
We also invited comment on whether we should consider adopting a
measure suppression policy in the situation of a future national PHE,
and if so, whether under such a policy, we should have the flexibility
to suppress certain measures without specifically proposing to do so in
rulemaking.
We also requested comment on whether we should in future years
consider adopting any form of regional adjustment for the proposed
measure suppression policy that could take into account any disparate
effects of circumstances affecting hospitals around the country that
would prompt us to suppress a measure. For example, COVID-19 affected
different regions of the country at different rates depending on
factors like time of year, geographic density, State and local
policies, and health care system capacity. We also requested
commenters' feedback on whether we should consider a suppression policy
with more granular effects based on our assessment of the geographic
effects of the circumstances, rather than suppress a measure completely
by assigning it a 0 percent weight during any future PHEs. We asked
commenters to discuss how region-based measure suppression could be
accounted for within the program's scoring methodology.
We invited public comment on this proposal. The comments we
received and our responses are set forth in this section of this rule.
Comment: Many commenters expressed support for our proposed measure
suppression policy, agreeing with our stated goal of ensuring that
hospitals are not rewarded or penalized for their quality performance
based on non-representative data. Some commenters recommended that we
ensure that the suppression policy does not unintentionally penalize
hospitals.
Response: We thank the commenters for their support. We acknowledge
commenters' concern that the suppression policy should not
unintentionally penalize hospitals. As discussed in the proposed rule
and in section V.G.6 of this final rule, we proposed to suppress the
CMS 30-Day Pneumonia Readmission Measure (NQF #0506) in the Hospital
Readmissions Reduction Program due to the impacts of the COVID-19 PHE
on this measure for purposes of scoring and payment adjustments because
of our concern in the ability to make fair, national comparisons of
hospitals across the country.
Comment: Several commenters expressed support for our proposal to
provide confidential performance feedback to hospitals on suppressed
measures.
Response: We thank the commenters for their support. We will
provide confidential feedback reports to hospitals for the pneumonia
readmission measure using the current specifications. In these
confidential reports, hospitals will be able to see which of their
patients were readmitted to the hospital, and which of their patients
were excluded from the measure denominator to inform hospital quality
improvement initiatives.
Comment: Some commenters expressed concerns about our proposed
suppression policy. Some commenters suggested that we should limit this
policy to the current PHE given the unique circumstances involved in
the COVID-19 pandemic. A few commenters expressed concerns about CMS
being empowered to implement scoring adjustments and payment changes
outside of rulemaking, and worried that comparisons between suppressed
and unsuppressed scores would be unfair.
Response: We thank the commenters for their feedback. We do not
intend for this policy to implement subregulatory scoring adjustments
or payment changes beyond the COVID-19 PHE. Any scoring adjustments or
payment changes that might address a different, future fiscal year of
the program due to the COVID-19 PHE or another type of public health
emergency would be proposed through rulemaking. We view the COVID-19
PHE as exceptional and, as with the measure suppression proposal, we
will continue to maintain our quality programs via rulemaking. We
acknowledge the commenters' concerns about potentially unfair
comparisons between suppressed and unsuppressed performance
information, and will consider for future rulemaking any such issues we
identify.
Comment: Several commenters stated that we should not publicly
report suppressed data, suggesting that data unfit to determine
payments should not be publicly reported, while others suggested that
we should note clearly that any publicly-reported data has been
affected by the COVID-19 PHE.
Response: We understand the commenters concern about publicly
reporting measure data from during the PHE due to COVID-19. However, as
noted previously in section V.G.5. of the preamble of this final rule,
we will make clear in the public presentation of the data that the
measure has been suppressed for purposes of scoring and payment
adjustments because of the effects of the COVID-19 PHE. Displaying this
information will promote transparency on the impacts of the PHE due to
COVID-19, and we will appropriately caveat the data in order to
mitigate public confusion.
Comment: Several commenters recommended that we carefully study the
effects of the measure suppression policy and the measure suppression
factors to inform any suppression policies for future PHEs. Several
commenters recommended that we work with stakeholders before adopting
additional measure suppression policies or any subregulatory policy
changes on this topic in the future, including any potential changes to
the Measure Suppression Factors, and requested that we explain the
effects of any changes to the Suppression Factors in detail. A
commenter suggested that we continue monitoring the effects of COVID-19
on 2021 quality performance and consider updating measure
specifications to exclude COVID-19 patients or change our risk
adjustment models. Other commenters suggested that we closely
[[Page 45253]]
monitor the shorter performance periods, as well as the effects of the
policy on future benchmarking, and that we assess the indirect effects
that the COVID-19 PHE has had on all aspects of medical care delivery.
Response: We share commenters' concerns about the potential long-
term effects of the measure suppression policy, including the measure
suppression factors. We intend to work carefully with stakeholders
before adopting any additional policies or policy changes on this topic
in the future. We agree with commenters that we should monitor the
COVID-19 PHE's ongoing effects carefully and we will work with measure
developers to refine measure specifications as circumstances warrant.
We will also assess performance periods, benchmarks, and other effects
of the COVID-19 PHE carefully, and we will monitor the policy's effects
as we implement it. We welcome stakeholders' continuing feedback as we
continue responding to the PHE.
Comment: Some commenters expressed support for the proposed Measure
Suppression Factors, while others suggested that we include more
flexibility in the Suppression Factors, particularly to account for
future PHEs, and that we consult with stakeholders when applying these
factors in the future. A commenter recommended that we include more
flexible language in our suppression factors to account for our
evolving understanding of COVID-19.
Response: We thank the commenters for this feedback. While we
appreciate the commenter's suggestion that we incorporate more
flexibility into the current Measure Suppression Factors, we believe
the specificity with which we proposed them was necessary to provide
hospitals, patients/consumers, and other stakeholders with insight into
the decision-making process that we employed in response to the COVID-
19 PHE. However, we will also engage with stakeholders when developing
and implementing these Suppression Factors for future PHEs.
Comment: Some commenters recommended that we refine our proposed
Measure Suppression Factors. Some commenters suggested that we define
them more precisely to be fully transparent with the factors' terms and
effects, arguing that we have not defined what we consider to be
``significant'' deviation in national performance on a measure during a
PHE. A commenter also argued that the Suppression Factors should be
focused on effects on Medicare beneficiaries, not on providers or
circumstances that may be within the control of providers. A commenter
suggested that we consider suppressing measures for individual
hospitals where performance may have deviated significantly from past
performance, while another commenter recommended that we ensure that
the Suppression Factors do not assess provider organizations' quality
per se, but rather, the PHE at issue.
Response: We thank the commenters for this feedback. We believe
that some level of discretion is necessary in the face of evolving
circumstances like those that have confronted us in the COVID-19 PHE,
which is why we have designed our Measure Suppression Factors to have a
certain degree of flexibility as to the factors' terms and effects. In
deciding which measures to suppress, and as discussed further in
section V.G.6. of this final rule, we examined each measure and
determined that the evidence showed deviation in the individual measure
performance data associated with the COVID-19 PHE. We believe providing
the evidence for the measure suppressions included in this final rule
is transparent and provides sufficient explanation for our rationales.
We note further that we designed several of the measure suppression
factors to account for circumstances that could affect the health and
safety of patients and healthcare personnel, and we believe that
situations like personal protective equipment (PPE) shortages affect
the care provided to Medicare beneficiaries. We recommend that any
individual hospitals that believe that they have faced extraordinary
circumstances that affect their quality performance that have not been
addressed by the suppression policy, consider seeking an Extraordinary
Circumstances Exception.\763\
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\763\ For more information regarding Extraordinary Circumstances
Exceptions requests under the Hospital Readmissions Reduction
Program, please see: https://qualitynet.cms.gov/impatient/hrrp/participation#tab2.
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Comment: Some commenters supported regional adjustments to the
measure suppression policy, suggesting that we should account for
disparate effects of circumstances like the COVID-19 pandemic around
the country. Commenters requested that we seek stakeholders' feedback
before adopting more granular suppression policies in the future. A
commenter cautioned against regional adjustments, suggesting that such
adjustments would not account for differences in PHE prevalence at
safety-net hospitals that take on leading roles during PHEs.
Response: We thank the commenters for their feedback and will
consider it for future rulemaking. We share the commenter's concern
that adjustments to account for regional differences in a PHE's effects
may not fully capture those differences.
After consideration of the public comments we received, we are
finalizing our proposal to adopt a measure suppression policy and
proposed Measure Suppression Factors for the duration of the COVID-19
PHE.
6. Provisions That Address the Impact of COVID-19 on Current Hospital
Readmissions Reduction Program Measures
a. Background
On March 11, 2020, the WHO publicly declared COVID-19 a pandemic.
On March 13, 2020, the President declared the COVID-19 pandemic a
national emergency. On April 21, 2020, July 23, 2020, October 2, 2020,
January 7, 2021, April 21, 2021, and July 19, 2021, the Secretary
renewed the January 31, 2020 determination that a PHE for COVID-19
exists and has existed since January 27, 2020. The Secretary may renew
the PHE every 90 days until such time as the Secretary determines that
a PHE no longer exists.
In response to the PHE for COVID-19, we have conducted analyses on
the six current Hospital Readmissions Reduction Program measures to
determine whether and how COVID-19 may have impacted the validity of
these condition/procedure-specific readmission measures. For the
reasons discussed in this section of this rule, we have concluded that
COVID-19 has significantly impacted the validity of the Hospital 30-
Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following
Pneumonia Hospitalization measure (NQF #0506) (hereafter referred to as
the CMS 30-Day Pneumonia Readmission Measure (NQF #0506)), such that we
cannot fairly assess this measure. The FY 2022 CMS 30-Day Pneumonia
Readmission Measure (NQF #506) applicable period is July 1, 2017
through June 30, 2020. However, in the September 2020 IFC, we noted
that we would except the use of any first or second quarter CY 2020
claims data from our calculation of performance for the applicable
fiscal years (85 FR 54833). With this exception, the FY 2022 applicable
period for this measure would only be affected by a shortened
performance period (July 1, 2017 through December 1, 2019) that does
not use data from the COVID-19 PHE. Therefore, we have determined that
it is not necessary to suppress this measure for the FY 2022 program
year. However,
[[Page 45254]]
given the ongoing status of the PHE and the impact of COVID-19 on this
measure data, we proposed to temporarily suppress this measure for the
FY 2023 program year (86 FR 25462 through 25464).
We stated in the FY 2022 PPS/LTCH PPS proposed rule that although
COVID-19 has also impacted the five remaining condition/procedure-
specific measures, we have concluded that this impact is less severe
overall and can be further mitigated by updating the measure
specifications to exclude Medicare beneficiaries with a secondary
diagnosis of COVID-19 (86 FR 25462). Therefore, we did not propose to
suppress the five remaining condition/procedure-specific measures for
the FY 2023 program year \764\ but are updating their specifications
instead (86 FR 25464). The measures are as follows:
---------------------------------------------------------------------------
\764\ In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25462),
we indicated that we were updating the five remaining condition/
procedure-specific measures for the FY 2022 program year. However,
as noted in our discussion above, in the September 2020 IFC we noted
that we would except the use of any first or second quarter CY 2020
claims data from our calculation of performance for the applicable
fiscal years (85 FR 54833). With this exception, the FY 2022
applicable period for these condition/procedure-specific readmission
measures would only be affected by a shortened performance period
(July 1, 2017 through December 1, 2019) that does not use data from
the COVID-19 PHE. Therefore, we are updating in this final rule that
we are modifying these condition/procedure-specific readmission
measure specifications for the FY 2023 program year.
---------------------------------------------------------------------------
Hospital 30-Day All-Cause Risk-Standardized Readmission
Rate (RSRR) Following Acute Myocardial Infarction (AMI) Hospitalization
(NQF #0505);
Hospital 30-Day, All-Cause, Unplanned, Risk-Standardized
Readmission Rate (RSRR) Following Coronary Artery Bypass Graft (CABG)
Surgery (NQF #2515);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Chronic Obstructive Pulmonary Disease (COPD)
Hospitalization (NQF #1891);
Hospital 30-Day, All-Cause, Risk-Standardized Readmission
Rate (RSRR) Following Heart Failure Hospitalization (NQF #0330); and
Hospital-Level 30-Day, All-Cause Risk-Standardized
Readmission Rate (RSRR) Following Elective Primary Total Hip
Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #1551).
As discussed more fully later in this section of this final rule,
we are modifying these five condition/procedure-specific measures to
exclude COVID-19 patients from the measures as technical updates to the
measure specifications.
b. Suppression of the CMS 30-Day Pneumonia Readmission Measure (NQF
#0506) for the FY 2023 Program Year
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51664 through 51666), the FY 2014 IPPS/LTCH PPS final rule (78 FR 50649
through 50676), the FY 2015 IPPS/LTCH PPS final rule (79 FR 50024
through 50048), and the FY 2016 IPPS/LTCH PPS final rule (80 FR 24490
through 24492) for information on our policies that relate to
refinement of the readmissions measures and related methodology for the
current applicable conditions/procedures.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25462 through
25464), we proposed to suppress temporarily the CMS 30-Day Pneumonia
Readmission Measure (NQF #0506) for the FY 2023 program year under
proposed Measure Suppression Factor 2, clinical proximity of the
measure's focus to the relevant disease or pathogen, particularly for a
novel disease or pathogen of unknown origin, due to the COVID-19 PHE.
COVID-19 is caused by the SAR-CoV-2 virus, which begins when
respiratory droplets containing the virus enter an individual's upper
respiratory tract.\765\ Pneumonia has been identified as a typical
characteristic of individuals infected with COVID-19,\766\ and our
analysis based on data from CY 2020 and early CY 2021 shows that a
substantial portion of the CMS 30-Day Pneumonia Readmission Measure
(NQF #0506) cohort includes admissions with a COVID-19 diagnosis. In
addition, almost all of the patient admissions with a COVID-19
diagnosis have a principal diagnosis of sepsis; observed mortality
rates for these admissions are extremely high and are substantially
higher than admissions without a COVID-19 diagnosis. We are concerned
that these higher mortality rates may also potentially distort
readmissions data for the CMS 30-Day Pneumonia Readmission Measure (NQF
#0506) cohort. Based on the currently available data for this measure,
there is a substantial proportion of Medicare beneficiaries with a
secondary diagnosis of COVID-19 in the measure cohort during CY 2020
and early CY 2021.
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\765\ CDC. ``How COVID-19 Spreads''. Available at: https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/how-covid-spreads.html.
\766\ CDC. ``Interim Clinical Guidance for Management of
Patients with Confirmed Coronavirus Disease (COVID-19)''. Updated
February 16, 2021. Available at: https://www.cdc.gov/coronavirus/2019-ncov/hcp/clinical-guidance-management-patients.html.
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In accordance with the previously discussed measure suppression
policy, we would weight the CMS 30-Day Pneumonia Readmission Measure
(NQF #0506) at zero percent in the Hospital Readmissions Reduction
Program payment methodology such that claims data for this measure
would not be used to assess that hospital's performance. Additionally,
we would continue to monitor the claims that form the basis for this
measure's calculations to evaluate the effect of the circumstances on
quality measurement and to determine the appropriate policies in the
future. We would also continue to provide feedback reports to hospitals
as part of program activities to ensure that they are made aware of the
changes in performance rates that are observed and to inform quality
improvement activities.
As previously discussed, the CMS 30-Day Pneumonia Readmission
Measure (NQF #0506) FY 2022 applicable period is July 1, 2017 through
June 30, 2020. However, in the September 2020 IFC, we noted that we
would not use any first or second quarter CY 2020 claims data to assess
performance for the applicable fiscal years (85 FR 54833). With this
exception, the FY 2022 applicable period for this measure would only be
affected by a shortened performance period (July 1, 2017 through
December 1, 2019) that does not use data impacted by the COVID-19 PHE.
Therefore, we have decided that it is not necessary to suppress this
measure for the FY 2022 program year. However, given the ongoing status
of the PHE and the impact of COVID-19 on this measure's data, we
proposed to temporarily suppress this measure for the FY 2023 program
year.
Our analysis of the CMS 30-Day Pneumonia Readmission Measure (NQF
#0506) claims data showed that a higher proportion of patients had a
secondary diagnosis of COVID-19 than other readmission measures and
that these patients have a higher risk of mortality than the remainder
of the admissions in the pneumonia measure cohort.
[[Page 45255]]
[GRAPHIC] [TIFF OMITTED] TR13AU21.257
Data from September 2020 showed that although admission volumes for
this cohort were substantially lower compared to admission volumes in
September 2019, the observed readmission rates were statistically
significantly higher compared to the observed readmission rates for
this cohort during the same period in 2019.
[GRAPHIC] [TIFF OMITTED] TR13AU21.258
Our analyses performed with available data demonstrated that COVID-
19 patients captured in the pneumonia readmission measure cohort likely
represent a distinct, severely ill group of patients for whom it may be
difficult to adequately ascertain appropriate risk adjustment. We want
to ensure that the measure reflects care provided by the hospital to
Medicare beneficiaries admitted with pneumonia and we are concerned
that excluding a significant proportion of all eligible patients may
not accurately reflect the care provided, particularly given the
unequal distribution of COVID-19 patients across hospitals over time.
Suppressing this measure for the FY 2023 program year would address
this concern.
As part of our analysis, we also evaluated the impact of
suppressing the CMS 30-Day Pneumonia Readmission Measure (NQF #0506) on
hospital eligibility, program calculations, and payment for the FY 2023
program year. We noted that we used data from the most recently
completed performance period, FY 2021, to simulate removal of the CMS
30-Day Pneumonia Readmission Measure (NQF #0506) as compared to the
baseline data.\767\ We found that the suppression of the CMS 30-Day
Pneumonia Readmission Measure (NQF #0506) resulted in about a 1 percent
decrease in eligibility for hospitals with at least 25 eligible
discharges for any of the readmission measures under the Hospital
Readmissions Reduction Program; the number of hospitals receiving a
payment reduction was reduced by 5.17 percent; the penalty as a share
of payments, or the weighted average payment reduction decreased by .13
percentage points; and the estimated Medicare savings decreased by
22.20%. Therefore, we believe that suppressing the CMS 30-Day Pneumonia
Readmission Measure (NQF #0506) measure would have a minimal negative
impact on eligibility for the Hospital Readmissions Reduction Program,
and the number of hospitals receiving payment reductions. Although we
noted that suppressing the CMS 30-Day Pneumonia Readmission Measure
(NQF #0506) measure would have larger impacts on the weighted average
payment reduction and the estimated Medicare savings under the Hospital
Readmissions Reduction Program, the reduction in penalty as a share of
payments and estimated Medicare savings are expected based on the
program methodology in which each measure contributes to the payment
reduction additively, increasing the size of the payment reduction.
---------------------------------------------------------------------------
\767\ We note that, for purposes of this analysis, we removed
the pneumonia readmission measure from program results calculated
using a 29-month performance period.
---------------------------------------------------------------------------
We sought comments on our proposal to suppress the current CMS 30-
Day Pneumonia Readmission Measure (NQF #0506) for FY 2023. The comments
we received and our responses are set forth in this section of this
rule.
Comment: Many commenters expressed support for our proposal to
suppress the CMS 30-Day Pneumonia Readmission Measure (NQF #0506) for
FY 2023. Several commenters noted that this suppression would help
address the significant impact of the COVID-19 PHE
[[Page 45256]]
and the close clinical proximity of pneumonia to COVID-19, both of
which could distort hospital performance on the measure. Several
commenters also expressed support for not including the suppressed
readmission measure in payment reduction calculations.
Response: We thank the commenters for their support.
Comment: Several commenters encouraged CMS to continue analyzing
data from 2020 and 2021 to determine if suppression is necessary in
future fiscal years due to the ongoing impact of the pandemic. A
commenter noted that although they support suppression of the measure
due to the COVID-19 PHE, the measures are intended to promote
improvements in critical patient safety and quality of care metrics.
For this reason, the commenter stressed the importance of resuming full
implementation of hospital quality programs as soon as sufficiently
reliable data are available.
Response: We thank the commenters for their feedback. We agree that
the effects of the COVID-19 pandemic are ongoing and we will continue
to monitor the claims that form the basis for this measure's
calculations to evaluate the effect of the circumstances on quality
measurement and to determine the appropriate policies in the future. We
agree that it is important to continue tracking the impact of the
COVID-19 PHE on the CMS 30-Day Pneumonia Readmission Measure (NQF
#0506), as these data will inform our considerations regarding whether
future measure suppression is necessary beyond FY 2023. We also agree
that the measure is important to improving patient safety and quality
of care, and will continue to monitor measure data to determine when it
may be considered sufficiently reliable such that resuming full
implementation of the CMS 30-Day Pneumonia Readmission Measure (NQF
#0506) is appropriate.
Comment: Some commenters expressed concern regarding the public
reporting of suppressed data, suggesting that data unfit to determine
payments should not be publicly reported. A few commenters stated that
such information should not be publicly reported because it would not
be sufficiently accurate to support informed decision-making by
beneficiaries and other stakeholders.
Response: We understand the commenters' concerns about publicly
reporting measure data from during the PHE due to COVID-19. However, as
noted previously in section V.G.5. of the preamble of this final rule,
we will make clear in the public presentation of the data that the
measure has been suppressed for purposes of scoring and payment
adjustments because of the effects of the PHE due to COVID-19.
Displaying this information will promote transparency on the impacts of
the PHE due to COVID-19, and we will appropriately caveat the data in
order to mitigate potential public confusion.
Comment: A few commenters expressed support for our proposal to
provide confidential performance feedback to hospitals on suppressed
measures.
Response: We thank the commenters for their support. We will
provide confidential feedback reports to hospitals for the pneumonia
readmission measure, with the current specifications. In these
confidential reports, hospitals will be able to see which of their
patients were readmitted to the hospital, and which of their patients
were excluded from the measure denominators to inform hospital quality
improvement initiatives.
After consideration of the public comments we received, we are
finalizing our proposal to suppress the CMS 30-Day Pneumonia
Readmission Measure (NQF #0506) for FY 2023 as proposed, without
modification.
c. Technical Measure Specification Update To Exclude COVID-19 Diagnosed
Patients From All Other Condition/Procedure-Specific Readmission
Measures Beginning With FY 2023
In the FY 2015 IPPS/LTCH final rule, we finalized a subregulatory
process to incorporate technical measure specification updates into the
measure specifications we have adopted for the Hospital Readmissions
Reduction Program (79 FR 50039). We reiterated this policy in the FY
2020 IPPS/LTCH final rule, stating our continued belief that the
subregulatory process is the most expeditious manner possible to ensure
that quality measures remain fully up to date while preserving the
public's ability to comment on updates that so fundamentally change a
measure that it is no longer the same measure that we originally
adopted (84 FR 42385). In the FY 2022 PPS/LTCH PPS proposed rule, we
stated that due to the impact of the COVID-19 PHE on the measures used
in the Hospital Readmissions Reduction Program, as described
previously, we would be updating these five condition/procedure-
specific readmission measures to exclude COVID-19 diagnosed patients
from the measure denominators (86 FR 25464). We also stated this
technical update would modify these five condition/procedure-specific
readmission measures to exclude certain ICD-10 Codes that represented
patients with a secondary diagnosis of COVID-19 from the measure
denominators, but would retain the measures in the program. Although in
the proposed rule we stated that the technical update would modify the
condition/procedure-specific readmission measures to exclude patients
with a secondary diagnosis of COVID-19 (86 FR 25462), it is possible
that certain procedure-specific readmission measures could include
patients with a primary diagnosis of COVID-19 in the measure cohort as
well. Therefore, we are updating our language in this final rule to
reflect that the technical measure specification updates would exclude
patients with primary or secondary COVID-19 diagnoses.
We believe that excluding COVID-19 patients from the measure
denominator will ensure that these five condition/procedure-specific
readmission measures continue to account for readmissions as intended
and meet the goals of the Hospital Readmissions Reduction Program.
Additional resources about the current measure technical specifications
and methodology for the Hospital Technical specification of the current
readmission measures are provided at our website in the Measure
Methodology Reports (available at: http://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/HospitalQualityInits/Measure-Methodology.html). Hospital Readmissions Reduction Program
resources are located at the Resources web page of the QualityNet
website (available at: https://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier3&cid=1228772412995).
We received public comments on this technical measure specification
update. The comments we received and our responses are set forth in
this section of this rule.
Comment: Many commenters expressed support for our technical
measure specification updates removing COVID-19 patients from the
denominator for the five remaining condition/procedure-specific
readmission measures beginning in FY 2023. These commenters agreed that
the COVID-19 public health emergency had a direct impact on the
readmission measures as well as an indirect effect through
complications and exacerbation of existing conditions. Several
commenters noted that these technical updates to measure specifications
[[Page 45257]]
would help to mitigate the impact of the COVID-19 PHE on condition/
procedure-specific readmission measures. A few commenters noted the
importance of keeping the measures in the program, while also
accounting for the impact of COVID-19 patients on measure cohorts.
Response: We thank the commenters for their support.
Comment: Several commenters supported the technical specification
updates to remove COVID-19 patients from the measure denominators, but
also encouraged CMS to continue analyzing COVID-19's impact on quality
measures. These commenters added that impacts on measure performance
may stem from more than just COVID-19 diagnoses, such as closing of
long-term care facilities, lack of visitors to understand aftercare
instructions, and lower elective procedure rates.
Response: We understand that the COVID-19 PHE is ongoing and may be
impacting many aspects of the healthcare system and patient outcomes.
We will continue to monitor the claims data that form the basis for
these measure calculations to evaluate the effect of COVID-19 on
quality measurement and to determine appropriate policies in the
future.
Comment: Several commenters expressed concern that the technical
measure specification updates to exclude COVID-19 patients from the
five condition/procedure-specific readmission measures may not
adequately address the impacts of COVID-19 on those measures. Several
commenters also sought clarification on whether the exclusion would
apply to patients who contract COVID-19 between the index admission and
readmission. A few commenters questioned CMS to specify the ICD-10
codes that will be used to identify secondary diagnosis of COVID-19. A
few commenters recommended additional exclusions to the measure
specifications in order to account for those readmissions to ensure
that CMS is not penalizing hospitals for readmissions due to COVID-19.
Response: We thank the commenters for their feedback. We share
commenters' concerns regarding whether the exclusions discussed in the
proposed rule adequately capture all COVID-19 readmissions. Therefore,
we wish to clarify that we plan to remove any patients diagnosed with
COVID-19, including a primary or secondary diagnosis of COVID-19, from
both index admissions and readmissions in order to exclude from the
measure cohort patients who are readmitted due to COVID-19 within the
30-day readmission period. We would like to clarify that we will be
removing index admissions (from the denominator) that have a principal
or secondary diagnosis present on admission (POA), of COVID-19 using
the COVID-19 specific ICD-10 code (U07.1). We are explicitly noting the
exclusion of principal diagnoses given the possible, though likely
rare, scenario in which a patient is admitted for a CABG or THA/TKA
procedure with a principal diagnosis of COVID-19. We will continue to
monitor the claims data and COVID-19 coding practices. Additionally, we
will be removing from the numerator any readmissions within 30 days
that have a principal or secondary diagnosis POA, of COVID-19 (U07.1).
Comment: A few commenters expressed concern that the exclusions may
not adequately adjust for the impacts of COVID-19 on the condition/
procedure-specific readmission measures and recommended that CMS
consider additional suppression policies, noting that the COVID-19 PHE
impacted measure data for a variety of reasons, including higher
patient acuity, disruptions in care due to the COVID-19 PHE, as well as
challenges with available resources. A few commenters requested that
CMS consider the impact of the COVID-19 PHE and exclusion of COVID-19
patients by modeling the potential impacts on hospital performance
scores prior to finalizing these technical measure specification
updates. A few commenters expressed concern that operational changes
and fluctuations in volume may have unintended consequences on the
calculation of performance scores.
Response: We appreciate commenters' concerns that the exclusions
may not capture the totality of the impacts of the COVID-19 PHE on
condition/procedure-specific readmission measures, and will continue to
evaluate data collected during the COVID-19 PHE to assess whether
additional measure suppressions or further exclusions may be necessary.
We have based our measurement and program changes announced in this
final rule based upon analyses of the most recently available data. As
additional months of data become available, we will continue to conduct
analyses to understand the evolving circumstances of the COVID-19
pandemic to inform future measurement approaches.
Comment: A few commenters recommended that CMS provide confidential
feedback reports to hospitals that include the entire measure cohort
for each condition/procedure-specific readmission measure, including
COVID-19 patients, in order to help hospitals and clinicians better
understand the relationship between COVID-19 and patient outcomes for
these condition/procedure-specific readmission measures.
Response: We thank the commenters for their feedback, and will
evaluate the feasibility of providing confidential feedback reports to
hospitals that include condition/procedure-specific readmission measure
data for patients with and without COVID-19 diagnoses. In these
confidential reports, hospitals would be able to see which of their
patients were excluded from the measures due to a qualifying COVID-19
diagnosis to inform hospital quality improvement initiatives.
Comment: A few commenters recommended that CMS continue to analyze
COVID-19 PHE data to determine whether the technical measure
specification updates should be extended beyond FY 2023 due to the
continuing impact of COVID-19 on the condition/procedure-specific
readmission measures.
Response: We thank the commenters for their feedback. We agree with
commenters that it is important to continue monitoring the PHE's
ongoing effects on condition/procedure-specific readmission measures,
as this will inform our considerations about whether to extend the
exclusions beyond FY 2023.
Comment: A few commenters expressed concern that removing patients
with COVID-19 from the readmission measures would not adequately
account for the effects of the PHE on the readmission measures,
including for patients who did not contract COVID-19. These commenters
requested that CMS consider suppression of the five readmission
measures as the COVID-19 pandemic impacted hospital volume and
operations.
Response: Our analyses of available data to date have estimated
only minimal impacts of COVID-19 on readmission measure results (for
measures other than pneumonia readmission) for the FY 2023 program
year. The proportion of admissions and readmissions with a principal or
secondary diagnosis of COVID-19 were very small due to the cohort
definitions and affected performance period.
After consideration of the public comments we received, we are
clarifying our technical measure specification update to remove any
patients diagnosed with COVID-19, including a primary or secondary
diagnosis POA of COVID-19, from both
[[Page 45258]]
index admissions and readmissions from the measure cohorts for these
five condition/procedure-specific readmission measures.
7. Automatic Adoption of Applicable Periods for FY 2023 and Subsequent
Years
We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR
51671) and the FY 2013 IPPS/LTCH PPS final rule (77 FR 53375) for
discussion of our previously finalized policy for defining ``applicable
period''. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41434 through
41435) and the FY 2020 IPPS/LTCH PPS final rule (84 FR 42387), we
finalized the ``applicable period'' consistent with the definition
specified at 42 CFR 412.152, to calculate the readmission payment
adjustment factor for FY 2022 as the 3-year time period of July 1, 2017
through June 30, 2020.\768\
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\768\ Although the FY 2022 applicable period is July 1, 2017
through June 30, 2020, we note that first and second quarter data
from CY 2020 is excluded from consideration for program calculation
purposes due to the nationwide ECE that was granted in response to
the COVID-19 PHE.
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The ``applicable period'' is the 3-year period from which data are
being collected in order to calculate excess readmission ratios (ERRs)
and payment adjustment factors for the fiscal year; this includes
aggregate payments for excess readmissions and aggregate payments for
all discharges used in the calculation of the payment adjustment. The
``applicable period'' for dually eligible beneficiaries is the same as
the ``applicable period'' that we otherwise adopt for purposes of the
Hospital Readmissions Reduction Program.
In order to provide greater certainty around future applicable
periods for the Hospital Readmissions Reduction Program, in the FY 2021
IPPS/LTCH final rule (85 FR 58846), we finalized the automatic adoption
of applicable periods for FY 2023 and all subsequent program years for
the Hospital Readmissions Reduction Program. Beginning in FY 2023, the
applicable period for the Hospital Readmissions Reduction Program will
be the 3-year period beginning 1 year advanced from the previous
program fiscal year's start of the applicable period. Under this
policy, for all subsequent years, we will advance this 3-year period by
1 year unless otherwise specified by the Secretary, which we would
convey through notice and comment rulemaking. Similarly, the applicable
period for dual eligibility will continue to correspond to the
applicable period for the Hospital Readmissions Reduction Program,
unless otherwise specified by the Secretary. We refer readers to the FY
2021 IPPS/LTCH PPS final rule (85 FR 58845 through 58846) for a more
detailed discussion of this topic. In the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25464), we did not propose any updates to this
policy.
8. Identification of Aggregate Payments for Each Condition/Procedure
and All Discharges for FY 2022
When calculating the numerator (aggregate payments for excess
readmissions), we determine the base operating DRG payment amount for
an individual hospital for the applicable period for each condition/
procedure using Medicare inpatient claims from the MedPAR file with
discharge dates that are within the applicable period. Under our
established methodology, we use the update of the MedPAR file for each
Federal fiscal year, which is updated 6 months after the end of each
Federal fiscal year within the applicable period, as our data source.
In identifying discharges for the applicable conditions/procedures
to calculate the aggregate payments for excess readmissions, we apply
the same exclusions to the claims in the MedPAR file as are applied in
the measure methodology for each of the applicable conditions/
procedures. For the FY 2022 applicable period, this includes the
discharge diagnoses for each applicable condition/procedure based on a
list of specific ICD-10-CM and ICD-10-PCS code sets, as applicable, for
that condition/procedure, because diagnoses and procedure codes for
discharges occurring on or after October 1, 2015 (FY 2016) began
reporting under the ICD-10-CM and ICD-10-PCS code sets as opposed to
the previous ICD-9-CM code set.
We identify Medicare fee-for-service (FFS) claims that meet the
criteria as previously described for each applicable condition/
procedure to calculate the aggregate payments for excess readmissions.
This means that claims paid for under Medicare Part C (Medicare
Advantage) are not included in this calculation. This policy is
consistent with the methodology to calculate ERRs based solely on
admissions and readmissions for Medicare FFS patients. Therefore,
consistent with our established methodology, for FY 2022, we proposed
to continue to exclude admissions for patients enrolled in Medicare
Advantage (MA), as identified in the Medicare Enrollment Database.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25464 through
25465), for FY 2022, we proposed to determine aggregate payments for
excess readmissions, and aggregate payments for all discharges using
data from MedPAR claims with discharge dates that align with the FY
2022 applicable period.\769\ As we stated in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38232), we would determine the neutrality modifier
using the most recently available full year of MedPAR data. However, we
noted that, for the purpose of modeling the estimated FY 2022
readmissions payment adjustment factors for this final rule, we would
use the proportion of dually eligible beneficiaries, excess readmission
ratios, and aggregate payments for each condition/procedure and all
discharges for applicable hospitals from the FY 2022 Hospital
Readmissions Reduction Program applicable period (July 1, 2017 through
December 1, 2019).\770\ For the FY 2022 program year, applicable
hospitals will have the opportunity to review and correct calculations
based on the FY 2022 applicable period of July 1, 2017 to December 1,
2019, before they are made public under our policy regarding reporting
of hospital-specific information. Again, we reiterate that this period
is intended to review the program calculations, and not the underlying
data. For more information on the review and corrections process, we
refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR 53399
through 53401).
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\769\ Although the FY 2022 applicable period is July 1, 2017
through June 30, 2020, we note that first and second quarter data
from CY 2020 is excluded from consideration for scoring purposes due
to the nationwide ECE that was granted in response to the COVID-19
PHE. Taking into consideration the 30-day window to identify
readmissions, the period for calculating DRG payments would be
adjusted to July 1, 2017 through December 1, 2019. Further
information will be found in the FY 2022 Hospital Specific Report
(HSR) User Guide located on QualityNet website at: https://qualitynet.cms.gov/inpatient/hrrp/reports that is anticipated to
become available in August 2021.
\770\ We note that in the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25465), we used data from the FY 2021 Hospital Readmissions
Reduction Program applicable period to estimate payment adjustment
factors. We are updating these estimates in this final rule with
data from the FY 2022 applicable period.
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In the proposed rule, we also proposed to continue to use MedPAR
data corresponding to the applicable period for identifying discharges
for the applicable conditions/procedures to calculate the aggregate
payments for excess readmissions for the Hospital Readmissions
Reduction Program. We proposed to use the update of the MedPAR file for
each Federal FY, which is updated 6 months after the end of each
Federal FY within the applicable period, as our data source.
We welcomed public comment on this proposal to identify aggregate
payments for each condition/procedure
[[Page 45259]]
and all discharges for the FY 2022 applicable period using
corresponding MedPAR data. The comments we received and our responses
are set forth in this section of this rule.
Comment: A few commenters expressed support for our proposal to
determine aggregate payments for excess readmissions, and aggregate
payments for all discharges using data from MedPAR claims with
discharge dates that align with the FY 2022 applicable period.
Response: We thank these commenters for their support.
Comment: A few commenters expressed support for the use of MedPAR
data based on the FY 2022 applicable period of July 1, 2017 through
December 1, 2019, which was modified due to the nationwide ECE granted
in response to the COVID-19 PHE.
Response: We thank these commenters for their support.
After consideration of the public comments we received, we are
finalizing our policy to identify aggregate payments for each
condition/procedure and all discharges for the FY 2022 applicable
period using corresponding MedPAR data as proposed, without
modification.
9. Automatic Adoption of the Use of MedPAR Data Corresponding to the
Applicable Period Beginning in FY 2023
We refer readers to the FY 2013 IPPS/LTCH PPS final rule (77 FR
53387 through 53390) for discussion of our previously finalized policy
for the use of MedPAR claims data as our data source for determining
aggregate payments for each condition/procedure and aggregate payments
for all discharges during applicable periods. Most recently, in the FY
2021 IPPS/LTCH PPS final rule (85 FR 58846), we finalized our policy on
the continued use of the MedPAR data corresponding to the applicable
period for the Hospital Readmissions Reduction Program calculations for
the FY 2021 applicable period. We also finalized our policy to use the
update of the MedPAR file for each Federal FY, which is updated 6
months after the end of each Federal FY within the applicable period,
as our data source to identify discharges within the FY 2021 applicable
period during that fiscal year. Similarly, in section V.G.8 of this
final rule, we are finalizing our proposal to use MedPAR data
corresponding to the applicable period for the Hospital Readmissions
Reduction Program calculations for the FY 2022 applicable period, and
to use the update of the MedPAR file for each Federal FY, which is
updated 6 months after the end of each Federal FY within the applicable
period, as our data source.
We continue to believe that the use of MedPAR claims data is the
appropriate source for identifying aggregate payments for each
condition/procedure and all discharges during the corresponding
applicable period for the Hospital Readmissions Reduction Program. In
order to provide greater certainty around future applicable periods for
the Hospital Readmissions Reduction Program, in the FY 2021 IPPS/LTCH
final rule (85 FR 58845 through 58846), we finalized the automatic
adoption of applicable periods for FY 2023 and all subsequent program
years for the Hospital Readmissions Reduction Program. Under this
policy, the 3-year applicable period will automatically advance by 1
year beginning in FY 2023. Because the MedPAR data used for the
Hospital Readmissions Reduction Program calculations corresponds to the
applicable period, we believe that the automatic adoption of the use of
MedPAR data corresponding to the applicable period for Hospital
Readmissions Reduction Program calculations each year will similarly
streamline the process and provide additional clarity and consistency
to the program.
Therefore, in the FY 2022 IPPS/LTCH proposed rule (86 FR 25465), we
proposed to automatically adopt the use of MedPAR data corresponding to
the applicable period for Hospital Readmissions Reduction Program
calculations for FY 2023 and all subsequent program years. We proposed
that, beginning in FY 2023, the MedPAR data used to calculate aggregate
payments for each condition/procedure and for all discharges will be
the 3-year period beginning 1 year advanced from the previous program
fiscal year's MedPAR data corresponding to the applicable period for
Hospital Readmissions Reduction Program calculations. Under this
proposal, for all subsequent years, we would advance this 3-year period
by 1 year unless otherwise specified by the Secretary, which we would
convey through notice and comment rulemaking. We also proposed to
automatically adopt the use of the update of the MedPAR file for each
Federal FY, which is updated 6 months after the end of each Federal FY
within the applicable period, as our data source, and to similarly
advance this by 1 year from the previous program fiscal year.
We welcomed public comment on this proposal. The comment we
received and our response are set forth in this section of this rule.
Comment: A commenter expressed support for the proposal to
automatically adopt the use of MedPAR data to its corresponding
applicable period beginning in FY 2023 program year and all subsequent
program years.
Response: We thank the commenter for its support.
After consideration of the public comment we received, we are
finalizing our policy to automatically adopt the use of MedPAR data
corresponding to the applicable period for Hospital Readmissions
Reduction Program calculations for FY 2023 and all subsequent program
years as proposed, without modification.
10. Calculation of Payment Adjustment Factors for FY 2022
As we discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR
38226), section 1886(q)(3)(D) of the Act requires the Secretary to
group hospitals and apply a methodology that allows for separate
comparisons of hospitals within peer groups, based on the proportion of
dually eligible beneficiaries served by each hospital, in determining a
hospital's adjustment factor for payments applied to discharges
beginning in FY 2019. Section 1886(q)(3)(D) also states that this
methodology could be replaced through the application of subclause
(E)(i), which states that the Secretary may take into account the
studies conducted and the recommendations made by the reports required
by section 2(d)(1) of the IMPACT Act of 2014 (Pub. L. 113-185; 42
U.S.C. 1395 note) with respect to risk adjustment methodologies. On
June 29, 2020,\771\ the second Report to Congress by the Department's
Office of the Assistant Secretary for Planning and Evaluation (ASPE) on
social risk and Medicare's value-based purchasing programs came out. We
are continuing our review of these recommendations and will address
them as appropriate in future rulemaking.
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\771\ Department of Health and Human Services Office of the
Assistant Secretary for Planning and Evaluation (ASPE), ``Report to
Congress: Social Risk Factors and Performance in Medicare's Value-
Based Purchasing Program.'' March 2020. Available at: https://aspe.hhs.gov/system/files/pdf/263676/Second-IMPACT-SES-Report-to-Congress.pdf.
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We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR
38226 through 38237) for a detailed discussion of the payment
adjustment methodology. We did not propose any changes to this payment
adjustment calculation methodology for FY 2022 in the proposed rule (86
FR 25466).
[[Page 45260]]
11. Calculation of Payment Adjustment for FY 2022
Section 1886(q)(3)(A) of the Act defines the payment adjustment
factor for an applicable hospital for a fiscal year as ``equal to the
greater of: (i) the ratio described in subparagraph (B) for the
hospital for the applicable period (as defined in paragraph (5)(D)) for
such fiscal year; or (ii) the floor adjustment factor specified in
subparagraph (C).'' Section 1886(q)(3)(B) of the Act, in turn,
describes the ratio used to calculate the adjustment factor.
Specifically, it states that the ratio is equal to 1 minus the ratio of
aggregate payments for excess readmissions to aggregate payments for
all discharges, scaled by the neutrality modifier. The calculation of
this ratio is codified at 42 CFR 412.154(c)(1) and the floor adjustment
factor is codified at 42 CFR 412.154(c)(2). Section 1886(q)(3)(C) of
the Act specifies the floor adjustment factor at 0.97 for FY 2015 and
subsequent fiscal years.
Consistent with section 1886(q)(3) of the Act, codified in our
regulations at 42 CFR 412.154(c)(2), for FY 2022, the payment
adjustment factor will be either the greater of the ratio or the floor
adjustment factor of 0.97. Under our established policy, the ratio is
rounded to the fourth decimal place. In other words, for FY 2022, a
hospital subject to the Hospital Readmissions Reduction Program would
have an adjustment factor that is between 1.0 (no reduction) and 0.9700
(greatest possible reduction).
For additional information on the FY 2022 payment calculation, we
refer readers to the Hospital Readmissions Reduction Program
information and resources available on our QualityNet website. We did
not propose any changes to our calculation of payment methodology in
the proposed rule (86 FR 25466).
12. Overall Hospital Quality Star Ratings
In the CY 2021 OPPS/ASC final rule with comment period and interim
final rule with comment period (85 FR 86193 through 86236), we
finalized a methodology to calculate the Overall Hospital Quality Star
Ratings (Overall Star Ratings). The Overall Star Ratings utilize data
collected on hospital inpatient and outpatient measures that are
publicly reported on a CMS website, including data from the Hospital
Readmissions Reduction Program. We refer readers to section XVI. of the
CY 2021 OPPS/ASC final rule for details (85 FR 86193 through 86236). We
did not propose any changes to our calculation of the Overall Star
Ratings.
13. Extraordinary Circumstance Exception (ECE) Policy for the Hospital
Readmissions Reduction Program
a. Background
(1) Previously Established Extraordinary Circumstance Exception (ECE)
Policy Under the Hospital Readmissions Reduction Program
We refer readers to the FY 2016 IPPS/LTCH PPS final rule (80 FR
49542 through 49543) and the FY 2018 IPPS/LTCH PPS final rule (82 FR
38239 through 38240) for discussion of our Extraordinary Circumstances
Exception (ECE) policy. In the FY 2016 IPPS/LTCH PPS final rule (80 FR
49542 through 49543), we adopted an ECE policy for the Hospital
Readmissions Reduction Program, which recognized that there may be
periods of time during which a hospital is not able to submit data
(from which readmission measures data are derived) in an accurate or
timely fashion due to an extraordinary circumstance beyond its control.
When adopting this policy, we noted that we considered the feasibility
and implications of excluding data for certain measures for a limited
period of time from the calculations for a hospital's excess
readmission ratios for the applicable performance period. By minimizing
the data excluded from the program, the policy enabled affected
hospitals to continue to participate in the Hospital Readmissions
Reduction Program for a given fiscal year if they otherwise continued
to meet applicable measure minimum threshold requirements. We expressed
the belief that this approach would help alleviate the burden for a
hospital that might be adversely impacted by a natural disaster or
other extraordinary circumstance beyond its control, while enabling the
hospital to continue to participate in the Hospital Readmissions
Reduction Program. We further observed that section 1886(q)(5)(D) of
the Act permits the Secretary to determine the applicable period for
readmissions data collection, and we interpreted the statute to allow
us to determine that the period not include times when hospitals may
encounter extraordinary circumstances. This policy was similar to the
ECE policy for the Hospital Inpatient Quality Reporting (IQR) Program,
as initially adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR
51651) and modified in the FY 2014 IPPS/LTCH PPS final rule (78 FR
50836) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 50277). We also
considered how best to align an extraordinary circumstance exception
policy for the Hospital Readmissions Reduction Program with existing
extraordinary circumstance exception policies for other IPPS quality
reporting and payment programs, such as the Hospital Value-Based
Purchasing (VBP) Program, to the extent feasible.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38239), we modified
the requirements for the Hospital Readmissions Reduction Program ECE
policy to further align with the processes used by other quality
reporting and VBP programs for requesting an exception from program
reporting due to an extraordinary circumstance not within a provider's
control.
(2) Extraordinary Circumstance Exception (ECE) Granted in Response to
the COVID-19 Public Health Emergency
On March 22, 2020, in response to COVID-19, we announced relief for
clinicians, providers, hospitals, and facilities participating in
Medicare quality reporting and value-based purchasing programs.\772\
Specifically, we announced that we were excluding data for the first
and second quarters of CY 2020. On March 27, 2020, we published a
supplemental guidance memorandum that described the scope and duration
of the ECEs we were granting under each Medicare quality reporting and
VBP program.\773\ For the Hospital Readmissions Reduction Program, we
stated that qualifying claims will be excluded from the measure
calculations for January 1, 2020-March 31, 2020 (Q1 2020) and April 1,
2020-June 30, 2020 (Q2 2020) from the readmission measures.
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\772\ CMS, Press Release, CMS Announces Relief for Clinicians,
Providers, Hospitals and Facilities Participating in Quality
Reporting Programs in Response to COVID-19 (Mar. 22, 2020), https://www.cms.gov/newsroom/press-releases/cms-announces-relief-clinicians-providers-hospitals-and-facilities-participating-quality-reporting.
\773\ CMS, Exceptions and Extensions for Quality Reporting
Requirements for Acute Care Hospitals, PPS-Exempt Cancer Hospitals,
Inpatient Psychiatric Facilities, Skilled Nursing Facilities, Home
Health Agencies, Hospices, Inpatient Rehabilitation Facilities,
Long-Term Care Hospitals, Ambulatory Surgical Centers, Renal
Dialysis Facilities, and MIPS Eligible Clinicians Affected by COVID-
19 (Mar. 27, 2020), https://www.cms.gov/files/document/guidance-memo-exceptions-and-extensions-quality-reporting-and-value-based-purchasing-programs.pdf.
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(3) Updated Application of the ECE Granted in Response to COVID-19
On September 2, 2020, we published the Interim Final Rule with
comment period (IFC), ``Medicare and Medicaid Programs, Clinical
Laboratory Improvement Amendments (CLIA), and Patient Protection and
Affordable Care Act; Additional Policy and Regulatory Revisions in
Response to the COVID-19
[[Page 45261]]
Public Health Emergency'' (85 FR 54820). The IFC updated the ECE we
granted in response to the PHE for COVID-19, for the Hospital
Readmissions Reduction Program and several other quality reporting
programs (85 FR 54827 through 54838).
In the IFC, we updated the previously announced application of our
ECE policy for the Hospital Readmissions Reduction Program (85 FR 54832
through 54833) to the COVID-19 PHE to exclude any data submitted
regarding care provided during the first and second quarters of CY 2020
from our calculation of performance for FY 2022, FY 2023, and FY 2024.
We expressed concern that excess readmission ratios calculated using
excepted claims data could affect the national comparability of these
data due to the geographic differences of COVID-19 incidence rates and
hospitalizations along with different impacts resulting from different
State and local law and policy changes implemented in response to
COVID-19, and therefore may not provide a nationally comparable
assessment of performance in keeping with the program goal of national
comparison.
In the IFC, we welcomed public comments on our policy to exclude
any data submitted regarding care provided during first and second
quarter of CY 2020 from our calculation of performance for FY 2022, FY
2023, and FY 2024. We are responding to those public comments in this
FY 2022 IPPS/LTCH PPS final rule.
In the September 2, 2020 IFC, we also announced that if, due to
ECEs related to the COVID-19 PHE, we do not have enough data to
reliably measure national performance, we may propose to not assess
hospitals based on such limited data or make temporary payment
adjustments to facilities under the Hospital Readmissions Reduction
Program for the affected program year. We stated that, if circumstances
warranted, we could propose to suspend prospective application of
program penalties or payment adjustments through the annual IPPS/LTCH
PPS proposed rule. We also stated that, in the interest of time and
transparency, we would provide subregulatory advance notice of our
intentions to suspend such penalties and adjustments through routine
communication channels to facilities, vendors, and QIOs. The
communications could include memos, emails, and notices on the public
QualityNet website (https://www.qualitynet.cms.gov/).\774\
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\774\ We note that the QualityNet website (previously at
QualityNet.org) has transitioned to a QualityNet.cms.gov.
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We received public comments on our policy to exclude any data
submitted regarding care provided during first and second quarter of CY
2020 from our calculation of performance for FY 2022, FY 2023, and FY
2024. The comments we received and our responses are set forth in this
section of this rule.
Comment: Several commenters supported CMS' updated application of
the ECE granted in response to the PHE due to COVID-19. A few
commenters also agreed with CMS' concerns regarding the national
comparability of data from Q1 and Q2 of CY 2020 and noted that the
integrity and validity of any measurement calculations associated with
these data could be compromised. A commenter encouraged CMS to continue
accepting data for purposes of evaluating the impact of COVID-19 on
hospitals' outcomes.
Response: We thank commenters for their support.
Comment: A commenter encouraged CMS to consider excluding the
remainder of CY 2020 data from use in payment determinations.
Response: We thank the commenter for this feedback. Although we are
not expanding the ECE we granted in response to the COVID-19 to exclude
data for the remainder of CY 2020 data from use in the Hospital
Readmissions Reduction Program, we refer readers to sections V.G.5 and
V.G.6 for further discussion of policies that we are adopting in
response to the impact of the COVID-19 PHE on measure data used in
payment determinations.
Comment: A commenter recommended that CMS consider factors which
may impact hospital performance in the Hospital Readmissions Reduction
Program besides the quantity of data submitted in deciding whether or
not to assess hospitals, expressing concern regarding the reliability
of the data that would be used to measure national performance. The
commenter recommended that CMS should not impose penalties under the
Hospital Readmissions Reduction Program for the affected program year.
Response: We thank commenter for this feedback. We refer readers to
our measure suppression policy in V.G.5, in which we consider factors
which may impact the reliability and comparability of the measure data
used to assess hospital performance in the Hospital Readmissions
Reduction Program due to the COVID-19 PHE. Under this policy, we are
suppressing the CMS 30-Day Pneumonia Readmission Measure (NQF #0506)
for FY 2023 due to the potential impact of COVID-19 diagnoses on the
reliability of the data that would be used to measure national
performance on that measure. We are also updating the technical
specifications for the remaining five condition/procedure-specific
measures to exclude COVID-19 diagnoses from the measure cohorts to
address the potential impact of COVID-19 on measure data quality. We
note that due to our policy to exclude any data submitted regarding
care provided during first and second quarter of CY 2020, the FY 2022
applicable period for the Hospital Readmissions Reduction Program will
not include measure data impacted by the COVID-19 PHE.
As established in the September 2020 IFC, we have finalized our
updated application of the ECE granted in response to the COVID-19 PHE.
b. General Clarifications to Hospital Readmissions Reduction Program
ECE Policy
After the nationwide ECE granted in response to the COVID-19 PHE
ended, we received several requests from hospitals for individual ECEs
under the Hospital Readmissions Reduction Program, due to extraordinary
circumstances resulting from the continuing impact of the PHE. In the
FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25467 through 25468), we
clarified our ECE policy to highlight that an ECE granted under the
Hospital Readmissions Reduction Program would exclude claims data
during the corresponding ECE period. Although we have considered the
feasibility and implications of excluding data under the ECE policy for
the Hospital Readmissions Reduction Program, we have never specified
the types of data that would be excluded under an ECE granted to an
individual hospital. Considering that the Hospital Readmissions
Reduction Program only uses claims data, we would like to clarify our
ECE policy to specify that claims data will be excluded from
calculations of measure performance under an approved ECE for the
Hospital Readmissions Reduction Program.
The FY 2016 IPPS/LTCH final rule specifies that we may waive
reporting requirements for the Hospital Readmissions Reduction Program
in response to ECE requests, in alignment with the Hospital Inpatient
Quality Reporting (IQR) policy (80 FR 49542). Although the Hospital
Readmissions Reduction Program and the Hospital IQR Program use
different sources of data and have different requirements
[[Page 45262]]
depending on the type of measure, the ECE policy applies to both
programs. Therefore, in the FY 2022 IPPS/LTCH proposed rule, we
clarified that although an approved ECE for the Hospital Readmissions
Reduction Program would exclude excepted data from Hospital
Readmissions Reduction Program payment reduction calculations, we did
not propose to waive the data submission requirements of a hospital for
claims data (86 FR 25467). For example, for claims data, we require a
hospital to submit claims to receive payments for the services they
provided to patients. Although an individual ECE approval under the
Hospital Readmissions Reduction Program would except data submitted by
a hospital from Hospital Readmissions Reduction Program calculations, a
hospital would still need to submit its claims in order to receive
payment outside the scope of the Hospital Readmissions Reduction
Program for services provided.
We have also received a few requests from hospitals for ECEs under
the Hospital Readmissions Reduction Program, in which the hospitals
requested an exception from the Hospital Readmissions Reduction Program
payment reduction. The ECE policy for the Hospital Readmissions
Reduction Program is intended to provide relief for a hospital that has
been negatively impacted as a direct result of experiencing a
significant disaster or other extraordinary circumstance beyond the
hospital's control by excepting data from the period during which
performance was impacted. The hospital would still be evaluated for the
remainder of the applicable period during which performance was not
impacted. The ECE policy is not intended to extend to payment
reductions. Therefore, we clarify that, although an approved ECE for
the Hospital Readmissions Reduction Program would exclude excepted data
from Hospital Readmissions Reduction Program payment reduction
calculations, it does not exempt hospitals from payment reductions
under the Hospital Readmissions Reduction Program. Instead of relying
upon our ECE policy, we are relying upon our authority under subsection
1886(q)(5)(A)(i) of the Act to determine the scope of ``applicable
conditions'', including the Secretary's authority to utilize his own
criteria to select measures to be used to calculate the excess
readmission measure.
c. Clarification of the Impact of ECE Excluded Data for the Hospital
Readmissions Reduction Program
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25468), we
clarified the impact of data which had been excluded from the Hospital
Readmissions Reduction Program due to the nationwide ECE that was
granted in response to COVID-19 on upcoming Hospital Readmissions
Reduction Program calculations. In order to determine and evaluate what
kind of impact the nationwide ECE might have on the Hospital
Readmissions Reduction Program, we conducted analyses to simulate the
impact of an altered performance period on program eligibility and the
resulting payment impacts to hospitals using pre-COVID-19 data from the
FY 2020 Hospital Readmissions Reduction Program year. This analysis was
intended to evaluate what patterns we might observe in Hospital
Readmissions Reduction Program eligibility and payment as a result of
excluding 6 months of data due to the ECE granted in response to the
PHE for COVID-19. Our analysis found that there would be a minimal
impact on hospitals if 6 months of data were removed from Hospital
Readmissions Reduction Program calculations. We are performing
additional analyses as CY 2020 data becomes available, and we will
provide updated analyses as necessary when it becomes available.
Although the FY 2022 applicable period is July 1, 2017 through June
30, 2020, due to the first and second quarter CY 2020 claims exception
period and the 30-day window to identify readmissions, the period for
calculating ERRs would be adjusted to July 1, 2017 through December 1,
2019. The period for calculating DRG payments would similarly be
adjusted to July 1, 2017 through December 1, 2019 to align with the
period to calculate ERRs. We would also note that CY 2019 data would be
used to calculate the Neutrality Modifier, as that would be the most
recent full year of data (since Q1 and Q2 CY 2020 data are excluded
from FY 2020 data under the nationwide ECE). Finally, we note that each
of the readmission measures uses claims data for the 12 months prior to
the index hospitalization as well as index hospitalization claims for
risk adjustment (76 FR 51672). Due to the nationwide ECE that was
granted in response to the COVID-19 PHE, the condition/procedure-
specific measures will use less than 12 months of data for risk
adjustment for admissions between July 1, 2020 and June 30, 2021 during
the FY 2023 applicable period. For example, if not for the COVID-19 PHE
and subsequent nationwide ECE, an admission on July 1, 2020 would have
included 12 months of prior claims data--a lookback period of July 2,
2019 through June 30, 2020--for risk adjustment. Because claims data
from January 1, 2020 through June 30, 2020 are excluded under the
nationwide ECE, an admission on July 1, 2020 will have a shorter
lookback period of July 2, 2019 through December 31, 2019.
Comorbidities from the index admission will continue to be used for all
admissions.
In the FY 2020 IPPS/LTCH PPS final rule, we finalized our policy to
adopt a subregulatory process to make nonsubstantive updates to payment
adjustment factor components to facilitate the program's operation when
minor changes are required, but do not substantively impact the
program's previously finalized policies (84 FR 42385 through 42387).
Although these changes are substantive, they do not substantially
impact the outcomes in comparison to the Hospital Readmissions
Reduction Program's previously finalized policies. Implementation of
this temporary policy will be addressed through the subregulatory
process. For more details on these subregulatory updates, we refer
readers to the Hospital Specific Report (HSR) User Guide located on
QualityNet website at: https://qualitynet.cms.gov/inpatient/hrrp/reports.
14. Request for Public Comment on Possible Future Stratification of
Results by Race and Ethnicity for Condition/Procedure-Specific
Readmission Measures
We are committed to achieving equity in health care outcomes for
our beneficiaries by supporting providers in quality improvement
activities to reduce health inequities, enabling them to make more
informed decisions, and promoting provider accountability for health
care disparities.\775\ As described in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25554 through 25561), in response to statute and
policy reports from the Assistant Secretary for Planning and Evaluation
(ASPE) of HHS and the National Academies of Science, Engineering and
Medicine to better account for social risk factors in the Medicare
program,\776\ we have created
[[Page 45263]]
two complementary methods to calculate disparities in condition/
procedure-specific readmission measures (the CMS Disparity Methods).
The first method (the Within-Hospital disparity method) promotes
quality improvement by calculating differences in outcome rates among
patient groups within a hospital while accounting for their clinical
risk factors. This method also allows for a comparison of those
differences, or disparities, across hospitals, so hospitals could
assess how well they are closing disparity gaps compared to other
hospitals. The second methodological approach (the Across-Hospital
method) is complementary and assesses hospitals' outcome rates for
subgroups of patients across hospitals, allowing for a comparison among
hospitals on their performance caring for their patients with social
risk factors. We refer readers to the technical report describing the
CMS Disparity Methods in detail as well as the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38405 through 38407) and the posted Disparity Methods
Updates and Specifications Report posted on the QualityNet website. The
CMS Disparity Methods have thus far focused on dual eligibility, a
proxy for social risk factors, as the main stratification variable for
reporting disparity results. These stratified data are provided in
confidential Hospital Specific Reports (HSRs) for six condition/
procedure-specific readmission measures and not publicly reported at
this time. The disparity methods were designed to accommodate
additional types of stratification variables, such as race and
ethnicity, language preference, and disability status.
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\775\ https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Downloads/CMS-Quality-Strategy.pdf.
\776\ ASPE, Report to Congress: Social Risk Factors and
Performance Under Medicare's Value-Based Purchasing Programs (2016),
https://aspe.hhs.gov/system/files/pdf/253971/ASPESESRTCfull.pdf. For
more information, see National Academies of Sciences, Engineering,
and Medicine, Accounting for Social Risk Factors in Medicare
Payment: Identifying Social Risk Factors (2016), https://doi.org/10.17226/21858. See also, Improving Medicare Post-Acute Care
Transformation Act of 2014 (2014), https://www.govinfo.gov/content/pkg/BILLS-113hr4994enr/pdf/BILLS-113hr4994enr.pdf.
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As described in the proposed rule (86 FR 25557 through 25560), we
sought comment on potentially expanding our methods for stratified
reporting of the Disparity Methods to better illuminate social
disparities in populations served by Medicare-participating hospitals.
As described in the proposed rule, studies have shown that among
Medicare beneficiaries, racial and ethnic minority persons often
experience worse health outcomes, including more frequent hospital
readmissions and procedural complications. We are, in particular,
exploring the significance of racial and ethnic inequities, as well as
other social factors such as language preference and disability status,
in outcomes in the Hospital Readmissions Reduction Program.\777\
Expanding the disparity methods to include stratified results by both
dual eligibility and race and ethnicity, as well as language preference
and disability status, may enable a more comprehensive assessment of
health equity and support initiatives to close the equity gap. We
believe that hospitals will be able to use the results from the
disparity methods to identify and develop strategies to promote health
equity.
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\777\ For example, see the RIT Race Code, available at https://www.resdac.org/cms-data/variables/research-triangle-institute-rti-race-code. See also, Health Serv Res. 2019 Feb; 54(1):13-23. doi:
10.1111/1475-6773.13099. Epub 2018 Dec 3.
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More specifically, we sought comment on expanding our efforts to
provide hospital-level results of both the Within- and Across-Hospital
Disparity Methods, as described in the proposed rule (86 FR 25557
through 25560), using indirectly estimated race and ethnicity, as well
as additional social factors, such as language preference and
disability status. Indirect estimation relies on a statistical
imputation method for inferring a missing variable or improving an
imperfect administrative variable using a related set of information
that is more readily available.\778\ Imputed data are most commonly
used at the population level, where aggregated results form a more
accurate description of the population than existing, imperfect data
sets. The proposed rule also summarized the existing challenges in
accurately determining race and ethnicity in our administrative data,
the need for using advanced statistical methods for indirectly
estimating race and ethnicity, and the previous algorithms developed to
indirectly estimate race and ethnicity in our data. The expanded
methods would be reported at the hospital-level, and provided to
hospitals in confidential HSRs for six condition/procedure-specific
readmission measures, stratified by both dual eligibility and race/
ethnicity: (1) Hospital 30-Day, All-Cause, Risk-Standardized
Readmission Rate (RSRR) Following Acute Myocardial Infarction (AMI)
Hospitalization (NQF #0505); (2) Hospital 30-Day, All-Cause, Risk-
Standardized Readmission Rate (RSRR) Following Coronary Artery Bypass
Graft (CABG) Surgery (NQF #2515); (3) Hospital 30-Day, All-Cause, Risk-
Standardized Readmission Rate (RSRR) Following Chronic Obstructive
Pulmonary Disease (COPD) Hospitalization (NQF #1891); (4) Hospital 30-
Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Heart Failure (HF) Hospitalization (NQF #0330); (5) Hospital-Level 30-
Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) Following
Elective Primary Total Hip Arthroplasty (THA) and/or Total Knee
Arthroplasty (TKA) (NQF #1551); and (6) Hospital 30-Day, All-Cause,
Risk-Standardized Readmission Rate (RSRR) Following Pneumonia
Hospitalization (NQF #0506), for groups where results are technically
feasible, adequately representative, and statistically reliable.\779\
---------------------------------------------------------------------------
\778\ IOM. 2009. Race, Ethnicity, and Language Data:
Standardization for Health Care Quality Improvement. Washington, DC:
The National Academies Press.
\779\ Although we proposed to suppress the CMS 30-Day Pneumonia
Readmission Measure (NQF #0506) in section V.G.6 of the proposed
rule, we note that the measure is not being proposed for removal and
is therefore still considered one of the six condition/procedure-
specific readmission measures included in the Hospital Readmissions
Reduction Program.
---------------------------------------------------------------------------
To allow stakeholders an opportunity to become more familiar with,
and gain comfort in interpreting stratified results using indirect
estimation of race and ethnicity as described in the proposed rule,
hospitals would receive confidential HSRs containing results for the
six condition/procedure-specific readmission measures, stratified by
both dual eligibility and race/ethnicity in Spring 2022, prior to
anticipated future publication of results in Spring 2023. Any proposal
to publicly display stratified quality measure data for these six
condition/procedure-specific readmission measures as previously
described on the Care Compare website, or expand stratified reporting
to additional social risk factors, would be made through future
rulemaking.
We invited public comment on the following: (1) The possibility of
confidentially reporting in HSRs stratified results using indirectly
estimated race and ethnicity in addition to the currently reported
results stratified using dual eligibility, for the six condition/
procedure-specific readmission measures, and by expansion of
standardized data collection to additional social factors, such as
language preference and disability status; (2) the possibility of
publicly reporting stratified results using both indirectly estimated
race and ethnicity, and dual eligibility, publicly on Care Compare,
after at least one year of confidential reporting and further
rulemaking, for the six condition/procedure-specific measures; and (3)
possible mechanisms of incorporating other demographic characteristics
into analysis that address and advance
[[Page 45264]]
health equity, such as the potential to include administrative and
self-reported data to measure co-occurring disability status.
Comment: Several commenters supported the creation and
dissemination of measures stratified by dual eligibility status,
imputed race/ethnicity, and other demographic and social risk factors.
Some commenters explicitly supported stratification by imputed race and
ethnicity for readmission measures. A commenter noted imputed race
could be used as a way to expand the collection of additional social
risk factors. Others noted that publicly reporting stratified results
could build trust and transparency with patients and communities; help
understand potential patterns in access and outcomes for patients with
social risk factors; identify patient populations that would benefit
from quality improvement strategies; and develop quality improvement
strategies targeted to specific populations.
Response: We thank the commenters for their feedback. We also
anticipate that stratified hospital-level reporting by dual eligibility
status, indirectly estimated race/ethnicity, and other demographic and
social factors, even if confidential, has the potential to support
quality improvement activities to improve quality of care and reduce
disparities in hospital outcomes. We intend to begin confidential
reporting of the six condition-specific readmission measures using both
dual eligibility and indirect estimation of race and ethnicity. We will
continue to evaluate the validity of the readmission measures
stratified by indirect estimation during the confidential reporting
period. We plan to report results confidentially to hospitals in Spring
2022 where results are technically feasible, meaningful, and
statistically reliable. Any potential future proposal to publicly
display the disparity results on Care Compare would be made through
future rulemaking.
Comment: Several other commenters that supported public reporting
of stratified results shared some concerns and suggestions for how to
report the data. Several commenters stated that stratified results
should only be publicly available for dual eligibility and self-
reported race and ethnicity. Some commenters were concerned about using
imputed data for stratification by race and ethnicity and explained
that reporting this information publicly could have unintended
consequences such as confusion for consumers and the public. Some
commenters recommended using indirect methods of calculating race and
ethnicity for the purposes of stratifying measures for confidential
reporting only. Many commenters noted concern about the lack of
accuracy of imputed data. They recommended against using imputed data
in programs that affect payment adjustments.
Response: We are sensitive to the concerns raised by stakeholders
about indirect estimation. As we summarized in the proposed rule (86 FR
25558), the Medicare program does not directly collect information from
beneficiaries on race and ethnicity, instead relying on data collected
by the Social Security Administration. A number of barriers contribute
to this information being insufficiently accurate to examine hospital-
level disparities. For example, prior to 1980, only three categories
(White, Black, and Other) were available for individuals to self-report
race, and respondents were not able to indicate Asian, American Indian/
Alaska Native, Hispanic, or Pacific Islander identities. As a result of
these constrained response options, many current beneficiaries may not
have had the opportunity to accurately self-report their race and
ethnicity. Although we have undertaken significant efforts to update
incorrect race and ethnicity information many inaccuracies remain
limiting our ability to measure disparities.
As summarized in the proposed rule (86 FR 25558), in recent years
we have sponsored the development of two indirect estimation
algorithms, both intended to correct and improve administrative
information on race and ethnicity. Indirect estimation methods such as
these can generally be used in two different ways: (a) To estimate
race/ethnicity in the absence of self-reported data; or (b) to improve
administrative data in which beneficiaries provided a self-report of
race/ethnicity but were not permitted a full set of response options
(post-1980). While there is evidence supporting the validity of both
approaches,\780\ accuracy and performance is particularly high in
situation (b), where indirect estimation allows the administrative
variables to better match the responses people would give when
permitted a full set of response options. The approach for indirect
estimation we intend to apply is situation (b), which uses an algorithm
to augment existing data to allow a constrained administrative self-
reported variable to better match what Medicare beneficiaries
themselves may have chosen when given a comprehensive set of response
options on race and ethnicity.
---------------------------------------------------------------------------
\780\ Dembosky JW, Haviland AM, Haas A, Hambarsoomian K, Weech-
Maldonado R, Wilson-Frederick SM, Gaillot S, Elliott MN. Indirect
Estimation of Race/Ethnicity for Survey Respondents Who Do Not
Report Race/Ethnicity. Med Care. 2019 May;57(5):e28-e33. doi:
10.1097/MLR.0000000000001011. PMID: 30520838. Available at: https://pubmed.ncbi.nlm.nih.gov/30520838/.
---------------------------------------------------------------------------
The Medicare Bayesian Improved Surname Geocoding Version 2.1 (MBISG
2.1) uses the original beneficiary self-report, but uses additional
information supplied by Medicare beneficiaries and information about
neighborhood composition, to make this variable better match what
Medicare beneficiaries themselves self-report when given a full set of
response options. With respect to Asian and Pacific Islander, Black,
Hispanic, and White Medicare beneficiaries, the improved version of the
administrative variable has 96-99% concordance with what Medicare
beneficiaries themselves report when allowed a full set of response
options,\781\ matching much better than the original self-reported
variable in which most Medicare beneficiaries were not allowed to
indicate Asian, American Indian/Alaska Native, Hispanic, or Pacific
Islander identities. The MBISG 2.1 also offers distinct advantages
because it generates probabilities of identification in each racial and
ethnic group for each beneficiary.
---------------------------------------------------------------------------
\781\ Ibid.
---------------------------------------------------------------------------
The MBISG 2.1 incorporates multiple sources of information to
develop racial and ethnic probabilities. In addition to the information
on race and ethnicity which that person reported to the SSA, the model
also considers the person's first and last name, the composition of the
census block group where they live, and other demographic information
that Medicare beneficiary shared. Through such a holistic approach, the
MBISG 2.1 can make accurate comparisons between groups of Medicare
beneficiaries regarding the quality of care received, including people
whose surnames are common among several racial and ethnic groups, and
people who changed their surnames upon marriage. The MBISG 2.1 is also
designed to consider those who identify as Multiracial and allows
measurement in Census categories that distinguish those who chose
single or multiple racial identity, as well as considering endorsement
of Hispanic ethnicity separately. Notably, we only intend to use the
MBISG 2.1 to make inferences about aggregated groups at the hospital
level, and do not intend to use it to make inferences about any single
individual, validation studies indicate that these aggregate estimates
[[Page 45265]]
further improve upon the higher predictive accuracy of the model.\782\
---------------------------------------------------------------------------
\782\ MBISG 2.1 validation results performed under contract #GS-
10F-0012Y/HHSM-500-2016- 00097G. Pending public release of the 2021
Part C and D Performance Data Stratified by Race, Ethnicity, and
Gender Report, available at: https://www.cms.gov/About-CMS/Agency-Information/OMH/research-and-data/statistics-and-data/stratified-reporting.
---------------------------------------------------------------------------
We believe that use of statistical imputation models, such as the
MBISG 2.1 will permit us to provide more accurate, less biased
information on disparities in hospital outcomes when reported
confidentially. We plan to report results confidentially to hospitals
in Spring 2022 where results are technically feasible, meaningful, and
statistically reliable. Any potential future proposal to publicly
display the disparity results on Care Compare would be made through
future rulemaking. We are sensitive to the concerns raised by
stakeholders and will continue to evaluate the validity of the
readmission measures when stratified by indirect estimation during the
confidential reporting period.
Comment: Some commenters shared concerns about data privacy and
raised doubt about the actionability of indirectly estimating race and
ethnicity data for stratified measures.
Response: We prioritize the privacy of the personal information of
our beneficiaries and are sensitive to concerns raised by commenters
about privacy and the use of data algorithms to infer potentially
sensitive information about individuals. We are also sensitive to the
need for hospitals to receive transparent information on health care
quality measures, including the opportunity to review measure
calculations and lists of potentially eligible patients. Notably, we
only intend to use the MBISG 2.1 to make inferences about aggregated
groups at the hospital level, and do not intend to use it to make
inferences about any single individual, validation studies indicate
that these aggregate estimates further improve upon the high predictive
accuracy of the MBISG 2.1. At this time, we do not intend to share the
individual-level race and ethnicity estimations or probabilities with
hospitals during the confidential reporting period. We look forward to
opportunities to address this issue with stakeholders in the future.
Comment: Several commenters raised concerns about the reliability
of disparity results. Specifically, they noted that groups of 10
patients may be too small to produce reliable disparity estimates at
the hospital level and highlighted the need to analyze the stability of
the random effect model.
Response: We agree that achieving statistical reliability of
measure results is important to provide more accurate, less biased
information on disparities in hospital outcomes. We will apply the same
reliability standards to reporting of disparities results as we do for
other measures that are publicly or confidentially reported. For
measures that rely on a random effect model we will assess model
stability and random effect variance prior to deriving any results, and
reporting thresholds will be adjusted based on model results.
Results will only be provided to hospitals where results are
technically feasible, meaningful, and statistically reliable.
Additional technical materials on minimum sample size thresholds will
be posted on the QualityNet website.
Comment: Commenters suggested that new reporting mechanisms may be
necessary. Several commenters suggested that public reporting should
occur only after enough time has passed to allow for testing messaging,
conducting focus groups, and other techniques to ensure public data are
comprehensible. A commenter suggested including text to aid
interpretation of publicly reported results. Others suggested public
reporting should occur after several years of confidential reporting to
ensure there is enough time to develop, test, and implement data review
and correction mechanisms.
Response: We thank the commenters for their feedback. We are
sensitive to the concerns raised by stakeholders about the need for
enough time to allow for testing of the new methods prior to any future
public reporting. As part of initial confidential reporting, we will
provide information on the QualityNet website which aids users in
interpretation of the methods and results during the confidential
reporting period. Any potential future proposal to publicly display the
disparity results on Care Compare would be made through future
rulemaking with opportunity for additional public feedback.
Comment: A commenter shared a concern about comparing disparity
results across all hospitals and recommended comparing results only
across hospitals with similar patient populations and communities.
Response: We thank the commenter for their feedback. We will
continue to evaluate the validity of the readmission measures
stratified by indirect estimation, including examining for differences
in hospital performance based on hospital characteristics and patient
and community composition, during the confidential reporting period.
Comment: Several commenters noted the need to stratify results
beyond dual eligibility and race/ethnicity to help hospitals close the
equity gap. They supported the collection and use of additional equity-
related predictor variables such as language, disability status,
financial strain, housing status, LGBTQ status, and ``evidence-based
social determinants''. A commenter recommended exploring methods to use
additional demographic characteristics in analyses. Another commenter
suggested that the Quality Reporting Document Architecture files would
have the necessary information for Within- and Across-Hospital
Disparity Methods their use would limit provider burden.
Response: We appreciate the feedback provided by the commenters
regarding stratification by other demographic characteristics in order
to further address and advance health equity. We agree with commenters
that many variables impact health equity, and note that this request
for public comment is just a first step in addressing the equity gap.
We will investigate the suggested predictor variables for use in future
reports in this program and across our programs. We agree that Quality
Reporting Document Architecture files and use of Certified Electronic
Health Record Technology would limit provider burden on any future data
collection efforts for future consideration. We will continue to take
all concerns, comments, and suggestions into account in future
policies.
Comment: Several commenters supported standardizing data sources to
capture social risk factors. A commenter highlighted that data used for
stratification should be complete and accurate. Another commenter
suggested that health information technology standards and guidance are
needed to standardize data collection processes. Another commenter
recommends that CMS should use existing data resources as a starting
point for building a health equity framework instead of requiring
hospitals to report additional data.
Response: We appreciate the feedback provided by the commenters
regarding approaches for incorporating other demographic
characteristics into analyses that address and advance health equity.
When considering future policy development, we agree that CMS would
conduct any future collection of demographic and social data in a
manner that minimizes provider reporting burden. We will take
commenters' feedback into consideration in future policy development.
[[Page 45266]]
Comment: Many commenters expressed overall support of CMS' goals to
improve health care outcomes for Medicare beneficiaries and supported
the stratification of measures in the Hospital Readmissions Reduction
Program to identify and understand disparities. They noted that
providing stratified measures could help hospitals identify gaps and
advance equity but had concerns about the timeline and process of
reporting the data. Some commenters recommended that if stratification
is used to support disparity identification, then there should be clear
statements around the intended use of the stratification variables.
Several commenters also recommended updates to the Hospital
Readmissions Reduction Program to better address health equity issues.
For example, a commenter noted the need to risk adjust readmission
measures by social risk factors, while another commenter suggested that
the Hospital Readmissions Reduction Program should be streamlined into
a more comprehensive program to better incorporate and address health
equity.
Response: We appreciate the feedback provided by the commenters
regarding measuring health equity in our hospital quality measurement
programs, including the Hospital Readmissions Reduction Program. We
will continue to take all concerns, comments, and suggestions into
account in our future policies.
15. Regulatory Updates (42 CFR 412.154)
We proposed to update the references to CMS resources in regulation
text (86 FR 25470). First, we note that we renamed our Hospital Compare
website. It is now referred to as Care Compare and is available at:
https://www.medicare.gov/care-compare. We proposed to revise our
regulations for the Hospital Readmissions Reduction Program at 42 CFR
412.154(f)(4) to reflect the new website name. We proposed to amend CFR
412.154(f)(4), by adding the phrase ``or successor website'' so that
the text reads ``Hospital Compare website or successor website.'' \783\
---------------------------------------------------------------------------
\783\ While the statute refers to Hospital Compare, the name has
been changed to Care Compare. Now called Care Compare, the website
continues to serve the purpose of displaying quality data submitted
for the Hospital Readmissions Reduction Program.
---------------------------------------------------------------------------
We invited public comment on our proposal. The comment we received
and our response are set forth in this section of this rule.
Comment: A commenter expressed support for the update to the
regulatory text that reflects the renaming of Hospital Compare to Care
Compare.
Response: We thank this commenter for its support.
After consideration of the public comment we received, we are
finalizing our proposal to update the regulatory text at 42 CFR
412.154(f)(4) as proposed, without modification.
H. Hospital Value-Based Purchasing (VBP) Program: Policy Changes
Section 1886(o) of the Act requires the Secretary to establish a
hospital value-based purchasing program (the Hospital VBP Program)
under which value-based incentive payments are made in a fiscal year
(FY) to hospitals that meet performance standards established for a
performance period for such fiscal year. Both the performance standards
and the performance period for a fiscal year are to be established by
the Secretary.
For more of the statutory background and descriptions of our
current policies for the Hospital VBP Program, we refer readers to our
codified requirements for the Hospital VBP Program at 42 CFR 412.160
through 412.168.
1. Flexibilities for the Hospital VBP Program in Response to the Public
Health Emergency (PHE) Due to COVID-19
a. Measure Suppression Policy for the Duration of the PHE for COVID-19
In previous rules, we have identified the need for flexibility in
our quality programs to account for the impact of changing conditions
that are beyond participating hospitals' control. We identified this
need because we would like to ensure that participants in our programs
are not affected negatively when their quality performance suffers not
due to the care provided, but due to external factors.
A significant example of the type of external factor that may
affect quality measurement is the COVID-19 public health emergency
(PHE), which has had, and continues to have, significant and ongoing
effects on the provision of medical care in the country and around the
world. The COVID-19 pandemic and associated PHE has impeded effective
quality measurement in many ways. Changes to clinical practices to
accommodate safety protocols for medical personnel and patients, as
well as unpredicted changes in the number of stays and facility-level
case mixes, have affected the data used in quality measurement and the
resulting quality scores. Measures used in the Hospital VBP Program
need to be evaluated to determine whether their specifications need to
be updated to account for new clinical guidelines, diagnosis or
procedure codes, and medication changes that we have observed during
the PHE. Additionally, because COVID-19 prevalence is not consistent
across the country, hospitals located in different areas have been
affected differently at different times throughout the pandemic. Under
those circumstances, we remain significantly concerned that Hospital
VBP Program quality measure scores that are calculated using data
submitted during the PHE for COVID-19 are distorted and will result in
skewed payment incentives and inequitable payments, particularly for
hospitals that have treated more COVID-19 patients than others.
It is not our intention to penalize hospitals based on measure
scores that we believe are distorted by the COVID-19 PHE and, thus, not
reflective of the quality of care that the measures in the Hospital VBP
Program were designed to assess. As previously discussed, the COVID-19
PHE has had, and continues to have, significant and enduring effects on
health care systems around the world, and affects care decisions,
including those made on clinical topics covered by the Hospital VBP
Program's measures. As a result of the COVID-19 PHE, hospitals could
provide care to their patients that meets the underlying clinical
standard but results in worse measured performance, and by extension,
lower incentive payments in the Hospital VBP Program. We are also
concerned that regional differences in COVID-19 prevalence during the
performance periods for the FY 2022 and FY 2023 Hospital VBP Programs,
which include CY 2020 data, have directly affected hospitals' measure
scores for the FY 2022 and FY 2023 Hospital VBP program years. Although
these regional differences in COVID-19 prevalence rates do not reflect
differences in the quality of care furnished by hospitals, they
directly affect the value-based incentive payments that these hospitals
are eligible to receive and could result in an unfair and inequitable
distribution of those incentives. These inequities could be especially
pronounced for hospitals that have treated a large number of COVID-19
patients.
Therefore, we proposed to adopt a policy for the duration of the
PHE for COVID-19 that would enable us to suppress the use of data for a
number of measures if we determine that circumstances caused by the
COVID-19 PHE have affected those measures and the resulting Total
Performance Scores significantly (86 FR 25470). We also proposed, as
described more fully in
[[Page 45267]]
section V.H.1.b. of this final rule, to suppress all of the measures in
the Person and Community Engagement, Safety, and Efficiency and Cost
Reduction Domains for the FY 2022 program year because we have
determined that circumstances caused by the COVID-19 PHE have affected
those measures significantly, and to adopt a special scoring and
payment rule for that program year. Under this special rule for FY
2022, which we would codify in our regulations at Sec. 412.168, we
would calculate measure rates for all measures, including the measures
we proposed to suppress, but would only calculate achievement and
improvement scores for the measures in the Clinical Outcomes Domain,
which we did not propose to suppress for FY 2022. We would also
calculate domain scores for the Clinical Outcomes Domain but because
that domain is only weighted at 25 percent of the TPS and we would have
no other domain scores, we would not calculate total performance scores
(TPSs) for hospitals. Finally, we would reduce each hospital's base-
operating DRG payment amount by 2 percent, as required under section
1886(o)(7)(B) of the Act, but because no hospital would receive a TPS
for FY 2022, we would assign to each hospital a value-based incentive
payment percentage that results in a value-based incentive payment
amount that matches the 2 percent reduction to the base operating DRG
payment amount. The net result of these payment adjustments would be
neutral for hospitals. That is, a hospital's base operating DRG payment
amount would remain unchanged for FY 2022.
We would still provide confidential feedback reports to hospitals
on their FY 2022 measure rates on all measures to ensure that they are
made aware of the changes in performance rates that we have observed.
We would also publicly report Q3 and Q4 2020 data with appropriate
caveats noting the limitations of the data due to the PHE for COVID-19.
We noted that, due to operational complications associated with
extended deadlines for Q3 2020 data submissions for the HCAHPS and HAI
measures granted in response to the system issues as well as the
proposed changes in the FY 2022 scoring methodology,\784\ and in order
to allow enough time for the appropriate notice and comment period
process, we may not be able to provide hospitals with the feedback
reports for FY 2022 until after August 1, 2021. We intend to provide
hospitals with these feedback reports for FY 2022 as soon as possible
and estimate that we will be able to provide reports before the end of
2021.
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\784\ All Programs (IQR, OQR, PCH, Validation, VBP, eCQM, HACRP,
ESRD QIP) Subject: Q3 2020 Data Submission Deadline Extension for
Certain Medicare Quality Reporting and Value-Based Purchasing
Programs, available at: https://www.cms.gov/files/document/2020-12-inpatient-quarter-3-2020-extension-listserve-final.pdf.
---------------------------------------------------------------------------
For the FY 2023 program year, we proposed to suppress only one
measure, MORT-30-PN because we have determined that circumstances
caused by the COVID-19 PHE have affected this measure significantly,
but we did not propose to adopt a special scoring and payment rule for
that program year (86 FR 25470). Instead, the scoring and payment rules
we previously adopted at Sec. 412.160 through 412.165 would apply. The
FY 2024 and FY 2025 program years also use CY 2020 data, but we did not
propose to suppress the MORT-30-PN measure in the FY 2024 and FY 2025
program years at this time. We will continue to analyze this data and
will address suppression of MORT-30-PN for additional program years in
future rulemaking.
In developing the measure suppression provision, we considered what
circumstances caused by the PHE for COVID-19 would affect a quality
measure significantly enough to warrant its suppression in the Hospital
VBP Program (86 FR 25471). We stated our belief that significant
deviation in measured performance that can be reasonably attributed to
the PHE is a significant indicator of changes in clinical conditions
that affect quality measurement. Similarly, we stated our belief that a
measure may be focused on a clinical topic or subject that is proximal
to the disease, pathogen, or other health impacts of the PHE. As has
been the case during the COVID-19 pandemic, we stated our belief that
rapid or unprecedented changes in clinical guidelines and care
delivery, potentially including appropriate treatments, drugs, or other
protocols, may affect quality measurement significantly and should not
be attributed to the participating facility positively or negatively.
We also noted that scientific understanding of a particular disease or
pathogen may evolve quickly during an emergency, especially in cases of
new disease or conditions. Finally, we stated our belief that, as
evidenced during the COVID-19 pandemic, national or regional shortages
or changes in health care personnel, medical supplies, equipment,
diagnostic tools, and patient case volumes or facility-level case mix
may result in significant distortions to quality measurement.
Based on these considerations, we developed a number of Measure
Suppression Factors that we believe should guide our determination of
whether to propose to suppress a Hospital VBP Program measure for one
or more program years where the baseline or performance period of the
measure overlaps with the PHE for COVID-19. We proposed to adopt these
Measure Suppression Factors for use in the Hospital VBP Program and,
for consistency, the following other value-based purchasing programs:
Hospital Readmissions Reduction Program, HAC Reduction Program, and
Skilled Nursing Facility Value-Based Purchasing Program. We stated our
belief that these Measure Suppression Factors will help us evaluate the
Hospital VBP Program's measures and that their adoption in the other
value-based purchasing programs, as previously noted, will help ensure
consistency in our measure evaluations across programs. The proposed
Measure Suppression Factors are as follows:
Significant deviation in national performance on the
measure during the PHE for COVID-19, which could be significantly
better or significantly worse compared to historical performance during
the immediately preceding program years.
Clinical proximity of the measure's focus to the relevant
disease, pathogen, or health impacts of the PHE for COVID-19.
Rapid or unprecedented changes in--
++ Clinical guidelines, care delivery or practice, treatments,
drugs, or related protocols, or equipment or diagnostic tools or
materials; or
++ The generally accepted scientific understanding of the nature or
biological pathway of the disease or pathogen, particularly for a novel
disease or pathogen of unknown origin.
Significant national shortages or rapid or unprecedented
changes in--
++ Healthcare personnel;
++ Medical supplies, equipment, or diagnostic tools or materials;
or
++ Patient case volumes or facility-level case mix.
We also considered alternatives to this proposed policy that could
fulfill our objective to not penalize hospitals for measure results
that are distorted due to the PHE for COVID-19. As previously noted,
the country continues to grapple with the effects of the COVID-19 PHE,
and in March 2020, CMS issued a nationwide, blanket Extraordinary
Circumstances Exception (ECE) for all hospitals and other facilities
participating in our quality reporting and value-based purchasing
programs in response to the COVID-19 PHE. This blanket ECE excepted
data reporting requirements for Q1 and Q2
[[Page 45268]]
2020 data, including excepting the use of claims data, HCAHPS survey
data, and data collected through the CDC's web-based surveillance
system for this data period. Quality data collection resumed on July 1,
2020. We considered extending this blanket ECE for Q3 and Q4 2020. This
alternative would have protected hospitals from having their quality
data used for quality scoring purposes if those data were affected
significantly by the COVID-19 PHE. However, this option would have made
hospital quality data collection and reporting to CMS no longer
mandatory and would have left us with no comprehensive data available
for use in providing confidential performance feedback to hospitals or
monitoring for purposes of deciding whether programmatic changes are
necessary to adequately respond to the PHE.
As an alternative to the proposed quality measure suppression
policy, we also considered not suppressing any measures under the
Hospital VBP Program. However, this alternative would mean assessing
hospitals using quality measure data that has been significantly
affected by the COVID-19 PHE. Additionally, given the geographic
disparities in the COVID-19 PHE's effects, we stated in the proposed
rule that we believe that if we do not adopt a policy to suppress
measures that have been significantly affected by the PHE for COVID-19,
hospitals in regions that are more heavily impacted by the COVID-19 PHE
will be at a disadvantage when compared to hospitals in regions that
are either not as heavily impacted, or are heavily impacted at a
different point in the pandemic.
We viewed the measure suppression proposal as a necessity to ensure
that the Hospital VBP Program does not reward or penalize hospitals
based on circumstances caused by the PHE for COVID-19 that the
Program's measures were not designed to accommodate. We intended for
policy to provide short-term relief to hospitals when we have
determined that one or more of the Measure Suppression Factors warrants
the suppression of one or more of the Program's measures.
We invited public comment on this provision for the adoption of a
measure suppression policy for the Hospital VBP Program for the
duration of the PHE for COVID-19, and also on the proposed Measure
Suppression Factors that we developed for purposes of the proposed
policy.
We also invited comment on whether we should consider adopting a
measure suppression policy in the situation of a future national PHE,
and if so, whether under such a policy, we should have the flexibility
to suppress certain measures without specifically proposing to do so in
rulemaking. We also requested comment on whether we should in future
years consider adopting any form of regional adjustment for the
proposed measure suppression policy that could take into account any
disparate effects of circumstances affecting hospitals around the
country that would prompt us to suppress a measure. For example, COVID-
19 affected different regions of the country at different rates
depending on factors like time of year, geographic density, State and
local policies, and health care system capacity. In future years and
for future PHEs, should they arise, we also requested commenters'
feedback on whether we should, rather than suppress a measure
completely for scoring and payment purposes, consider a suppression
policy with more granular effects based on our assessment of the
geographic effects of the circumstances, and if so, how region-based
measure suppression could be accounted for within the program's scoring
methodology.
The comments we received on our proposals and other requests for
comments, as well as our responses, are set forth below.
Comment: Many commenters expressed support for our proposed measure
suppression policy, agreeing with our stated goal of ensuring that
hospitals are not rewarded or penalized for their quality performance
based on non-representative data. Commenters encouraged us to consult
with stakeholders on any subregulatory policy changes on this topic in
the future, including any potential changes to the Measure Suppression
Factors, and requested that we explain the effects of any changes to
the Measure Suppression Factors in detail. Some commenters recommended
that we ensure that the suppression policy does not unintentionally
penalize hospitals.
Response: We thank the commenters for their support. We acknowledge
commenters' concern that the suppression policy should not
unintentionally penalize hospitals. As discussed in the FY 2022 IPPS/
LTCH PPS proposed rule and section V.H.1.b of this final rule, we
proposed to suppress measures for purposes of scoring and payment
adjustments because of our concern that we could be unable to make
fair, national comparisons of hospitals across the country.
Comment: Some commenters expressed concerns about our proposed
suppression policy. Several commenters argued that we should not
publicly report suppressed data, suggesting that data unfit to
determine payments should not be publicly reported, while others
suggested that we should note clearly that any publicly reported data
has been affected by the COVID-19 PHE.
Response: We believe it is important to balance fairness in value-
based payments with the public's need for transparency. Therefore, we
intend to make the data publicly available. We understand the
commenters' concern about publicly reporting data that was gathered by
hospitals during the COVID-19 PHE; however, we will make clear in the
public presentation of any data on a suppressed measure that the
measure has been suppressed for purposes of scoring and payment
adjustments because of the effects of the COVID-19 PHE. We will
appropriately caveat the data in order to mitigate public confusion and
avoid misrepresenting quality of care.
Comment: Some commenters suggested that we should limit this policy
to the current PHE given the unique circumstances involved in the
COVID-19 pandemic. A few commenters expressed concerns about CMS being
empowered to implement scoring adjustments and payment changes outside
of rulemaking, and worried that comparisons between suppressed and
unsuppressed scores would be unfair.
Response: We did not propose to apply this policy beyond the COVID-
19 PHE. Any scoring adjustments or payment changes that might address a
different, future fiscal year of the program due to the COVID-PHE or
another type of emergency would be proposed through rulemaking. We
acknowledge the commenters' concerns about potentially unfair
comparisons and will consider for future rulemaking any such issues we
identify.
Comment: A few commenters requested additional information
regarding how CMS plans to refresh the Overall Hospital Quality Star
Ratings and HCAHPS Star Ratings when only Q3 and Q4 of CY 2020 data are
scheduled to be publicly reported.
Response: We are continuing to evaluate the data impacts and will
provide information on future refreshes to the Overall Hospital Star
Ratings and HCAHPS Star Ratings when available. Information will be
provided through the Overall Hospital Star Ratings' and HCAHPS Star
Ratings' previously established communication channels.
Comment: Several commenters recommended that we study the effects
of the measure suppression policy and the Measure Suppression Factors
to
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inform any suppression policies for future PHEs and that we work with
stakeholders before adopting additional measure suppression policies. A
commenter recommended that we include more flexible language in our
suppression factors to account for our evolving understanding of COVID-
19, while another commenter suggested that we continue monitoring the
effects of COVID-19 on 2021 quality performance and consider updating
measure specifications to exclude COVID-19 patients or change our risk
adjustment models. Other commenters suggested that we monitor the
shorter performance periods carefully, as well as the effects of the
policy on future benchmarking, and that we assess the indirect effects
that the COVID-19 PHE has had on all aspects of medical care delivery.
Response: We share commenters' concerns about the potential long-
term effects of the measure suppression policy, including the Measure
Suppression Factors. While we appreciate the commenter's suggestion
that we incorporate more flexibility into the Measure Suppression
Factors, we believe the specificity with which we proposed them was
necessary to provide hospitals and other members of the stakeholder
community with clear insight into the decision-making process that we
employed in response to the COVID-19 PHE. We agree with commenters that
we should monitor the PHE's ongoing effects carefully and we will work
with measure developers to refine measure specifications as
circumstances warrant. We will also assess performance periods,
benchmarks, and other effects of the COVID-19 PHE carefully and welcome
stakeholders' continuing feedback as we continue responding to the PHE.
Comment: Some commenters recommended that we refine our proposed
Measure Suppression Factors. Some commenters suggested that we define
them more precisely to be fully transparent with the factors' terms and
effects, arguing that we have not defined what we consider to be
``significant'' deviation in national performance on a measure during a
PHE. A commenter also argued that the Measure Suppression Factors
should be focused on effects on Medicare beneficiaries, not on
providers or circumstances within the control of providers. A commenter
suggested that we consider suppressing measures for individual
hospitals where performance may have deviated significantly from past
performance, while another commenter recommended that we ensure that
the Measure Suppression Factors do not assess provider organizations'
quality per se, but rather, the PHE at issue.
Response: We thank the commenters for this feedback. We believe
that some level of discretion is necessary in the face of evolving
circumstances like those that have confronted us in the COVID-19 PHE.
In deciding which measures to suppress, and as discussed further in
section VI.H.1.b. of this final rule, we examined each measure and
determined that the evidence showed significant deviation in the
individual measure performance data associated with the COVID-19 PHE.
We believe providing the evidence for the measure suppressions is
transparent and provides sufficient explanation for our rationales. We
note further that we designed several of the Measure Suppression
Factors to account for circumstances that could affect the health and
safety of patients and healthcare personnel, and we believe that
situations like personal protective equipment (PPE) shortages do affect
the care provided to Medicare beneficiaries. We recommend that any
individual hospitals believing that they have faced extraordinary
circumstances that affect their quality performance, but that have not
been addressed by the suppression policy, consider seeking an
Extraordinary Circumstances Exception.\785\
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\785\ For more information regarding Extraordinary Circumstances
Exceptions requests under the Hospital VBP Program, please see: