[Federal Register Volume 87, Number 90 (Tuesday, May 10, 2022)]
[Proposed Rules]
[Pages 28108-28746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-08268]
[[Page 28107]]
Vol. 87
Tuesday,
No. 90
May 10, 2022
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 412, 413, 482, et al.
Medicare Program; Hospital Inpatient Prospective Payment Systems for
Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2023 Rates;
Quality Programs and Medicare Promoting Interoperability Program
Requirements for Eligible Hospitals and Critical Access Hospitals;
Costs Incurred for Qualified and Non-Qualified Deferred Compensation
Plans; and Changes to Hospital and Critical Access Hospital Conditions
of Participation; Proposed Rule
Federal Register / Vol. 87, No. 90 / Tuesday, May 10, 2022 / Proposed
Rules
[[Page 28108]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 412, 413, 482, 485, and 495
[CMS-1771-P]
RIN 0938-AU84
Medicare Program; Hospital Inpatient Prospective Payment Systems
for Acute Care Hospitals and the Long-Term Care Hospital Prospective
Payment System and Proposed Policy Changes and Fiscal Year 2023 Rates;
Quality Programs and Medicare Promoting Interoperability Program
Requirements for Eligible Hospitals and Critical Access Hospitals;
Costs Incurred for Qualified and Non-Qualified Deferred Compensation
Plans; and Changes to Hospital and Critical Access Hospital Conditions
of Participation
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would: Revise the Medicare hospital
inpatient prospective payment systems (IPPS) for operating and capital-
related costs of acute care hospitals; make changes relating to
Medicare graduate medical education (GME) for teaching hospitals;
update 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). In additon it
would establish new requirements and revise existing requirements for
eligible hospitals and critical access hospitals (CAHs) participating
in the Medicare Promoting Interoperability Program; provide estimated
and newly established performance standards for the Hospital Value-
Based Purchasing (VBP) Program; and propose updated policies for the
Hospital Readmissions Reduction Program, Hospital Inpatient Quality
Reporting (IQR) Program, Hospital VBP Program, Hospital-Acquired
Condition (HAC) Reduction Program, PPS-Exempt Cancer Hospital Reporting
(PCHQR) Program, and the Long-Term Care Hospital Quality Reporting
Program (LTCH QRP). It would also revise the hospital and critical
access hospital (CAH) conditions of participation (CoPs) for infection
prevention and control and antibiotic stewardship programs; and codify
and clarify policies related to the costs incurred for qualified and
non-qualified deferred compensation plans. Lastly, this proposed rule
would provide updates on the Rural Community Hospital Demonstration
Program and the Frontier Community Health Integration Project.
DATES: To be assured consideration, comments must be received at one of
the addresses provided in the ADDRESSES section, no later than 5 p.m.
EDT on June 17, 2022.
ADDRESSES: In commenting, please refer to file code CMS-1771-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may (and we encourage you to) submit
electronic comments on this regulation to https://www.regulations.gov.
Follow the instructions under the ``submit a comment'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1771-P, P.O. Box 8013,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments via
express or overnight mail to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1771-P, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
For information on viewing public comments, we refer readers to the
beginning of the SUPPLEMENTARY INFORMATION section.
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,
Graduate Medical Education, 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.
Allison Pompey, (410) 786-2348, New Technology Add-On Payments and
New COVID-19 Treatments Add-on Payments Issues.
Mady Hue, [email protected], and Andrea Hazeley,
[email protected], MS-DRG Classifications Issues.
Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital
Demonstration Program Issues.
Jeris Smith, [email protected], Frontier Community Health
Integration Project Demonstration Issues.
Sophia Chan, [email protected], Hospital Readmissions
Reduction Program--Administration Issues.
Jennifer Robinson, [email protected], Hospital
Readmissions Reduction Program--Measures Issues.
Jennifer Tate, [email protected], Hospital-Acquired
Condition Reduction Program--Administration Issues.
Yuling Li, [email protected], Hospital-Acquired Condition
Reduction Program--Measures Issues.
Julia Venanzi, [email protected], Hospital Inpatient
Quality Reporting and Hospital Value-Based Purchasing Programs--
Administration Issues.
Melissa Hager, [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.
Ora Dawedeit, [email protected], PPS-Exempt Cancer Hospital
Quality Reporting--Administration Issues.
Leah Domino, [email protected], PPS-Exempt Cancer Hospital
Quality Reporting Program--Measure Issues.
Christy Hughes, [email protected], Long-Term Care Hospital
Quality Reporting Program--Data Reporting Issues.
Elizabeth Holland, [email protected], Medicare
Promoting Interoperability Program.
CAPT Scott Cooper, USPHS, (410) 786-9465, and Dawn Linn,
[email protected], Conditions of Participation Pandemic Reporting
Requirements for Hospitals and Critical Access Hospitals.
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SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: https://www.regulations.gov/. Follow the search instructions on that website to
view public comments.
Tables Available Through the Internet on the CMS Website
The IPPS tables for this fiscal year (FY) 2023 proposed 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 2023 IPPS Proposed rule Home Page'' or ``Acute
Inpatient--Files for Download.'' The LTCH PPS tables for this FY 2023
proposed rule are available through the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation
Number CMS-1771-P. For further details on the contents of the tables
referenced in this proposed rule, we refer readers to section VI. of
the Addendum to this FY 2023 IPPS/LTCH PPS proposed 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 That Would Be
Implemented in This Proposed Rule
D. Summary of the Provisions of This Proposed Rule
E. Advancing Health Information Exchange
F. Proposed Use of FY 2021 Data and Proposed Methodology
Modifications for the FY 2023 IPPS and LTCH PPS Ratesetting
II. Proposed 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. Proposed FY 2023 MS-DRG Documentation and Coding Adjustment
D. Proposed Changes to Specific MS-DRG Classifications
E. Recalibration of the FY 2023 MS-DRG Relative Weights
F. Add-On Payments for New Services and Technologies for FY 2023
III. Proposed 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. Proposed Occupational Mix Adjustment to the FY 2023 Wage
Index
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2023 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 Proposed Budget Neutrality Adjustment
H. Proposed FY 2023 Wage Index Tables
I. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
J. Proposed 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. Proposed Labor-Related Share for the FY 2023 Wage Index
IV. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2023 (Sec. 412.106)
A. General Discussion
B. Eligibility for Empirically Justified Medicare DSH Payments
and Uncompensated Care Payments
C. Empirically Justified Medicare DSH Payments
D. Uncompensated Care Payments
E. Proposed Supplemental Payment for Indian Health Service and
Tribal Hospitals and Puerto Rico Hospitals for FY 2023 and
Subsequent Fiscal Years
F. Counting Days Associated With Section 1115 Demonstrations in
the Medicaid Fraction
V. Other Decisions and Changes to the IPPS for Operating Costs
A. Proposed Changes in the Inpatient Hospital Updates for FY
2022 (Sec. 412.64(d))
B. Rural Referral Centers (RRCs)--Proposed Annual Updates to
Case-Mix Index (CMI) and Discharge Criteria (Sec. 412.96)
C. Proposed Payment Adjustment for Low-Volume Hospitals (Sec.
412.101)
D. Proposed Changes in the Medicare-Dependent, Small Rural
Hospital (MDH) Program (Sec. 412.108)
E. Proposed Indirect Medical Education (IME) Payment Adjustment
Factor (Sec. 412.105)
F. Proposed Payment for Indirect and Direct Graduate Medical
Education Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)
G. Proposed Payment Adjustment for Certain Clinical Trial and
Expanded Access Use Immunotherapy Cases (Sec. Sec. 412.85 and
412.312)
H. Hospital Readmissions Reduction Program: Proposed Updates and
Changes (Sec. Sec. 412.150 Through 412.154)
I. Hospital Value-Based Purchasing (VBP) Program: Proposed
Policy Changes
J. Hospital-Acquired Conditions (HAC) Reduction Program:
Proposed Updates and Changes (Sec. 412.170)
K. Rural Community Hospital Demonstration Program
VI. Proposed Changes to the IPPS for Capital-Related Costs
A. Overview
B. Additional Provisions
C. Proposed Annual Update for FY 2023
VII. Proposed Changes for Hospitals Excluded From the IPPS
A. Proposed Rate-of-Increase in Payments to Excluded Hospitals
for FY 2023
B. Critical Access Hospitals (CAHs)
VIII. Proposed Changes to the Long-Term Care Hospital Prospective
Payment System (LTCH PPS) for FY 2023
A. Background of the LTCH PPS
B. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-
LTC-DRG) Classifications and Relative Weights for FY 2023
C. Proposed Changes to the LTCH PPS Payment Rates and Other
Proposed Changes to the LTCH PPS for FY 2023
IX. Quality Data Reporting Requirements for Specific Providers and
Suppliers
A. Assessment of the Impact of Climate Change and Health Equity
B. Overarching Principles for Measuring Healthcare Quality
Disparities Across CMS Quality Programs--Request for Information
C. Continuing to Advance to Digital Quality Measurement and the
Use of Fast Healthcare Interoperability Resources (FHIR) in Hospital
Quality Programs--Request for Information
D. Advancing the Trusted Exchange Framework and Common
Agreement-Request for Information
E. Hospital Inpatient Quality Reporting (IQR) Program
F. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program
G. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)
H. Proposed Changes to the Medicare Promoting Interoperability
Program
X. Changes for Hospitals and Other Providers and Suppliers
A. Codification of the Costs Incurred for Qualified and Non-
Qualified Deferred Compensation Plans
B. Condition of Participation (CoP) Requirements for Hospitals
and CAHs To Report Data Elements To Address Any Future Pandemics and
Epidemics as Determined by the Secretary
C. Request for Public Comments on IPPS Payment Adjustment for
N95 Respirators That Are Wholly Domestically Made
XI. MedPAC Recommendations
XII. Other Required Information
A. Publicly Available Files
B. Collection of Information Requirements
C. Response to Comments
Addendum--Schedule of Standardized Amounts, Update Factors, and
Rate-of-
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Increase Percentages Effective With Cost Reporting Periods Beginning
on or After October 1, 2022 and Payment Rates for LTCHs Effective
for Discharges Occurring on or After October 1, 2022
I. Executive Summary and Background
A. Executive Summary
1. Purpose and Legal Authority
This FY 2023 IPPS/LTCH PPS proposed rule would make 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 would make 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 proposed rule also would make policy changes to
programs associated with Medicare IPPS hospitals, IPPS-excluded
hospitals, and LTCHs. In this FY 2023 proposed rule, we are proposing
to implement a permanent policy to cap wage index decreases as well as
continuing policies to address wage index disparities impacting low
wage index hospitals. We also are proposing to make changes relating to
Medicare graduate medical education (GME) for teaching hospitals and
new technology add-on payments.
We are proposing to establish new requirements and revise existing
requirements for eligible hospitals and CAHs participating in the
Medicare Promoting Interoperability Program.
We are proposing updated policies for the Hospital Readmissions
Reduction Program, Hospital Inpatient Quality Reporting (IQR) Program,
Hospital Value-Based Purchasing (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. We are also requesting feedback across
programs on health impacts due to climate change and on overarching
principles in measuring healthcare quality disparities in hospital
quality programs and value-based purchasing programs. We are also
seeking feedback on advancing the Trusted Exchange Framework and Common
Agreement (TEFCA). Additionally, due to the impact of the COVID-19 PHE
on measure data used in our value-based purchasing programs, we are
proposing to suppress several measures in the Hospital VBP Program and
HAC Reduction Program. In addition to these measure suppressions for
the Hospital VBP Program, we are proposing to implement a special
scoring methodology for FY 2023 that results in each hospital receiving
a value-based incentive payment amount that matches their 2 percent
reduction to the base operating DRG payment amount. Similarly, we are
also proposing to suppress all six measures in the HAC Reduction
Program for the FY 2023 program year. If finalized as proposed, for the
FY 2023 program year, hospitals participating in the HAC Reduction
Program will not be given a measure score, a Total HAC score, nor will
hospitals receive a payment penalty. We are also providing estimated
and newly established performance standards for the Hospital VBP
Program. For the Hospital Readmissions Reduction Program, we are
proposing to resume the use of the one affected measure under the
proposed measure suppression policy for the FY 2024 applicable period
following suppression of this measure for the FY 2023 applicable
period, and incorporating measure updates to the six condition/
procedure measures addressed by the Hospital Readmission Reduction
Program to account for patient history of COVID-19.
Under various statutory authorities, we either discuss continued
program implementation or propose to make changes to the Medicare IPPS,
the LTCH PPS, other related payment methodologies and programs for FY
2023 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 (Pub. L. (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 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
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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 1861(e) of the Act provides the specific statutory
authority for the hospital CoPs; section 1820(e) of the Act provides
similar authority for CAHs. The hospital provision at section
1861(e)(9) of the Act authorizes the Secretary to issue any regulations
he or she deems necessary to protect the health and safety of patients
receiving services in those facilities; the CAH provision at section
1820(e)(3) of the Act authorizes the Secretary to issue such other
criteria as he or she may require.
2. Summary of the Major Provisions
The following is a summary of the major provisions in this proposed
rule. In general, these major provisions are being proposed as part of
the annual update to the payment policies and payment rates, consistent
with the applicable statutory provisions. A general summary of the
proposed changes in this proposed rule is presented in section I.D. of
the preamble of this proposed rule.
a. Proposed 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 Pub. L. 110-90 until FY 2013. Prior to the ATRA,
this amount could not have been recovered under Pub. L. 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 2023, we are proposing to make an adjustment of
+ 0.5 percent to the standardized amount.
b. Proposed Use of FY 2021 Data and Proposed Methodology Modifications
for the FY 2023 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 proposed rule, we discuss our proposal to return to
our historical practice of using the most recent data available for
purposes of FY 2023 ratesetting, including the FY 2021 MedPAR claims
and FY 2020 cost report data, with certain proposed modifications to
our usual ratesetting methodologies to account for the anticipated
decline in COVID-19 hospitalizations of Medicare beneficiaries at IPPS
hospitals and LTCHs as compared to FY 2021. As discussed in greater
detail in section I.F of the preamble of this proposed rule, we believe
that it is reasonable to assume that some Medicare beneficiaries will
continue to be hospitalized with COVID-19 at IPPS hospitals and LTCHs
in FY 2023. Given this expectation, we believe it is appropriate to use
FY 2021 data, as the most recent available data during the period of
the COVID-19 PHE, for purposes of the FY 2023 IPPS and LTCH PPS
ratesetting. However, as also discussed in greater detail in section
I.F. of the preamble of this proposed rule, we believe it is reasonable
to assume based on the information available at this time that there
will be fewer COVID-19 hospitalizations in FY 2023 than in FY 2021.
Therefore, we are proposing to use the FY 2021 data for purposes of the
FY 2023 IPPS and LTCH PPS ratesetting but with modifications to our
usual ratesetting methodologies to account for the anticipated decline
in COVID-19 hospitalizations of Medicare beneficiaries at IPPS
hospitals and LTCHs as compared to FY 2021. As discussed in section
I.O. of Appendix A of this proposed rule, we are also requesting
comments on, as an alternative to our proposed approach, the use of the
FY 2021 data for purposes of FY 2023 ratesetting without the proposed
modifications to our usual methodologies for the calculation of the FY
2023 MS-DRG and MS-LTC-DRG relative weights or the usual methodologies
used to determine the FY 2023 outlier fixed-loss amount for IPPS cases
and LTCH PPS standard Federal payment rate cases.
c. Proposed Continuation of the Low Wage Index Hospital Policy
To help mitigate wage index disparities between high wage and low
[[Page 28112]]
wage 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 our intention that this policy would be
effective for at least 4 years, beginning in FY 2020, in order to allow
employee compensation increases implemented by these hospitals
sufficient time to be reflected in the wage index calculation. We are
proposing for the low wage index hospital policy to continue for FY
2023, and are also proposing to apply this policy in a budget neutral
manner by applying an adjustment to the standardized amounts.
d. Proposed Permanent Cap on Wage Index Decreases
Consistent with section 1886(d)(3)(E) of the Act, we adjust the
IPPS 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 and update the wage index
annually based on a survey of wages and wage-related costs of short-
term, acute care hospitals. As described in section III.N. of the
preamble of this proposed rule, we have further considered the comments
we received during the FY 2022 rulemaking recommending a permanent 5
percent cap policy to prevent large year-to-year variations in wage
index values as a means to reduce overall volatility for hospitals.
Under the authority at sections 1886(d)(3)(E) and 1886(d)(5)(I)(i) of
the Act, for FY 2023 and subsequent years, we are proposing to apply a
5-percent cap on any decrease to a hospital's wage index from its wage
index in the prior FY, regardless of the circumstances causing the
decline. That is, we are proposing that a hospital's wage index for FY
2023 would not be less than 95 percent of its final wage index for FY
2022, and that for subsequent years, a hospital's wage index would not
be less than 95 percent of its final wage index for the prior FY. We
are also proposing to apply this proposed wage index cap policy in a
budget neutral manner through a national adjustment to the standardized
amount under our authority in sections 1886(d)(3)(E) and
1886(d)(5)(I)(i) of the Act.
e. Proposed DSH Payment Adjustment and Additional Payment for
Uncompensated Care
Under section 1886(r) of the Act, which was added by section 3133
of the Affordable Care Act, starting in FY 2014, Medicare
disproportionate share hospitals (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 proposed rule, we are proposing to update our estimates of
the three factors used to determine uncompensated care payments for FY
2023. We are also proposing to continue to use uninsured estimates
produced by CMS' Office of the Actuary (OACT) as part of the
development of the National Health Expenditure Accounts (NHEA) in
conjunction with more recently available data in the calculation of
Factor 2. For FY 2023, we are proposing to use the two most recent
years of audited data on uncompensated care costs from Worksheet S-10
of the FY 2018 cost reports and the FY 2019 cost reports to calculate
Factor 3 in the uncompensated care payment methodology for all eligible
hospitals. In addition, for FY 2024 and subsequent fiscal years, we are
proposing to use a three-year average of the data on uncompensated care
costs from Worksheet S-10 for the three most recent fiscal years for
which audited data are available. Beginning in FY 2023, we are
proposing to discontinue the use of low-income insured days as a proxy
for uncompensated care to determine Factor 3 for Indian Health Service
(IHS) and Tribal hospitals and hospitals located in Puerto Rico. In
addition, we are proposing certain methodological changes for
calculating Factor 3 for FY 2023 and subsequent fiscal years.
We recognize that our proposal to discontinue the use of the low-
income insured days proxy to calculate uncompensated care payments for
Indian Health Service (IHS) and Tribal hospitals and hospitals located
in Puerto Rico could result in a significant financial disruption for
these hospitals. Accordingly, we are proposing to use our exceptions
and adjustments authority under section 1886(d)(5)(I) to establish a
new supplemental payment for IHS and Tribal hospitals and hospitals
located in Puerto Rico, beginning in FY 2023.
Additionally, we are proposing to revise our regulation governing
the calculation of the Medicaid fraction of the DSH calculation. Under
this proposal, we would revise our regulation to explicitly reflect our
interpretation of the language ``regarded as'' ``eligible for medical
assistance under a State plan approved under title XIX'' in section
1886(d)(5)(F)(vi) of the Act to mean patients who receive health
insurance authorized by a section 1115 demonstration or patients who
pay for all or substantially all of the cost of such health insurance
with premium assistance authorized by a section 1115 demonstration,
where state expenditures to provide the health insurance or premium
assistance may be matched with funds from Title XIX. Moreover, of the
groups we ``regard as'' Medicaid eligible, we propose to include in the
Medicaid fraction only the days of those patients who obtain health
insurance directly or with premium assistance that provides essential
health benefits (EHB) as set forth in 42 CFR part 440, subpart C, for
an Alternative Benefit Plan (ABP), and for patients obtaining premium
assistance, only the days of those patients for which the premium
assistance is equal to or greater than 90 percent of the cost of the
health insurance, provided the patient is not also entitled to Medicare
Part A.
f. Proposed Changes to GME Payments Based on Milton S. Hershey Medical
Center, et al. v. Becerra Litigation
On May 17, 2021, the U.S. District Court for the District of
Columbia ruled against CMS's method of calculating direct GME payments
to teaching hospitals when those hospitals' weighted full-time
equivalent (FTE) counts exceed their direct GME FTE cap. In Milton S.
Hershey Medical Center, et al. v. Becerra, the court ordered CMS to
recalculate reimbursement owed, holding that CMS's regulation
impermissibly modified the statutory weighting factors. The plaintiffs
in these consolidated cases alleged that as far back as 2005, the
proportional reduction that CMS applied to the weighted FTE count when
the weighted FTE count exceeded the FTE cap conflicted with the
Medicare statute, and it was an arbitrary and capricious exercise of
agency discretion under the Administrative Procedure Act. The court
held that the
[[Page 28113]]
proportional reduction methodology impermissibly modified the weighting
factors statutorily assigned to residents and fellows. The court
granted the motion for summary judgment to plaintiffs' motions, denied
defendant's, and remanded to the Agency so that it could recalculate
plaintiffs' reimbursement payments consistent with the court's opinion.
After reviewing the statutory language regarding the direct GME FTE
cap and the court's opinion, we have decided to propose a modified
policy to be applied prospectively for all teaching hospitals, as well
as retroactively to the providers and cost years in Hershey and certain
other providers as described in greater detail in section V.F.2. of the
preamble of this proposed rule. The proposed modified policy would
address situations for applying the FTE cap when a hospital's weighted
FTE count is greater than its FTE cap, but would not reduce the
weighting factor of residents that are beyond their initial residency
period to an amount less than 0.5. Specifically, effective for cost
reporting periods beginning on or after October 1, 2022, we are
proposing that the hospital's unweighted number of FTE residents
exceeds the FTE cap, and the number of weighted FTE residents also
exceeds that FTE cap, the respective primary care and obstetrics and
gynecology weighted FTE counts and other weighted FTE counts are
adjusted to make the total weighted FTE count equal the FTE cap. If the
number of weighted FTE residents does not exceed that FTE cap, then the
allowable weighted FTE count for direct GME payment is the actual
weighted FTE count.
g. Reduction of Hospital Payments for Excess Readmissions
We are proposing to make changes to policies for the Hospital
Readmissions Reduction Program, which was established under section
1886(q) of the Act, as amended by section 15002 of the 21st Century
Cures Act. The Hospital Readmissions Reduction Program requires a
reduction to a hospital's base operating DRG payment to account for
excess readmissions of selected applicable conditions. For FY 2017 and
subsequent years, the reduction is based on a hospital's risk-adjusted
readmission rate during a 3-year period for acute myocardial infarction
(AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary
disease (COPD), elective primary total hip arthroplasty/total knee
arthroplasty (THA/TKA), and coronary artery bypass graft (CABG)
surgery. In this FY 2023 IPPS/LTCH PPS proposed rule, we are discussing
the following policies: (1) Proposal to resume use of the Hospital 30-
Day, All-Cause, Risk-Standardized Readmission Rate (RSRR) following
Pneumonia Hospitalization measure (NQF #0506) for the FY 2024 program
year; (2) modification of the Hospital 30-Day, All-Cause, Risk-
Standardized Readmission Rate (RSRR) following Pneumonia
Hospitalization measure (NQF #0506) to exclude COVID-19 diagnosed
patients from the measure denominator, beginning with the Hospital
Specific Reports (HSRs) for the FY 2023 program year; and (3)
modification of all six condition/procedure specific measures to
include a covariate adjustment for patient history of COVID-19 within
one year prior to the index admission beginning with the FY 2023
program year. We are also seeking comment on updating the to
incorporate provider performance for socially at-risk populations.
h. 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 proposed rule, we are proposing to: (1) Suppress the Hospital
Consumer Assessment of Healthcare Providers and Systems (HCAHPS) and
five Hospital Acquired Infection (HAI) measures, for the FY 2023
Program year; and (2) update the baseline periods for certain measures
for the FY 2025 program year. We are also proposing to revise the
scoring and payment methodology for the FY 2023 program year such that
hospitals will not receive Total Performance Scores (TPSs). Instead, we
are proposing 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 note that we are
also announcing technical updates to the measures in the Clinical
Outcomes Domain.
i. Hospital-Acquired Condition (HAC) Reduction Program
We are proposing changes to the HAC Reduction program, which was
established under Section 1886(p) of the Act, to provide an incentive
to hospitals to reduce the incidence of hospital-acquired conditions.
We refer readers to the FY 2022 IPPS/LTCH PPS final rule for further
details on our measure suppression policy (86 FR 45301 through 45304).
In this FY 2023 IPPS/LTCH PPS proposed rule, we are proposing to: (1)
Suppress the CMS PSI 90 measure and the five CDC NHSN HAI measures from
the calculation of measure scores and the Total HAC Score, thereby not
penalizing any hospital under the HAC Reduction Program FY 2023 program
year; (2) publicly and confidentially report CDC NHSN HAI measure
results but not calculate or report measure results for the CMS PSI 90
measure for the HAC Reduction Program FY 2023 program year; (3)
suppress CY 2021 CDC NHSN HAI measures data from the FY 2024 HAC
Reduction Program Year; (4) update the measure specification to the
minimum volume threshold for the CMS PSI 90 measure beginning with the
FY 2023 program year; (5) update the measure specifications to risk-
adjust for COVID-19 diagnosis in the CMS PSI 90 measure beginning with
the FY 2024 HAC Reduction Program Year; (6) request information from
stakeholders on the potential adoption of two digital National
Healthcare Safety Network (NHSN) measures: The NHSN Healthcare-
associated Clostridioides difficile Infection Outcome measure and NHSN
Hospital-Onset Bacteremia & Fungemia Outcome measure; (7) request
information on overarching principles for measuring healthcare quality
disparities across CMS Quality Programs; (8) update the NHSN CDC HAI
data submission requirements for newly opened hospitals beginning in
the FY 2024 HAC Reduction Program Year; and (9) clarify the removal of
the no mapped location policy beginning with the FY 2023 program year.
j. 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.
In this FY 2023 IPPS/LTCH PPS proposed rule, we are proposing
several changes to the Hospital IQR Program. We are proposing the
adoption of 10 new measures: (1) Hospital Commitment to Health Equity
beginning with the CY 2023 reporting period/FY 2025 payment
determination; (2) Screening for Social Drivers of Health beginning
with voluntary reporting for the CY 2023 reporting period and mandatory
reporting beginning with the CY 2024 reporting period/FY 2026 payment
determination; (3) Screen Positive Rate for Social Drivers of Health
beginning with voluntary reporting for the CY 2023 reporting period and
mandatory reporting beginning with the CY 2024 reporting
[[Page 28114]]
period/FY 2026 payment determination; (4) Cesarean Birth electronic
clinical quality measure (eCQM) with inclusion in the measure set
beginning with the CY 2023 reporting period/FY 2025 payment
determination, and mandatory reporting beginning with the CY 2024
reporting period/FY 2026 payment determination; (5) Severe Obstetric
Complications eCQM with inclusion in the measure set beginning with the
CY 2023 reporting period/FY 2025 payment determination, and mandatory
reporting beginning with the CY 2024 reporting period/FY 2026 payment
determination; (6) Hospital-Harm--Opioid-Related Adverse Events eCQM
(NQF #3501e) beginning with the CY 2024 reporting period/FY 2026
payment determination; (7) Global Malnutrition Composite Score eCQM
(NQF #3592e) beginning with the CY 2024 reporting period/FY 2026
payment determination; (8) Hospital-Level, Risk Standardized Patient-
Reported Outcomes Performance Measure Following Elective Primary Total
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) (NQF #3559)
beginning with two voluntary periods, followed by mandatory reporting
for the reporting period which runs from July 1, 2025 through June 30,
2026, impacting the FY 2028 payment determination; (9) Medicare
Spending Per Beneficiary (MSPB) Hospital (NQF #2158) beginning with the
FY 2024 payment determination; and (10) Hospital-Level Risk-
Standardized Complication Rate (RSCR) Following Elective Primary THA/
TKA (NQF #1550) beginning with the FY 2024 payment determination. We
are proposing refinements to two current measures beginning with the FY
2024 payment determination: (1) Hospital[hyphen]Level,
Risk[hyphen]Standardized Payment Associated with an Episode-of-Care for
Primary Elective THA/TKA; and (2) Excess Days in Acute Care (EDAC)
After Hospitalization for Acute Myocardial Infarction (AMI) (NQF
#2881). We are also requesting comment on the potential future
development and inclusion of two National Healthcare Safety Network
(NHSN) measures: (1) Healthcare-Associated Clostridioides difficile
Infection Outcome; and (2) Hospital-Onset Bacteremia & Fungemia
Outcome.
We are proposing changes to current policies related to eCQMs and
hybrid measures: (1) A proposal to modify the eCQM reporting and
submission requirements to increase the number of eCQMs to be reported
beginning with the CY 2024 reporting period/FY 2026 payment
determination; (2) a proposal to remove the zero denominator
declarations and case threshold exemption policies for hybrid measures
beginning with the FY 2026 payment determination; (3) a proposal for
the data submission and reporting requirements for patient-reported
outcome-based performance measures (PRO-PMs) beginning with the FY 2026
payment determination; and (4) a proposal to modify the eCQM validation
policy to increase the requirement from 75 percent to 100 percent of
requested medical records, beginning with the FY 2025 payment
determination.
With respect to public reporting, we are proposing to establish a
hospital designation related to maternity care to be publicly-reported
on a public-facing website beginning in Fall 2023, and are also seeking
comments on other potential associated activities regarding this
designation. Additionally, we are seeking comments on ongoing ways we
can advance digital quality measurement and use of Fast Healthcare
Interoperability Resources (FHIR).
k. 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 FY 2023 IPPS/LTCH PPS proposed rule, we are proposing to
adopt a patient safety exception into the measure removal policy. We
are also proposing to begin public display of the 30-Day Unplanned
Readmissions for Cancer Patients measure (NQF #3188) (PCH-36), the
Proportion of Patients Who Died from Cancer Receiving Chemotherapy in
the Last 14 Days of Life measure (NQF #0210) (PCH-32), the Proportion
of Patients Who Died from Cancer Not Admitted to Hospice measure (NQF
#0215) (PCH-34), the Proportion of Patients Who Died from Cancer
Admitted to the ICU in the Last 30 Days of Life measure (NQF #0213)
(PCH-33), and the Proportion of Patients Who Died from Cancer Admitted
to Hospice for Less Than Three Days measure (NQF #0216) (PCH-35). In
addition, along with the Hospital IQR and HAC Reduction Programs, we
are requesting comment on the potential adoption of two digital
National Healthcare Safety Network (NHSN) measures: The NHSN
Healthcare-associated Clostridioides difficile Infection Outcome
measure and NHSN Hospital-Onset Bacteremia and Fungemia Outcome
measure.
l. Medicare Promoting Interoperability Program
For CY 2023, we are proposing several changes to the Medicare
Promoting Interoperability Program. Specifically, we are proposing: (1)
To require and modify the Electronic Prescribing Objective's Query of
Prescription Drug Monitoring Program (PDMP) measure while maintaining
the associated points at 10 points beginning with the EHR reporting
period in CY 2023; (2) to expand the Query of PDMP measure to include
Schedule II, III, and IV drugs beginning with the CY 2023 EHR reporting
period; (3) to add a new Health Information Exchange (HIE) Objective
option, the Enabling Exchange under the Trusted Exchange Framework and
Common Agreement (TEFCA) measure (requiring a yes/no response), as an
optional alternative to fulfill the objective, beginning with the CY
2023 EHR reporting period; (4) to modify the Public Health and Clinical
Data Exchange Objective by adding an Antibiotic Use and Antibiotic
Resistance (AUR) measure in addition to the current four required
measures (Syndromic Surveillance Reporting, Immunization Registry
Reporting, Electronic Case Reporting, and Electronic Reportable
Laboratory Result Reporting beginning in the CY 2023 EHR reporting
period; (5) to consolidate the current options from three to two levels
of active engagement for the Public Health and Clinical Data Exchange
Objective and to require the reporting of active engagement for the
measures under the objective beginning with the CY 2023 EHR reporting
period; (6) to modify the scoring methodology for the Medicare
Promoting Interoperability Program beginning in CY 2023; (7) to
institute public reporting of certain Medicare Promoting
Interoperability Program data beginning with the CY 2023 EHR reporting
period; (8) to remove regulation text for the objectives and measures
in the Medicare Promoting Interoperability Program from paragraph (e)
under 42 CFR 495.24 and add new paragraph (f) beginning in CY 2023; and
(9) to adopt two new eCQMs in the Medicare Promoting Interoperability
Program's eCQM measure set beginning with the CY 2023 reporting period,
two new eCQMs in the Medicare Promoting Interoperability Program's eCQM
measure set beginning with the CY 2024 reporting period, and modify the
eCQM data reporting and submission requirements to increase the number
of eCQMs required to be reported and the total number of eCQMs
[[Page 28115]]
to be reported beginning with the CY 2024 reporting period, which is in
alignment with the eCQM updates proposed for the Hospital IQR Program.
m. Condition of Participation (CoP) Requirements for Hospitals and CAHs
To Report Data Elements To Address Any Future Pandemics and Epidemics
as Determined by the Secretary
In this proposed rule, we would revise the hospital and CAH
infection prevention and control CoP requirements to continue COVID-19
reporting requirements commencing either upon the conclusion of the
current COVID-19 PHE declaration or the effective date of this proposed
rule, whichever is later, and lasting until April 30, 2024 (unless the
Secretary determines an earlier end date). We also propose additional
requirements to address future PHEs related to epidemics and pandemics.
Specifically, when the Secretary has declared a PHE, we propose to
require hospitals and CAHs to report specific data elements to the
CDC's National Health Safety Network (NHSN), or other CDC-supported
surveillance systems, as determined by the Secretary. The proposed
requirements of this section would apply to local, state, and national
PHEs as declared by the Secretary. Additionally, we are proposing that
the hospital (or CAH) provide the information specified on a daily
basis, unless the Secretary specifies a lesser frequency contingent
upon the state of the PHE and ongoing risks.
n. Comment Solicitation on IPPS and Outpatient Prospective Payment
System (OPPS) Payment Adjustments for Wholly Domestically Made National
Institute for Occupational Safety and Health (NIOSH)-Approved Surgical
N95 Respirators
As discussed in section X.C. of the preamble of this proposed rule,
the Biden-Harris Administration has made it a priority to ensure
America is prepared to continue to respond to COVID-19, and to combat
future pandemics. A significant action to improve hospital preparedness
and readiness for future threats might be to provide payment
adjustments to hospitals to recognize the additional resource costs
they incur to acquire NIOSH-approved surgical N95 respirators that are
wholly domestically made. These surgical respirators, which faced
severe shortage at the onset of the COVID-19 pandemic, are essential
for the protection of beneficiaries and hospital personnel that
interface with patients. The Department of Health and Human Services
(HHS) recognizes that procurement of surgical N95 respirators that are
wholly domestically made, while critical to pandemic preparedness and
protecting health care workers and patients, can result in additional
resource costs for hospitals.
We are interested in feedback and comments on the appropriateness
of payment adjustments that would account for these additional resource
costs. We believe such a payment adjustment could help achieve a
strategic policy goal, namely, sustaining a level of supply resilience
for surgical N95 respirators that is critical to protect the health and
safety of personnel and patients in a public health emergency. We are
considering such payment adjustments to apply to 2023 and potentially
subsequent years. We realize there may be different ways a payment
adjustment to recognize the additional resource costs hospitals incur
when purchasing wholly domestically made NIOSH-approved surgical N95
respirators could be implemented and seek comment on two potential
frameworks and alternative approaches.
3. Summary of Costs and Benefits
The following table provides a summary of the costs, savings, and
benefits associated with the major provisions described in section
I.A.3. of the preamble of this proposed rule.
BILLING CODE 4120-01-P
[[Page 28116]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.000
[[Page 28117]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.001
[[Page 28118]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.002
BILLING CODE 4120-01-C
[[Page 28119]]
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 and, as we are proposing beginning in FY 2023 for IHS and
Tribal hospitals and hospitals located in Puerto Rico, the proposed new
supplemental payment.
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). As section 50205 of the Bipartisan
Budget Act extended the MDH program through FY 2022 only, for FY 2023,
beginning on October 1, 2022, the MDH program will no longer be in
effect absent a change in law. Because the MDH program is not
authorized by statute beyond September 30, 2022, beginning October 1,
2022, all hospitals that previously qualified for MDH status under
section 1886(d)(5)(G) of the Act will no longer have MDH status and
will be paid based on the IPPS Federal rate.
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
[[Page 28120]]
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 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 That Would Be
Implemented in This Proposed 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.
D. Summary of the Provisions of This Proposed Rule
In this proposed rule, we set forth proposed payment and policy
changes to the Medicare IPPS for FY 2023 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 2023.
The following is a general summary of the changes that we are
proposing to make in this proposed rule.
1. Proposed Changes to MS-DRG Classifications and Recalibrations of
Relative Weights
In section II. of the preamble of this proposed rule, we include
the following:
Proposed changes to MS-DRG classifications based on our
yearly review for FY 2023.
Proposed adjustment to the standardized amounts under
section 1886(d) of the Act for FY 2023 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,
including a proposed 10 percent cap on decreases in an MS-DRG relative
weight from one fiscal year to the next.
A discussion of the proposed FY 2023 status of new
technologies approved for add-on payments for FY 2022, a presentation
of our evaluation and analysis of the FY 2023 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 2023 new technology
applicants under the alternative pathways for certain medical devices
and certain antimicrobial products.
A proposal to use National Drug Codes (NDCs) to identify
cases involving use of therapeutic agents approved for new technology
add-on payments.
A proposal to publicly post online future applications for
new technology add-on payments. Specifically, beginning with the FY
2024 application cycle, we are proposing to post online the completed
application forms and certain related materials and updated application
information submitted subsequent to the initial application submission
for new technology add-on payments, with the exception of certain cost
and volume information and certain additional materials (as discussed
more fully in section II.F.9. of this proposed rule), no later than the
issuance of the proposed rule.
[[Page 28121]]
2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals
In section III. of the preamble of this proposed rule we are
proposing to make revisions 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 2023 wage index update using wage data
from cost reporting periods beginning in FY 2019.
Calculation, analysis, and implementation of the proposed
occupational mix adjustment to the wage index for acute care hospitals
for FY 2023 based on the 2019 Occupational Mix Survey.
Proposed application of the rural, imputed and frontier
State floors, and continuation of the low wage index hospital policy.
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 adjustment to the wage index for acute care
hospitals for FY 2023 based on commuting patterns of hospital employees
who reside in a county and work in a different area with a higher wage
index.
Proposed permanent cap on annual wage index decreases.
Proposed labor-related share for the proposed FY 2023 wage
index.
3. Other Decisions and Proposed Changes to the IPPS for Operating Costs
In section V. of the preamble of this proposed rule, we discuss
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 2023.
Proposed updated national and regional case-mix values and
discharges for purposes of determining RRC status.
Proposed payment adjustment for low-volume hospitals for
FY 2023 and subsequent years.
The statutorily required IME adjustment factor for FY
2023.
Proposed changes to the methodologies for determining
Medicare DSH payments and the additional payments for uncompensated
care.
Proposed new supplemental payment for IHS/Tribal and
Puerto Rico hospitals.
Proposed revisions to the regulations regarding the
counting of days associated with section 1115 demonstrations in the
Medicaid fraction.
Discussion of statutory expiration of the MDH program at
the end of FY 2022.
Proposed requirements for payment adjustments under the
Hospital Readmissions Reduction Program for FY 2023.
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 2023.
Discussion of and proposed changes relating to the
implementation of the Rural Community Hospital Demonstration Program in
FY 2023.
Proposed GME payment change in response to Milton S.
Hershey Medical Center et al v. Becerra litigation.
Proposed nursing and allied health education program
Medicare Advantage (MA) add-on rates and direct GME MA percent
reductions for CYs 2020 and 2021.
Proposal to allow Medicare GME affiliation agreements
within certain rural track full-time equivalent limitations.
Proposed payment adjustment for certain clinical trial and
expanded access use immunotherapy cases.
4. Proposed FY 2023 Policy Governing the IPPS for Capital-Related Costs
In section VI. of the preamble to this proposed rule, we discuss
the proposed payment policy requirements for capital-related costs and
capital payments to hospitals for FY 2023.
5. Proposed Changes to the Payment Rates for Certain Excluded
Hospitals: Rate-of-Increase Percentages
In section VII. of the preamble of this proposed rule, we discuss--
Proposed changes to payments to certain excluded hospitals
for FY 2023.
Proposed continued implementation of the Frontier
Community Health Integration Project (FCHIP) Demonstration.
6. Proposed Changes to the LTCH PPS
In section VIII. of the preamble of this 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 2023.
7. Proposed Changes Relating to Quality Data Reporting for Specific
Providers and Suppliers
In section IX. of the preamble of this proposed rule, we address
the following:
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).
For the Long Term Care Hospital Quality Reporting Program
(LTCH QRP), we are requesting information on CMS' overarching
principles for measuring healthcare disparities across CMS Quality
Programs, including the LTCH QRP. We are also requesting information on
the potential adoption of one future National Healthcare Safety Network
(NHSN) digital quality measure (dQM) for the LTCH QRP, as well as
quality measure concepts under consideration for future years.
Proposed changes to requirements pertaining to eligible
hospitals and CAHs participating in the Medicare Promoting
Interoperability Program.
8. Other Proposals and Comment Solicitations Included in This Proposed
Rule
Section X. of the preamble to this proposed rule includes the
following:
Proposals to codify policies related to the costs incurred
for qualified and non-qualified deferred compensation plans.
Proposed changes pertaining to the CoPs at 42 CFR part 482
for hospitals, and at 42 CFR part 485, subpart F, for CAHs.
Solicitation of comments on the appropriateness of payment
adjustments that would account for the additional resource costs for
hospitals for the procurement of wholly domestically made NIOSH-
approved surgical N95 respirators.
9. Other Provisions of This Proposed Rule
Section XI. of the preamble to this proposed rule includes our
discussion of the MedPAC Recommendations.
Section XII. of the preamble to this 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.
[[Page 28122]]
10. 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 this proposed rule, we
set forth proposed changes to the amounts and factors for determining
the proposed FY 2023 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 this proposed rule, we address the
proposed update factors for determining the rate-of-increase limits for
cost reporting periods beginning in FY 2023 for certain hospitals
excluded from the IPPS.
11. 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 2023 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
2023. 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.
12. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact the proposed changes would have on affected acute care
hospitals, CAHs, LTCHs and other entities.
13. 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 2023 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.
14. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, MedPAC is required to submit a
report to Congress, no later than March 15 of each year, in which
MedPAC reviews and makes recommendations on Medicare payment policies.
MedPAC's March 2022 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 address these recommendations in Appendix B of this proposed rule.
For further information relating specifically to the MedPAC March 2022
report or to obtain a copy of the report, contact MedPAC at (202) 220-
3700 or visit MedPAC's website at https://www.medpac.gov.
E. Advancing Health Information Exchange
The Department of Health and Human Services (HHS) has a number of
initiatives designed to encourage and support the adoption of
interoperable health information technology and to promote nationwide
health information exchange to improve health care and patient access
to their digital 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) to facilitate collaboration with industry
stakeholders to develop Health Level Seven International[supreg] (HL7)
Fast Healthcare Interoperability Resources[supreg] (FHIR) standards.
These standards could support the exchange and reuse of patient
assessment data derived from the post-acute care (PAC) setting
assessment tools, such as Minimum Data Set (MDS), Inpatient
Rehabilitation Facility-Patient Assessment Instrument (IRF-PAI), Long
Term Care Hospital (LTCH) Continuity Assessment Record and Evaluation
(CARE) Data Set (LCDS), Outcome and Assessment Information Set (OASIS),
and other sources.1 2 The PACIO Project has focused on HL7
FHIR implementation guides for functional status, cognitive status and
new use cases on advance directives, re-assessment timepoints, and
Speech, Language, Swallowing Cognitive communications and Hearing
(SPLASCH).\3\ We encourage PAC provider and health internet technology
(IT) vendor participation as the efforts advance. The CMS Data Element
Library (DEL) continues to be updated and serves as a 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).\4\ The DEL furthers CMS' goal of data standardization and
interoperability. Standards in the DEL can be referenced on the CMS
website (https://del.cms.gov/DELWeb/pubHome) and in the ONC
Interoperability Standards Advisory (ISA). The 2022 ISA is available at
https://www.healthit.gov/isa/sites/isa/files/inline-files/2022-ISA-Reference-Edition.pdf.
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\1\ HL7 FHIR Release 4. Available at: https://www.hl7.org/fhir/.
\2\ HL7 FHIR. PACIO Functional Status Implementation Guide.
Available at: https://paciowg.github.io/functional-status-ig/.
\3\ PACIO Project. Available at: http://pacioproject.org/about/.
\4\ CMS Data Element Library Fact Sheet. Available at: https://www.cms.gov/newsroom/fact-sheets/cms-data-element-library-fact-sheet.
\5\ Public Law 114-255, sections 4001 through 4008. Available
at: https://www.govinfo.gov/content/pkg/PLAW-114publ255/html/PLAW-114publ255.htm.
\6\ The Trusted Exchange Framework (TEF): Principles for Trusted
Exchange (Jan. 2022). Available at: https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf.
\7\ Common Agreement for Nationwide Health Information
Interoperability Version 1 (Jan. 2022). Available at: https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
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The 21st Century Cures Act (Cures Act) (Pub. L. 114-255, enacted
December 13, 2016) required HHS and ONC to take steps further
interoperability for providers in settings across the care
continuum.\5\ Specifically, section 4003(b) of the Cures Act required
ONC to take steps to advance interoperability through the development
of a trusted exchange framework and common agreement aimed at
establishing a universal floor of interoperability across the country.
On January 18, 2022, ONC announced a significant milestone by releasing
the Trusted Exchange Framework \6\ and Common Agreement Version 1.\7\
The Trusted Exchange Frameworkis a set of non-binding principles for
health information exchange, and the Common Agreement is a contract
that advances those principles. The Common Agreement and the
incorporated by reference Qualified Health Information Network
Technical Framework Version 1 establish the technical infrastructure
model and governing approach for different health information networks
and their users to securely share clinical
[[Page 28123]]
information with each other, all under commonly agreed to terms. The
technical and policy architecture of how exchange occurs under the
Trusted Exchange Framework and the Common Agreement follows a network-
of-networks structure, which allows for connections at different levels
and is inclusive of many different types of entities at those different
levels, such as health information networks, healthcare practices,
hospitals, public health agencies, and Individual Access Services (IAS)
Providers.\8\ For more information, we refer readers to https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement.
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\8\ The Common Agreement defines Individual Access Services
(IAS) as ``with respect to the Exchange Purposes definition, the
services provided utilizing the Connectivity Services, to the extent
consistent with Applicable Law, to an Individual with whom the QHIN,
Participant, or Subparticipant has a Direct Relationship to satisfy
that Individual's ability to access, inspect, or obtain a copy of
that Individual's Required Information that is then maintained by or
for any QHIN, Participant, or Subparticipant.'' The Common Agreement
defines ``IAS Provider'' as: ``Each QHIN, Participant, and
Subparticipant that offers Individual Access Services.'' See Common
Agreement for Nationwide Health Information Interoperability Version
1, at 7 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
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We invite providers to learn more about these important
developments and how they are likely to affect hospitals.
F. Proposed Use of FY 2021 Data and Proposed Methodology Modifications
for the FY 2023 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 bills for discharges in a
fiscal year. The cost report data source is the Medicare hospital cost
report data files from the most recent quarterly Healthcare Cost Report
Information System (HCRIS) release. Our goal is always to use the best
available data overall for ratesetting. Ordinarily, the best available
MedPAR data is 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. Ordinarily, the best available
cost report data is based on the cost reports beginning 3 fiscal years
prior to the fiscal year that is the subject of the rulemaking.
However, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44789 through
44793), we finalized our proposal to use FY 2019 data for the FY 2022
ratesetting for circumstances where the FY 2020 data (the most recently
available data at the time of rulemaking) was significantly impacted by
the COVID-19 PHE.
As we discussed in the FY 2022 IPPS/LTCH PPS final rule, the FY
2020 MedPAR claims file and the FY 2019 HCRIS dataset both contained
data that was significantly impacted by the COVID-19 PHE, primarily in
that the utilization of services at IPPS hospitals and LTCHs was
generally markedly different for certain types of services in FY 2020
than would have been expected in the absence of the PHE. However, the
most recent vaccination and hospitalization data from the CDC at the
time of development of that rule supported our belief at the time that
the risk of COVID-19 in FY 2022 would be significantly lower than the
risk of COVID-19 in FY 2020 and there would be fewer COVID-19
hospitalizations for Medicare beneficiaries in FY 2022 than there were
in FY 2020. Therefore, we finalized our proposal to use FY 2019 data
for the FY 2022 ratesetting for circumstances where the FY 2020 data
was significantly impacted by the COVID-19 PHE, based on the belief
that FY 2019 data from before the COVID-19 PHE would be a better
overall approximation of the FY 2022 inpatient experience at both IPPS
hospitals and LTCHs. For example, we used the FY 2019 MedPAR claims
data for purposes where we ordinarily would have used the FY 2020
MedPAR claims data. We also used cost report data from the FY 2018
HCRIS file for purposes where we ordinarily would have used the FY 2019
HCRIS file (since the FY 2019 cost report data from HCRIS contained
many cost reports ending in FY 2020 based on each hospital's cost
reporting period).
Similar to our analysis of the FY 2020 MedPAR claims file and the
FY 2019 HCRIS dataset for the FY 2022 IPPS/LTCH PPS rulemaking, the FY
2021 MedPAR claims file and the FY 2020 HCRIS dataset also both contain
data that was significantly impacted by the virus that causes COVID-19,
primarily in that the utilization of services at IPPS hospitals and
LTCHs was again generally markedly different for certain types of
services in FY 2021 than would have been expected in the absence of the
virus that causes COVID-19. Specifically, the share of admissions at
IPPS hospitals and LTCHs for MS-DRGs and MS-LTC-DRGs associated with
the treatment of COVID-19 continued to remain significantly higher than
levels prior to the COVID-19 PHE. For example, in FY 2019, the share of
IPPS cases and LTCH PPS standard Federal payment rate cases grouped to
MS-DRG and MS-LTC-DRG 177 (Respiratory infections and inflammations
with MCC) was approximately 1 percent and 2 percent, respectively. In
comparison, in FY 2021, the share of IPPS cases and LTCH PPS standard
Federal payment rate cases grouped to MS-DRG 177 was approximately 6
percent and 8 percent, respectively. However, as we discuss further in
this section, in light of the expected continued impact on
hospitalizations of the virus that causes COVID-19, we believe it is
appropriate to use the FY 2021 data reflecting this impact for this FY
2023 IPPS/LTCH PPS rulemaking, with some proposed modifications to our
usual ratesetting methodologies to account for the anticipated decline
in COVID-19 hospitalizations of Medicare beneficiaries at IPPS
hospitals and LTCHs as compared to FY 2021.
The CDC graph below illustrates new inpatient hospital admissions
of patients with confirmed COVID-19 from August 1, 2020 through
February 15, 2022. (https://www.cdc.gov/coronavirus/2019-ncov/covid-data/covidview/02182022/images/hospitalizations_02182022.jpg?_=35767,
accessed February 22, 2022)
[[Page 28124]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.003
The low point of the graph (late June 2021) approximately coincides
with the time of the development of the FY 2022 IPPS/LTCH PPS final
rule and generally supports, in conjunction with the other factors
discussed in that rulemaking (including the most recent vaccination
data from the CDC), our assumption in the final rule that the FY 2022
time period would be more similar to the time period prior to the PHE.
However, as can be seen in the graph, the virus that causes COVID-19
has continued to significantly impact hospitalizations for the time
period subsequent to the development of the FY 2022 IPPS/LTCH PPS final
rule. As the CDC has noted, the most recent increase in
hospitalizations has been primarily associated with the Omicron variant
of the virus.\9\ The CDC has stated that new variants will continue to
emerge. Viruses constantly change through mutation and sometimes these
mutations result in a new variant of the virus. The CDC and other
public health organizations monitor all variants of the virus that
causes COVID-19 in the United States and globally. Scientists monitor
all variants but may classify certain ones as variants being monitored,
variants of interest, variants of concern and variants of high
consequence. Some variants spread more easily and quickly than other
variants, which may lead to more cases of COVID-19. Even if a variant
causes less severe disease in general, an increase in the overall
number of cases could cause an increase in hospitalizations. (see
https://www.cdc.gov/coronavirus/2019-ncov/variants/about-variants.html,
accessed February 25, 2022)
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\9\ https://www.cdc.gov/coronavirus/2019-ncov/variants/omicron-variant.html.
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Given the effects of the virus that causes COVID-19 in the Medicare
FY 2020 data, the Medicare FY 2021 data, and the CDC hospitalization
data, coupled with the expectation for future variants, we believe that
it is reasonable to assume that some Medicare beneficiaries will
continue to be hospitalized with COVID-19 at IPPS hospitals and LTCHs
in FY 2023. Accordingly, we believe it is appropriate to use FY 2021
data, specifically the FY 2021 MedPAR claims file and the FY 2020 HCRIS
dataset (which contains data from many cost reports ending in FY 2021
based on each hospital's cost reporting period) as the most recent
available data during the period of the COVID-19 PHE, for purposes of
the FY 2023 IPPS and LTCH PPS ratesetting. However, we also believe it
is reasonable to assume based on the information available at this time
that there will be fewer COVID-19 hospitalizations in FY 2023 than in
FY 2021 given the more recent trends in the CDC hospitalization data
since the Omicron variant peak in January, 2022. Accordingly, because
we anticipate Medicare inpatient hospitalizations for COVID-19 will
continue in FY 2023 but at a lower level, we are proposing to use FY
2021 data for purposes of the FY 2023 IPPS and LTCH PPS ratesetting but
with modifications to our usual ratesetting methodologies to account
for the anticipated decline in COVID-19 hospitalizations of Medicare
beneficiaries at IPPS hospitals and LTCHs as compared to FY 2021.
First, we are proposing to modify the calculation of the FY 2023
MS-DRG and MS-LTC-DRG relative weights. We observed that COVID-19 cases
were impacting the relative weights as calculated using the FY 2021
MedPAR data for a few COVID-19-related MS-DRGs and MS-LTC-DRGs. As an
example, for MS-DRG and MS-LTC-DRG 870 (Septicemia or Severe Sepsis
with MV >96 hours), the MS-DRG and MS-LTC-DRG relative weights
calculated using the FY 2021 MedPAR data are approximately 9 and 3
percent higher, respectively, compared to their relative weights if
calculated excluding COVID-19 cases. Because this MS-DRG contains a mix
of COVID-19 cases and non-COVID-19 cases with different average costs,
the relative weight for this MS-DRG is dependent on that mix of cases.
As noted previously, we believe it is reasonable to assume that there
will be fewer COVID-19 hospitalizations among Medicare beneficiaries in
FY 2023 than there were in FY 2021; however it is not possible to know
precisely how COVID-19 hospitalizations in FY 2023 will compare to FY
2021. We believe that averaging the relative weights as calculated with
and without the COVID-19 cases reflected in the FY 2021 MedPAR data
would reflect a reasonable estimation of the case mix for FY 2023 based
on the information available at this time, and more accurately estimate
the relative resource use for the cases treated in FY 2023. Therefore,
we are proposing to calculate the relative weights for FY 2023 by first
calculating two sets of weights, one including and one excluding COVID-
19 claims, and then averaging the two sets of relative weights to
determine the proposed FY 2023 relative weight values. We believe this
proposed modification to our relative weight setting methodology would
appropriately reduce, but not remove entirely, the effect of COVID-19
cases on the relative weight calculations, consistent with our
expectation that Medicare inpatient hospitalizations for COVID-19 will
continue in FY 2023 at a lower level as compared to FY 2021,
[[Page 28125]]
and provide a more accurate estimate of relative resource use for FY
2023 than if we were to calculate the proposed relative weights using
all applicable cases in the FY 2021 data. The proposal for modifying
the methodology for determining the FY 2023 IPPS MS-DRG relative
weights is discussed in greater detail in section II.E. of the preamble
of this proposed rule. The proposal for modifying the methodology for
determining the FY 2023 LTCH PPS MS-LTC-DRG relative weights is
discussed in greater detail in section VIII.B. of the preamble of this
proposed rule.
We also are proposing to modify our methodologies for determining
the FY 2023 outlier fixed-loss amount for IPPS cases and LTCH PPS
standard Federal payment rate cases. The methodologies for determining
both of these outlier fixed-loss amounts include calculating and
applying a charge inflation factor to increase charges from the claim
year to the rulemaking year, as well as calculating and applying CCR
adjustment factors to adjust CCRs used to make payments in the current
year to the rulemaking year. The charge inflation factors calculated
using the two most recently available years of MedPAR claims data (FY
2020 and FY 2021) that would ordinarily be used for this FY 2023
proposed rule to inflate the charges on the FY 2021 MedPAR claims were
abnormally high as compared to recent historical levels prior to the
PHE (for example, for the IPPS, approximately 10 percent based on the
FY 2020 and FY 2021 MedPAR claims data as compared to approximately 6
percent based on the FY 2018 and FY 2019 MedPAR claims data).
Furthermore, the IPPS operating and capital CCR adjustment factors
calculated based on the percentage changes in the CCRs from the
December 2020 update of the PSF to the December 2021 update of the PSF
that would ordinarily be used for this FY 2023 proposed rule to adjust
the CCRs from the December 2021 update of the PSF were also abnormally
high as compared to recent historical levels prior to the PHE (for
example, for the IPPS operating CCR adjustment factor, a factor of
approximately 1.03 based on the December 2020 and December 2021 updates
to the PSF as compared to a factor of approximately 0.97 based on the
March 2019 and March 2020 updates to the PSF). We believe these
abnormally high charge inflation and CCR adjustment factors as compared
to historical levels were partially due to the high number of COVID-19
cases with higher charges that were treated in IPPS hospitals and LTCHs
in FY 2021. As we previously stated, we believe there will be fewer
COVID-19 cases in FY 2023 than in FY 2021. Therefore, we do not believe
it is reasonable to assume charges and CCRs will continue to increase
at these abnormally high rates. Consequently, when determining the FY
2023 outlier fixed-loss amounts for IPPS cases and LTCH PPS standard
Federal payment rate cases, we are proposing to inflate the charges on
the FY 2021 MedPAR claims using charge inflation factors computed by
comparing the average covered charge per case in the March 2019 MedPAR
file of FY 2018 to the average covered charge per case in the March
2020 MedPAR file of FY 2019, which is the last 1-year period prior to
the COVID-19 PHE. We also are proposing to adjust the CCRs from the
December 2021 update of the PSF by comparing the percentage change in
the national average case-weighted CCR from the March 2019 update of
the PSF to the national average case-weighted CCR from the March 2020
update of the PSF, which is the last 1-year period prior to the COVID-
19 PHE. We believe using the charge inflation factors and CCR
adjustment factors derived from data prior to the COVID-19 PHE would
provide a more reasonable approximation of the increase in costs that
will occur from FY 2021 to FY 2023 because we do not believe the charge
inflation that has occurred during the PHE will continue as the number
of higher cost COVID-19 cases declines. The proposal for modifying the
methodology for determining the FY 2023 outlier fixed-loss amounts for
IPPS cases is discussed in greater detail in section II.A.4. of the
addendum to this proposed rule. The proposal for modifying the
methodology for determining the FY 2023 outlier fixed-loss amounts for
LTCH PPS standard Federal payment rate cases is discussed in greater
detail in section V.D.3. of the addendum to this proposed rule.
As discussed in section I.O. of Appendix A of this proposed rule,
we are also requesting comments on, as an alternative to our proposed
approach, the use of the FY 2021 data for purposes of FY 2023
ratesetting without these proposed modifications to our usual
methodologies for the calculation of the FY 2023 MS-DRG and MS-LTC-DRG
relative weights or the usual methodologies used to determine the FY
2023 outlier fixed-loss amount for IPPS cases and LTCH PPS standard
Federal payment rate cases. We note that the FY 2023 outlier fixed-loss
amount would be significantly higher under this alternative approach.
In order to illustrate the effect of our proposed modifications on the
relative weights and fixed loss amount, we are making available
supplemental information, including the relative weights and fixed loss
amount calculated without the proposed modifications to our usual
methodologies, as described in section I.O. of Appendix A of this
proposed rule. We refer the reader to section I.O. of Appendix A of
this proposed rule for a discussion of the files that we are making
available with regard to our alternative approach.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as 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 2022 IPPS/LTCH PPS final
rules (75 FR 50053 through 50055; 76
[[Page 28126]]
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, 85 FR 58445 through
58596, 86 FR 44795 through 44961, respectively).
C. Proposed FY 2023 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, 2021, and 2022 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), FY 2021 IPPS/LTCH PPS final rule (85 FR 58444 and
58445), and the FY 2022 IPPS/LTCH PPS final rule (86 FR 44794 and
44795), 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, FY 2021, and FY 2022,
respectively. We indicated the FY 2018, FY 2019, FY 2020, FY 2021, and
FY 2022 adjustments were permanent adjustments to payment rates. We
also stated that we plan to propose a future adjustment required under
section 414 of the MACRA for FY 2023 in future rulemaking.
3. Proposed Adjustment for FY 2023
Consistent with the requirements of section 414 of the MACRA, we
are proposing to implement a 0.5 percentage point positive adjustment
to the standardized amount for FY 2023. This would constitute a
permanent adjustment to payment rates. This proposed 0.5 percentage
point positive adjustment is the final adjustment prescribed by section
414 of the MACRA. Along with the 0.4588 percentage point positive
adjustment for FY 2018, and the 0.5 percentage point positive
adjustments for FY 2019, FY 2020, FY 2021, and FY 2022, this final
proposed adjustment will result in combined positive adjustment of
2.9588 percentage points (or the sum of the adjustments for FYs 2018
through 2023) to the standardized amount.
[[Page 28127]]
D. Proposed Changes to Specific MS-DRG Classifications
1. Discussion of Changes to Coding System and Basis for Proposed FY
2023 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 Proposed FY 2023 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 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. In the FY 2022 IPPS/LTCH PPS
proposed rule, we stated that while we continue to believe that a
change in the deadline from November 1 to October 20 would provide
hospitals sufficient time to assess potential impacts and inform future
MS-DRG recommendations, we were maintaining the deadline of November 1
for FY 2023 MS-DRG classification change requests. As discussed in the
FY 2022 IPPS/LTCH PPS final rule (86 FR 44795), we received public
comments expressing support for a future change to the deadline for
requesting updates to the MS-DRG classifications from November 1 to
October 20, and we noted in response that we may consider any changes
to the deadline or frequency for submissions of requests for MS-DRG
classification changes for future fiscal years. Beginning with FY 2024
MS-DRG classification change requests, we are changing the deadline to
request changes to the MS-DRGs to October 20th of each year to allow
for additional time for the review and consideration of any proposed
updates. As previously discussed, we continue to believe such a change
would allow hospitals sufficient time to assess potential impacts and
inform future MS-DRG recommendations, while also providing CMS the
additional time needed for evaluation of the requested changes,
analysis of claims data, and consideration of any proposed updates.
We are also changing the process for submitting requested updates
to the MS-DRG classifications, beginning with the FY 2024 MS-DRG
classification change requests. CMS is in the process of implementing a
new electronic application intake system, Medicare Electronic
Application Request Information SystemTM (MEARIS\TM\), that
will be available for users to begin gaining familiarity with a new
approach and process to submit new technology add-on payment
applications, requests for ICD-10-PCS procedure codes, and other
requests. To simplify and streamline the process for submission of
standardized applications and requests that inform payment policy under
the IPPS, we will also be using this new system for submission of MS-
DRG classification change requests. We believe that submission of MS-
DRG reclassification requests through MEARIS\TM\ will not only help CMS
to track such requests, but it will also create efficiencies for
requestors when compared to the previous submission process.
Accordingly, beginning with the FY 2024 MS-DRG classification
change requests, CMS will only accept such requests submitted via
MEARIS\TM\, and will no longer consider any such requests that are sent
via email. We anticipate that, beginning April 5, 2022, MEARIS\TM\ will
be available for users to begin gaining familiarity with this new
approach for submitting MS-DRG classification change requests.
MEARIS\TM\, including the mechanism for submitting MS-DRG
classification change requests, can be accessed at https://mearis.cms.gov. We encourage users to register and begin using this
system to provide feedback on their experience with this initial
version. We note that within MEARIS\TM\, we have built in several
resources to support users, including a ``Resources'' section
(available at https://mearis.cms.gov/public/resources) and technical
support available under ``Useful Links'' at the bottom of the
MEARIS\TM\ site. Questions regarding the MEARIS\TM\ system can be
submitted to CMS using the form available under ``Contact'' at https://mearis.cms.gov/public/resources?app=msdrg.
We also note that, as discussed in section II.D.17. of the preamble
of this proposed rule, effective January 5, 2022, MEARIS\TM\ was made
available for users to begin gaining familiarity with a new approach
and process to submit ICD-10-PCS procedure code requests.
As noted previously, interested parties had to submit MS-DRG
classification change requests for FY 2023 by November 1, 2021. As we
have discussed in prior rulemaking, 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 submit any comments and
suggestions for FY 2024 by October 20, 2022 via the new electronic
intake system, Medicare Electronic Application Request Information
SystemTM (MEARISTM) at https://mearis.cms.gov/public/home.
As we did for the FY 2022 IPPS/LTCH PPS proposed rule, for this FY
2023 IPPS/LTCH PPS proposed rule we are providing a test version of the
ICD-10
[[Page 28128]]
MS-DRG GROUPER Software, Version 40, so that the public can better
analyze and understand the impact of the proposals included in this
proposed rule. We note that this test software reflects the proposed
GROUPER logic for FY 2023. Therefore, it includes the new diagnosis and
procedure codes that are effective for FY 2023 as reflected in Table
6A.--New Diagnosis Codes--FY 2023 and Table 6B.--New Procedure Codes--
FY 2023 associated with this proposed rule and does not include the
diagnosis codes that are invalid beginning in FY 2023 as reflected in
Table 6C.--Invalid Diagnosis Codes--FY 2023 associated with this
proposed rule. We note that at the time of the development of this
proposed rule there were no procedure codes designated as invalid for
FY 2023, and therefore, there is no Table 6D--Invalid Procedure Codes--
FY 2023 associated with this proposed rule. These tables are not
published in the Addendum to this 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 this proposed rule. Because
the diagnosis codes no longer valid for FY 2023 are not reflected in
the test software, we are making available a supplemental file in Table
6P.1a that includes the mapped Version 40 FY 2023 ICD-10-CM codes and
the deleted Version 39.1 FY 2022 ICD-10-CM codes that should be used
for testing purposes with users' available claims data. Therefore,
users will have access to the test software allowing them to build case
examples that reflect the proposals included in this proposed rule. In
addition, users will be able to view the draft version of the ICD-10
MS-DRG Definitions Manual, Version 40.
The test version of the ICD-10 MS-DRG GROUPER Software, Version 40,
the draft version of the ICD-10 MS-DRG Definitions Manual, Version 40,
and the supplemental mapping files in Table 6P.1a of the FY 2022 and FY
2023 ICD-10-CM diagnosis 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 are proposing to the MS-DRGs for
FY 2023. We are inviting 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 this proposed
rule. In some cases, we are proposing changes to the MS-DRG
classifications based on our analysis of claims data and consultation
with our clinical advisors. In other cases, we are proposing 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 this proposed rule, we are proposing
to use the FY 2021 MedPAR data for purposes of this FY 2023 IPPS
rulemaking, with certain proposed modifications to the relative weight
and outlier methodologies. For this FY 2023 IPPS/LTCH PPS proposed
rule, our MS-DRG analysis was based on ICD-10 claims data from the
September 2021 update of the FY 2021 MedPAR file, which contains
hospital bills received from October 1, 2020 through September 30,
2021, for discharges occurring through September 30, 2021. In our
discussion of the proposed MS-DRG reclassification changes, we refer to
these claims data as the ``September 2021 update of the FY 2021 MedPAR
file.''
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 our belief 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 the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798), we finalized
a delay in applying this technical criterion to existing MS-DRGs until
FY 2023 or future rulemaking, in light of the PHE. Commenters
recommended that a complete analysis of the MS-DRG changes to be
proposed for future rulemaking 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, payment rates, and hospital
case mix to allow meaningful comment prior to implementation.
In our analysis of the MS-DRG classification requests for FY 2023
that we received by November 1, 2021, 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 28129]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.004
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, we
stated earlier that for this FY 2023 IPPS/LTCH PPS proposed rule, our
MS-DRG analysis was based on ICD-10 claims data from the September 2021
update of the FY 2021 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 2 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 are 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.
For this FY 2023 IPPS/LTCH PPS proposed rule, using the September
2021 update of the FY 2021 MedPAR file, we also 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 2023.
Findings from our analysis indicated that approximately 41 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 123 MS-DRGs (41 MS-DRGs
x 3 severity levels = 123) and the creation of 75 new MS-DRGs. 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 refer the reader to Table 6P.1b for the
list of the 123 MS-DRGs that would be subject to deletion and the list
of the 75 new MS-DRGs that would be proposed for creation for FY 2023
under this policy if the NonCC subgroup criteria were applied.
In light of the ongoing public health emergency (PHE), we continue
to have concerns about the impact of implementing this volume of MS-DRG
changes at this time, and believe it may be appropriate to continue to
delay application of the NonCC subgroup criteria to existing MS-DRGs to
maintain more stability in the current MS-DRG structure and until such
time additional analyses can be performed to assess impacts, as
discussed in response to comments in the FY 2022 IPPS/LTCH PPS final
rule. Therefore, we are proposing not to apply the NonCC subgroup
criteria to existing MS-DRGs with a three-way severity level split for
FY 2023, and to instead maintain the current structure of the 41 MS-
DRGs that currently have a three-way severity level split (total of 123
MS-DRGs) that would otherwise be subject to these criteria. We intend
to address the application of the NonCC subgroup criteria to existing
MS-DRGs with a three-way severity level split in future rulemaking.
2. Pre-MDC: MS-DRG 018 Chimeric Antigen Receptor (CAR) T-Cell and Other
Immunotherapies
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44798 through
44806), we finalized our proposal to assign procedure codes describing
CAR T-cell, non-CAR T-cell, and other immunotherapies to Pre-MDC MS-DRG
[[Page 28130]]
018 and to revise the title for Pre-MDC MS-DRG 018 to ``Chimeric
Antigen Receptor (CAR) T-cell and Other Immunotherapies'' to reflect
this assignment. In that discussion, we noted that a few commenters
recommended we continue to work with stakeholders on ways to improve
the predictability and stability of hospital payments for these
complex, novel cell therapies and that we 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.
We also noted 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, held annually in the
spring and fall, where code proposals are presented and the public is
provided the opportunity to comment. All codes finalized from the fall
meeting are subsequently proposed for assignment under the ICD-10 MS-
DRGs through rulemaking. We refer the reader to section II.D.17 of the
preamble of this proposed rule for additional information regarding the
ICD-10 Coordination and Maintenance Committee meeting process.
There were no requests or proposals for new procedure codes to
describe the administration of a CAR T-cell or another type of gene or
cellular therapy discussed at the September 14-15, 2021 ICD-10
Coordination and Maintenance Committee meeting. For the March 8-9, 2022
ICD-10 Coordination and Maintenance Committee meeting, there were
topics included on the agenda and in the related meeting materials that
included proposals for new procedure codes to describe the
administration of a CAR T-cell or another type of gene or cellular
therapy product. The agenda and related meeting materials for these
specific topics are available via the internet on the CMS website at
https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials.
As stated in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44805) and
noted previously, 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. We also clarified that the assignment of a procedure
code to a MS-DRG is not dependent upon a product's Food and Drug
Administration (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.
Because the diagnosis and procedure code proposals that are
presented at the March meeting for an October 1 implementation
(upcoming FY) are not finalized in time to include in Table 6A.--New
Diagnosis Codes and Table 6B.--New Procedure Codes in association with
the proposed rule, as noted in prior rulemaking, we use our established
process to examine the MS-DRG assignment for the predecessor codes to
determine the most appropriate MS-DRG assignment. Specifically, we
review the predecessor code and MS-DRG assignment most closely
associated with the new 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 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.
In response to commenters' recommendation that we continue to
assess the appropriateness of the therapies assigned to Pre-MDC MS-DRG
018, we are providing the results of our data analysis using the
September 2021 update of the FY 2021 MedPAR file for cases reporting
the administration of a CAR T-cell or other immunotherapy in Pre-MDC
MS-DRG 018 and the number of cases reporting a secondary diagnosis of
Z00.6 (Encounter for examination for normal comparison and control in
clinical research program). We note that if a procedure code that is
assigned to the logic for Pre-MDC MS-DRG 018 is not listed it is
because there were no cases found. We also note there were no cases
reporting diagnosis code Z00.6 as a principal diagnosis. Our findings
are shown in the following table.
[[Page 28131]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.005
The data show that there is a wide range in the volume of cases (4
cases versus 435 cases), average length of stay (11.3 days versus 20.3
days), and average costs ($157,950 versus $310,561) reporting the
administration of CAR T-cell therapies in MS-DRG 018. This is to be
expected since these therapies continue to evolve and the ICD-10-PCS
coding to identify and describe these therapies also continues to be
refined through the ICD-10 Coordination and Maintenance Committee
meeting process. As additional claims data becomes available for these
therapies, we will continue to evaluate to determine if further
modifications to Pre-MDC MS-DRG 018 are warranted.
In response to our statement in the FY 2022 IPPS/LTCH PPS final
rule that we plan to continue engaging with stakeholders on additional
options for consideration in this field of cellular and gene therapies,
we received additional feedback and suggestions, including
recommendations for Town Hall meetings/listening sessions to discuss
the interconnectedness of these issues; exploration of what was
described as a different set and kind of MS-DRGs that would reward
providers for controlling patient care costs, without consideration of
product costs outside of their control; and evaluation of the creation
and assignment of multiple MS-DRGs for cell and gene therapy cases: One
to cover patient care costs, the other to cover product costs across
therapeutic product categories.
We appreciate this additional feedback and will continue to
consider these issues and suggestions in connection with future
rulemaking. We also intend to continue engaging with stakeholders by
sharing updates from our analysis of claims data as we examine and
explore potential refinements for these therapies under the IPPS.
a. Laser Interstitial Thermal Therapy (LITT)
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44812 through
44814), we finalized the reassignment of 31 ICD-10-PCS procedure codes
describing laser interstitial thermal therapy (LITT) of various body
parts to more clinically appropriate MS-DRGs, as shown in Table 6P.2b
associated with the FY 2022 IPPS/LTCH PPS final rule and available via
the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS, including the
reassignment of procedure codes D0Y0KZZ (Laser interstitial thermal
therapy of brain) and D0Y1KZZ (Laser interstitial thermal therapy of
brain stem), which were reassigned from MS-DRG 023 (Craniotomy with
Major Device Implant or Acute Complex CNS Principal Diagnosis with MCC
or Chemotherapy Implant or Epilepsy with Neurostimulator), MS-DRG 024
(Craniotomy with Major Device Implant or Acute Complex CNS Principal
Diagnosis without MCC), and MS-DRGs 025, 026, and 027 (Craniotomy and
Endovascular Intracranial Procedures with MCC, with CC, and without CC/
MCC, respectively) to MS-DRGs 040, 041, and 042 (Peripheral, Cranial
Nerve and Other Nervous System Procedures with MCC, with CC and without
CC/MCC, respectively).
We also finalized the redesignation of these two LITT procedures
(codes D0Y0KZZ and D0Y1KZZ) and the reassignment from extensive O.R.
procedures in MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure
Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC,
respectively) to non-extensive O.R procedures in MS-DRGs 987, 989, and
989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) (86 FR 44889).
For FY 2023, we received two requests from the manufacturers of the
LITT technology (Medtronic and Monteris[supreg] Medical) to reverse the
MS-DRG reassignment for the ICD-10 procedure codes that identify LITT
of the brain and brain stem (codes D0Y0KZZ and D0Y1KZZ) from the MS-
DRGs for peripheral, cranial nerve and other nervous system procedures
(MS-DRGs 040, 041, and 042) back to the MS-DRGs for craniotomy and
endovascular procedures (MS-DRGs 023, 024, 025, 026, and 027). The
first
[[Page 28132]]
requestor acknowledged that the technique utilized in the performance
of LITT procedures for the brain and brain stem are minimally invasive
and do not involve a craniotomy however, the requestor also stated the
procedures assigned to MS-DRGs 025, 026, and 027 are not exclusive to
craniotomies. The requestor further stated that these LITT procedures
involve a twist drill or burr hole and are similar to other non-
craniotomy procedures in MS-DRGs 025, 026, and 027 including
radioactive elements and neurostimulator leads that involve inserting
these devices into the brain.
In its review of the other procedures assigned to MS-DRGs 040, 041,
and 042, the requestor stated that there are distinct clinical
differences between the invasiveness of LITT that involves
instrumentation being placed deeply within the brain tissue and the
non-invasiveness of stereotactic radiosurgery that does not involve
entering the brain with instrumentation. The requestor also indicated
LITT utilizes a different modality via direct thermal ablation compared
to stereotactic radiosurgery that utilizes externally-generated
ionizing radiation.
The requestor performed its own data analysis for LITT procedures
of the brain and brain stem using MedPAR data from FY 2019 through FY
2022 impact files. According to the requestor, its findings demonstrate
that the costs of the cases reporting LITT of the brain or brain stem
are better aligned with MS-DRGs 025, 026, and 027 compared to MS-DRGs
040, 041, and 042.
The second requestor similarly discussed the steps and resources
involved in the performance of LITT procedures for the brain and brain
stem, provided its detailed analysis on the indications for LITT (brain
tumors and epileptic foci), compared LITT to other procedures in MS-
DRGs 025, 026, and 027 and stated that the majority of the procedures
currently assigned to MS-DRGs 040, 041, 042 are not performed for the
treatment of brain cancer or epilepsy. The requestor stated that the
LITT procedure is on the inpatient only list and is only performed on
Medicare beneficiaries in the inpatient hospital setting. The requestor
provided the top 10 principal diagnoses associated with LITT of brain
cases it found based on its analysis, and identified the diagnoses for
which there were less than 10 cases with an asterisk, as reflected in
the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.006
The requestor asserted that the statement in the FY 2022 IPPS/LTCH
PPS final rule that the technique to perform the LITT procedure on
brain and brain stem structures is considered minimally invasive and
does not involve a craniotomy, and that therefore, continued assignment
to the craniotomy MS-DRGs is not clinically appropriate,
mischaracterizes both the LITT procedures and universe of services
assigned to MS-DRGs 023 through 027. The requestor acknowledged that
the craniotomy procedures listed in the logic for MS-DRGs 023 through
027 include open procedures but stated the logic also lists less
invasive procedures including percutaneous and percutaneous endoscopic
procedures. The requestor asserted that open procedures are a minority
of the ICD-10-PCS codes assigned to these MS-DRGs.
In addition, the requestor stated that LITT and craniotomy are in
fact very clinically similar; in that both procedures are intended to
remove and destroy the targeted tumor and lesion with a different
surgical tool used (scalpel versus heated ablation probe). According to
the requestor, brain LITT procedures involve insertion of laser probes
into the brain which requires opening both the skull and dura, similar
to a craniotomy. The requestor also stated that craniotomy and LITT
share several procedural characteristics and provided the following
list.
Require an operating room;
Performed under general anesthesia;
Require creation of burr holes and invasive skull
fixation;
Require a sterile field, incision, opening of the skull
and dura;
Cause tissue to be immediately destroyed or excised;
Carry a risk of immediate intracranial bleeding;
Require closure of the scalp wound;
Risk intracranial infection; and
Require a hospital stay of one or more nights.
In contrast, the requestor stated that procedures assigned to MS-
DRGs 040, 041, and 042 are primarily nerve procedures or excision or
detachment procedures performed on parts of the body other than the
head, including the upper and lower extremities. According to the
requestor, none of the procedures in MS-DRGs 040, 041, and 042 require
drilling into the patient's skull, a step which is integral to LITT.
The requestor provided the following top 10 principal
[[Page 28133]]
diagnoses associated with cases it found in MS-DRGs 040, 041, and 042
during its analysis and stated that most of the procedures assigned to
MS-DRGs 040, 041, and 042 are not typically performed in the treatment
of brain cancer or epilepsy.
[GRAPHIC] [TIFF OMITTED] TP10MY22.007
However, the requestor stated an exception is stereotactic
radiosurgery (SRS) procedures performed on the brain and brain stem
that are assigned to MS-DRGs 040, 041, and 042 and are used to treat
brain cancer. According to the requestor, craniotomy, LITT and SRS are
all image-guided procedures used to treat a variety of brain disorders
including tumors and epilepsy, although it stated that is where any
similarity between LITT and SRS ends and where the procedural
similarities between craniotomy and LITT begin.
The requestor stated SRS is a non-invasive procedure that gradually
destroys or inactivates tissues in or around the brain and is typically
performed on an outpatient basis while inpatient SRS treatment is rare.
According to the requestor, SRS does not require an operating room, is
rarely done under general anesthesia (children and highly
claustrophobic individuals being an exception), and does not require
(but can use) rigid skull fixation. In addition, the requestor stated
that because it is non-invasive, there is no need for a sterile field,
incision, opening/closing of the skull, opening/closing of the dura,
suturing/stapling the wound, and produces essentially no risk of
immediate intracranial bleeding or delayed infection. According to the
requestor, LITT is much more invasive than SRS using a head frame and
involves and requires the same surgical skill and hospital resources as
craniotomies.
Following the submission of the two FY 2023 MS-DRG classification
change requests for LITT, these same two requestors (the manufacturers
of the LITT technology) submitted a joint code proposal requesting an
overall change to how LITT is classified within the ICD-10-PCS
classification and for consideration as an agenda topic to be discussed
at the March 8-9, 2022 ICD-10 Coordination and Maintenance Committee
meeting. The proposal was presented and discussed at the March 8-9,
2022 ICD-10 Coordination and Maintenance Committee meeting. We refer
the reader to the CMS website at https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials for additional detailed information
regarding the request, including a recording of the discussion and the
related meeting materials. Public comments in response to the code
proposal were due by April 8, 2022.
Because the diagnosis and procedure code proposals that are
presented at the March ICD-10-CM Coordination and Maintenance Committee
meeting for an October 1 implementation (upcoming FY) are not finalized
in time to include in Table 6A.--New Diagnosis Codes and Table 6B.--New
Procedure Codes in association with the proposed rule, as we have noted
in prior rulemaking and discuss further in this section, we use our
established process to examine the MS-DRG assignment for the
predecessor codes to determine the most appropriate MS-DRG assignment.
Specifically, we review the predecessor code and MS-DRG assignment most
closely associated with the new 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 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. Under this
established process, the MS-DRG assignment for the upcoming fiscal year
for any new diagnosis or procedure codes finalized after the March
meeting would be reflected in Table 6A.--New Diagnosis Codes and Table
6B.--New Procedure Codes associated with the final rule for that fiscal
year. However, in light of the unique circumstances relating to these
procedures, for which there is a pending proposal to reclassify LITT
within ICD-10-PCS and for new procedure codes discussed at the March
meeting, as well as an MS-DRG reclassification request to reassign the
existing codes describing these procedures, we address in this section
first, the code proposal discussed at the March meeting and the
possible MS-DRG assignments for any new codes that may be approved, and
then secondly, the requested reassignment of the existing codes, in the
event the new codes are not approved.
To summarize, as discussed at the March meeting, the code proposal
is to reclassify LITT procedures from the Radiation Therapy section of
ICD-10-PCS (Section D) to the Medical and Surgical section of ICD-10-
PCS. Specifically, the proposal is to reclassify LITT procedures to the
root operation Destruction. In ICD-10-PCS, the root operation
Destruction is defined as physical eradication of all or a portion
[[Page 28134]]
of a body part by the direct use of energy, force, or a destructive
agent. According to the requestors, LITT is misclassified to section
D--Radiation Therapy in ICD-10-PCS possibly because of terminology that
was used for predicate devices, whose indications included the phrase
``interstitial irradiation or thermal therapy'' in describing LITT's
method of action. The requestors stated LITT is thermal therapy,
destroying soft tissue using heat generated by a laser probe at the
target site and that the LITT procedure does not use ionizing
radiation, which is what the term ``radiation'' commonly refers to in
the general medical sense. The requestors also stated that by itself,
radiation is a broad term and provided an example that the spectrum of
electromagnetic radiation technically encompasses low energy non-
ionizing radio waves, microwaves, and infrared to high energy ionizing
X-rays and gamma rays while ionizing radiation creates ions in the
cells it passes through by removing electrons, a process which kills or
alters the cells over time.
The requestors further stated that only certain medical uses of
radiation are classified to section D--Radiation Therapy. For instance,
section D--Radiation Therapy categorizes treatments using ionizing
radiation, including beam radiation, brachytherapy, and stereotactic
radiosurgery. All of these deliver concentrated ionizing radiation to
eradicate abnormal cells, most commonly neoplasms. Other treatments
classified to section D--Radiation Therapy, such as hyperthermia, are
used as adjuncts to ionizing radiation. The requestors asserted that
while LITT eradicates abnormal cells, it does so with heat, not
ionizing radiation and rather than a radiation therapy procedure, LITT
is a surgical procedure. According to the requestors, LITT would be
more appropriately classified as an ablation procedure with the root
operation Destruction.
The original request for a new code(s) to describe the LITT
technology was initially discussed at the September 24-25, 2008 ICD-9-
CM Coordination and Maintenance Committee meeting. At that time, the
requestor sought an April 1, 2009 implementation date. Public comments
opposed an April 1, 2009 implementation date, therefore, effective
October 1, 2009 (FY 2010), ICD-9-CM procedure codes were created to
identify procedures performed utilizing the LITT technology. The
following table lists the ICD-9-CM procedure codes describing LITT and
their respective MDC and MS-DRG assignments under the ICD-9 based MS-
DRGs. We refer the reader to the ICD-9 and ICD-10 MS-DRG Definitions
Manual Files V33 (available via the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download-Items/FY2016-
Final-Rule-Correction-Notice-Files (in the Downloads section) for
complete documentation of the GROUPER logic for ICD-9.
[GRAPHIC] [TIFF OMITTED] TP10MY22.008
The requestors maintain that although LITT was used to treat a
variety of anatomic sites when it was first introduced, its current
primary use is intracranial, specifically to treat brain tumors and
epileptic foci. However, the requestors stated it is also used to treat
radiation necrosis, an inflammatory response from prior treatment with
ionizing radiation.
Currently, in the U.S. there are only two LITT systems in use,
VisualaseTM MRI-Guided Laser Ablation (Medtronic) and the
Neuroblate[supreg] System (Monteris[supreg] Medical). The requestors
also stated that over the last six years, the Indications for Use (IFU)
for one of the two U.S. approved LITT technologies (Neuroblate[supreg])
has been updated to reflect the system's current use in the brain and
to align with the intended neurosurgical patient population. The
requestor indicated applications in the spine are also anticipated in
the future within the central nervous system.
As previously noted, the deadline for receipt of public comments
for the proposed reclassification of LITT procedures that was presented
at the March 8-9, 2022 ICD-10 Coordination and Maintenance Committee
meeting along with the corresponding proposal for new procedure codes
was April 8, 2022, and the final code decisions on these proposals are
not yet available for inclusion in Table 6B.--New Procedure Codes
associated with this FY 2023 IPPS/LTCH PPS proposed rule. However, as
discussed in prior rulemaking (86 FR 44805), codes that are finalized
after the March meeting are reviewed and subject to our established
process of initially reviewing the predecessor codes MS-DRG assignment
and designation, while considering
[[Page 28135]]
other relevant factors (for example, severity of illness, treatment
difficulty, complexity of service and the resources utilized in the
diagnosis and/or treatment of the condition) 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 is then taken into consideration for the following
fiscal year.
Accordingly, as previously discussed, the MS-DRG assignment for any
new procedure codes describing LITT, if finalized following the March
meeting, would be reflected in Table 6B.--New Procedure Codes
associated with the final rule for FY 2023. However, in light of the
unique circumstances with respect to these procedures, for which there
is both a proposal for reclassifying LITT from the Radiation Therapy
section of the procedure code classification to the Medical/Surgical
section with new ICD-10-PCS procedure code(s) and a separate MS-DRG
reclassification request on the existing procedure codes, we are
providing the opportunity for public comment on possible MS-DRG
assignments for the requested new procedure codes describing LITT that
may apply based on the application of our established process and
analysis, in the event the new codes are finalized for FY 2023. We note
that while we discuss the potential MS-DRG assignments for new
procedure codes describing LITT, stakeholders may use current coding
information to consider the potential MS-DRG assignments for any other
procedure codes that may be finalized after the March meeting and
submit public comments for consideration. Specifically, in the ICD-10
Coordination and Maintenance Committee meeting materials (available via
the internet on the CMS website at https://www.cms.gov/Medicare/Coding/ICD10/C-and-M-Meeting-Materials), for each procedure code proposal we
provide the current coding that is applicable within the classification
and that should be reported in the absence of a more unique code, or
until such time a new code is created and becomes effective. The
procedure code(s) listed in current coding are generally, but not
always, the same code(s) that are considered as the predecessor code(s)
for purposes of MS-DRG assignment. As previously noted, our process for
determining the MS-DRG assignment for a new procedure code does not
automatically result in the new procedure code being assigned to the
same MS-DRG or having the same designation (O.R. versus Non-O.R.) as
the predecessor code. However, this current coding information can be
used in conjunction with the GROUPER logic, as set forth in the ICD-10
MS-DRG Definitions Manual and publicly available via the internet on
our CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software
to review the MS-DRG assignment of the current code(s) and examine the
potential MS-DRG assignment of the proposed code(s), to assist in
formulating any public comments for submission to CMS for
consideration.
We note that, unlike the typical code request for a new or revised
procedure code that involves a new technology or a new approach to
performing an existing procedure, the circumstances for this particular
request are distinct in that the code request would reclassify LITT
within the ICD-10-PCS classification from section D--Radiation Therapy
to the root operation Destruction in the Medical and Surgical section
of ICD-10-PCS. Therefore, in light of the unique considerations with
respect to the requested reclassification of the LITT procedures in
connection with the pending code proposal, we believe it is appropriate
to utilize the assignments and designations of the procedure codes
describing Destruction of the respective anatomic body site as
predecessor codes rather than the current codes describing LITT from
the Radiation Therapy section of ICD-10-PCS in considering potential
MS-DRG assignment for the requested new LITT procedure codes.
As previously discussed, under our established process for
determining the MS-DRG assignment for newly approved procedure codes,
we examine the MS-DRG assignment for the predecessor codes to determine
the most appropriate MS-DRG assignment for the new codes. Specifically,
we review the predecessor code and MS-DRG assignment most closely
associated with the new 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. As we have noted in prior rulemaking,
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.
Applying this established review process to the proposed codes for
the LITT procedures, we believe that, based on the predecessor codes,
and as previously noted, the potential assignments and designations
would align with the assignments and designations of the procedure
codes describing Destruction of the respective anatomic body site. For
example, as discussed earlier in this section of this proposed rule,
the code request involved reclassifying LITT procedures from section
D--Radiation Therapy to the root operation Destruction in the Medical
and Surgical section of ICD-10-PCS. The root operation Destruction is
appropriate to identify and report procedures, such as ablation, that
are performed on various body parts. The code request also involved
creating what is referred to as a qualifier value, to uniquely describe
LITT as the modality. The qualifier value is the seventh character or
digit, in a valid ICD-10-PCS procedure code.
The following ICD-10-PCS table illustrates an example of the
proposed procedure codes for LITT of the brain and brain stem, and
cervical, thoracic, and lumbar spinal cord body parts, including the
qualifier value that was presented and discussed at the March 8-9, 2022
ICD-10 Coordination and Maintenance Committee meeting.
[[Page 28136]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.009
We note that the code proposal presented only provided the body
part value 0 Brain, for reporting any LITT procedures performed on the
brain, as well as, the brain stem, consistent with the current
available body part option in Table 005, Destruction of Central Nervous
System and Cranial Nerves, where the predecessor code is located. The
predecessor code(s) and associated MS-DRG assignments for the proposed
new procedure code(s) describing LITT of the brain and spinal cord
under MDC 01 are identified as follows.
[GRAPHIC] [TIFF OMITTED] TP10MY22.010
As shown in the table, the procedure codes describing destruction
of brain with an open, percutaneous or percutaneous endoscopic approach
are assigned to MS-DRGs 023 through 027 (craniotomy and endovascular
procedures) and the procedure codes describing destruction of cervical,
thoracic or lumbar spinal cord with an open, percutaneous or
percutaneous endoscopic approach are assigned to MS-DRG 028 (Spinal
Procedures with MCC), MS-DRG 029 (Spinal Procedures with CC or Spinal
Neurostimulators), and MS-DRG 030 (Spinal Procedures without CC/MCC).
We refer the reader to Table 6P.2a associated with this proposed
rule (and available via the internet at https://www.cms.gov/medicare/
medicare-fee-for-service-payment/acuteinpatientpps) to review the
potential MDCs, MS-DRGs, and O.R. versus Non-O.R. designations
identified based on this analysis of the proposed new procedure codes
describing LITT as presented and discussed at the meeting. We note that
Table 6P.2a also includes the predecessor codes that we utilized to
inform this analysis. If finalized, the new procedure codes would be
included in the FY 2023 code update files that are made available in
late May/early June via the internet on the CMS website at https://www.cms.gov/medicare/coding/icd10. Additionally, if finalized, the new
procedure codes describing LITT would be displayed in Table 6B.--New
Procedure Codes, and the existing codes describing LITT would be
deleted and reflected in Table 6D.--Invalid Procedure Codes, in
association with the FY 2023 IPPS/LTCH PPS final rule. We refer the
reader to section II.D.14. for further information regarding the files.
As previously discussed, we also received requests to reassign the
existing ICD-10 procedure codes that identify LITT of the brain and
brain stem (codes D0Y0KZZ and D0Y1KZZ). In the event there is not
support for the proposed reclassification of LITT procedures and the
corresponding new procedure codes as presented at the March 8-9, 2022
ICD-10 Coordination and Maintenance Committee meeting, we are also
providing the results of our analysis of these existing codes and our
proposed MS-DRG assignments for FY 2023, if those existing codes are
retained.
We examined claims data from the September 2021 update of the FY
2021 MedPAR file for MS-DRGs 023, 024, 025, 026, and 027, in addition
to MS-DRGs 040, 041, and 042 for cases reporting LITT of the brain
(code D0Y0KZZ) or brain stem (code D0Y1KZZ). We note that if a
procedure code is not listed it is because there were no cases found
reporting that procedure code. Our findings are shown in the following
tables.
[[Page 28137]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.011
[GRAPHIC] [TIFF OMITTED] TP10MY22.012
As shown, we found a total of 123 cases reporting LITT of the brain
across MS-DRGs 023, 025, 026, and 027. There were no cases found in MS-
DRG 024. The cases reporting LITT of the brain grouped to these MS-DRGs
because another O.R. procedure that is assigned to the respective MS-
DRG was also reported. We refer the reader to Table 6P.2b for the list
of the other O.R. procedures we identified that were also reported with
LITT of the brain.
For MS-DRGs 040, 041, and 042, we found a total of 54 cases
reporting LITT of the brain and 2 cases reporting LITT of the brain
stem. While the average costs of the cases reporting LITT of the brain
were higher compared to all the cases in their respective MS-DRGs, the
average length of stay was shorter. For example, the data demonstrates
a shorter average length of stay (8.1 days versus 9.9 days) and higher
average costs ($40,458 versus $30,212) for the 14 cases reporting LITT
of brain in MS-DRG 040 compared to all the cases in MS-DRG 040. There
were no cases found to report LITT of brain stem in MS-DRG 040. For MS-
DRG 041, we found 16 cases reporting LITT of brain with an average
length of stay of 3.4 days and average costs of $23,278 and 1 case
reporting LITT of brain stem with an average length of stay of 1 day
and average costs of $10,222. The average length of stay for all the
cases in MS-DRG 041 is 5 days with average costs of $19,090. The data
demonstrates a shorter average length of stay (3.4 days and 1 day,
respectively, versus 5 days) for the 16 cases reporting LITT of brain
and the 1 case reporting LITT of brain stem. The data also demonstrates
higher average costs ($23,278 versus $19,090) for the 16 cases
reporting LITT of brain, and lower average costs for the 1 case
reporting LITT of brain stem ($10,222 versus $19,090), as compared to
the average costs of all cases in MS-DRG 041. For MS-DRG 042, we found
24 cases reporting LITT of brain with an average length of stay of 1.7
days and average costs of $22,426 and 1 case reporting LITT of brain
stem with an average length of stay of 2 days and average costs of
$32,668. The average length of stay for all the cases in MS-DRG 042 is
2.9 days with average costs of $15,451. The data demonstrates a shorter
average length of stay (1.7 days
[[Page 28138]]
and 2 days, respectively, versus 2.9 days) for the 24 cases reporting
LITT of brain and the 1 case reporting LITT of brain stem. The data
also demonstrate higher average costs ($22,426 and $32,668,
respectively versus $15,451) for the 24 cases reporting LITT of brain
and the 1 case reporting LITT of brain stem, compared to all the cases
in MS-DRG 042.
Based on the findings from our analysis, we considered whether
other factors, such as the reporting of secondary MCC and CC diagnoses,
may have contributed to the higher average costs for these cases.
Specifically, we conducted additional analyses of the claims data from
the September 2021 update of the FY 2021 MedPAR file to determine what
secondary MCC diagnoses were also reported for the 14 cases reporting
LITT of brain in MS-DRG 040 and what secondary CC diagnoses were
reported for the 17 cases (16 for LITT of brain and 1 for LITT of brain
stem) in MS-DRG 041. Our findings are shown in the following tables.
[GRAPHIC] [TIFF OMITTED] TP10MY22.013
[GRAPHIC] [TIFF OMITTED] TP10MY22.014
[[Page 28139]]
We note that we did not find any other O.R. procedures reported on
the claims in addition to the procedures for LITT of brain or brain
stem for MS-DRGs 040, 041 and 042.
The data shows that at least one of the listed secondary MCC
diagnoses was reported with each claim for LITT of brain identified in
MS-DRG 040 and the average length of stay for these cases ranged from 9
days to 48 days and the average costs of these cases ranged from
$41,486 to $80,745. We note that this data reflects the frequency with
which each of the listed diagnoses was reported on a claim with LITT of
brain. Therefore, multiple MCCs from this list of diagnoses may have
been reported on a single claim. In addition, while the logic for case
assignment to MS-DRG 040 requires at least one secondary MCC diagnosis,
we conducted additional detailed analyses for MS-DRG 040, as shown in
Table 6P.2f, to determine whether there were also secondary CC
diagnoses reported in conjunction with one or more of the listed MCC
diagnoses that may be contributing to the higher average costs for
cases reporting LITT of brain in MS-DRG 040 in comparison to all the
cases in MS-DRG 040. We found that 6 of the 14 cases reporting at least
one or more secondary MCC diagnosis also reported one or more secondary
CC diagnosis, which would appear to support that the severity of
illness for these patients, as identified by the secondary MCC and CC
diagnoses, may be more directly related to the higher average costs for
these patients than the LITT procedure itself.
Similarly, the data for MS-DRG 041 show the frequency with which
each of the listed secondary CC diagnoses was reported with LITT of
brain or brain stem. Results from the analysis for the 17 cases (16 for
LITT of brain and 1 for LITT of brain stem) show the average length of
stay for these cases ranged from 1 day to 29 days and the average costs
ranged from $9,101 to $57,999. These data analysis findings for MS-DRG
041 also appear to support our belief that the severity of illness for
these patients, as identified by the listed secondary CC diagnoses, may
be more directly related to the higher average costs for these patients
than the LITT procedure itself.
As stated previously, we did not find any other O.R. procedures
reported on the claims in addition to the procedures for LITT of brain
or brain stem for MS-DRGs 040, 041 and 042. Since the logic for case
assignment to MS-DRG 042 is not based on the reporting requirement of
any CC or MCC diagnoses, we conducted a detailed analysis of the claims
data to determine what other factors may be contributing to the higher
average costs and shorter average length of stay for these cases in
comparison to all the cases in MS-DRG 042. We refer the reader to Table
6P.2g associated with this proposed rule for the findings from our
analysis. As shown in the data, the majority of the cases (15 of 25)
had a principal diagnosis of epilepsy, 8 cases had a principal
diagnosis related to malignant neoplasm of the brain or brain
structures, 1 case had a principal diagnosis of hemangioma of
intracranial structures and 1 case had a principal diagnosis of
unspecified convulsions. The data also demonstrate that 16 of the 25
cases reported in MS-DRG 042 include patients who were under the age of
65, with ages ranging from 32 years old to 64 years old. We note that
patients diagnosed with epilepsy are eligible for coverage since it is
a condition that qualifies under certain criteria. It is not entirely
clear if the age of these patients had any impact on the average length
of stay since the average length of stay of the 24 cases reporting LITT
of brain was 1.7 days and the 1 case reporting LITT of brain stem was 2
days.
As stated previously, the logic for case assignment to MS-DRG 042
is not dependent on the reporting of any CC or MCC diagnoses, however,
based on the diagnoses reflected in the claims data for MS-DRG 042, it
is possible that conditions such as obesity and chronic conditions
requiring the long-term use of certain therapeutic agents may be
contributing factors to the consumption of resources, separately from
the LITT procedure. We found 17 of the 25 cases reporting LITT of brain
or brain stem to also report one or both of these conditions.
We also reviewed the number of cases of LITT of the brain or brain
stem procedures reported in the data since the transition to ICD-10.
Specifically, we examined the claims data for cases reporting LITT of
brain or brain stem as a standalone procedure or with another procedure
in the FY 2016 through FY 2021 MedPAR data files across all MS-DRGs.
The findings from our analysis are shown in table 6P.2e associated with
this proposed rule.
The data demonstrates that since the implementation of ICD-10, a
shift in the reporting of LITT of brain and brain stem procedures has
occurred. For example, the FY 2016, FY 2017 and FY 2018 MedPAR data
reflect that the number of cases for which LITT of brain or brain stem
procedures were reported as a standalone procedure is higher in
comparison to the number of cases reported with another procedure.
Conversely, the FY 2019, FY 2020, and FY 2021 MedPAR data reflect that
the number of cases for which LITT of brain or brain stem procedures
were reported as a standalone procedure is lower in comparison to the
number of cases reported with another procedure. The data also reflect
that the average length of stay is shorter and the average costs are
lower for cases reporting LITT of brain or brain stem as a standalone
procedure in comparison to the average length of stay and average costs
for cases reported with another procedure across the FY 2016 through FY
2021 MedPAR data files. Lastly, the data demonstrate that overall, the
number of cases for which LITT of brain or brain stem procedures was
performed had remained fairly stable at over 100 cases with increases
in the FY 2017, FY 2020 and FY 2021 MedPAR data files of 156, 154 and
185 cases, respectively.
We also analyzed claims data from the September 2021 update of the
FY 2021 MedPAR file for cases reporting LITT of other anatomic sites
across all MS-DRGs. Although the requestors indicated that LITT is
primarily performed on intracranial lesions, as shown in Table 6P.2c
associated with this proposed rule, we identified a small number of
cases reporting LITT of the lung, rectum, liver, breast, and prostate,
for a total of 29 cases where LITT was performed on other body parts/
anatomic sites.
For example, we found a total of 5 cases reporting LITT of lung
across 5 different MS-DRGs. Of these 5 cases, 2 cases had a longer
average length of stay and higher average costs in comparison to all
the cases in their respective MS-DRG. Specifically, for MS-DRG 163
(Major Chest Procedures with MCC), we found 1 case reporting LITT of
lung with an average length of stay of 17 days and average costs of
$41,467. The average length of stay for all cases in MS-DRG 163 is 10.7
days with average costs of $38,367. The data demonstrates a difference
of 6.3 days (17-10.7=6.3) for the average length of stay and a
difference of $3,100 in average costs ($41,467-$38,367=$3,100) for the
1 case reporting LITT of lung in MS-DRG 163 compared to all the cases
in MS-DRG 163. For MS-DRG 167 (Other Respiratory System O.R. Procedures
with CC), we found 1 case reporting LITT of lung with an average length
of stay of 7 days and average costs of $22,975. The average length of
stay for all cases in MS-DRG 167 is 4.6 days with average costs of
$15,397. The data demonstrates a difference of 2.4 days (7-4.6=2.4) for
the average length of stay and a difference of $7,578 in average costs
($22,975-$15,397=$7,578) for the 1
[[Page 28140]]
case reporting LITT of lung in MS-DRG 167 compared to all the cases in
MS-DRG 167. The data for the remaining 3 cases reporting LITT of lung
demonstrated a shorter average length of stay and lower average costs
in comparison to all the cases in their respective MS-DRGs.
We found 1 case reporting LITT of rectum in MS-DRG 357 (Other
Digestive System O.R. Procedures with CC) with a shorter average length
of stay (4 days versus 5.6 days) and lower average costs ($3,069 versus
$18,065) as compared to all the cases in MS-DRG 357. We also found 1
case reporting LITT of liver in MS-DRG 405 (Pancreas Liver and Shunt
Procedures with MCC) with a longer average length of stay (20 days
versus 12.3 days) and higher average costs ($49,0695 versus $43,771) as
compared to all the cases in MS-DRG 405.We also found 1 case reporting
LITT of right breast in MS-DRG 580 (Other Skin Subcutaneous Tissue and
Breast Procedures with CC) with a longer average length of stay (19
days versus 5.4 days) and higher average costs ($32,064 versus $13,767)
as compared to all the cases in MS-DRG 580.
Lastly, we found 21 cases reporting LITT of prostate across 14 MS-
DRGs. Of those 21 cases, 6 cases had a longer average length of stay or
higher average costs, or both, in comparison to the average length of
stay and average costs of all the cases in their respective MS-DRG. For
example, in MS-DRG 650 (Kidney Transplant with Hemodialysis with MCC)
we found 1 case reporting LITT of prostate with an average length of
stay of 36 days and average costs of $67,238. The average length of
stay for all cases in MS-DRG 650 is 8.1 days with average costs of
$38,139. The data demonstrates a difference of 27.9 days (36-8.1=27.9)
for the average length of stay and a difference of $29,099 in average
costs ($67,238-$38,139= $29,099) for the 1 case reporting LITT of
prostate in MS-DRG 650 compared to all the cases in MS-DRG 650. We also
found 1 case reporting LITT of prostate in MS-DRG 659 (Kidney and
Ureter Procedures for Non-Neoplasm with MCC) with an average length of
stay of 26 days. The average length of stay for all cases in MS-DRG 659
is 7.8 days, demonstrating a difference of 18.2 days (26-7.8=18.2). We
found 1 case reporting LITT of prostate in MS-DRG 712 (Testes
Procedures without CC/MCC) with average costs of $15,669. The average
costs for all cases in MS-DRG 712 is $10,482, demonstrating a
difference of $5,187 ($15,669-$10,482=$5,187). We found 1 case
reporting LITT of prostate in MS-DRG 987 with an average length of stay
of 23 days and average costs of $35,465. The average length of stay for
all cases in MS-DRG 987 is 10.9 days with average costs of $26,657. The
data demonstrates a difference of 12.1 days (23-10.9=12.1) for the
average length of stay and a difference of $8,808 in average costs
($35,465-$26,657= $8,808) for the 1 case reporting LITT of prostate in
MS-DRG 987 compared to all the cases in MS-DRG 987. Lastly, we found 2
cases reporting LITT of prostate in MS-DRG 988 (Non-Extensive O.R.
Procedures Unrelated to Principal Diagnosis with CC) with average costs
of $17,126. The average costs for all cases in MS-DRG 988 is $13,670,
demonstrating a difference of $3,456 ($17,126-$13,670= $3,456) for the
2 cases reporting LITT of prostate in MS-DRG 988.
We refer the reader to Table 6P.2c for the detailed findings from
our analysis. We note that if the procedure code describing LITT of a
specific anatomic site is not listed it is because there were no cases
found.
We note that for the 10 cases previously described, for which LITT
of a different anatomic site from the brain or brain stem was reported
and had a longer average length of stay or higher average costs, or
both, in comparison to the average length of stay and average costs of
all the cases in their respective MS-DRG, that with the exception of
MS-DRG 712, all the other MS-DRGs include a ``with MCC'' or ``with CC''
designation, or were reported in a surgical MS-DRG. We believe that
these other factors may have contributed to the longer average length
of stay and higher average costs for these cases, therefore we
conducted additional analyses of the claims data to determine what
diagnoses or procedures were also reported. We refer the reader to
Table 6P.2d associated with this proposed rule for the findings from
our detailed analysis of these 10 cases.
As shown in Table 6P.2d, the data demonstrate that a number of MCC
and/or CC secondary diagnoses were reported for each of the 10 cases
and that the surgical procedures that were reported in addition to the
LITT procedure seem to have contributed to the longer average length of
stay and higher average costs for those cases when compared to the
average length of stay and average costs for all the cases in their
respective MS-DRG. For example, in case number 1 there are 2 diagnoses
that are designated as MCC conditions and 5 diagnoses that that are
designated as CC conditions with procedure codes describing a kidney
transplant, hemodialysis, and insertion of a ureteral stent that were
reported along with LITT of prostate. For case number 3 there are 4
diagnoses that are designated as MCC conditions and 6 diagnoses that
are designated as CC conditions with procedure codes describing
bronchoscopic treatment of a bronchial tumor with and without stents,
as well as the use of mechanical ventilation. Overall, the data appear
to indicate that the performance of the LITT procedure was not the
underlying reason for, or main driver of, the increase in resource
utilization for those cases.
As noted, the requestors indicated that LITT is primarily being
performed on intracranial lesions. However, as summarized, we
identified a limited number of cases reporting LITT procedures for
other anatomic sites. We are interested in comments regarding the use
of and experience with LITT for these other anatomic sites.
Based on our analysis of the FY 2021 MedPAR claims data for cases
reporting LITT of brain or brain stem (codes D0Y0KZZ and D0Y1KZZ) in
MS-DRGs 040, 041, and 042, we agree with the requestors that the
average costs of these cases are higher as compared to the average
costs of all cases assigned to MS-DRGs 040, 041, and 042. For the
reasons summarized, we also believe that other factors, including the
reporting of secondary MCC and CC diagnoses, may be contributing to the
higher average costs for these cases. As discussed in the FY 2022 IPPS/
LTCH PPS final rule (86 FR 44813), we examined procedure codes D0Y0KZZ
and D0Y1KZZ describing LITT of brain and brain stem, respectively, and
stated that 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. Our clinical advisors continue to
maintain that LITT is a minimally invasive procedure, requiring only a
tiny incision for purposes of a burr hole and that patients are often
only kept overnight (as reflected in the detailed claims data).
However, we also recognize that craniotomy and LITT share common
procedural characteristics including use of an operating room, carry
risk of immediate intracranial bleeding or infection, and cause tissue
to be immediately destroyed or excised. While the data do not
demonstrate that the LITT procedure is the underlying reason for the
higher average costs and consumption of resources for the small number
of cases reporting LITT of brain (54 cases) or brain stem (2 cases)
that we found in MS-DRGs 040, 041, and 042,
[[Page 28141]]
the data do demonstrate that the patients receiving this treatment
therapy have brain tumors or epilepsy combined with multiple
comorbidities or chronic conditions necessitating long-term use of
medications, or both, and we note the indications for LITT (brain
tumors and epileptic foci) are better aligned with MS-DRGs 025, 026,
and 027 as compared to MS-DRGs 040, 041, and 042.
As we discuss further in this section, we intend to more fully
evaluate the logic for the procedures specifically involving a
craniotomy, as well as the overall structure of MS-DRGs 023 through
027, and we believe that reassignment of cases reporting LITT of brain
or brain stem to MS-DRGs 025, 026, and 027 would be an appropriate
first step in connection with these efforts. For example, while we
recognize the distinctions between open craniotomy procedures and
minimally invasive percutaneous intracranial procedures, we also
recognize that the current logic for MS-DRGs 025 through 027 also
includes other endovascular intracranial procedures performed using
percutaneous or percutaneous endoscopic approaches, and we believe that
further review of the clinical coherence of the procedures assigned to
these MS-DRGs may be warranted. Our clinical advisors note that while
the typical patient treated with LITT usually has a single small scalp
incision through which a hole approximately the diameter of a straw is
drilled, with no extensive surgical exposure, that LITT can still be
employed for another subset of more complex patients, including
patients with primary brain malignancies and those with larger
metastatic lesions or multiple lesions. For this subset of more complex
patients, a longer post-operative stay with direct medical supervision
may be necessary. As such, we believe reassigning these procedures to
MS-DRGs 025 through 027 for FY 2023 would be appropriate as we consider
restructuring MS-DRGs 023 through 027, including how to better align
the clinical indications with the performance of specific intracranial
procedures. Accordingly, for these reasons, in the event there is not
support for the proposed reclassification of LITT procedures and the
corresponding new procedure codes as presented at the March 8-9, 2022
ICD-10 Coordination and Maintenance Committee meeting, we are proposing
to reassign the existing procedure codes describing LITT of the brain
or brain stem from MS-DRGs 040, 041, and 042 to MS-DRGs 025, 026, and
027 for FY 2023. We are also proposing to maintain the MS-DRG
assignments for the existing procedure codes describing LITT of other
anatomic sites as finalized and displayed in Table 6P.2b in association
with the FY 2022 IPPS/LTCH PPS final rule, for FY 2023. We note that we
did not receive any comments or requests to reconsider those finalized
MS-DRG assignments for FY 2023.
As noted, in connection with our analysis of cases reporting LITT
procedures performed on the brain or brain stem in MDC 01, we have
started to examine the logic for case assignment to MS-DRGs 023 through
027 to determine where further refinements could potentially be made to
better account for differences in the technical complexity and resource
utilization among the procedures that are currently assigned to those
MS-DRGs. Specifically, we are in the process of evaluating procedures
that are performed using an open craniotomy (where it is necessary to
surgically remove a portion of the skull) versus a percutaneous burr
hole (where a hole approximately the size of a pencil is drilled) to
obtain access to the brain in the performance of a procedure. We are
also reviewing the indications for these procedures, for example,
malignant neoplasms versus epilepsy to consider if there may be merit
in considering restructuring the current MS-DRGs to better recognize
the clinical distinctions of these patient populations in the MS-DRGs.
We believe it is worthwhile to also compare the claims data for
epilepsy patients who are treated with a neurostimulator implant versus
a LITT procedure, as well as the claims data for patients with a
diagnosis of epilepsy or malignant neoplasms who undergo a LITT
procedure. Our analysis also includes reviewing the claims data with
regard to the cases that reflect a procedure that is generally
performed with another O.R. procedure versus a standalone procedure.
As we continue this analysis of the claims data with respect to MS-
DRGs 023 through 027, we are also seeking public comments and feedback
on other factors that should be considered in the potential
restructuring of these MS-DRGs. As previously described, we are
examining procedures by their approach (open versus percutaneous),
clinical indications, and procedures that involve the insertion or
implantation of a device. We recognize the logic for MS-DRGs 023
through 027 has grown more complex over the years and believe there is
opportunity for further refinement. We refer the reader to the ICD-10
MS-DRG Definitions Manual, version 39.1, 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
023 through 027. Feedback and other suggestions may be submitted by
October 20, 2022 and directed to the new electronic intake system,
Medicare Electronic Application Request Information SystemTM
(MEARISTM), discussed in section II.D.1.b of the preamble of
this proposed rule at https://mearis.cms.gov/public/home.
b. Vagus Nerve Stimulation
We received a request to review the MS-DRG assignment for cases
that identify patients who receive an implantable vagus nerve
stimulation system for heart failure. The vagus nerve, also called the
X cranial nerve or the 10th cranial nerve, is the longest and most
complex of the cranial nerves. There is one vagus nerve on each side of
the body that runs from the brain through the face and thorax to the
abdomen. According to the requestor, cranial nerve stimulation (CNS),
which includes vagus nerve stimulation, is a well-established therapy
for various indications including epilepsy, treatment resistant
depression (TRD) and obstructive sleep apnea (OSA), and is now being
investigated and studied for use in patients with heart failure.
According to the requestor, heart failure, or the heart's inability
to pump an adequate supply of blood and oxygen to support the other
organs of the body, is an autonomic nervous system dysfunction. The
brain controls the function of the heart through the sympathetic branch
and the parasympathetic branches of the autonomic nervous system. In
heart failure, there is an imbalance in the autonomic nervous system.
The vagus nerve stimulation system for heart failure is comprised of an
implantable pulse generator, an electrical lead, and a programming
computer system. The pulse generator, which is usually implanted just
under the skin of the pectoral region, sends the energy to the vagus
nerve through the lead. The lead is a flexible insulated wire that is
guided under the skin from the chest up to the neck and is implanted
onto the vagus nerve and transmits tiny electrical impulses from the
generator to the nerve. These electrical impulses to the vagus nerve
are intended to activate the parasympathetic branch of the autonomic
nervous system to restore balance.
[[Page 28142]]
The requestor stated that cases reporting a procedure code
describing the insertion of a neurostimulator lead onto the vagus nerve
and a procedure code describing the insertion of a stimulator generator
with a principal diagnosis code describing epilepsy, TRD or OSA are
assigned to surgical MS-DRGs 040, 041 and 042 (Peripheral Cranial Nerve
and Other Nervous System Procedures with MCC, with CC or Peripheral
Neurostimulator, and without CC/MCC, respectively) in MDC 01 (Diseases
and Disorders of the Nervous System). However, when the same codes
describing the insertion of a neurostimulator lead onto the vagus nerve
and the insertion of a stimulator generator are reported with a
principal diagnosis of heart failure, the cases instead are assigned to
surgical MS-DRGs 252, 253 and 254 (Other Vascular Procedures with MCC,
with CC, without MCC respectively) in MDC 05 (Diseases and Disorders of
the Circulatory System).
The requestor stated that the treatment of autonomic nervous system
dysfunction is the underlying therapeutic objective of cranial nerve
stimulation for heart failure, and therefore the diagnosis of heart
failure is more clinically coherent with other diagnoses in MDC 01. As
a result, the requestor, who is developing the VITARIA[supreg] System,
an active implantable neuromodulation system that uses vagus nerve
stimulation to deliver autonomic regulation therapy (ART) for an
indicated use that includes patients who have moderate to severe heart
failure, submitted a request to reassign cases reporting a procedure
code describing the insertion of a neurostimulator lead onto the vagus
nerve and a procedure code describing the insertion of a stimulator
generator with a principal diagnosis code describing heart failure,
from MS-DRGs 252, 253 and 254 in MDC 05 to MS-DRGs 040, 041 and 042 in
MDC 01. This requestor also submitted an application for new technology
add-on payment for FY 2023. We refer readers to section II.F.6. of the
preamble of this proposed rule for a discussion regarding the
application for new technology add-on payments for the VITARIA[supreg]
System for FY 2023.
According to the requestor, the following ICD-10-PCS procedure code
pair identifies the insertion of a vagus nerve stimulation system for
heart failure:
[GRAPHIC] [TIFF OMITTED] TP10MY22.015
The requestor performed its own analysis of Medicare claims from
2020 and stated that it found that patients enrolled in their pivotal
clinical trials had an average length of stay of 6.38 days. According
to the requestor this finding indicates a resource coherence more
similar to cases assigned to MS-DRGs 040, 041 and 042, whose average
lengths of stay ranges from 2 to 8 days, when compared to the average
lengths of stay of 1 to 3 days for cases assigned to MS-DRGs 252 and
253. The requestor stated their own analysis of 2019 and 2020 Medicare
claims data also showed that fewer than 11 cases with procedure codes
describing the implantation of a vagus nerve stimulation system map to
MS-DRGs 252, 253 and 254 annually but it is expected that Medicare
patients will receive vagus nerve stimulation system for heart failure
on an inpatient basis. Because of the shared clinical and resource
similarity of the procedure to implant the VITARIA[supreg] system to
other CNS procedures, regardless of indication, the requestor stated
that CNS procedures for the treatment of heart failure should also be
assigned to MS-DRGs 040, 041 and 042. The requestor also noted that the
title of MS-DRGs 252, 253 and 254 is ``Other Vascular Procedures with
MCC, with CC, without MCC respectively''. Since no vascular access is
involved in the procedure to implant vagus nerve stimulation systems,
the requestor stated MS-DRGs 252, 253 and 254 are not appropriate
mappings for these procedures.
The ICD-10-CM diagnosis codes that describe heart failure are found
in the following table. These diagnosis codes are all currently
assigned to MDC 05.
BILLING CODE 4120-01-P
[[Page 28143]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.016
The ICD-10-PCS codes that identify the insertion of a
neurostimulator lead onto the vagus nerve are listed in the following
table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.018
[[Page 28144]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.019
The ICD-10-PCS codes that identify the insertion of a stimulator
generator are listed in the following table.
[[Page 28145]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.020
[[Page 28146]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.021
BILLING CODE 4120-01-C
Our analysis of this grouping issue confirmed that, when a
procedure code describing the insertion of a neurostimulator lead onto
the vagus
[[Page 28147]]
nerve and a procedure code describing the insertion of a stimulator
generator are reported with a principal diagnosis code describing heart
failure, these cases group to surgical MS-DRGs 252, 253 and 254 (Other
Vascular Procedures with MCC, with CC, without MCC respectively).
We note that cases involving the use of a peripheral
neurostimulator and a diagnosis from MDC 01 are assigned to MS-DRG 041
only. The GROUPER logic for MS-DRGs 040, 041, and 042 is reflected in
the logic table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.022
We refer the reader to the ICD-10 MS-DRG Version 39.1 Definitions
Manual (which is available via the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) for complete
documentation of the GROUPER logic for the listed MS-DRGs.
We examined claims data from the September 2021 update of the FY
2021 MedPAR file for MS-DRGs 252, 253 and 254 to identify the subset of
cases within MS-DRGs 252, 253 and 254 reporting a procedure code
describing the insertion of a neurostimulator lead onto the vagus nerve
and a procedure code describing the insertion of a stimulator generator
with a principal diagnosis of heart failure. We found zero cases in MS-
DRGs 252, 253 and 254 reporting a procedure code describing the
insertion of a neurostimulator lead onto the vagus nerve and a
procedure code describing the insertion of a stimulator generator with
a principal diagnosis of heart failure. In an attempt to further
examine this issue, we then examined claims data from the September
2021 update of the FY 2021 MedPAR file for MS-DRGs 252, 253 and 254 to
identify the subset of cases within MS-DRGs 252, 253 and 254 reporting
a procedure code describing the insertion of a neurostimulator lead
onto the vagus nerve and a procedure code describing the insertion of a
stimulator generator with a secondary diagnosis of heart failure and
similarly found zero cases.
The results of the claims analysis demonstrate that there is not
sufficient claims data in the MedPAR file on which to assess the
resource use of cases reporting a procedure code describing the
insertion of a neurostimulator lead onto the vagus nerve and a
procedure code describing the insertion of a stimulator generator with
a principal or secondary diagnosis of heart failure as compared to
other cases assigned to MS-DRGs 252, 253, and 254.
In reviewing the requestor's concerns regarding clinical coherence,
our clinical advisors acknowledge that heart failure is a complex
syndrome involving autonomic nervous system dysfunction, however our
clinical advisors disagree with assigning the diagnosis codes
describing heart failure to MDC 01 (Diseases and Disorders of the
Nervous System). Our clinical advisors note the concept of clinical
coherence requires that the patient characteristics included in the
definition of each MS-DRG relate to a common organ system or etiology.
As the listed diagnosis codes describe heart failure, these diagnosis
codes are appropriately assigned to MDC 05 (Diseases and Disorders of
the Circulatory System). Our clinical advisors also state it would not
be appropriate to move these diagnoses into MDC 01 because it could
inadvertently cause cases reporting these same MDC 05 diagnoses with a
circulatory system procedure to be assigned to an unrelated MS-DRG
because 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''.
To further examine the impact of moving the diagnoses describing
heart failure into MDC 01, we analyzed claims data for cases reporting
a circulatory system O.R. procedure and a principal diagnosis of heart
failure. Our findings are reflected in the following table.
BILLING CODE 4120-01-P
[[Page 28148]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.023
[[Page 28149]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.024
BILLING CODE 4120-01-C
As shown in the table, if we were to move diagnosis codes
describing heart failure to MDC 01, 20,199 cases would be assigned to
the surgical class referred to as ``unrelated operating room
procedures'' as an unintended consequence because the surgical
procedure reported on the claim would be considered unrelated to the
MDC to which the case was assigned based on the principal diagnosis.
In response to the requestor's concerns regarding the title of MS-
DRGs 252, 253 and 254, we 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 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. There are, however, also
patients who receive surgical procedures which are completely unrelated
to the MDC to which the patient was assigned. An example of such a
patient would be a patient with a principal diagnosis of pneumonia
whose only surgical procedure is a destruction of prostate
(transurethral prostatectomy in ICD-9-CM). Such patients are assigned
to a surgical class referred to as ``unrelated operating room
procedures.'' '' We further note that MS-DRGs 252, 253, and 254 (Other
Vascular Procedures with MCC, with CC, and without CC/MCC,
respectively) are examples of the ``other'' surgical class, therefore
it is expected that there will be procedures not as precisely
clinically aligned within the definition (logic) of these MS-DRGs.
Considering that there is no data in the FY 2021 MedPAR file to
support a reassignment of these cases based on resource consumption,
the analysis of clinical coherence as discussed previously, and the
impact that moving the diagnoses describing heart failure into MDC 01
from MDC 05 would have on heart failure cases, we do not believe a
reassignment of these cases is appropriate at this time. We can
[[Page 28150]]
continue to evaluate the clinical coherence and resource consumption
costs that impact this subset of cases and their current MS-DRG
assignment as data become available for future rulemaking.
In summary for the reasons stated previously, we are not proposing
to reassign cases reporting a procedure code describing the insertion
of a neurostimulator lead onto the vagus nerve and a procedure code
describing the insertion of a stimulator generator with a principal
diagnosis of heart failure from MS-DRG 252, 253 and 254 to MS-DRGs 040,
041 and 042.
As we examined the GROUPER logic that would determine an assignment
of a case to MS-DRGs 252, 253 and 254, we noted the logic for MS-DRGs
252, 253 and 254 includes ICD-10-PCS procedure codes that describe the
insertion of the stimulator generator. We refer the reader to the ICD-
10 MS-DRG Version 39.1 Definitions Manual (which is available via the
internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) for complete documentation of the GROUPER logic for the
listed MS-DRGs. During our review of the stimulator generator insertion
procedures assigned to these MS-DRGs, we identified the following 24
procedure codes that describe the insertion of a stimulator generator,
differentiated by device type (for example single array or multiple
array), that do not exist in the logic for MS-DRGs 252, 253 and 254.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.025
[[Page 28151]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.026
BILLING CODE 4120-01-C
For clinical consistency with the other procedure codes describing
the insertion of the stimulator generator currently assigned to these
MS-DRGs, we are proposing to add the 24 ICD-10-PCS codes listed
previously 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) effective October 1, 2022 for FY
2023.
Also, as we examined the GROUPER logic that would determine an
assignment of a case to MS-DRG 041, we note the logic for case
assignment to MS-DRG 041 as displayed in the ICD-10 MS-DRG Version 39.1
Definitions Manual, available via the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.html contains
code combinations or ``clusters'' representing the insertion of a
neurostimulator lead and the insertion of a stimulator generator that
are captured under a list referred to as ``Peripheral
Neurostimulators.'' During our review of the procedure code clusters in
this list, we noted that ICD-10-PCS procedure code clusters describing
the insertion of a neurostimulator lead and the insertion of the
stimulator generator differentiated by device type (for example single
array or multiple array), approach and anatomical site placement are
captured. However, procedure code clusters describing the insertion of
stimulator generator, that is not differentiated by device type, and a
neurostimulator lead were inadvertently excluded. We refer the reader
to Table 6P.3a (which is available via the internet on the CMS website
at https://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for the list of the 108 ICD-10-PCS code
clusters that were inadvertently excluded and do not exist in the logic
for MS-DRG 041.
For clinical consistency, our clinical advisors supported the
addition of the 108 procedure code clusters to the GROUPER logic list
referred to as ``Peripheral Neurostimulators'' for MS-DRG 041 that
describe the insertion of stimulator generator, not differentiated by
device type, and a neurostimulator lead. Therefore, we are proposing to
add the 108 ICD-10-PCS code clusters listed in Table 6P.3a that
describe the insertion of a stimulator generator, that is not
differentiated by device type, and a neurostimulator lead to MS-DRG
041, effective October 1, 2022 for FY 2023.
4. MDC 02 (Diseases and Disorders of the Eye): Retinal Artery Occlusion
We received a request to reassign cases reporting diagnosis codes
describing central retinal artery occlusion, and the closely allied
condition branch retinal artery occlusion, from MS-DRG 123
(Neurological Eye Disorders) in MDC 02 (Diseases and Disorders of the
Eye) to MS-DRGs 061, 062, and 063 (Ischemic Stroke Precerebral
Occlusion or Transient Ischemia with Thrombolytic Agent with MCC, with
CC, and without CC/MCC, respectively) in MDC 01 (Diseases and Disorders
of the Nervous System).
Retinal artery occlusion refers to blockage of the retinal artery
that carries oxygen to the nerve cells in the retina at the back of the
eye, often by an embolus or thrombus. A blockage in the main artery in
the retina is called central retinal artery occlusion (CRAO). A
blockage in a smaller artery is called branch retinal artery occlusion
(BRAO). According to the requestor, in the current mapping to MS-DRG
123, diagnoses of CRAO and BRAO are being captured inappropriately as
eye disorders in MDC 02. Instead, the requestor stated that CRAO and
BRAO are forms of acute ischemic stroke which occur when a vessel
supplying blood to the brain is obstructed.
The requestor stated the retina is a core component of the central
nervous system and there is growing recognition that damage to it is a
vascular neurological problem and not an ophthalmological one. Patients
with CRAO or BRAO are typically very sick, have an underlying
condition, and are at imminent risk for further events including heart
attack or brain stroke. A diagnosis of CRAO or BRAO requires an urgent,
structured and multidisciplinary team-based examination to evaluate and
treat other diagnoses that may be present such as high blood pressure,
dyslipidemia, diabetes mellitus, obesity, obstructive sleep apnea and
smoking to ameliorate the risks of a subsequent, potentially lethal,
cardiovascular event.
The requestor further stated new evidence outlines treatment of
patients with CRAO with acute stroke protocols, specifically with
intravenous thrombolysis (IV tPA) or hyperbaric oxygen therapy (HBOT),
to improve outcomes. According to the requestor, BRAO is less commonly
treated with IV tPA than CRAO but also requires an urgent and thorough
diagnostic workup as with any other form of stroke. The requestor
stated the current assignment of these conditions to MS-DRG 123 does
not properly recognize disease complexity and allocation of resources
for care for these cases. The requestor stated that patients with CRAO
or BRAO more closely resemble patients currently mapped to MS-DRGs 061,
062, and 063 in terms of in resource intensity and criticality and that
in instances where HBOT is the chosen treatment modality, any revised
MS-DRG mapping should include the ICD-10-PCS codes for HBOT.
[[Page 28152]]
The ICD-10-CM codes that describe CRAO and BRAO are found in the
following table.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.027
Thrombolytic therapy is identified with the following ICD-10-PCS
procedure codes.
[GRAPHIC] [TIFF OMITTED] TP10MY22.028
The requestor identified three ICD-10-PCS codes that they stated
describe HBOT.
[GRAPHIC] [TIFF OMITTED] TP10MY22.029
During our review of this issue, we included the three procedure
codes as identified by the requestor as describing HBOT, as well as the
similar procedure code 5A05221 (Extracorporeal hyperbaric oxygenation,
continuous) that also describes HBOT, differing only in duration.
Our analysis of this grouping issue confirmed that, when a
procedure code describing the administration of a thrombolytic agent or
a procedure code describing HBOT is reported with principal diagnosis
code describing CRAO or BRAO, these cases group to medical MS-DRG 123.
To begin our analysis, we examined claims data from the September 2021
update of the FY 2021 MedPAR file for MS-DRG 123 to (1) identify cases
reporting a principal diagnosis code describing CRAO or BRAO without a
procedure code describing the administration of a thrombolytic agent or
a procedure code describing HBOT; (2) identify cases reporting
diagnosis codes describing CRAO or BRAO with a procedure code
describing HBOT; and (3) identify cases reporting diagnosis codes
describing CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent. Our findings are shown in the
following table:
[[Page 28153]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.030
BILLING CODE 4120-01-C
As shown in the table, we identified a total of 2,642 cases within
MS-DRG 123 with an average length of stay of 2.5 days and average costs
of $6,457. Of these 2,642 cases, there are 774 cases that reported a
principal diagnosis code describing CRAO or BRAO without a procedure
code describing the administration of a thrombolytic agent or a
procedure code describing HBOT with an average length of stay of 2.2
days and average costs of $5,482. There are nine cases that reported a
principal diagnosis code describing CRAO or BRAO with a procedure code
describing HBOT with an average length of stay of 2 days and average
costs of $6,491. There are 47 cases that reported a principal diagnosis
code describing CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent with an average length of stay
of 2.3 days and average costs of $14,335.
The data analysis shows that the 774 cases in MS-DRG 123 reporting
a principal diagnosis code describing CRAO or BRAO without a procedure
code describing the administration of a thrombolytic agent or a
procedure code describing HBOT have average costs lower than the
average costs in the FY 2021 MedPAR file for MS-DRG 123 ($5,482
compared to $6,457), and the average length of stay is shorter (2.2
days compared to 2.5 days). For the nine cases in MS-DRG 123 reporting
a principal diagnosis code describing CRAO or BRAO with a procedure
code describing HBOT, the average length of stay is shorter (2 days
compared to 2.5 days) and the average costs ($6,491 compared to $6,457)
are slightly higher than the average length of stay and average costs
compared to all cases in that MS-DRG. For the 47 cases in MS-DRG 123
reporting a principal diagnosis code describing CRAO or BRAO with a
procedure code describing the administration of a thrombolytic agent,
the average length of stay is slightly shorter (2.3 days compared to
2.5 days) and the average costs are higher ($14,335 compared to $6,457)
than the average length of stay and average costs compared to all cases
in that MS-DRG.
We also examined claims data from the September 2021 update of the
FY 2021 MedPAR file for MS-DRGs 061, 062, and 063. Our findings are
shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.031
Because MS-DRG 123 is a base DRG and there is a three-way split
within MS-DRGs 061, 062, and 063, we also analyzed the 47 cases
reporting a principal diagnosis code describing CRAO or BRAO with a
procedure code describing the administration of a thrombolytic agent
and the nine cases reporting a principal diagnosis code describing CRAO
or BRAO with a procedure code describing HBOT for the presence or
absence of a secondary diagnosis designated as a complication or
comorbidity (CC) or a major complication or comorbidity (MCC).
[[Page 28154]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.032
This data analysis shows the cases in MS-DRG 123 reporting a
principal diagnosis code describing CRAO or BRAO with a procedure code
describing the administration of a thrombolytic agent or with a
procedure code describing HBOT when distributed based on the presence
or absence of a secondary diagnosis designated as a CC or an MCC have
average costs lower than the average costs in the FY 2021 MedPAR file
for MS-DRGs 061, 062, and 063 respectively, and the average lengths of
stay are shorter. Accordingly, we do not believe the data adequately
support a potential reassignment of these cases to MS-DRGs 061, 062,
and 063 respectively.
Our clinical advisors reviewed this issue and the related data
analysis and do not believe that the small subset of patients with a
diagnosis of CRAO or BRAO receiving a thrombolytic agent or hyperbaric
oxygen therapy warrant a separate MS-DRG or reassignment at this time.
Our clinical advisors noted the average costs for cases of patients
with a diagnosis of CRAO or BRAO receiving HBOT are only slightly
higher than the average costs for all cases in MS-DRG 123 ($6,491
compared to $6,457). The average costs for cases of patients with a
diagnosis of CRAO or BRAO receiving a thrombolytic agent are higher
than the average costs for all cases in MS-DRG 123 however 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) it is unclear to what degree the
higher average costs for these cases are attributable to the severity
of illness of the patient and other circumstances of the admission as
opposed to the administration of a thrombolytic agent, as the claims
data reflects a wide variance with regard to average costs for these
cases.
Our clinical advisors further note that ischemia is defined as a
condition in which the blood vessels become blocked, and blood flow is
stopped or reduced. The condition has many potential causes, including
a blockage caused by a blood clot, or due to buildup of deposits, such
as cholesterol. Ischemia can occur anywhere in the body, and the
different names for the condition depend on the organ or body part
affected such as the brain (cerebral ischemia), heart (ischemic heart
disease, myocardial ischemia, or cardiac ischemia), and intestines
(mesenteric ischemia or bowel ischemia), legs (critical limb ischemia--
a form of peripheral artery disease), and skin (cutaneous ischemia),
while they are similar in that they all involve a blocked blood vessel.
In ICD-10 the body or organ system is the axis of the
classification and diagnosis codes describing ischemia affecting other
body parts are classified by the body or organ system affected. For
example, codes describing myocardial ischemia are assigned to MDC 05
(Diseases and Disorders of the Circulatory System) and codes describing
mesenteric ischemia are assigned to MDC 06 (Diseases and Disorders of
the Digestive System). Our clinical advisors disagree with assigning
the diagnosis codes describing CRAO and BRAO to MDC 01. Our clinical
advisors note the concept of clinical coherence generally requires that
the patient characteristics included in the definition of each MS-DRG
relate to a common organ system or etiology and that a specific medical
specialty should typically provide care to the patients in the DRG.
While closely related, the eyes and the brain are different organs. Our
clinical advisors state that because the diagnosis codes used to report
CRAO and BRAO describe ischemia affecting the retina, these diagnosis
codes are appropriately assigned to MDC 02 (Diseases and Disorders of
the Eye). The retina is a collection of cells at the back of the eye
where the processing of visual information begins. Due to the retina's
vital role in vision, damage to it can cause permanent blindness. The
presence of CRAO or BRAO requires input from an ophthalmologist and
treatment for these diagnoses would be expected to utilize different
resources than a diagnosis of cerebral ischemia which may or may not
involve visual impairment. Other possible interventions for CRAO or
BRAO included attempting to lower the intraocular pressure with
medication or by using a small-gauge needle to remove fluid to try to
dislodge the embolus or ocular massage to dislodge the clot, which are
not interventions generally performed for a diagnosis of acute ischemic
stroke.
To explore other mechanisms to address this request, we also
reviewed claims data to consider the option of adding another severity
level to the current structure of MS-DRG 123 (Neurological Eye
Disorders) and assigning the cases with a principal diagnosis of CRAO
or BRAO with a procedure code describing the administration of a
thrombolytic agent to the highest level. This option would involve
modifying the current base MS-DRG to a two-way severity level split or
to a three-way severity level split of ``with MCC or thrombolytic
agent, with CC, and without CC/MCC.'' Therefore, it would include
proposing new MS-DRGs if the data and our clinical advisors supported
creation of new MS-DRGs. However, as displayed in the data findings in
the table that follows, the data did not support this option. We
applied the five criteria as described in section II.D.1.b. of the
preamble of this
[[Page 28155]]
proposed rule to determine if it would be appropriate to subdivide
cases currently assigned to MS-DRG 123 into severity levels. This
analysis generally includes two years of MedPAR claims data to compare
the data results from one 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.
However, as discussed in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR
25092), our MS-DRG analysis last year 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 and the 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
given the potential impact of the PHE for COVID-19. Therefore, for this
FY 2023 IPPS/LTCH PPS proposed rule, we reviewed the claims data for
base MS-DRG 123 using the March 2020 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 2022. We also reviewed the claims data for base MS-DRG
123 using the September 2021 update of the FY 2021 MedPAR file, which
were used in our analysis of claims data for MS-DRG reclassification
requests for FY 2023. Our findings are shown in the table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.033
We applied the criteria to create subgroups for the three-way
severity level split. We refer the reader to section II.D.1.b. of the
preamble of this FY 2023 IPPS/LTCH PPS proposed rule, for related
discussion regarding our finalization of the expansion of the criteria
to include the NonCC subgroup and our proposal to continue to delay
application of the NonCC subgroup criteria to existing MS-DRGs with a
three-way severity level split to maintain more stability in the
current MS-DRG structure. We found that the criterion that there be at
least 500 cases for each subgroup was not met, as shown in the table
based on the data in the FY 2019, FY 2020, and FY 2021 MedPAR files.
Specifically, for the ``with MCC'', ``with CC'', and ``without CC/MCC''
split, there were only 376 cases in the ``with MCC'' subgroup based on
the data in the FY 2019 MedPAR file, only 345 cases in the ``with MCC''
subgroup based on the data in the FY 2020 MedPAR file and only 374
cases in the ``with MCC'' subgroup based on the data in the FY 2021
MedPAR file.
We then applied the criteria to create subgroups for the two-way
severity level splits. For the ``with MCC'' and ``without MCC'' (CC +
NonCC) split, the criterion that there be at least 500 cases for each
subgroup failed due to low volume each year, specifically, for the
``with MCC'' subgroup as previously described. For the ``with CC/MCC''
and ``without CC/MCC'' (NonCC) split, we found that the criterion that
there be at least a $2,000 difference in average costs between the
``with CC/MCC'' and ``without CC/MCC'' subgroups also failed. In the FY
2019 MedPAR file, our data analysis shows average costs in the
hypothetical ``with CC/MCC'' subgroup of $6,282 and average costs in
the hypothetical ``without CC/MCC'' subgroup of $4,832, for a
difference of only $1,450 ($6,282 minus $4,832 = $1,450). In the FY
2020 MedPAR file, our data analysis shows average costs in the
hypothetical ``with CC/MCC'' subgroup of $6,573 and average costs in
the hypothetical ``without CC/MCC'' subgroup of $5,122, for a
difference of only $1,451 ($6,573 minus $5,122 = $1,451). In the FY
2021 MedPAR file, our data analysis shows average costs in the
hypothetical ``with CC/MCC'' subgroup of $7,176 and average costs in
the hypothetical ``without CC/MCC'' subgroup of $5,364, for a
difference of only $1,812 ($7,176 minus $5,364 = $1,812). Our data
analysis indicates that the current base MS-DRG 123 maintains the
overall accuracy of the IPPS, and that the claims data do not support a
three-way or a two-way severity level split for MS-DRG 123.
Lastly, we explored reassigning cases with a principal diagnosis of
CRAO or BRAO that receive the administration of a thrombolytic agent to
other MS-DRGs within MDC 02. However, our review did not support
reassignment of these cases to any other medical MS-DRGs as these cases
would not be clinically coherent with the cases assigned to those other
MS-DRGs.
Therefore, based on the various data analyses we performed to
explore the possible reassignment of cases with a principal diagnosis
of CRAO or BRAO with a procedure code describing the administration of
a thrombolytic agent or a procedure code describing hyperbaric oxygen
therapy, and the clinical analysis as previously discussed, for FY 2023
we are not proposing any MS-DRG changes for cases with a principal
diagnosis of CRAO or BRAO with a procedure code describing the
administration of a thrombolytic agent or a procedure code describing
hyperbaric oxygen therapy.
5. MDC 04 (Diseases and Disorders of the Respiratory System): Acute
Respiratory Distress Syndrome (ARDS)
We received a request to reassign cases reporting diagnosis code
J80 (Acute respiratory distress syndrome) as the principal diagnosis
from MS-DRG 204 (Respiratory Signs and Symptoms) to MS-DRG 189
(Pulmonary Edema and Respiratory Failure).
According to the requestor, when a patient presents with the
condition of acute respiratory failure that progresses to acute
respiratory distress syndrome (ARDS) during the hospital stay, official
coding guidance instructs to only report the diagnosis code for ARDS
(code J80). The requestor stated that in the American Hospital
Association's (AHA) Coding Clinic for ICD-10-CM and ICD-10-PCS, Fourth
Quarter 2020 publication, for a patient who is admitted in acute
hypoxic respiratory failure that progresses to ARDS, the advice is to
assign code J80, Acute respiratory distress syndrome. Additionally, in
the ICD-10-CM Tabular List of Diseases, per the Excludes 1 note under
category J96 (Respiratory failure, not elsewhere
[[Page 28156]]
classified) only code J80 should be assigned when respiratory failure
and ARDS are both documented. The same publication also maintained that
ARDS is a life-threatening form of respiratory failure and is not an
unrelated condition. Therefore, when acute respiratory failure is
documented along with ARDS, only one code is reported to capture the
highest level of severity.
The requestor also conveyed the Fourth Quarter 2020 publication's
reference to previously published advice from the Fourth Quarter 2017
publication that stated, ``Acute respiratory distress syndrome (ARDS)
is a life-threatening condition. ARDS is a rapidly progressive disorder
that has symptoms of dyspnea, tachypnea, and hypoxemia. Fluid builds up
in the alveoli and lowers the amount of oxygen that is circulated
through the bloodstream. Low levels of oxygen in the blood threatens
organ function. ARDS is often associated with sepsis, pneumonia, trauma
and aspiration. The majority of people who develop ARDS are already in
the hospital in critical condition from some other health complication.
The focus of treatment is getting oxygen to the organs.''
We examined claims data from the September 2021 update of the FY
2021 MedPAR file for all cases in MS-DRG 204 and the cases reporting
ARDS (code J80) as a principal diagnosis. Our findings are shown in the
following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.034
As shown in the table, the data demonstrate a longer average length
of stay (7.6 days versus 2.8 days) and higher average costs ($15,077
versus $6,780) for the 96 cases reporting ARDS (code J80) as a
principal diagnosis when compared to all 5,241 cases in MS-DRG 204.
We also examined claims data from the September 2021 update of the
FY 2021 MedPAR file for all cases in MS-DRG 189. Our findings are shown
in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.035
The data analysis supports that cases reporting ARDS (code J80) are
more appropriately aligned with the average length of stay and average
costs of the cases in MS-DRG 189 in comparison to MS-DRG 204 when ARDS
is reported as a principal diagnosis. We also agree that, consistent
with the coding clinic advice, ARDS is a life-threatening form of
respiratory failure and the conventions of the ICD-10-CM classification
as displayed in the Tabular List of Diseases Excludes note, support the
concept that cases reporting ARDS as a principal diagnosis are more
clinically coherent with the other conditions currently assigned to MS-
DRG 189.
For these reasons, we are proposing to reassign cases reporting
ARDS (code J80) as a principal diagnosis from MS-DRG 204 to MS-DRG 189
effective FY 2023.
6. MDC 05 (Diseases and Disorders of the Circulatory System)
a. Percutaneous Transluminal Coronary Angioplasty (PTCA) Logic
We identified a replication issue from the ICD-9 based MS-DRGs to
the ICD-10 based MS-DRGs for procedure code 02UG3JE (Supplement mitral
valve created from left atrioventricular valve with synthetic
substitute, percutaneous approach) that was created effective October
1, 2016 (FY 2017), to identify and describe further interventions that
may occur for a patient who had previously undergone cardiac valve
surgery to correct a congenital anomaly, such as repair of a complete
common atrioventricular canal defect.
We used our established process in the assignment of new procedure
code 02UG3JE to the most appropriate MS-DRG(s) for FY 2017. Procedure
code 02UG3JE was proposed for assignment to the same MS-DRGs as its
predecessor code. The predecessor code for procedure code 02UG3JE as
shown in the 2017 ICD-10-PCS conversion table (available via the
internet on the CMS web page at https://www.cms.gov/Medicare/Coding/ICD10/2017-ICD-10-PCS-and-GEMs) is 02UG3JZ (Supplement mitral valve
with synthetic substitute, percutaneous approach). The ICD-9-CM
comparable translation for this code (02UG3JZ) is procedure code 35.97
(Percutaneous mitral valve repair with implant), which identifies the
use of the MitraClip[supreg] technology that has been discussed
extensively in prior rulemaking.
In the FY 2017 rulemaking, using our established process, new
procedure code 02UG3JE was proposed and finalized for assignment to the
following MS-DRGs for FY 2017, as also shown in Table 6B.--New
Procedure Codes in association with the FY 2017 IPPS/LTCH PPS proposed
and final rules (available via the internet on the CMS web page at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/Acute-Inpatient-Files-for-Download). We note that the
listed MS-DRGs also reflect the MS-DRGs that the predecessor code
(02UG3JZ) was assigned to at the time of the proposed rule.
[[Page 28157]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.036
However, as also discussed in the FY 2017 IPPS/LTCH PPS final rule
(81 FR 56809 through 56813), in connection with replication efforts
between the ICD-9 and ICD-10 based MS-DRGs and the surgical hierarchy,
the predecessor procedure code (02UG3JZ) was reassigned from MS-DRGs
273 and 274 to MS-DRG 228 (Other Cardiothoracic Procedures with MCC)
and revised MS-DRG 229 (Other Cardiothoracic Procedures without MCC),
and was removed from the PTCA logic for MS-DRGs 231 and 232. However,
these proposed and finalized MS-DRG changes for procedure code 02UG3JZ
were not considered for purposes of the MS-DRG assignments for new
procedure code 02UG3JE, which were instead finalized as proposed based
on the existing MS-DRG assignments for the predecessor code, and code
02UG3JE continued to remain on the PTCA list in the GROUPER logic for
MS-DRGs 231 and 232.
Our clinical advisors stated that procedure code 02UG3JE does not
describe a PTCA procedure. We analyzed claims data from the September
2021 update of the FY 2021 MedPAR file for cases in MS-DRGs 231 and 232
to determine if there were any cases reported with procedure code
02UG3JE, and there were no such cases found.
Accordingly, because the procedure described by procedure code
02UG3JE is not clinically consistent with a PTCA procedure and it was
initially assigned to the list for PTCA procedures in the GROUPER logic
as a result of replication in the transition from ICD-9 to ICD-10 based
MS-DRGs, we are proposing to remove procedure code 02UG3JE from the
list for PTCA procedures in the GROUPER logic for MS-DRGs 231 and 232
effective FY 2023. We are also proposing to maintain the MS-DRG
assignment for procedure code 02UG3JE in MS-DRGs 266 and 267
(Endovascular Cardiac Valve Replacement and Supplement Procedures with
and without MCC, respectively) for FY 2023.
b. Neuromodulation Device Implant for Heart Failure
(BarostimTM Baroreflex Activation Therapy)
The BAROSTIM NEOTM System is the first neuromodulation
device system designed to trigger the body's main cardiovascular reflex
to target symptoms of heart failure. The system consists of an
implantable pulse generator (IPG) that is implanted subcutaneously in
the upper chest below the clavicle, a stimulation lead that is sutured
to either the right or left carotid sinus to activate the baroreceptors
in the wall of the carotid artery and a wireless programmer system that
is used to non-invasively program and adjust BAROSTIM NEOTM
therapy via telemetry. The BAROSTIM NEOTM System is
indicated for the improvement of symptoms of heart failure in a subset
of patients with symptomatic New York Heart Association (NYHA) class II
and III heart failure with low cardiac ejection fractions who do not
benefit from guideline directed pharmacologic therapy or qualify for
Cardiac Resynchronization Therapy (CRT).
The BAROSTIM NEOTM System was approved for new
technology add-on payments for FY 2021 (85 FR 58716 through 58717) and
FY 2022 (86 FR 44974). We refer readers to section II.F.4.a. of the
preamble of this proposed rule for a discussion regarding the proposed
FY 2023 status of technologies approved for FY 2022 new technology add-
on payments, including the BAROSTIM NEOTM System.
For this FY 2023 IPPS/LTCH PPS proposed rule, we received a request
to (1) reassign the ICD-10-PCS procedure codes that describe the
implantation of the BAROSTIM NEOTM System from MS-DRGs 252,
253 and 254 (Other Vascular Procedures with MCC, with CC, without MCC
respectively) to MS-DRGs 222, 223, 224, 225, 226, and 227 (Cardiac
Defibrillator Implant with and without Cardiac Catheterization with and
without AMI/HF/Shock with and without MCC, respectively) and (2)
reassign the procedure code that describes the placement of a BAROSTIM
NEOTM IPG alone from MS-DRGs 252, 253 and 254 to MS-DRG 245
(AICD Generator Procedures).
The following ICD-10-PCS procedure codes uniquely identify the
implantation of the BAROSTIM NEOTM System: 0JH60MZ
(Insertion of stimulator generator into chest subcutaneous tissue and
fascia, open approach) in combination with 03HK3MZ (Insertion of
stimulator lead into right internal carotid artery, percutaneous
approach) or 03HL3MZ (Insertion of stimulator lead into left internal
carotid artery, percutaneous approach). The requestor noted that ICD-
10-PCS codes 0JH60MZ, 03HK3MZ and 03HL3MZ are individually assigned to
MDC 05 in MS-DRGs 252, 253, and 254 but not mapped to the logic of
these MS-DRGs in a code combination or code cluster. According to the
requestor this means that cases with a principal diagnosis from MDC 05
with procedure codes describing the implantation of a BAROSTIM
NEOTM system (0JH60MZ with 03HL3MZ or 03HK3MZ); with
procedure codes describing placement of the stimulator generator alone
(0JH60MZ); or with procedure codes describing the placement of a
carotid sinus lead only (03HL3MZ or 03HK3MZ) are all assigned to MS-
DRGs 252, 253, and 254, despite the significant differences in the
clinical coherence and resources required to perform these distinct
procedures.
[[Page 28158]]
The requestor stated that cases reporting procedure codes
describing the implantation of a BAROSTIM NEOTM system are
more clinically similar to, and have costs that are more closely
aligned to, cases within MS-DRGs 222, 223, 224, 225, 226, and 227. The
requestor stated that according to its own analysis, the population of
Medicare patients surgically treated with procedures assigned to MS-
DRGs 222, 223, 224, 225, 226, and 227 is essentially identical to the
population treated with the BAROSTIM NEOTM System. According
to the requestor, this congruent patient population accounts for
essentially all cases assigned to MS-DRGs 222, 223, 224, 225, 226, and
227. The requestor stated their analysis demonstrated that over 80% of
the cases in MS-DRGs 222, 223, 224, 225, 226, and 227 had a diagnosis
of heart failure, compared to only 30% of cases with a diagnosis of
heart failure assigned to MS-DRGs 252, 253, and 254. The requestor
stated that the subset of patients that have an indication for the
implantation of a BAROSTIM NEOTM system also have
indications for the implantation of Implantable Cardioverter
Defibrillators (ICD), Cardiac Resynchronization Therapy Defibrillators
(CRT-D) and/or Cardiac Contractility Modulation (CCM) devices, all of
which also require the permanent implantation of a programmable,
electrical pulse generator and at least one electrical lead. The
requestor specifically highlighted that the procedure code combinations
describing the implantation of a cardiac contractility modulation (CCM)
device system, which consists of a programmable implantable pulse
generator (IPG) and three leads, one of which is implanted into the
right atrium and the other two leads which are inserted into the right
ventricle is assigned to MS-DRGs 222, 223, 224, 225, 226, and 227, and
the codes describing the insertion of contractility modulation device
generator alone are assigned to MS-DRG 245. The requestor stated that
the average resource utilization required to implant the BAROSTIM
NEOTM System demonstrates a significant disparity compared
to all procedures within MS-DRGs 252, 253, and 254 and noted that the
cost of the BAROSTIM NEOTM implantable device is $35,000,
which is in range with the cost of the other cardiac implantable
devices (for example ICD, CRT-D, and CCM) assigned to MS-DRGs 222, 223,
224, 225, 226, and 227.
The requestor stated that the majority of the procedures assigned
to MS-DRGs 252, 253, and 254 are primarily designed to identify,
diagnose, clear and restructure veins and arteries, excluding those
that require implantable devices. Furthermore, the requestor stated the
surgical procedures within MS-DRGs 252, 253, and 254 are not intended
to treat or improve the function of the heart, nor treat the symptoms
of heart failure.
The requestor acknowledged that there are very few cases within the
publicly available Medicare inpatient claims data that potentially
includes procedure codes describing the implantation of a BAROSTIM
NEOTM system. The requestors' own analysis revealed fewer
than 11 cases with procedure codes describing the implantation of a
BAROSTIM NEOTM system in the combined FY 2019 and FY 2020
MedPAR data and noted that during much of this time period, the
BAROSTIM NEOTM System was only implanted as part of a
controlled clinical trial. The requestor stated that this incomplete
data should not be used to determine initial MS-DRG assignments,
especially for new FDA designated `breakthrough' medical technologies
like the BAROSTIM NEOTM system. Rather, the requestor stated
that CMS should use available information and expert knowledge to make
initial MS-DRG assignments, while waiting for a substantial number of
Medicare covered, post-approved claims from a disperse set of hospitals
to reconsider MS-DRG assignments as necessary. The requestor cautioned
that upon new technology add-on payments expiration, and if the
inadequate MS-DRG assignment for these procedures continues, inpatient
admissions to implant the BAROSTIM NEOTM system will be paid
less than outpatient admissions to perform the same procedures.
The ICD-10-CM diagnosis codes that describe heart failure are found
in the following table. These diagnosis codes are all currently
assigned to MDC 05.
BILLING CODE 4120-01-P
[[Page 28159]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.037
First, we examined claims data from the September 2021 update of
the FY 2021 MedPAR file for MS-DRGs 252, 253 and 254 to identify cases
reporting a diagnosis of heart failure and procedure codes describing
the implantation of the BAROSTIM NEOTM system with or
without a procedure code describing the performance of a cardiac
catheterization as MS-DRGs 222, 223, 224, 225, 226, and 227 are defined
by the performance of cardiac catheterization. Our findings are shown
in the following table.
[[Page 28160]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.038
As shown in the table, the data analysis performed indicates that
the two cases in MS-DRG 252 reporting procedure codes describing the
implantation of a BAROSTIM NEOTM system have an average
length of stay that is shorter than the average length of stay for all
the cases in MS-DRG 252 (4.5 days versus 7.6 days) and higher average
costs when compared to all the cases in MS-DRG 252 ($67,588 versus
$27,488). These two cases did not also report a procedure code
describing the performance of a cardiac catherization. The one case in
MS-DRG 253 reporting procedure codes describing the implantation of a
BAROSTIM NEOTM system had a length of stay that is shorter
than the average length of stay for all the cases in MS-DRG 253 (1 day
versus 5.2 days) and lower costs when compared to all the cases in MS-
DRG 253 ($19,237 versus $21,978). This case did not also report a
procedure code describing the performance of a cardiac catherization.
We found zero cases in MS-DRG 254 reporting procedure codes describing
the implantation of a BAROSTIM NEOTM system.
Our clinical advisors reviewed this data and note that is it is
difficult to detect patterns of complexity and resource intensity based
on the three cases that reported procedure codes describing the
implantation of a BAROSTIM NEOTM system. The claims data
also reflect a wide variance with regard to the length of stay and
average costs for the three cases that did report the implantation of a
BAROSTIM NEOTM system. The results of the claims analysis
demonstrate we do not have sufficient claims data on which to base and
evaluate any proposed changes to the current MS-DRG assignment. Our
clinical advisors also expressed concern in equating the implantation
of a BAROSTIM NEOTM system to the placement of ICD, CRT-D,
and CCM devices as these devices all differ in terms of technical
complexity and anatomical placement of the electrical lead(s). Our
clinical advisors note there is no intravascular component or vascular
puncture involved when implanting a BAROSTIM NEOTM system.
Our clinical advisors also note the placement of ICD, CRT-D, and CCM
devices generally involve a lead being affixed to the myocardium, being
threaded through the coronary sinus or crossing a heart valve and are
procedures that involve a greater level of complexity than affixing the
stimulator lead to either the right or left carotid sinus when
implanting a BAROSTIM NEOTM system.
Next, to evaluate the request to reassign the procedure code that
describes the placement of a BAROSTIM NEOTM IPG alone from
MS-DRGs 252, 253 and 254 to MS-DRG 245 (AICD Generator Procedures), we
examined claims data from the September 2021 update of the FY 2021
MedPAR file for all cases in MS-DRGs 252, 253 and 254 and compared the
results to cases with a procedure code describing placement of the
stimulator generator alone. Our findings are shown in the following
table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.039
[[Page 28161]]
BILLING CODE 4120-01-C
As shown in the table, the data analysis performed indicates that
the 12 cases in MS-DRG 252 reporting a procedure code describing
placement of the stimulator generator alone have an average length of
stay that is longer than the average length of stay for all the cases
in MS-DRG 252 (8.8 days versus 7.6 days) and higher average costs when
compared to all the cases in MS-DRG 252 ($56,622 versus $27,488). The
four cases in MS-DRG 253 reporting a procedure code describing
placement of the stimulator generator alone have an average length of
stay that is shorter than the average length of stay for all the cases
in MS-DRG 253 (2.5 days versus 5.2 days) and higher average costs when
compared to all the cases in MS-DRG 253 ($30,451 versus $21,978). We
found zero cases in MS-DRG 254 reporting a procedure code describing
placement of the stimulator generator alone.
Our clinical advisors reviewed this data, and found, similar to the
analysis of the data from the three cases that reported procedure codes
describing the implantation of a BAROSTIM NEOTM system, that
it is difficult to detect patterns of complexity and resource intensity
based on the few cases that reported procedure codes describing
placement of the stimulator generator alone. The claims data similarly
reflects a wide variance with regard to the length of stay and average
costs for these cases that did report the placement of the stimulator
generator alone, indicating there may have been other factors
contributing to the higher costs. When reviewing the consumption of
hospital resources for this small 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 as the
patients tended to have a major complication or co-morbid (MCC)
condition reported based on the MS-DRG assigned.
We recognize the average costs of the small numbers of cases
reporting a procedure code describing placement of the stimulator
generator alone are greater when compared to the average costs of all
cases in their respective MS-DRG. 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 note that section
1886(d)(5)(A) of the Act provides for Medicare payments to Medicare-
participating hospitals in addition to the basic prospective payments
for cases incurring extraordinarily high costs.
In response to the requestor's concerns regarding procedures
currently assigned to MS-DRGs 252, 253 and 254, as discussed in section
II.D.3.b. of the preamble of this proposed rule, we note that MS-DRGs
252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and
without CC/MCC, respectively) are examples of the ``other'' surgical
class, and therefore it is expected that there will be procedures not
as precisely clinically aligned within the definition (logic) of these
MS-DRGs. In regard to the concern about the implications for
reimbursement when these procedures are performed in the outpatient
setting as opposed to the inpatient setting, we note that the goals of
reviewing the MS-DRG assignments of particular procedures are to better
clinically represent the resources involved in caring for these
patients and to enhance the overall accuracy of the system.
In response to the requestor's statement that CMS should use
available information and expert knowledge to make initial MS-DRG
assignments, while waiting for a substantial number of Medicare
covered, post-approved claims from a disperse set of hospitals to
reconsider MS-DRG assignments as necessary, we note that we use 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 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 or treatment of the
condition. We note that this process will 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. Members of the
public have the opportunity to provide feedback on the assignment and
designation of the codes if they disagree. We refer the reader to
section II.D.17 of this proposed rule for a more detailed discussion of
this process. We note that when BAROSTIM NEOTM applied for
new technology add-on payment, it was noted that the technology could
be uniquely identified using a combination of existing ICD-10-PCS codes
that were already assigned to MS-DRGs, and this circumstance generally
would not provide a basis for MS-DRG reassignment.
Lastly, our clinical advisors expressed concern regarding making
proposed MS-DRG changes based on a specific, single technology
(BAROSTIM NEOTM system), identified by only one unique
procedure code combination versus considering proposed changes based on
a group of related procedure codes that can be reported to describe
that same type or class of technology, which is more consistent with
the intent of the MS-DRGs.
We believe that as the number of cases reporting procedure codes
describing the implantation of neuromodulation devices for heart
failure increases, a better view of the associated costs and lengths of
stay on average will be reflected in the data for purposes of assessing
any reassignment of these cases. Our clinical advisors stated that it
would not be appropriate to reassign cases for patients from MS-DRGs
252, 253 and 254 to MS-DRGs 222, 223, 224, 225, 226, and 227 in the
absence of additional data to better determine the resource utilization
for this subset of patients to help inform whether a reassignment would
be clinically warranted. Therefore, for the reasons stated previously,
we are proposing to maintain the assignment of cases reporting
procedure codes that describe the implantation of a neuromodulation
device in MS-DRGs 252, 253 and 254 for FY 2023. We are also proposing
to maintain the assignment of cases reporting a procedure code
describing placement of a stimulator generator alone in MS-DRGs 252,
253 and 254 for FY 2023.
During our review of this issue, as we examined the GROUPER logic
that would determine an assignment of a case to MS-DRGs 222, 223, 224,
225, 226, and 227, we found two diagnosis codes describing heart
failure that are not currently in 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). These diagnosis codes are listed in the following
table.
[[Page 28162]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.040
As a result, when either of these codes are coded as a principal
diagnosis, 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 procedure code
combination describing the implantation of a cardiac defibrillator and
a procedure describing the performance of a cardiac catherization
procedure. We refer the reader to the ICD-10 MS-DRG Definitions Manual
Version 39.1, 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.
Our clinical advisors reviewed this issue and believe that cases
reporting diagnosis code I97.130 or I97.131 as a principal diagnosis
are associated with a severity of illness on par with cases reporting a
principal diagnosis of a type of heart failure. To code postprocedural
heart failure in ICD-10-CM, instructional notes at category I50 direct
to ``code first heart failure following surgery'' (that is, I97.130 and
I97.131) with a second code from subcategory of I50 listed after the
postprocedural heart failure code to specify the type of heart failure.
Our clinical advisors recommend adding diagnosis codes I97.130 and
I97.131 to the logic list of principal diagnoses that describe heart
failure for clinical consistency, recognizing that coding guidelines
instruct to code I97.130 and I97.131 before the codes from subcategory
of I50 that specify the type of heart failure, as the codes from
subcategory of I50 are currently in the listed principal diagnoses in
the GROUPER logic for MS-DRGs 222 and 223. Therefore, we are proposing
to modify the GROUPER logic to allow cases reporting diagnosis code
I97.130 or I97.131 as a principal diagnosis to group to MS-DRGs 222 and
223 when reported with qualifying procedures.
c. Cardiac Mapping
We identified a replication issue from the ICD-9 based MS-DRGs to
the ICD-10 based MS-DRGs for procedure code 02K80ZZ (Map conduction
mechanism, open approach). Cardiac mapping describes the creation of
detailed maps to detect how the electrical signals that control the
timing of the heart rhythm move between each heartbeat to identify the
location of rhythm disorders. Cardiac mapping is generally performed
during open-heart surgery or performed via cardiac catherization.
In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49363 through
49369), we discussed a request to remove the cardiac ablation and other
specified cardiovascular procedures from the following MS-DRGs, and to
create new MS-DRGs to classify these procedures:
MS-DRG 246 (Percutaneous Cardiovascular Procedure with
Drug- Eluting Stent with MCC or 4+ Vessels/Stents);
MS-DRG 247 (Percutaneous Cardiovascular Procedure with
Drug-Eluting Stent without MCC);
MS-DRG 248 (Percutaneous Cardiovascular Procedure with
Non-Drug-Eluting Stent with MCC or 4+ Vessels/Stents);
MS-DRG 249 (Percutaneous Cardiovascular Procedure with
Non- Drug-Eluting Stent without MCC);
MS-DRG 250 (Percutaneous Cardiovascular Procedure without
Coronary Artery Stent with MCC); and
MS-DRG 251 (Percutaneous Cardiovascular Procedure without
Coronary Artery Stent without MCC).
The requestor recommended that CMS assign the following ICD-9-CM
procedure codes that identify and describe cardiac ablation procedures
and the other percutaneous intracardiac procedures to the newly created
MS-DRGs:
35.52 (Repair of atrial septal defect with prosthesis,
closed technique);
35.96 (Percutaneous balloon valvuloplasty);
35.97 (Percutaneous mitral valve repair with implant);
37.26 (Catheter based invasive electrophysiologic
testing);
37.27 (Cardiac mapping);
37.34 (Excision or destruction of other lesion or tissue
of heart, endovascular approach);
37.36 (Excision, destruction, or exclusion of left atrial
appendage (LAA)); and
37.90 (Insertion of left atrial appendage device).
We stated we agreed that creating these new MS-DRGs would better
reflect utilization of resources and clinical cohesiveness for
intracardiac procedures in comparison to intracoronary procedures.
Therefore, after consideration of the public comments we received, we
finalized our proposal to create MS-DRGs 273 (Percutaneous Intracardiac
Procedures with MCC) and MS-DRG 274 (Percutaneous Intracardiac
Procedures without MCC) for the FY 2016 ICD-10 MS-DRGs Version 33 and
finalized the assignment of the procedures performed within the heart
chambers using intracardiac techniques to the two new MS-DRGs.
In the FY 2016 rulemaking, we stated that the comparable ICD-10-PCS
code translations for ICD-9-CM procedure code 37.27 (Cardiac mapping)
were ICD-10-PCS codes 02K83ZZ (Map conduction mechanism, percutaneous
approach) and 02K84ZZ (Map conduction mechanism, percutaneous
endoscopic approach). However, code 02K80ZZ (Map Conduction Mechanism,
Open Approach), which is also a comparable ICD-10-PCS code translation
for ICD-9-CM procedure code 37.27, was inadvertently excluded.
Consequently, procedure code 02K80ZZ continued to remain in the GROUPER
logic for MS-DRGs 246, 247, 248, 249, 250 and 251.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58477), we finalized
a revision to the titles for MS-DRGs 273 and 274 to ``Percutaneous and
Other Intracardiac Procedures with and without MCC, respectively'' to
better reflect the procedures assigned to them.
In the ICD-10 MS-DRGs Definitions Manual Version 39.1, procedure
code 02K80ZZ is currently recognized as a non-O.R. procedure that
affects the MS-DRG to which it is assigned. Our clinical advisors
reviewed this grouping issue and stated that procedure code 02K80ZZ
does not describe a percutaneous cardiovascular procedure. Our clinical
advisors support the reassignment of code 02K80ZZ for clinical
coherence, noting the procedure should be appropriately grouped along
with other procedure codes that describe cardiac mapping currently
assigned to MS-DRGs 273 and 274. Accordingly, because the procedure
described by procedure code 02K80ZZ is not clinically consistent with
percutaneous cardiovascular procedures
[[Page 28163]]
and it was initially assigned MS-DRGs 246, 247, 248, 249, 250 and 251
as a result of replication in the transition from ICD-9 to ICD-10 based
MS-DRGs, we are proposing the reassignment of procedure code 02K80ZZ
from MS-DRGs 246, 247, 248, 249, 250 and 251 to MS-DRGs 273 and 274
(Percutaneous and Other Intracardiac Procedures with and without MCC,
respectively) in MDC 05 effective FY 2023.
As discussed in section II.D.1.b. of the preamble of this proposed
rule, we are providing a test version of the ICD-10 MS-DRG GROUPER
Software, Version 40, so that the public can better analyze and
understand the impact of the proposals included in this proposed rule.
We note that at the time of the development of the test software this
issue was unable to be addressed and therefore, it does not reflect the
proposed reassignment of procedure code 02K80ZZ from MS-DRGs 246, 247,
248, 249, 250 and 251 to MS-DRGs 273 and 274 (Percutaneous and Other
Intracardiac Procedures with and without MCC, respectively) in MDC 05
for Version 40.
d. Surgical Ablation
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44836 through
44848), we discussed a two-part request we received to review the MS-
DRG assignments for cases involving the surgical ablation procedure for
atrial fibrillation. The first part of the request was to create a new
classification of surgical ablation MS-DRGs to better accommodate the
costs of open concomitant surgical ablations. 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
As discussed in the FY 2022 IPPS/LTCH PPS final 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 procedure code combinations describing open concomitant
surgical ablations. We refer the reader to Table 6P.1o associated with
the FY 2022 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. We stated our analysis showed 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 variation in the
volume, length of stay, and average costs of the cases. We also stated
findings from our analysis indicated that MS-DRGs 216, 217, 218
(Cardiac Valve and Other Major Cardiothoracic Procedures with Cardiac
Catheterization with MCC, with CC, and without CC/MCC, respectively) 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 section II.D.1.b. of this FY 2023 IPPS/LTCH PPS
proposed rule, for related discussion regarding our proposal to
continue to delay application of the NonCC subgroup criteria to
existing MS-DRGs with three-way severity level split to maintain more
stability in the current MS-DRG structure.
In the FY 2022 final rule, we finalized our proposal to revise the
surgical hierarchy for the MS-DRGs in MDC 05 (Diseases and Disorders of
the Circulatory System) to sequence MS-DRGs 231-236 (Coronary Bypass)
above MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and
without MCC, respectively), effective October 1, 2021. In addition, we
also finalized 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 changed the titles of these MS-DRGs to ``Coronary
Bypass with Cardiac Catheterization or Open Ablation with and without
MCC, respectively'' to reflect this reassignment for FY 2022.
In response to this final policy, for this FY 2023 IPPS/LTCH PPS
proposed rule, we received a request to again review the MS-DRG
assignment of cases involving open concomitant surgical ablation
procedures. The requestor stated they continue to believe that the
average hospital costs for surgical ablation for atrial fibrillation
demonstrates a cost disparity compared to all procedures within their
respective MS-DRGs. The requestor asked that that when open surgical
ablation is performed with MVR, or AVR or MVR/AVR + CABG that these
procedures are either (1) assigned to a different family of MS-DRGs or
(2) assigned to MS-DRGs 216 and 217 (Cardiac Valve and Other Major
Cardiothoracic Procedures with Cardiac Catheterization with MCC and
with CC, respectively) similar to what CMS did with CABG and open
ablation procedures in the FY 2022 rulemaking to better accommodate the
added cost of open concomitant surgical ablation.
The change to the surgical hierarchy in MDC 05 and the assignment
of cases with a procedure code describing coronary bypass and a
procedure code describing open ablation to MS-DRGs 233 and 234 is
recent, only becoming effective October 1, 2021. We believe more time
is needed before considering to again review the MS-DRG assignment of
cases reporting procedure code combinations describing open concomitant
surgical ablations as the data from the September 2021 update of the FY
2021 MedPAR file does not reflect our FY 2022 finalization. In
addition, our clinical advisors continue to state that in open
concomitant surgical ablation procedures, the CABG, MVR, and AVR
components of the procedure are more technically complex than the open
surgical ablation procedure. They also state that the finalized
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. As noted, we believe that additional time is needed
to allow for further analysis of the claims data to reflect our FY 2022
finalization, and also to determine to what extent the patient's co-
morbid conditions are also contributing to costs and to identify other
contributing factors that might exist with respect to the increased
length of stay and costs of this subset of cases in these MS-DRGs, as
discussed in the FY 2022 IPPS/LTCH PPS final rule.
7. MDC 06 (Diseases and Disorders of the Digestive System):
Appendicitis
We received a request to reconsider the MS-DRG assignment for
diagnosis code K35.20 (Acute appendicitis with generalized peritonitis,
without abscess). According to the requestor, when this code is
reported in combination with any one of the corresponding procedure
codes that describe an appendectomy, the case is grouping to MS-DRGs
341, 342, and 343 (Appendectomy without Complicated Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively). Alternatively,
the requestor stated that when diagnosis code K35.32 (Acute
[[Page 28164]]
appendicitis with perforation and localized peritonitis, without
abscess) is reported in combination with any one of the corresponding
procedure codes that describe an appendectomy, the case is grouping to
MS-DRGs 338, 339, and 340 (Appendectomy with Complicated Principal
Diagnosis with MCC, with CC, and without CC/MCC, respectively).
The requestor asserted that the difference in MS-DRG assignment
suggests that localized peritonitis is more severe or requires an
additional level of care over and above that for generalized
peritonitis. The requestor stated that clinically, both localized and
generalized peritonitis, when treated with an appendectomy require the
same level of patient care, including extensive intraoperative
irrigation at the surgical site, direct inspection or imaging of the
abdomen to look for possible abscess, use of intravenous antibiotics,
and prolonged inpatient monitoring. The requestor added that
generalized peritonitis can be thought of as a progression of the
localized peritonitis condition and that patients progress from
localized to generalized peritonitis and not vice versa.
We note that this topic has been discussed previously in our FY
2019 (83 FR 41230) and FY 2021 rulemakings (85 FR 32500 through 32503)
and (85 FR 58484 through 58488). Effective FY 2019 (October 1, 2018)
diagnosis code K35.2 (Acute appendicitis with generalized peritonitis)
was expanded to K35.20 (Acute appendicitis with generalized
peritonitis, without abscess); and K35.21 (Acute appendicitis with
generalized peritonitis, with abscess). In addition, code K35.3 (Acute
appendicitis with localized peritonitis) was expanded to K35.30 (Acute
appendicitis with localized peritonitis, without perforation or
gangrene); K35.31 (Acute appendicitis with localized peritonitis and
gangrene, without perforation); K35.32 (Acute appendicitis with
perforation and localized peritonitis, without abscess); and K35.33
(Acute appendicitis with perforation and localized peritonitis, with
abscess).
We finalized the severity level designations for these new
diagnosis codes in the FY 2019 IPPS/LTCH PPS final rule and stated our
clinical advisors believed that the new diagnosis codes for acute
appendicitis described as ``with abscess'' or ``with perforation'' were
clinically qualified for the MCC severity level designation, while
acute appendicitis ``without abscess'' or ``without perforation'' were
clinically qualified for the CC severity level designation because
cases with abscess or perforation would be expected to require more
clinical resources and time to treat while those cases ``without
abscess'' or ``without perforation'' are not as severe clinical
conditions.
As discussed in our FY 2021 rulemaking, we received the request to
add K35.20 (Acute appendicitis with generalized peritonitis, without
abscess) to the list of complicated principal diagnoses so that all
ruptured/perforated appendicitis codes in MDC 06 group to MS-DRGs 338,
339, and 340 (Appendectomy with Complicated Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively) as K35.20 is the only
ruptured appendicitis code not included in the list of complicated
principal diagnosis codes. At that time, we noted that the inclusion
term at subcategory K35.2 (Acute appendicitis with generalized
peritonitis) is: ``Appendicitis (acute) with generalized (diffuse)
peritonitis following rupture or perforation of the appendix''. The
requestor stated that code K35.20 (Acute appendicitis with generalized
peritonitis, without abscess) describes a generalized, more extensive
form of peritonitis than code K35.32 (Acute appendicitis with
perforation and localized peritonitis, without abscess). We noted that
our clinical advisors agreed that the presence of an abscess would
clinically determine whether a diagnosis of acute appendicitis would be
considered a complicated principal diagnosis. As diagnosis code K35.20
is described as ``without'' an abscess, our clinical advisors
recommended that K35.20 not be added to the list of complicated
principal diagnoses for MS-DRGS 338, 339, and 340. We also proposed to
remove diagnosis code K35.32 (Acute appendicitis with perforation and
localized peritonitis, without abscess) from the complicated principal
diagnosis list.
In response to that proposal, some commenters disagreed. A
commenter stated that when ruptured appendicitis results in generalized
peritonitis, resources are greater because the infection is not walled
off, not localized, and has spread to two or more compartments within
the abdominal cavity. According to the commenter, clinical literature
supports the statement that generalized peritonitis is a more morbid
(severe) presentation than just perforation or localized abscess. After
consideration of the comments received and for the reasons discussed in
the FY 2021 final rule, we did not finalize our proposals in that final
rule. We concurred that the expansion of diagnosis codes K35.2 and
K35.3 to introduce additional clinical concepts effective October 1,
2018 significantly changed the scope and complexity of the diagnosis
codes for this subset of patients. We also stated NCHS' staff
acknowledged the clinical concerns based on the manner in which
diagnosis codes K35.2 and K35.3 were expanded and confirmed that they
would consider further review of these newly expanded codes with
respect to the clinical concepts.
We communicated with the CDC/NCHS staff regarding this repeat
request submitted for FY 2023 consideration. The CDC/NCHS staff
included these codes describing appendicitis on the agenda and a
proposal for further revisions was presented for discussion at the
March 8-9, 2022 ICD-10 Coordination and Maintenance Committee meeting.
Specifically, the CDC/NCHS staff proposed to expand current diagnosis
codes K35.20 and K35.21, making them sub-subcategories and creating new
diagnosis codes to identify and describe acute appendicitis with
generalized peritonitis, with perforation and without perforation, and
unspecified as to perforation, as shown in the following table.
[[Page 28165]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.041
We refer the reader to the CDC website at https://www.cdc.gov/nchs/icd/icd10cm_maintenance.htm for additional detailed information
regarding the proposal, including a recording of the discussion and the
related meeting materials.
We note that the deadline for submitting public comments on the
diagnosis code proposals discussed at the March 8-9, 2022 ICD-10
Coordination and Maintenance Committee meeting is May 9, 2022 and
according to the CDC/NCHS staff, the diagnosis code proposals are being
considered for an October 1, 2023 implementation (FY 2024). Any future
proposed changes to the MS-DRGs for Appendectomy would be dependent on
the diagnosis code revisions that are finalized by the CDC/NCHS. Since
it is not clear what code changes may be finalized, including whether
public comments would support the proposed changes or provide
alternative options for consideration, we believe it is appropriate to
delay any possible MS-DRG modifications for future rulemaking.
Therefore, we are not proposing a change to the MS-DRG assignment or
the current structure for MS-DRGs 338, 339, 340, 341, 342, and 343 at
this time. Although we are not proposing a change to the MS-DRG
assignments for FY 2023, we are making available the findings from our
data analysis for the listed MS-DRGs and the associated diagnosis codes
which may help inform future comments. We refer the reader to Table
6P.4a (which is available via the internet on the CMS website at
https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps).
8. MDC 07 (Diseases and Disorders of the Hepatobiliary System and
Pancreas): Laparoscopic Cholecystectomy with Common Bile Duct
Exploration
We received a request to review the MS-DRG assignment when
procedure code 0FC94ZZ (Extirpation of matter from common bile duct,
percutaneous endoscopic approach) that describes a common bile duct
exploration with gallstone removal procedure using a laparoscopic
approach, is reported with a laparoscopic cholecystectomy. The
procedure codes describing a laparoscopic cholecystectomy are
[GRAPHIC] [TIFF OMITTED] TP10MY22.042
According to the requestor, when a laparoscopic cholecystectomy is
reported with any one of the listed procedure codes with a common bile
duct exploration and gallstone removal procedure that is performed
laparoscopically and reported with procedure code 0FC94ZZ, the
resulting assignment is MS-DRGs 417, 418 and 419 (Laparoscopic
Cholecystectomy without C.D.E. with MCC, with CC, and without CC/MCC,
respectively). This MS-DRG assignment does not recognize that a common
bile duct exploration (C.D.E.) was performed. However, the requestor
stated that when procedure code 0FC90ZZ (Extirpation of matter from
common bile duct, open approach) that describes a common bile duct
exploration with gallstone removal procedure using an open approach is
reported with any one of the listed procedure codes describing a
laparoscopic cholecystectomy, the resulting assignment is MS-DRGs 411,
412, and 413 (Cholecystectomy with C.D.E. with MCC, with CC, and
without CC/MCC, respectively). The requestor stated that this MS-DRG
assignment appropriately recognizes that a common bile duct exploration
was performed. The requestor questioned why only the common bile duct
exploration with gallstone removal procedure performed using an open
approach (code 0FC90ZZ) grouped appropriately when reported with the
laparoscopic cholecystectomy.
We reviewed procedure code 0FC94ZZ and found that it is currently
designated as a non-O.R. procedure, therefore, the GROUPER logic does
not recognize this procedure for purposes of MS-DRG assignment. We also
note that MS-DRGs 411, 412, and 413 include cholecystectomy procedures
performed by either an open or a percutaneous endoscopic (laparoscopic)
approach. We refer the reader to the V39.1 ICD-10 MS-DRG Definitions
Manual, which is available via the internet on the CMS website at
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software for complete
documentation of the GROUPER logic for MS-DRGs 411, 412, 413, 417, 418
and 419.
We analyzed claims data from the September 2021 update of the FY
2021 MedPAR file for all cases in MS-DRGs 411, 412, 413, 417, 418, and
419. Because the logic for MS-DRGs 411, 412, and 413 includes
cholecystectomy
[[Page 28166]]
procedures performed by either an open or percutaneous endoscopic
(laparoscopic) approach, we also analyzed the cases reported with each
approach separately. The findings from our analysis are shown in the
following tables.
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[GRAPHIC] [TIFF OMITTED] TP10MY22.044
[GRAPHIC] [TIFF OMITTED] TP10MY22.045
In MS-DRG 411, we found a total of 116 cases with an average length
of stay of 8.5 days and average costs of $29,332. Of those 116 cases,
there were 56 cases reporting an open cholecystectomy, with an average
length of stay of 10.7 days and average costs of $36,135 and 60 cases
reporting a laparoscopic cholecystectomy, with an average length of
stay of 6.5 days and average costs of $22,982. The data show that the
cases reporting an open cholecystectomy have a longer average length of
stay (10.7 days versus 6.5 days) and higher average costs ($36,135
versus $22,982) compared to the cases reporting a laparoscopic
cholecystectomy. The data also show that the cases reporting an open
cholecystectomy have a longer average length of stay (10.7 days versus
8.5 days) and higher average costs ($36,135 versus $29,332) compared to
all the cases in MS-DRG 411. Similar findings are demonstrated for MS-
DRGs 412 and 413, where the data show that the cases reporting an open
cholecystectomy have a longer average length of stay and higher average
costs compared to the cases reporting a laparoscopic cholecystectomy,
and also, when compared to all the cases in their respective MS-DRGs.
We then analyzed claims data from the September 2021 update of the
FY 2021 MedPAR file for cases reporting procedure code 0FC94ZZ in MS-
DRGs 417, 418, and 419 to assess how often it was reported. The
findings from our analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.046
[[Page 28167]]
We found a total of 231 cases across MS-DRGs 417, 418, and 419 with
an average length of stay of 4.6 days and average costs of $15,348
reporting procedure code 0FC94ZZ. In our review of the cases reporting
a laparoscopic cholecystectomy across MS-DRGs 411, 412, and 413, we
found a total of 178 cases with an average length of stay of 5.3 days
and average costs of $18,206.
We also examined claims data from the September 2021 update of the
FY 2021 MedPAR file for cases reporting procedure code 0FC94ZZ across
all the MS-DRGs without another O.R. procedure reported, to assess the
number of cases and which MS-DRGs procedure code 0FC94ZZ was found. The
findings from our analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.047
The data analysis shows procedure code 0FC94ZZ was reported in a
total of 32 cases across 7 MS-DRGs with an average length of stay of
5.9 days and average costs of $16,087. While procedure code 0FC94ZZ is
designated as non-O.R., we also analyzed the average length of stay and
average costs of the cases found within each of the 7 MS-DRGs reporting
procedure code 0FC94ZZ against all the cases in their respective MS-
DRGs, to determine if there was any indication that the performance of
the procedure described by procedure code 0FC94ZZ may have had any
impact. For instance, as shown in the table, for MS-DRG 438 we found 2
cases reporting procedure code 0FC94ZZ with an average length of stay
of 14 days and average costs of $26,092. In the September 2021 update
of the FY 2021 MedPAR file, the total number of cases for MS-DRG 438 is
10,240 with an average length of stay of 6.4 days and average costs of
$13,341. The 2 cases reporting procedure code 0FC94ZZ have
approximately twice the average length of stay (14 days versus 6.4
days) and approximately twice the average costs ($26,092 versus
$13,341) compared to all the cases for MS-DRG 438. In the absence of
additional analysis, it is unknown if these differences can be
attributed to other factors, such as the MCCs that were reported in
these cases. Similar findings were found for MS-DRGs 441, 445, 446, and
871. We will consider if further detailed analysis may be warranted for
these cases.
Our clinical advisors agreed that procedure code 0FC94ZZ describes
a common bile duct exploration procedure with removal of a gallstone
and should be added to the logic for case assignment to MS-DRGs 411,
412, and 413 for clinical coherence with the other procedures that
describe a common bile duct exploration. Therefore, for FY 2023, we are
proposing to redesignate procedure code 0FC94ZZ from a non-O.R.
procedure to an O.R. procedure and add it to the logic list for common
bile duct exploration (CDE) in MS-DRGs 411, 412, and 413
(Cholecystectomy with C.D.E. with MCC, with CC, and without CC/MCC,
respectively) in MDC 07 to appropriately reflect when this procedure is
performed and improve the clinical coherence of the patients assigned
to these MS-DRGs.
In addition, we note that MS-DRGs 414, 415, and 416
(Cholecystectomy Except By Laparoscope without C.D.E. with MCC, with CC
and without CC/MCC, respectively) also reflect cholecystectomy
procedures, however, the logic is specifically defined for open
cholecystectomy procedures without a common bile duct exploration
procedure performed. Since MS-DRGs 411, 412, and 413 reflect cases
where an open or laparoscopic cholecystectomy is performed with a
common bile duct exploration procedure, MS-DRGs 414, 415, and 416
reflect cases where only an open cholecystectomy is performed without a
common bile duct exploration procedure, and MS-DRGs 417, 418, and 419
reflect cases where only a laparoscopic cholecystectomy is performed
without a common bile duct exploration procedure, we believe there may
be an opportunity to further refine these MS-DRGs once additional
analysis is performed for consideration in future rulemaking. For
example, we could consider proposing to restructure these
cholecystectomy MS-DRGs to reflect the following two concepts, if
supported by the data, and relatedly, to determine if severity levels
are also supported according to the existing criteria.
Open Cholecystectomy with or without C.D.E.; and
Laparoscopic Cholecystectomy with or without C.D.E.
We are interested in receiving feedback from the public on this and
any alternative recommendations or options to further refine these MS-
DRGs by October 20, 2022 for future consideration. Feedback and other
suggestions should be directed to the new electronic intake system,
Medicare Electronic Application Request Information SystemTM
(MEARISTM), discussed in section II.D.1.b. of the preamble
of this proposed rule at https://mearis.cms.gov/public/home.
9. MDC 10 (Diseases and Disorders of the Endocrine System): Eladocagene
Exuparvovec Gene Therapy
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44895), we finalized
the redesignation of code XW0Q316 (Introduction of eladocagene
exuparvovec into cranial cavity and brain, percutaneous approach, new
technology group 6) from a Non-O.R. procedure to 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,
[[Page 28168]]
and 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC and without MCC/CC, respectively). We received a
request to reconsider this assignment for FY 2023. According to the
requestor, the clinical characteristics and costs of cases assigned to
MS-DRGs 628 through 630 are significantly different from those
associated with the administration of eladocagene exuparvovec. The
requestor performed its own analysis, using deep brain stimulation for
epilepsy and selective dorsal rhizotomy for cerebral palsy as proxies,
and stated that based on its findings for the initial cost analysis and
clinical comparison, that MS-DRG 23 (Craniotomy with Major Device
Implant or Acute Complex CNS Principal Diagnosis with MCC or
Chemotherapy Implant or Epilepsy with Neurostimulator), MS-DRG 24
(Craniotomy with Major Device Implant or Acute Complex CNS Principal
Diagnosis without MCC) and MS-DRGs 25, 26, and 27 (Craniotomy and
Endovascular Intracranial Procedures with MCC, with CC, and without CC/
MCC, respectively) may be more appropriate. However, the requestor also
stated that while the clinical aspects of eladocagene exuparvovec cases
are similar to those of MS-DRGs 23 through 27, the costs are much
higher and neither MS-DRGs 628, 629, 630 or MS-DRGs 23 through 27 are
appropriate. Therefore, the requestor stated its belief that assigning
eladocagene exuparvovec cases to new MS-DRGs is warranted.
Eladocagene exuparvovec is a gene therapy for the treatment of
patients with aromatic L-amino acid decarboxylase (AADC) deficiency, a
rare genetic and fatal condition identified with ICD-10-CM diagnosis
code E70.81. Patients with AADC deficiency are generally observed to
have onset of symptoms in the first year of life, most notably
hypotonia (muscle weakness), followed by movement disorders,
developmental delay and autonomic signs, such as hyperhidrosis (profuse
sweating unrelated to heat or exercise). It is understood that the
long-term implications of this disease are severe, resulting in severe
deficits and limitations in life expectancy. Because the condition is
primarily diagnosed in the pediatric population, we would not expect to
find any meaningful volume of cases in the MedPAR data.
We analyzed claims data from the September 2021 update of the FY
2021 MedPAR file for MS-DRGs 628, 629, and 630 for cases reporting
procedure code XW0Q316 and did not find any cases. We then extended our
analysis to all MS-DRGs and found 1 case reporting the administration
of this therapy in MS-DRG 829 (Myeloproliferative Disorders or Poorly
Differentiated Neoplasms with Other Procedures with CC/MCC) with an
average length of stay of 2 days and average costs of $1,544. As we
have discussed elsewhere we generally prefer not to create a new MS-DRG
unless it would include a substantial number of cases. However, as
discussed in section II.D.19.b. of the preamble of this proposed rule,
we are seeking public comment on possible mechanisms through which we
can address rare diseases and conditions that are represented by low
volumes in our claims data. We believe this topic, relating to the
administration of treatment to address the rare genetic and fatal
condition of AADC deficiency, is appropriately aligned with and should
be considered as part of that effort. Therefore, we are maintaining the
current structure for MS-DRGs 628, 629, and 630 for FY 2023, but will
continue to consider this request in connection with our evaluation of
possible mechanisms to address rare diseases and conditions in the MS-
DRG structure, as discussed later in this rule.
10. MDC 15 Newborns and Other Neonates With Conditions Originating in
Perinatal Period: MS-DRG 795 Normal Newborn
We received a request to review the MS-DRG assignment of newborn
encounters with diagnosis codes describing contact with and (suspected)
exposure to COVID-19 when the condition is ruled out after clinical
evaluation and negative workup. The requestor expressed concern that a
newborn encounter coded with a principal diagnosis code from category
Z38 (Liveborn infants according to place of birth and type of
delivery), followed by codes Z05.1 (Observation and evaluation of
newborn for suspected infectious condition ruled out) and Z20.822
(Contact with and (suspected) exposure to COVID-19) is assigned to MS-
DRG 794 (Neonate with Other Significant Problems). The requestor stated
that this assignment appears to be in error and that the assignment
should instead be to MS-DRG 795 (Normal Newborn).
Our analysis of this grouping issue confirmed that, when a
principal diagnosis code from category Z38 (Liveborn infants according
to place of birth and type of delivery), followed by codes Z05.1
(Observation and evaluation of newborn for suspected infectious
condition ruled out) and Z20.822 (Contact with and (suspected) exposure
to COVID-19), the case is assigned to MS-DRG 794.
As we examined the GROUPER logic that would determine an assignment
of cases to MS-DRG 795, we note the ``only secondary diagnosis'' list
under MS-DRG 795 includes the following five ICD-10-CM diagnosis codes
from ICD-10-CM category Z20. We refer the reader to the ICD-10 MS-DRG
Version 39.1 Definitions Manual (which is available via the internet on
the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software
for complete documentation of the GROUPER logic for the MS-DRG 795.
[GRAPHIC] [TIFF OMITTED] TP10MY22.048
In reviewing the ICD-10-CM diagnosis code classification and the
GROUPER logic list, we note that the 13 ICD-10-CM diagnosis codes, also
from category Z20, listed in the following table were inadvertently
omitted from the ``only secondary diagnosis'' list under MS-DRG 795.
[[Page 28169]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.049
We reviewed section I.C.21.c.1 of the 2022 ICD-10-CM Official
Guidelines for Coding and Reporting which state ``category Z20
indicates contact with, and suspected exposure to, communicable
diseases. These codes are for patients who are suspected to have been
exposed to a disease by close personal contact with an infected
individual or are in an area where a disease is epidemic . . . Contact/
exposure codes may be used as a first-listed code to explain an
encounter for testing, or, more commonly, as a secondary code to
identify a potential risk.'' Per the Excludes1 note at category Z20,
when applicable, diagnoses of current infectious or parasitic disease
are coded instead of codes from category Z20.
Our clinical advisors reviewed this issue and agree that patients
exposed to communicable diseases that are worked up or treated
prophylactically or both, and for whom those conditions are later
determined after study to not be present, are distinct from patients
with identified signs or symptoms of a suspected problem or diagnosed
with having that communicable disease. Our clinical advisors supported
adding the 13 diagnosis codes listed previously to the logic of MS-DRG
795 for clinical consistency with the five other diagnosis codes
describing contact with, and suspected exposure to, communicable
diseases currently assigned to the ``only secondary diagnosis'' list
under MS-DRG 795.
After review of the coding guidelines and conventions, and
discussion with our clinical advisors, we agree with the requestor that
in these circumstances, these encounters should not map to MS-DRG 794
(Neonate with Other Significant Problems) and should instead be
assigned to MS-DRG 795 (Normal Newborn). Therefore, we are proposing to
add the 13 diagnosis codes listed previously that describe contact with
and (suspected) exposure to communicable diseases to the ``only
secondary diagnosis'' list under MS-DRG 795 (Normal Newborn). Under
this proposal, cases with a principal diagnosis described by an ICD-10-
CM code from category Z38 (Liveborn infants according to place of birth
and type of delivery), following by codes Z05.1 (Observation and
evaluation of newborn for suspected infectious condition ruled out) and
Z20.822 (Contact with and (suspected) exposure to COVID-19) will be
assigned to MS-DRG 795.
As we examined the GROUPER logic that would determine an assignment
of cases to MS-DRGs in MDC 15, we noted the logic for MS-DRG 790
(Extreme Immaturity or Respiratory Distress Syndrome Neonate) includes
ICD-10-CM diagnosis codes that describe extremely low birth weight
newborn, extreme immaturity of newborn and respiratory distress
syndrome of newborn. We refer the reader to the ICD-10 MS-DRG Version
39.1 Definitions Manual (which is available via the internet on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software) for
complete documentation of the GROUPER logic for MS-DRG 790. During our
review of the diagnosis codes assigned to these MS-DRGs, we identified
three diagnosis codes that do not exist in the logic for MS-DRG 790.
The three diagnosis codes and their current MS-DRG assignments are
listed in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.050
Our clinical advisors reviewed this grouping issue and noted that
while virtually every neonate under 1000 grams, which is the definition
of extremely low birth weight (ELBW), will have a weight documented
somewhere
[[Page 28170]]
in the medical record, in the rare instance that it is not, if the
diagnosis documented by the provider is ``ELBW'' the neonate would be
in a higher risk category. Our clinical advisors also note that whereas
weight is measured with high precision, gestational age is more
complicated. With the exception of in vitro fertilization, gestational
age is an estimate. Our clinical advisors state similar to
documentation of ``ELBW'', if the diagnosis documented by the provider
is ``extreme immaturity of newborn'' the neonate would be in a higher
risk category. These diagnoses describe conditions that require
advanced care and resources similar to other conditions already
assigned to the logic of MS-DRG 790 even in cases where the birth
weight, or weeks of gestation, are unspecified.
For clinical consistency, our clinical advisors supported the
addition of these three diagnosis codes to the GROUPER logic list for
MS-DRG 790. Therefore, we are proposing to reassign ICD-10-CM diagnosis
codes P07.00, P07.20 and P07.26 to MS-DRG 790, effective October 1,
2022 for FY 2023.
11. 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
September 2021 update of the FY 2021 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 are proposing 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.
a. Embolization of Portal and Hepatic Veins
We received a request to reassign cases with a principal diagnosis
from MDC 07 (Diseases and Disorders of the Hepatobiliary System and
Pancreas) when reported with procedures involving the embolization of a
hepatic or portal vein 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 423, 424, and 425 (Other
Hepatobiliary or Pancreas Procedures with MCC, with CC, and without CC/
MCC, respectively) in MDC 07.
In ICD-10-PCS, the root operation selected to code embolization
procedures is dependent on the objective of the procedure. If the
objective of an embolization procedure is to completely close a vessel,
the root operation Occlusion is coded. ICD-10-PCS procedure codes
06L43DZ (Occlusion of hepatic vein with intraluminal device,
percutaneous approach) or 06L83DZ (Occlusion of portal vein with
intraluminal device, percutaneous approach) may be reported to describe
embolization procedures to completely close off a hepatic or portal
vein with an intraluminal device. If the objective of an embolization
procedure is to narrow the lumen of a vessel, the root operation
Restriction is coded. ICD-10-PCS procedure codes 06V43DZ (Restriction
of hepatic vein with intraluminal device, percutaneous approach) or
06V83DZ (Restriction of portal vein with intraluminal device,
percutaneous approach) may be reported to describe embolization
procedures to narrow or partially occlude a hepatic or portal vein with
an intraluminal device.
These four ICD-10-PCS procedure codes, as well as their MDC
assignments, are listed in the table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.051
Our analysis of this grouping issue confirmed that when a procedure
code describing the percutaneous occlusion or restriction of the
hepatic or portal vein with intraluminal device is reported with a
principal diagnosis from MDC 07, these cases group to MS-DRGs 981, 982,
and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with
MCC, with CC, and without CC/MCC, respectively). Whenever there is a
surgical procedure reported on the claim that is unrelated to the MDC
to which the case was assigned based on the principal diagnosis, it
results in an MS-DRG assignment to a surgical class referred to as
``unrelated operating room procedures''.
To understand the resource use for the subset of cases reporting
procedure codes 06L43DZ, 06L83DZ, 06V43DZ or 06V83DZ with a principal
diagnosis from MDC 07 that are currently
[[Page 28171]]
grouping to MS-DRGs 981, 982, and 983, we examined claims data from the
September 2021 update of the FY 2021 MedPAR file for the average length
of stay and average costs for these cases. Our findings are shown in
the following table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.052
We also examined the data for cases in MS-DRGs 423, 424, and 425,
and our findings are shown in the following table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.053
While the claims analysis based on the September 2021 update of the
FY 2021 MedPAR file identified only 34 cases for which these procedures
were reported with a principal diagnosis from MDC 07 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 423, 424, and
425, given the clinical indications for hepatic or portal vein
embolization procedures, such as to induce regrowth on one side of the
liver in advance of a planned hepatic resection on the other side, we
believe it is clinically appropriate to add these procedure codes
describing the percutaneous occlusion or restriction of the hepatic or
portal vein with intraluminal device to MS-DRGs 423, 424, and 425 in
MDC 07. Our clinical advisors state that these procedures are clearly
related to the principal diagnoses as they are procedures performed for
hepatobiliary diagnoses, namely hepatocellular carcinoma and liver
metastases, so it is clinically appropriate for the procedures to group
to the same MDC as the principal diagnoses. Our clinical advisors also
stated the procedures describing the percutaneous occlusion or
restriction of the hepatic or portal vein with intraluminal device are
consistent with the existing procedure codes included in the logic for
case assignment to MS-DRGs 423, 424, and 425.
Therefore, we are proposing to add ICD-10-PCS procedure codes
06L43DZ, 06L83DZ, 06V43DZ and 06V83DZ to MDC 07 in MS-DRGs 423, 424 and
425. Under this proposal, cases reporting procedure codes 06L43DZ,
06L83DZ, 06V43DZ or 06V83DZ in conjunction with a principal diagnosis
code from MDC 07 would group to MS-DRGs 423, 424 and 425.
b. Percutaneous Excision of Hip Muscle
We received a request to examine cases reporting a procedure
describing percutaneous biopsies of muscle. The requestor stated that
when procedures describing the percutaneous excision of the left hip
muscle for diagnostic purposes are reported with a principal diagnosis
from MDC 06 (Diseases and Disorders of the Digestive System) such as
K68.12 (Psoas muscle abscess), the cases are assigned to MS-DRGs 981,
982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis
with MCC, with CC, and without CC/MCC, respectively). However, when
procedures describing the percutaneous excision of the retroperitoneum
for diagnostic purposes are reported with the same principal diagnosis
of psoas muscle abscess, the cases are assigned to medical MS-DRGs 371,
372, and 373 (Major Gastrointestinal Disorders and Peritoneal
Infections with MCC, with CC, and without CC/MCC, respectively).
[[Page 28172]]
The requestor stated the cases at their facility with a principal
diagnosis of psoas muscle abscess when reported with a procedure
describing a biopsy of the left muscle had an average length of stay
comparable to other cases assigned to MS-DRGs 371, 372, and 373. The
requestor provided ICD-10-PCS procedure code 0KBP3ZX (Excision of left
hip muscle, percutaneous approach, diagnostic) in its request and asked
that CMS evaluate the assignment of procedure code 0KBP3ZX because
procedures describing the percutaneous excision of the left hip muscle
for diagnostic purposes appear to be related to a diagnosis of psoas
muscle abscess.
To analyze this request, we first identified the similar ICD-10-PCS
procedure codes that also describe the excision of hip muscle. We note
that under the ICD-10-PCS procedure classification, biopsy procedures
are identified by the 7th digit qualifier value ``diagnostic'' in the
code description. The four ICD-10-PCS procedure codes that describe the
excision of hip muscle, as well as their MDC assignments, are listed in
the table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.054
Our analysis of this grouping issue confirmed that when procedure
codes 0KBN3ZX, 0KBN3ZZ, 0KBP3ZX or 0KBP3ZZ are reported with a
principal diagnosis from MDC 06, such as K68.12, these cases group to
MS-DRGs 981, 982, and 983. As noted in the previous discussion,
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''.
We examined the claims data from the September 2021 update of the
FY 2021 MedPAR file to identify cases reporting procedure codes
0KBN3ZX, 0KBN3ZZ, 0KBP3ZX, or 0KBP3ZZ with a principal diagnosis of
K68.12 (Psoas muscle abscess) that are currently grouping to MS-DRGs
981, 982, and 983. Our findings are shown in this table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.055
As shown, in our analyses of the claims data for MS-DRGs 981
through 983, we found a total of seven cases reporting procedures
describing excision of hip muscle with a principal diagnosis of K68.12
in the September 2021 update of the FY 2021 MedPAR file.
To further evaluate this issue, we examined claims data from the
September 2021 update of the FY 2021 MedPAR file for cases reporting
any one of the four procedure codes (0KBN3ZX, 0KBN3ZZ, 0KBP3ZX, or
0KBP3ZZ) in MS-DRGs 981 through 983 with a principal diagnosis from MDC
06. Our findings are shown in the following table.
[[Page 28173]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.056
As shown, in our analyses of the claims data for MS-DRGs 981
through 983, we found a total of 14 cases reporting procedures
describing excision of hip muscle with a principal diagnosis from MDC
06 in the September 2021 update of the FY 2021 MedPAR file.
We also examined the data for cases in MS-DRGs 371, 372, and 373,
and our findings are shown in the following table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.057
We reviewed these procedures and our clinical advisors state that
procedures that describe the percutaneous excision of hip muscle are
not surgical in nature and would not be the main reason for inpatient
hospitalization or be considered the principal driver of resource
expenditure. Our clinical advisors state although a correlation cannot
usually be made between procedures performed in general anatomic
regions, such as the retroperitoneum, and procedures performed in
specific body parts, such as muscle, because procedures coded with
general anatomic region body parts represent a broader range of
procedures that cannot be coded to a specific body part, they agree
that in this instance procedures that describe the percutaneous
excision of hip muscle should have the same designation as the ICD-10-
PCS procedure codes that describe the percutaneous excision of the
retroperitoneum that are currently designated as non-O.R. procedures.
Our clinical advisors reviewed this analysis and believe that, for
clinical coherence and consistency, it would be appropriate to
designate ICD-10-PCS codes 0KBN3ZX, 0KBN3ZZ, 0KBP3ZX, and 0KBP3ZZ as
non-O.R. procedures.
Therefore, we are proposing to remove codes 0KBN3ZX, 0KBN3ZZ,
0KBP3ZX, and 0KBP3ZZ from the FY 2023 ICD-10 MS-DRGs Version 40
Definitions Manual in Appendix E--Operating Room Procedures and
Procedure Code/MS-DRG Index as O.R. procedures. Under this proposal,
these procedures would no longer impact MS-DRG assignment. Cases
reporting procedure codes 0KBN3ZX, 0KBN3ZZ, 0KBP3ZX, and 0KBP3ZZ in
conjunction with a principal diagnosis code from MDC 06 would group to
MS-DRGs 371, 372, and 373.
In addition, we also conduct an internal review and 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 September 2021 update of the FY 2021 MedPAR file we did
not identify any cases for reassignment. We also did not receive any
requests suggesting reassignment. Therefore, for FY 2023 we are not
proposing to move any cases reporting procedure codes from MS-DRGs 981
through 983 to MS-DRGs 987 through 989 or vice versa.
12. 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
[[Page 28174]]
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.14. of the preamble of this proposed rule, we
are making Table 6B.--New Procedure Codes--FY 2023 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 39.1 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 multiyear
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. In consideration of the ongoing PHE, we continue to
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, we will provide more detail on this
analysis and the methodology for conducting this review in future
rulemaking.
We received the following requests regarding changing the
designation of specific ICD-10-PCS procedure codes from non-O.R. to
O.R. procedures. We summarize these requests in this section of this
rule and address why we are not considering a change to the designation
of these codes at this time.
We received a request to change the designation of all
ICD-10-PCS procedure codes that describe diagnostic and therapeutic
percutaneous endoscopic procedures performed on thoracic and abdominal
organs, from non-O.R. to O.R. According to the requestor, thoracoscopic
and laparoscopic procedures are always performed in the operating room
under general anesthesia. We believe additional time is needed to fully
examine the numerous ICD-10-PCS codes in the classification that
describe diagnostic and therapeutic percutaneous endoscopic procedures
performed on thoracic and abdominal organs as there are over 19,000
ICD-10-PCS codes in the classification that describe procedures
performed using a percutaneous endoscopic approach. As we have signaled
in prior rulemaking, the designation of an O.R. procedure encompasses
more than the physical location of the hospital in which the procedure
may be performed. We also examine if, and in what way, the performance
of the procedure affects the resource expenditure in those admissions
in the inpatient setting, in addition to examining other clinical
factors such as procedure complexity, and need for anesthesia
administration as well as other types of sedation. We will continue to
evaluate the ICD-10-PCS procedure codes that describe diagnostic and
therapeutic percutaneous endoscopic procedures performed on
[[Page 28175]]
thoracic and abdominal organs as we conduct a comprehensive, systematic
review of the ICD-10-PCS procedure codes.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44892
through 44895), CMS finalized the proposal to remove the 22 codes that
describe the open drainage of subcutaneous tissue and fascia listed in
the following table from the ICD-10 MS-DRGs Version 39.1 Definitions
Manual in Appendix E-Operating Room Procedures and Procedure Code/MS-
DRG Index as O.R. procedures. Under this finalization, these procedures
no longer impact MS-DRG assignment.
[GRAPHIC] [TIFF OMITTED] TP10MY22.058
In the FY 2022 final rule, we noted that the designation of the 22
procedure codes that describe the open drainage of subcutaneous tissue
and fascia as O.R. procedures was 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, as
opposed to 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. We stated in the FY 2022 final rule that designating
the 22 procedure codes that describe the open drainage of subcutaneous
tissue and fascia as non-O.R. procedures would 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.
For this FY 2023 IPPS/LTCH PPS proposed rule, we received a request
to re-examine this change in designation. According to the requestor,
open procedures for the drainage of subcutaneous tissue and fascia are
indeed typically performed in the operating room under general
anesthesia and involve making incisions through the subcutaneous tissue
into fascia for therapeutic drainage, breaking up of loculations, and
irrigation. While our clinical advisors do not disagree with the
requestor that these procedures can involve making incisions through
the subcutaneous tissue into fascia, they continue to state 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, they are typically performed in conjunction with
another O.R. procedure. For the reasons discussed in the FY 2022 final
rule, our clinical advisors state that the non-O.R. designation of the
22 procedure codes that describe the open drainage of subcutaneous
tissue and fascia as finalized in the FY 2022 final rule better
reflects the associated technical complexity and hospital resource use
of these procedures.
13. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2023
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
[[Page 28176]]
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.
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/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip 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 mathematical data generated using
claims from the FY 2018 MedPAR file 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.
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58550 through
58554), we discussed our 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 or management of care or both.
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.
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25175 through
25180), as another interval step in our comprehensive review of the
severity designations of ICD-10-CM diagnosis codes, 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 ``unspecified'' diagnosis
codes to a NonCC where there are other codes available in that code
subcategory that further specify the anatomic site. As summarized in
the FY 2022 IPPS/LTCH PPS final rule, many commenters expressed concern
with the potential severity level designation changes overall and
recommended that CMS delay any possible change to the designation of
these codes to give hospitals and their physicians time to prepare.
After careful consideration of the public comments we received, we
maintained the severity level designation of the ``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
[[Page 28177]]
FY 2022. We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86
FR 44916 through 44926) for a complete discussion of our response to
public comments regarding the potential severity level designation
changes. Instead, for FY 2022, we finalized a new Medicare Code Editor
(MCE) code edit for ``unspecified'' codes, effective with discharges on
and after April 1, 2022. We stated we believe finalizing this new edit
would provide additional time for providers to be educated while not
affecting the payment the provider is eligible to receive. We refer the
reader to section II.D.14.e. of the FY 2022 IPPS/LTCH PPS final rule
(86 FR 44940 through 44943) for the complete discussion.
As this new edit will be effective beginning with discharges on and
after April 1, 2022, our clinical advisors believe at this time, it is
appropriate to not propose to change the designation of any ICD-10-CM
diagnosis codes, including the unspecified codes that are subject to
the ``Unspecified Code'' edit, as we continue our comprehensive CC/MCC
analysis to allow stakeholders the time needed to become acclimated to
the new edit.
We continue to solicit feedback regarding the guiding principles,
as well as other possible ways we can incorporate meaningful indicators
of clinical severity. We have made available on the CMS website updated
impact on resource use files so that the public can review the
mathematical data for the impact on resource use generated using claims
from the FY 2019 MedPAR file, the FY 2020 MedPAR file and the FY 2021
MedPAR files. 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. 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. We also 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.
For new diagnosis codes approved for FY 2023, 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 or treatment of the condition. We note 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 section II.D.14 of this proposed rule for the discussion of
the proposed changes to the ICD-10-CM and ICD-10-PCS coding systems for
FY 2023.
c. Requested Changes to Severity Levels
For this FY 2023 IPPS/LTCH PPS proposed rule, we received several
requests to change the severity level designations of specific ICD-10-
CM diagnosis codes, including a request to analyze a subset of the
social determinants of health (SDOH) diagnosis codes. Our clinical
advisors believe it is 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. However, we refer
the reader to section II.D.13.d for further discussion related to the
diagnosis codes describing social determinants of health. As stated
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.
d. Request for Information on Social Determinants of Health Diagnosis
Codes
For this FY 2023 IPPS/LTCH PPS proposed rule, we are soliciting
public comments on how the reporting of diagnosis codes in categories
Z55-Z65 may improve our ability to recognize severity of illness,
complexity of illness, and/or utilization of resources under the MS-
DRGs as described further in this section. Consistent with the
Administration's goal of advancing health equity for all, including
members of historically underserved and under-resourced communities, as
described in the President's January 20, 2021 Executive Order 13985 on
``Advancing Racial Equity and Support for Underserved Communities
Through the Federal Government,'' \10\ we are also interested in
receiving feedback on how we might otherwise foster the documentation
and reporting of the diagnosis codes describing social and economic
circumstances to more accurately reflect each health care encounter and
improve the reliability and validity of the coded data including in
support of efforts to advance health equity.
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\10\ 86 FR 7009 (January 25, 2021). Available at: https://www.federalregister.gov/documents/2021/01/25/2021-01753/advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government.
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Social determinants of health (SDOH) are the conditions in the
environments where people are born, live, learn, work, play, worship,
and age that affect a wide range of health, functioning, and quality-
of-life outcomes and risks.\11\ These circumstances or determinants
influence an individual's health status and can contribute to wide
health disparities and inequities. While SDOH do not describe current
illnesses or injuries at the individual level, they are widely
recognized as important potential predictors of risk for developing
medical conditions like heart disease, diabetes, and obesity. In ICD-
10-CM, the Z codes found in Chapter 21 represent reasons for
encounters, and are provided for occasions when circumstances other
than a disease, injury or external cause classifiable to categories
A00-Y89 are recorded as `diagnoses' or `problems'. The subset of Z
codes that describe the social determinants of health are found in
categories Z55-Z65 (Persons with potential health hazards related to
socioeconomic and psychosocial circumstances). These codes describe a
range of issues related--but not limited--to education and literacy,
employment, housing, ability to obtain adequate amounts of food or safe
drinking water, and occupational exposure to toxic agents, dust, or
radiation. Effective October 1, 2021, the Centers for Disease Control
and Prevention (CDC) National Center for Health Statistics (NCHS) added
11 new diagnosis codes describing SDOH to provide additional
information regarding determinants such as housing, food insecurity,
and transportation. In addition, section I.B.14 of the FY 2022 ICD-10-
CM Official Guidelines for Coding and Reporting was updated to provide
clarification of the term ``clinician'' in reporting codes related to
social determinants of health and clarified the documentation that can
be
[[Page 28178]]
utilized to assign SDOH codes when included in the official medical
record. 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.'' \12\
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\11\ Available at: https://health.gov/healthypeople/objectives-and-data/social-determinants-health.
\12\ Available at: https://ftp.cdc.gov/pub/Health_Statistics/NCHS/Publications/ICD10CM/2022/10cmguidelines-FY2022-April%201%20update%202-3-22.pdf.
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Reporting SDOH Z codes in inpatient claims data could enhance
quality improvement activities, track factors that influence people's
health, and provide further insight into existing health inequities.
13 14 15 More routine collection of SDOH Z codes could also
likely improve coordination within hospitals to utilize the data across
their clinical care and discharge planning teams, including with post-
acute partners. CMS has heard from stakeholders about a number of
reasons for why there may be less routine documentation and reporting
of SDOH in the inpatient setting. First, Z codes are not required to be
reported by inpatient hospitals and generally do not affect MS-DRG
assignment. Rather, these codes are currently reported voluntarily by
providers when and if supported in the medical record documentation. As
such, consistent protocols may not be in place for documenting and
reporting. Second, many of the circumstances captured through SDOH Z
codes are dependent on the willingness of patients to discuss personal
social, economic, or environmental conditions. Providers may or may not
be able to reliably document certain circumstances,\16\ as a result, in
the medical records. There are also questions of how bias can play into
screening for SDOH and how systemic bias within the health care system
can play a role in this process.\17\ CMS has also heard of the
significant pressures on provider time, and whether providers have
access to comprehensive care and coordination teams, including social
workers, who may be more appropriately skilled to assess certain SDOH.
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\13\ Maksut JL, Hodge C, Van CD, Razmi, A, & Khau MT.
Utilization of Z Codes for Social Determinants of Health among
Medicare Fee-For-Service Beneficiaries, 2019. Office of Minority
Health (OMH) Data Highlight No. 24. Centers for Medicare & Medicaid
Services (CMS), Baltimore, MD, 2021.
\14\ Truong HP, Luke AA, Hammond G, Wadhera RK, Reidhead M,
Joynt Maddox KE. Utilization of Social Determinants of Health ICD-10
Z-Codes Among Hospitalized Patients in the United States, 2016-2017.
Med Care. 2020;58(12):1037-1043. doi:10.1097/MLR.0000000000001418.
\15\ Wark K, Cheung K, Wolter E, Avey JP. Engaging stakeholders
in integrating social determinants of health into electronic health
records: A scoping review. International Journal of Circumpolar
Health. 2021 Jan 1;80(1):1943983.
\16\ Garg A, Boynton-Jarrett R, Dworkin PH. Avoiding the
Unintended Consequences of Screening for Social Determinants of
Health. JAMA. 2016;316(8):813-814. doi:10.1001/jama.2016.9282
\17\ Egede LE, Walker RJ, Williams JS. Intersection of
Structural Racism, Social Determinants of Health, and Implicit Bias
With Emergency Physician Admission Tendencies. JAMA Netw Open.
2021;4(9):e2126375. doi:10.1001/jamanetworkopen.2021.26375
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Given that SDOH diagnosis codes describe economic and environmental
circumstances faced by patients and often correlate with substantial
variance in health outcomes,\18\ more widely adopted consistent
documentation and reporting in the inpatient setting could better
identify non-medical factors affecting health and track progress toward
addressing them. Doing so could also aid in work toward formulating
more comprehensive and actionable policies to address health equity and
promote the highest quality, best-value care for all beneficiaries.
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\18\ Commission on Social Determinants of Health. Closing the
gap in a generation: Health equity through action on the social
determinants of health: Final report of the commission on social
determinants of health. World Health Organization, 2008.
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As we discuss more fully later in this section, we believe
reporting of SDOH Z codes may also better determine the resource
utilization for treating patients experiencing these circumstances to
help inform whether a change to the severity designation of these codes
would be clinically warranted as we 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.
There are 96 diagnosis codes that describe the social determinants
of health found in categories Z55-Z65. These 96 diagnosis codes for
which we are soliciting comments as described in this proposed rule are
shown in Table 6P.5a (which is available via the internet on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS). We note we are also making available the
data describing the impact on resource use when reported as a secondary
diagnosis for all 96 ICD-10-CM Z codes that describe the social
determinants of health from categories Z55-Z65. 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 the comprehensive CC/MCC analysis.
In Table 6P.5a associated with this proposed rule, column C
displays the FY 2021 severity level designation for these diagnosis
codes in MS-DRG GROUPER Version 38.1. Column D displays CMS's current
FY 2022 severity level designation in MS-DRG GROUPER Version 39.1.
Columns E--N show data on the impact on resource use generated using
discharge claims from the September 2021 update of the FY 2021 MedPAR
file and MS-DRG GROUPER Version 39.1. For further information on the
data on the impact on resource use as displayed in Columns E--N, 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/Downloads/10082019ListingSessionTrasncriptandQandAsandAudioFile.zip 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 updated impact on resource
use files so that the public can review the mathematical data for the
impact on resource use generated using claims from the FY 2019 MedPAR
file, FY 2020 MedPAR file and the FY 2021 MedPAR files.
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
[[Page 28179]]
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. In Version 39.1, the 96 diagnosis codes that describe the
social determinants of health from categories Z55-Z65 have a severity
designation of NonCC.
If SDOH Z codes are not consistently reported in inpatient claims
data, our methodology utilized to mathematically measure the impact on
resource use, as described previously, may not adequately reflect what
additional resources were expended by the hospital to address these
SDOH circumstances in terms of requiring clinical evaluation, extended
length of hospital stay, increased nursing care or monitoring or both,
and comprehensive discharge planning. We seek public comment on whether
CMS should consider requiring more robust documentation and claims data
reporting to inform the impact on resource use these determinants have
on caring for patients affected by these circumstances in an inpatient
setting and inform our decision-making in a future year in determining
the most appropriate CC subclass (NonCC, CC, or MCC) assignment for
each SDOH Z code as a secondary diagnosis. We also seek public comment
on developing protocols to standardize the screening for SDOH for all
patients, and then consistently document and report such codes and on
whether such protocols should vary based on certain factors, such as
hospital size and type. For instance, we recognize that hospitals have
different mixes of patients and volume of patients, and as such, may
have different staffing resources to devote to proper documentation and
coding of SDOH. In particular, we are interested in hearing the
perspectives of different sized hospitals in both urban and rural
settings, and hospitals disproportionately serving members of
historically underserved and under-resourced communities in regard to
their experience with reporting of SDOH. We are additionally interested
in learning how reporting SDOH Z codes may be used to inform community
health need assessment activities required by non-profit hospitals.
We also recognize that there is a potential for different uses and
complexity in appropriately determining and reporting the full range of
Z codes. For instance, certain code categories like Z62 (Problems
related to upbringing) and Z63 (Other problems related to principal
support group, including family circumstances) may require specialized
clinical training to diagnose and document, which may not be the
primary purpose of the inpatient admission. Category Z57 describes
occupational exposure to risk factors, which also may not be apparent
in most inpatient admissions and would rely upon the patient providing
this information voluntarily. Category Z60 (Problems related to social
environment) also describes problems of adjustment to life-cycle
transitions, which also may or may not be readily apparent or discussed
by the patient in relation to the inpatient admission.
Thus, we are seeking comment on which specific SDOH Z codes are
most likely to influence (that is, increase) hospital resource
utilization related to inpatient care, including any supporting
information that correlates inpatient hospital resource use to specific
SDOH Z codes. CMS believes a potential starting point for discussion is
consideration of the SDOH Z diagnosis codes describing homelessness.
Homelessness can be reasonably expected to have an impact on hospital
utilization.\19\ Healthcare needs for patients experiencing
homelessness may be associated with increased resource utilization
compared to other patients due to difficulty finding discharge
destinations to meet the patient's multifaceted needs which can result
in longer inpatient stays and can have financial impacts for
hospitals.\20\ Longer hospital stays for these patients \21\ can also
be associated with increased costs because patients experiencing
homelessness are less able to access care at early stages of illness,
and also may be exposed to communicable disease and harsh climate
conditions, resulting in more severe and complex symptoms by the time
they are admitted to hospitals, potentially leading to worse health
outcomes. Patients experiencing homelessness can also be
disproportionately affected by mental health diagnoses and issues with
substance use disorders. In addition, patients experiencing
homelessness may have limited or no access to prescription medicines or
over-the-counter medicines, including adequate locations to store
medications away from the heat or cold,\22\ and studies have shown
difficulties adhering to medication regimens among persons experiencing
homeless.\23\ Patients experiencing homelessness may also face
challenges in accessing transplants and clinicians may defer care
because of the uncertain post-acute discharge.
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\19\ Koh HK, O'Connell JJ. Improving Health Care for Homeless
People. JAMA. 2016;316(24):2586-2587. doi:10.1001/jama.2016.18760.
\20\ Canham SL, Custodio K, Mauboules C, Good C, Bosma H. Health
and Psychosocial Needs of Older Adults Who Are Experiencing
Homelessness Following Hospital Discharge. Gerontologist. 2020 May
15;60(4):715-724. doi: 10.1093/geront/gnz078. PMID: 31228238.
https://pubmed.ncbi.nlm.nih.gov/31228238/.
\21\ Hwang SW, Weaver J, Aubry T. Hospital costs and length of
stay among homeless patients admitted to medical, surgical, and
psychiatric services. Med Care. 2011;49:350-354. https://journals.lww.com/lww-medicalcare/Fulltext/2019/01000/Trends,_Causes,_and_Outcomes_of_Hospitalizations.4.aspx.
\22\ Sun R (AHRQ), Karaca Z (AHRQ), Wong HS (AHRQ).
Characteristics of Homeless Individuals Using Emergency Department
Services in 2014. HCUP Statistical Brief #229. October 2017. Agency
for Healthcare Research and Quality, Rockville, MD. www.hcup-us.ahrq.gov/reports/statbriefs/sb229-Homeless-ED-Visits-2014.pdf.
\23\ Coe, Antoinette B. Coe et al. ``Medication Adherence
Challenges Among Patients Experiencing Homelessness in a Behavioral
Health Clinic. https://journals.lww.com/lww-medicalcare/Fulltext/2019/01000/Trends,_Causes,_and_Outcomes_of_Hospitalizations.4.aspx.
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To further examine the diagnosis codes that describe SDOH, we
reviewed the data on the impact on resource use for diagnosis code
Z59.0 (Homelessness) when reported as a secondary diagnosis to
facilitate discussion for the purposes of this comment solicitation. We
note that prior to FY 2022, homelessness was one of the more frequently
reported codes that describe social determinants of health. We also
note that effective FY 2022, this subcategory has been expanded and now
includes codes Z59.00 (Homelessness, unspecified), Z59.01 (Sheltered
homelessness), and code Z59.02 (Unsheltered homelessness).
In the FY 2020 IPPS/LTCH PPS proposed rule (84 FR 19243 through
19244), as part of our proposal to change the severity level
designations for 1,492 ICD-10-CM diagnosis codes, we proposed to change
the severity level designation of code Z59.0 (Homelessness) from NonCC
to CC. We stated that because the C1 value (C1 = 1.5964) in the table
was generally close to 2, the data suggested that when reported as a
secondary diagnosis, the resources involved in caring for a patient
experiencing homelessness supported increasing the severity level from
a NonCC to a CC. In the FY 2020 IPPS/LTCH PPS proposed rule, we also
stated our clinical advisors reviewed these data and believed the
resources involved in caring for these patients are more aligned with a
CC. As noted in section II.D.13.b of this proposed rule, many
commenters expressed concern with the proposed severity level
designation changes overall and consequently we generally did not
finalize our proposed changes to the severity designations for the
1,492 ICD-10-CM diagnosis codes, at that time.
[[Page 28180]]
However, the proposal to change the severity designation of code Z59.0
specifically did receive mostly supportive comments. Many commenters
stated that a patient experiencing homelessness requires significant
coordination of social services along with their health care. One
commenter also recommended that CMS expand the change in designation to
all the codes in category Z59, not just code Z59.0. Another commenter,
while indicating their support of the proposal, noted that it is
unclear that the status/condition would result in increased hospital
resource use.
Our proposal in FY 2020 was based on the data for the impact on
resource use generated using claims from the FY 2018 MedPAR file. The
following table reflects the impact on resource use data generated
using claims from the FY 2019 MedPAR file, FY 2020 MedPAR file and the
FY 2021 MedPAR file, respectively, for the diagnosis code that
describes homelessness as a NonCC. We note there is currently no data
for codes Z59.01 (Sheltered homelessness) and code Z59.02 (Unsheltered
homelessness) as these codes became effective on October 1, 2021.
Again, 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 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] TP10MY22.059
As shown in the table, we examined data for the diagnosis code(s)
that describe homelessness as a NonCC in FY 2019 through FY 2021. When
examining diagnosis code Z59.0 (Homelessness), the value in column C1
is closer to 2.0 than to 1.0 in FY 2019 and FY 2020, though we note
that we did not use FY 2020 data for rate setting purposes in light of
impacts related to the PHE for COVID-19 as described in the FY 2022
IPPS/LTCH PPS final rule (86 FR 44778). The data suggests that when
homelessness is 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, in FY 2021, the C1 value is generally closer to
1, which suggest the resources involved in caring for patients
experiencing homelessness are more aligned with a NonCC severity level
than a CC or an MCC severity level. We also note fluctuations in the C1
values year to year. We are uncertain if the data from FY 2021, in
particular, reflect fluctuations that may be a result of the public
health emergency or even reduced hospitalizations of certain
conditions. We also are uncertain if homelessness may be underreported
when there is not an available field on the claim when other diagnoses
are reported instead. We seek public comment on these possibilities,
particularly to inform our understanding of the trend of the C1 value.
As we have stated in prior rulemaking, these mathematical
constructs are used in conjunction with the judgment of our clinical
advisors to classify each secondary diagnosis reviewed. We present
these data to highlight that the resources expended in caring for
patients reported to be affected by a SDOH such as homelessness during
an inpatient hospitalization may not be consistently expressed in the
inpatient claims data and to demonstrate how reporting the SDOH Z codes
could more accurately reflect the health care encounter and improve the
reliability and validity of the coded data.
In summary, we appreciate public comment on these issues, including
on the following questions:
How the reporting of certain Z codes--and if so, which Z
codes \24\--may improve our ability to recognize severity of illness,
complexity of illness, and utilization of resources under the MS-DRGs?
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\24\ https://www.cms.gov/files/document/zcodes-infographic.pdf.
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Whether CMS should require the reporting of certain Z
codes--and if so, which ones--to be reported on hospital inpatient
claims to strengthen data analysis?
The additional provider burden and potential benefits of
documenting and reporting of certain Z codes, including potential
benefits to beneficiaries.
Whether codes in category Z59 (Homelessness) have been
underreported and if so, why? In particular, we are interested in
hearing the perspectives of large urban hospitals, rural hospitals, and
other hospital types in regard to their experience. We also seek
comments on how factors such as hospital size and type might impact a
hospital's ability to develop standardized consistent protocols to
better screen, document and report homelessness.
The comments we receive on these issues may also be informative as
we evaluate whether to develop a proposal in future rulemaking to
change the severity level designation of the diagnosis codes describing
homelessness from NonCC to CC and whether other SDOH, as described by Z
codes, are also appropriate candidates to be proposed for designation
as CCs.
We note that examining the severity level designation of diagnosis
codes is just one area to possibly support documentation and reporting
of SDOH in the inpatient setting. We are also interested in ideas from
the public on how the MS-DRG classification can be utilized in agency
wide efforts to advance health equity, expand access, drive high-
quality, person-centered care, and promote affordability and
sustainability in the Medicare program. Specifically, we invite public
comment on ways the MS-DRG classification can be useful in addressing
the challenges of defining and collecting accurate and standardized
self-identified socioeconomic information for the purposes of
reporting, measure stratification, and other data collection efforts.
We are interested in learning more about the potential benefits and
challenges associated with the collection of SDOH data in the inpatient
setting. Feedback on the limitations and barriers providers could
experience as they consider more robust documentation and reporting
would also help inform our development of appropriately tailored
efforts that address and mitigate barriers for all hospital types
across communities and patient mixes. We will take
[[Page 28181]]
commenters' feedback into consideration in future policy development.
e. Proposed Additions and Deletions to the Diagnosis Code Severity
Levels for FY 2023
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 2023 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 2023;
Table 6I.2--Proposed Deletions to the MCC List--FY 2023;
Table 6J.1--Proposed Additions to the CC List--FY 2023; and
Table 6J.2--Proposed Deletions to the CC List--FY 2023.
f. Proposed CC Exclusions List for FY 2023
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.
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 39.1 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.
We are proposing additional changes to the ICD-10 MS-DRGs Version
40 CC Exclusion List based on the diagnosis and procedure code updates
as discussed in section II.D.14. of this FY 2023 IPPS/LTCH PPS proposed
rule. Therefore, we have developed Table 6G.1.-Proposed Secondary
Diagnosis Order Additions to the CC Exclusions List-FY 2023; Table
6G.2.-Proposed Principal Diagnosis Order Additions to the CC Exclusions
List-FY 2023; Table 6H.1.-Proposed Secondary Diagnosis Order Deletions
to the CC Exclusions List-FY 2023; and Table 6H.2.-Proposed Principal
Diagnosis Order Deletions to the CC Exclusions List-FY 2023. For Table
6G.1, each secondary diagnosis code proposed for addition to the CC
Exclusion List is shown with an asterisk and the principal diagnoses
proposed to exclude the secondary diagnosis code are provided in the
indented column immediately following it. For Table 6G.2, each of the
principal diagnosis codes for which there is a CC exclusion is shown
with an asterisk and the conditions proposed for addition to the CC
Exclusion List that will not count as a CC are provided in an indented
column immediately following the affected principal diagnosis. For
Table 6H.1, each secondary diagnosis code proposed for deletion from
the CC Exclusion List is shown with an asterisk followed by the
principal diagnosis codes that currently exclude it. For Table 6H.2,
each of the principal diagnosis codes is shown with an asterisk and the
proposed deletions to the CC Exclusions List are provided in an
indented column immediately following the affected principal diagnosis.
Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this proposed
rule are available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.
14. Proposed Changes to the ICD-10-CM and ICD-10-PCS Coding Systems
To identify new, revised and deleted diagnosis and procedure codes,
for FY 2023, we have developed Table 6A.-New Diagnosis Codes, Table
6B.-New Procedure Codes, Table 6C.-Invalid Diagnosis Codes, and Table
6E.-Revised Diagnosis Code Titles for this proposed rule. These tables
are not published in the Addendum to this 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 this proposed rule. As
discussed in section II.D.17. of the preamble of this proposed 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.
We are proposing 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. In addition, 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 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
[[Page 28182]]
severity of illness, treatment difficulty, complexity of service and
the resources utilized in the diagnosis 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 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 proposed rule:
Table 6A.--New Diagnosis Codes-FY 2023
Table 6B.--New Procedure Codes-FY 2023
Table 6C.--Invalid Diagnosis Codes-FY 2023
Table 6E.--Revised Diagnosis Code Titles-FY 2023
Table 6G.1.--Proposed Secondary Diagnosis Order Additions to
the CC Exclusions List-FY 2023
Table 6G.2.--Proposed Principal Diagnosis Order Additions to
the CC Exclusions List-FY 2023
Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to
the CC Exclusions List-FY 2023
Table 6H.2.--Proposed Principal Diagnosis Order Deletions to
the CC Exclusions List--FY 2023
Table 6I.1.--Proposed Additions to the MCC List-FY 2023
Table 6I.2.--Proposed Deletions to the MCC List-FY 2023
Table 6J.1.--Proposed Additions to the CC List-FY 2023
Table 6J.2.--Proposed Deletions to the CC List-FY 2023.
15. Proposed 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 2022 IPPS/LTCH PPS final rule (86 FR 44936),
we made available the FY 2022 ICD-10 MCE Version 39 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 39
(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.
For this FY 2023 IPPS/LTCH PPS proposed rule, we discuss the
proposals we are making based on our internal review and analysis. We
did not receive any specific MCE requests by the November 1, 2021
deadline.
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.14. of the preamble of this proposed
rule, Table 6C.--Invalid Diagnosis Codes, lists the diagnosis codes
that are no longer effective October 1, 2022. Included in this table
are codes currently subject to the External causes of morbidity codes
as principal diagnosis edit. We are proposing to delete the ICD-10-CM
diagnosis codes shown in Table 6P.6a associated with this proposed rule
and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS
that are currently subject to the External causes of morbidity codes as
principal diagnosis edit since they will no longer be valid for
reporting purposes.
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) Maternity Diagnoses
Under the ICD-10 MCE, the Maternity diagnoses category for the Age
conflict edit considers the age range of 9 to 64 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.14. of the preamble of this proposed
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, 2022. We are proposing to add new ICD-10-CM
diagnosis codes to the edit code list for the Maternity diagnoses
category as shown in Table 6P.6b associated with this proposed rule and
available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS under the
Age conflict edit.
In addition, as discussed in section II.D.14. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2022. Included
in this table are the following ICD-10-CM diagnosis codes that are
currently listed on the edit code list for the Maternity diagnoses
category under the Age conflict edit. We are proposing to delete these
codes from the Maternity diagnoses edit code list.
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[[Page 28183]]
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(2) Adult Diagnoses
Under the ICD-10 MCE, the Adult diagnoses category for the Age
conflict edit considers the age range of 15 to 124 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.14. of the preamble of this proposed
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, 2022. We are proposing to add the following new
ICD-10-CM diagnosis codes to the edit code list for the Adult diagnoses
category under the Age conflict edit.
[[Page 28184]]
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In addition, as discussed in section II.D.14. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2022. Included
in this table are the following ICD-10-CM diagnosis codes that are
currently listed on the edit code list for the Adult diagnoses category
under the Age conflict edit. We are proposing to delete these codes
from the Adult diagnoses edit code list.
[GRAPHIC] [TIFF OMITTED] TP10MY22.062
[[Page 28185]]
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 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.14. of the preamble of this proposed
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, 2022. We are proposing to add new ICD-10-CM
diagnosis codes to the edit code list for the Diagnoses for females
only category as shown in Table 6P.6c associated with this proposed
rule and available via the internet on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS
under the Sex conflict edit.
In addition, as discussed in section II.D.14. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2022. Included
in this table are the following ICD-10-CM diagnosis codes that are
currently listed on the edit code list for the Diagnoses for females
only category under the Sex conflict edit. We are proposing to delete
these codes from the Diagnoses for females only edit code list.
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(2) Procedures for Males Only
As discussed in section II.D.14. of the preamble of this proposed
rule, Table 6B.--New Procedure Codes, lists the new procedure codes
that have been approved to date which will be effective with discharges
on and after October 1, 2022. Included in this table are the following
procedure codes we are proposing to add to the edit code list for the
Procedures for males only category under the Sex conflict edit.
[[Page 28186]]
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d. Manifestation Code as Principal Diagnosis Edit
In the ICD-10-CM classification system, manifestation codes
describe the manifestation of an underlying disease, not the disease
itself, and therefore should not be used as a principal diagnosis.
As discussed in section II.D.14. of the preamble of this proposed
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, 2022. Included in this table are the following
new ICD-10-CM diagnosis codes that we are proposing to add to the edit
code list for the Manifestation code as principal diagnosis edit,
because the disease itself would be required to be reported first.
[GRAPHIC] [TIFF OMITTED] TP10MY22.065
[[Page 28187]]
In addition, as discussed in section II.D.14. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2022. Included
in this table is ICD-10-CM diagnosis code F02.81 (Dementia in other
diseases classified elsewhere with behavioral disturbance), that is
currently listed on the edit code list for the Manifestation code as
principal diagnosis edit. We are proposing to delete this code from the
Manifestation code as principal diagnosis edit code list.
e. 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.14. of the preamble of this proposed
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, 2022. We are proposing to add the following new
ICD-10-CM diagnosis codes to the Unacceptable Principal Diagnosis edit
code list.
As discussed in section II.D.1.b. of the preamble of this proposed
rule, we are providing a test version of the ICD-10 MS-DRG GROUPER
Software, Version 40, so that the public can better analyze and
understand the impact of the proposals included in this proposed rule.
We note that at the time of the development of the test software, a
subset of the listed codes (F01.511 through F01.C4) proposed for this
edit were unable to be included and therefore, the test software does
not reflect these codes.
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[[Page 28188]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.067
In addition, as discussed in section II.D.14. of the preamble of
this proposed rule, Table 6C.--Invalid Diagnosis Codes, lists the
diagnosis codes that are no longer effective October 1, 2022. Included
in this table are the following
[[Page 28189]]
ICD-10-CM diagnosis codes that are currently listed on the Unacceptable
Principal Diagnosis edit code list. We are proposing to delete these
codes from the Unacceptable Principal Diagnosis edit code list.
[GRAPHIC] [TIFF OMITTED] TP10MY22.068
f. Unspecified Code
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 44940 through
44943), we finalized the implementation of a new Unspecified code edit,
effective with discharges on and after April 1, 2022. 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.
As discussed in section II.D.14. of the preamble of this proposed
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, 2022. We are proposing to add the following new
ICD-10-CM diagnosis codes to the Unspecified code edit code list.
[GRAPHIC] [TIFF OMITTED] TP10MY22.069
g. 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.
[GRAPHIC] [TIFF OMITTED] TP10MY22.070
BILLING CODE 4120-01-C
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 new electronic intake system, Medicare Electronic Application
Request Information SystemTM (MEARISTM),
discussed in section II.D.1.b. of the preamble of this
[[Page 28190]]
proposed rule at https://mearis.cms.gov/public/home by October 20,
2022.
16. Proposed 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 proposed rule.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted MS-DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average cost is
ordered above a surgical class with a higher average cost. For example,
the ``other O.R. procedures'' surgical class is uniformly ordered last
in the surgical hierarchy of each MDC in which it occurs, regardless of
the fact that the average costs for the MS-DRG or MS-DRGs in that
surgical class may be higher than those for other surgical classes in
the MDC. The ``other O.R. procedures'' class is a group of procedures
that are only infrequently related to the diagnoses in the MDC, but are
still occasionally performed on patients with cases assigned to the MDC
with these diagnoses. Therefore, assignment to these surgical classes
should only occur if no other surgical class more closely related to
the diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
costs for two surgical classes is very small. We have found that small
differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average costs are likely to shift such that the higher-
ordered surgical class has lower average costs than the class ordered
below it.
Based on the changes that we are proposing to make for FY 2023, as
discussed in section II.D. of the preamble of this proposed rule, we
are proposing to maintain the existing surgical hierarchy for FY 2023.
17. 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://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official
list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS website
at https://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 ICD-10 Coordination and Maintenance Committee holds its
meetings in the spring and fall 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.
The Committee encourages participation in the previously mentioned
process by health- related organizations. In this regard, the Committee
holds public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed during the
public meetings and in writing, the Committee formulates
recommendations, which then must be approved by the agencies.
[[Page 28191]]
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.
The Committee presented proposals for coding changes for
implementation in FY 2023 at a public meeting held on September 14-15,
2021, and finalized the coding changes after consideration of comments
received at the meetings and in writing by November 15, 2021.
The Committee held its 2022 meeting on March 8-9, 2022. The
deadline for submitting comments on the procedure code proposals that
are being considered for an October 1, 2022 implementation was April 8,
2022. The deadline for submitting comments on the diagnosis code
proposals that are being considered for an October 1, 2023
implementation is May 9, 2022. 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 2022 would be included in the October 1, 2022,
update to the ICD-10-CM diagnosis and ICD-10-PCS procedure code sets.
It was also announced at this meeting that we are changing the process
for submitting requested updates to the ICD-10-PCS classification,
beginning with the procedure code request submitted for consideration
for the September 13-14, 2022 ICD-10 Coordination and Maintenance
Committee Meeting. As stated in section II.D.1.b. of the preamble of
this proposed rule, CMS is in the process of implementing a new
electronic application intake system, MEARIS\TM\. Effective January 5,
2022, MEARIS\TM\ became available as an initial release for users to
begin gaining familiarity with a new approach and process to submit
ICD-10-PCS procedure code requests. Information on this new approach
for submitting an ICD-10-PCS code request can be accessed at https://mearis.cms.gov. Effective March 1, 2022, the full release of MEARIS\TM\
became active for ICD-10-PCS code request submissions. ICD-10-PCS code
request submissions are due no later than June 10, 2022, to be
considered for the September 13-14, 2022, ICD-10 Coordination and
Maintenance Committee Meeting. Moving forward, CMS will only accept
ICD-10-PCS code requests submitted via MEARIS\TM\. Requests submitted
through the ICDProcedureCodeRequest mailbox will no longer be
considered. Within MEARIS\TM\, we have built in several resources to
support users, including a ``Resources'' section (available at https://mearis.cms.gov/public/resources) and technical support available under
``Useful Links'' at the bottom of the MEARIS\TM\ site. Questions
regarding MEARIS\TM\ can be submitted to CMS using the form available
under ``Contact'' at https://mearis.cms.gov/public/resources.
As discussed in earlier sections of the preamble of this proposed
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, and Table 6E.--Revised Diagnosis Code Titles for this
proposed rule, which are available via the internet on the CMS website
at https://www.cms.gov/medicare/medicare-fee-for-service-payment/
acuteinpatientpps. The code titles are adopted as part of the ICD-10
Coordination and Maintenance Committee process. Therefore, although we
make the code titles available through tables in association with the
IPPS proposed rule, they are not subject to comment in the proposed
rule. Because of the length of these tables, they are not published in
the Addendum to the proposed rule. Rather, they are available via the
internet as discussed in section VI. of the Addendum to the proposed
rule.
Recordings for the virtual meeting discussions of the procedure
codes at the Committee's September 14-15, 2021, meeting and the March
8-9, 2022, 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 14-15, 2021, meeting and March 8-9, 2022, meeting can be
found at https://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 [email protected].
Questions and comments concerning the procedure codes should be
submitted via Email to [email protected].
As a result of the ongoing COVID-19 public health emergency, the
CDC implemented three new diagnosis codes describing immunization
status related to COVID-19 into the ICD-10-CM effective with discharges
on and after April 1, 2022. The diagnosis codes are as follows:
[GRAPHIC] [TIFF OMITTED] TP10MY22.071
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.
We provided the MS-DRG assignments for the three diagnosis codes
effective with discharges on and after April 1, 2022, 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 (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 this proposed
[[Page 28192]]
rule, we are soliciting public comments on the most appropriate MDC,
MS-DRG, and severity level assignments for these codes for FY 2023, as
well as any other options for the GROUPER logic.
In addition, CMS implemented nine new procedure codes describing
the introduction or infusion of therapeutics, including vaccines for
COVID-19 treatment, into the ICD-10-PCS effective with discharges on
and after April 1, 2022. The nine 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.
[GRAPHIC] [TIFF OMITTED] TP10MY22.072
The ICD-10 MS-DRG assignment for cases reporting any one of the
nine 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 nine procedure codes are
reflected in Table 6B--New Procedure Codes (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 this
proposed rule, we are soliciting public comments on the most
appropriate MDC, MS-DRG, and operating room status assignments for
these codes for FY 2023, as well as any other options for the GROUPER
logic.
We note that Change Request (CR) 12578, Transmittal 11174, titled
``April 2022 Update to the Medicare Severity--Diagnosis Related Group
(MS-DRG) Grouper and Medicare Code Editor (MCE) Version 39.1 for the
International Classification of Diseases, Tenth Revision (ICD-10)
Diagnosis Codes for 2019 Novel Coronavirus (COVID-19) Vaccination
Status and ICD-10 Procedure Coding System (PCS) Codes for Introduction
or Infusion of Therapeutics and Vaccines for COVID-19 Treatment'', was
issued on January 14, 2022 (available via the internet on the CMS
website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Transmittals/r11174cp) regarding the release of an updated
version of the ICD-10 MS-DRG GROUPER and Medicare Code Editor software,
Version 39.1, effective with discharges on and after April 1, 2022,
reflecting the new diagnosis and procedure codes. The updated software,
along with the updated ICD-10 MS-DRG V39.1 Definitions Manual and the
Definitions of Medicare Code Edits V39.1 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
[[Page 28193]]
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.
In the FY 2005 IPPS final rule, we implemented section
1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law
108-173, by developing a mechanism for approving, in time for the April
update, diagnosis and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making those determinations. Topics considered during the Fall ICD-10
(previously ICD-9-CM) Coordination and Maintenance Committee meeting
were considered for an April 1 update if a strong and convincing case
was made by the requestor during the Committee's public meeting. The
request needed to identify the reason why a new code was needed in
April for purposes of the new technology process. Meeting participants
and those reviewing the Committee meeting materials were provided the
opportunity to comment on the expedited request. We refer the reader to
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44950) for further
discussion of the implementation of this prior April 1 update for
purposes of the new technology add-on payment process.
However, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86
FR 44950 through 44956), we adopted an April 1 implementation date, in
addition to the annual October 1 update, beginning with April 1, 2022.
We noted that the intent of this April 1 implementation date is to
allow flexibility in the ICD-10 code update process. With this new
April 1 update, CMS now uses the same process for consideration of all
requests for an April 1 implementation date, including for purposes of
the new technology add-on payment process (that is, the prior process
for consideration of an April 1 implementation date only if a strong
and convincing case was made by the requestor during the meeting no
longer applies). We are continuing to use several aspects of our
existing established process to implement new codes through the April 1
code update, which includes 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
note that under our established process, requestors indicate whether
they are submitting their code request for consideration for an April 1
implementation date or an October 1 implementation date. The ICD-10
Coordination and Maintenance Committee makes efforts to accommodate the
requested implementation date for each request submitted. However, the
Committee determines which requests are to be presented for
consideration for an April 1 implementation date or an October 1
implementation date. As discussed earlier in this section of the
preamble of this proposed rule, there were code proposals presented for
an expedited April 1, 2022, implementation at the September 14-15,
2021, Committee meetings that involved treatments related to the COVID-
19 PHE. One of these code proposals was also in connection with a
request for a new technology add-on payment application. Following the
receipt of public comments, the code proposals were approved and
finalized, therefore, there were new codes implemented April 1, 2022.
Consistent with the process we outlined for the April 1
implementation date, we announced the new codes in November 2021 and
provided the updated code files and ICD-10-CM Official Guidelines for
Coding and Reporting in December 2021. In the January 24, 2022, Federal
Register (87 FR 3549), notice for the March 8-9, 2022, ICD-10
Coordination and Maintenance Committee Meeting was published that
includes the tentative agenda and identifies which topics are related
to a new technology add-on payment application. By February 1, 2022, we
made available the updated V39.1 ICD-10 MS-DRG Grouper software and
related materials via the internet on CMS web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/MS-DRG-Classifications-and-Software.
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 https://www.cms.gov/medicare/coding/icd10. 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.
For FY 2022, there are currently 72,750 diagnosis codes and 78,229
procedure codes. As displayed in Table 6A.--New Diagnosis Codes and in
Table 6B.--New Procedure Codes associated with this proposed rule (and
available via the internet on the CMS website at https://www.cms.gov/
medicare/medicare-fee-for-service-payment/acuteinpatientpps, there are
1,176 new diagnosis codes and 45 new procedure codes that have been
finalized for FY 2023 at the time of the development of this proposed
rule. 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.
18. 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
[[Page 28194]]
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. Proposed Changes for FY 2023
For FY 2023 we are proposing not to add any MS-DRGs to the policy
for replaced devices offered without cost or with a credit. We are
proposing to continue to include the existing MS-DRGs currently subject
to the policy as displayed in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.073
[[Page 28195]]
The final list of MS-DRGs subject to the IPPS policy for replaced
devices offered without cost or with a credit will be included in the
FY 2023 IPPS/LTCH PPS final rule and also will be issued to providers
in the form of a Change Request (CR).
19. Other Policy Issues
a. Comment Solicitation on Possible Mechanisms To Address Rare Diseases
and Conditions Represented by Low Volumes Within the MS-DRG Structure
As discussed in section II.D.13.d. of the preamble of this proposed
rule, we are soliciting public comments involving how the reporting of
certain diagnosis codes may improve our ability to recognize severity
of illness, complexity of illness, and utilization of resources under
the MS-DRGs, as well as feedback on mechanisms to improve the
reliability and validity of the coded data as part of an ongoing effort
across CMS to evaluate and develop policies to reduce health
disparities. In concert with that effort, we are also soliciting
comments to explore possible mechanisms through which we can address
rare diseases and conditions that are represented by low volumes in our
claims data.
One subset of our beneficiary population for which we are seeking
comment on potential issues related to patient access in the inpatient
setting are patients diagnosed with rare diseases and conditions that
are represented by low volumes in our claims data. The Orphan Drug Act
(ODA) added section 526(a)(2)(B) to the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 360bb(a)(2)(B)), defining a rare disease or
condition as ``any disease or condition which (A) affects less than
200,000 persons in the United States, or (B) affects more than 200,000
in the United States and for which there is no reasonable expectation
that the cost of developing and making available in the United States a
drug for such disease or condition will be recovered from sales in the
United States of such drug.'' Most rare diseases, however, affect far
fewer people. The Genetic and Rare Diseases Information Center (GARD),
which was created in 2002 by the National Institutes of Health (NIH)
Office of Rare Diseases Research, estimates that there are as many as
7,000 distinct rare diseases. Rare diseases, which can include genetic
diseases, autoimmune conditions, some cancers, and uncommon infections,
are highly diverse, may affect many organ systems and have wide
variations in the rates and patterns of manifestations and progression.
The ODA created a process for the U.S. Food and Drug Administration
(FDA) to identify a drug as a drug developed for the treatment of a
rare disease or condition called ``orphan-drug designation''. The
sponsor of a drug that has orphan drug designation may be eligible for
certain financial incentives, such as tax credits and potentially seven
years of market exclusivity after approval, all of which are intended
to incentivize developing drugs for small numbers of patients. We have
heard from some stakeholders, however, that there may be a number of
barriers to providers in treating these patients with these orphan
designated drugs in the Medicare hospital inpatient setting.
According to these stakeholders, one significant barrier that
continues to present challenges to manufacturers is accessing formulary
coverage for potentially high cost therapeutics for rare diseases.
These stakeholders have stated that hospitals utilize formularies for
inpatient drugs as a cost-management tool that strongly incentivizes
physicians to use on-formulary drugs over off-formulary drugs, whenever
clinically appropriate to do so. A drug formulary is defined as a list
of medications and continually updated related information, that
represents the clinical judgment of pharmacists, physicians, and other
experts in the diagnosis and treatment of disease or promotion of
health. It is often described as a list of medications routinely
stocked by the health care system. These stakeholders stated that
although certain therapeutics can be associated with better outcomes
for patients with rare diseases, the lack of access to hospital
formularies represents a hurdle under the IPPS MS-DRGs. According to
these stakeholders, when Medicare reimbursement is insufficient to
cover the costs of certain therapeutics that treat patients with rare
diseases, a disincentive can be created in addressing these conditions.
For the purposes of this comment solicitation we describe in this
section three selected requests we have received relating to the MS-DRG
classification of rare diseases and conditions that are represented by
low volumes in our claims data.
In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53311), the FY 2015
IPPS/LTCH PPS final rule (79 FR 49901), and the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41200), we discussed requests we received to revise
the MS-DRG classification for cases of patients diagnosed with
porphyria to recognize the resource requirements in caring for these
patients, to ensure appropriate payment for these cases, and to
preserve patient access to necessary treatments. Porphyria is defined
as a group of rare disorders (``porphyrias'') that interfere with the
production of hemoglobin that is needed for red blood cells. While some
of these disorders are genetic (inborn) and others are acquired, they
all result in the abnormal accumulation of hemoglobin building blocks,
called porphyrins, which can be deposited in the tissues where they
particularly interfere with the functioning of the nervous system and
the skin. Treatment for patients suffering from disorders of porphyrin
metabolism consists of an intravenous injection of Panhematin[supreg]
(hemin for injection).
In the FY 2019 proposed rule, we stated our data analysis showed
that cases reporting diagnosis code E80.21 (Acute intermittent
(hepatic) porphyria) as the principal diagnosis in MS-DRG 642 (Inborn
and Other Disorders of Metabolism) had higher average costs and longer
average lengths of stay compared to the average costs and length of
stay for all other cases in MS-DRG 642. However, after considering
these findings in the context of the current MS-DRG structure, we
stated that we were unable to identify an MS-DRG that would more
closely parallel these cases with respect to average costs and length
of stay that would also be clinically aligned. We further stated that
our clinical advisors believed that, in the current MS-DRG structure,
the clinical characteristics of patients in these cases are most
closely aligned with the clinical characteristics of patients in all
cases in MS-DRG 642. Moreover, given the small number of porphyria
cases, we stated we did not believe there was justification for
creating a new MS-DRG and did not propose to revise the MS-DRG
classification for porphyria cases.
In response, some commenters described significant difficulties
encountered by patients with acute porphyria attacks in obtaining
Panhematin[supreg] when presenting to an inpatient hospital, which they
attributed to the strong financial disincentives faced by facilities to
treat these cases on an inpatient basis. The commenters stated that,
based on the lower than expected average cost per case and longer than
expected length of stay for acute porphyria attacks, it appeared that
facilities were frequently not providing Panhematin[supreg] to patients
in this condition, and instead attempting to provide symptom relief and
transferring patients to an outpatient setting to receive the drug
where they can be adequately paid. The commenters stated that this is
in contrast to the standard of
[[Page 28196]]
care for acute porphyria attacks and could result in devastating long-
term health consequences.
In the FY 2019 final rule (83 FR 41200), as we have stated in prior
rulemaking, we noted it is not appropriate for facilities to deny
treatment to beneficiaries needing a specific type of therapy or
treatment that involves increased costs. We further noted 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. While we recognized the average
costs of the small number of porphyria cases were greater than the
average costs of the cases in MS-DRG 642 overall, we also noted that an
averaged payment system depends on aggregation of similar cases with a
range of costs, and that we 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 of
diagnoses. We further stated that we were sensitive to the commenters'
concerns about access to treatment for beneficiaries who have been
diagnosed with this condition and we would continue to explore
mechanisms through which to address rare diseases and low volume DRGs.
Similarly, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44869),
we discussed a request we received to review potential access issues in
the inpatient setting for the administration of ANDEXXA[supreg].
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). We noted that while our data
findings demonstrated the average costs for the cases reporting the
intravenous administration of ANDEXXA[supreg] were higher when compared
to all cases in their respective MS-DRG, these cases represented a very
small percentage of the total number of cases reported in those MS-
DRGs. We stated 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. We also stated that while we were
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 was needed to explore options and other mechanisms
through which to address low volume, high-cost drugs outside of the MS-
DRGs.
Lastly, we received a request to reconsider how cases reporting the
administration of Zulresso[supreg] (brexanolone) are recognized for
payment under the ICD-10 MS-DRGs in an effort to improve access to
treatment for maternal mental health. On March 19, 2019
Zulresso[supreg] (brexanolone) became the first Food and Drug
Administration (FDA) approved drug, specifically for postpartum
depression (PPD) in adults. According to the requestor, PPD is one of
the most common complications during and after pregnancy. The requestor
stated PPD is a serious but manageable disorder and that with early
treatment, the life of the mother, baby, and the entire family could be
positively impacted. The requestor indicated it shares CMS's goals of
addressing disparities in access to care, and urged CMS to take
additional steps to address inequities in women's health by permitting
separate payment for Zulresso[supreg] (brexanolone), in addition to the
MS-DRG payment.
Effective with discharges on and after October 1, 2020, cases
reporting the administration of Zulresso[supreg] in the inpatient
setting are identified by ICD-10-PCS procedure codes XW03306
(Introduction of brexanolone into peripheral vein, percutaneous
approach, new technology group 6) or XW04306 (Introduction of
brexanolone into central vein, percutaneous approach, new technology
group 6). These procedure codes are designated as non-O. R. procedures
and do not affect the MS-DRG assignment when reported on an inpatient
claim. We note that an application for new technology add-on payment
for Zulresso[supreg] (brexanolone) was discussed in the FY 2021 IPPS/
LTCH PPS proposed rule (85 FR 32672 through 32676) and was not
approved, as discussed in the final rule (85 FR 58709 through 58715).
We analyzed claims from the September 2021 update of the FY 2021
MedPAR file for cases reporting the administration of Zulresso[supreg]
(brexanolone). Our analysis of the claims data identified only one case
reporting the administration of Zulresso[supreg] (brexanolone) in MS-
DRG 870 (Septicemia or Severe Sepsis with MV >96 Hours) with an average
length of stay of 22 days and average costs of $67,812. For all cases
in MS-DRG 870, the average costs are $55,459 and the average length of
stay is 15.9 days. While the average length of stay for the case
reporting the administration of Zulresso[supreg] (brexanolone) is
greater (22 days versus 15.9 days) and the average costs are higher
($67,812 versus $55,459), than all cases in MS-DRG 870 it is unclear if
treatment with Zulresso[supreg] (brexanolone) is the underlying reason
for these factors, given that the MS-DRG assigned is for sepsis and it
is not uncommon for sepsis patients to have multiple co-morbidities and
intensive treatment strategies to address this severe, often life
threatening condition.
We appreciate the requestor's interest in sharing CMS's goal of
advancing women's health, however, we note that the population in which
Zulresso[supreg] (brexanolone) is indicated generally does not include
our inpatient Medicare population. As we have stated in prior
rulemaking, (83 FR 41210), we have not adopted the same approach to
refine the maternity and newborn MS-DRGs because of the extremely low
volume of Medicare patients there are in these MS-DRGs. When there is
not a high volume of these cases (for example, maternity and newborn)
represented in the Medicare data, we generally advise that other payers
should develop DRGs to address the needs of their patients. We believe
the same would apply with respect to administration of Zulresso[supreg]
(brexanolone) for which, as noted, we identified only one case in the
FY 2021 MedPAR file.
As discussed in prior rulemaking, the MS-DRGs are a classification
system intended to group together diagnoses and procedures with similar
clinical characteristics and utilization of resources. Rare diseases
and conditions that are represented by low volumes in our claims data
however, pose a unique challenge to this methodology as these
conditions by definition affect small subsets of the population. It has
been difficult to identify other MS-DRGs that would be more appropriate
MS-DRG assignments for these rare conditions based on the wide variance
in the clinical characteristics and utilization of resources for each
condition, depending on the diagnosis. Creating a new MS-DRG for these
conditions as a distinct ``related'' group is also challenging for the
same reasons.
As previously noted, 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. We have been concerned that basing MS-DRG reclassification
decisions on small numbers of cases could lead to complexities in
establishing the relative payment weights for the MS-DRGs
[[Page 28197]]
because several expensive cases could impact the overall relative
payment weight. Having larger clinical cohesive groups within an MS-DRG
provides greater stability and thus predictability for hospitals for
annual updates to the relative payment weights.
As also previously noted, 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. However, as noted, cases
involving treatment of rare diseases may involve more resource use than
other cases in their respective MS-DRG. 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, however we are soliciting feedback on other
mechanisms we can explore through which we could address concerns
relating to payment for patients with rare diseases and conditions that
are represented by low volumes in our claims data. We are also
interested in receiving comments on other meaningful ways in which we
may potentially improve access to treatment for postpartum depression
in certain populations, including through activities pursuant to Vice
President Harris's Call to Action to Reduce Maternal Mortality and
Morbidity.\25\
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\25\ Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/07/fact-sheet-vice-president-kamala-harris-announces-call-to-action-to-reduce-maternal-mortality-and-morbidity/.
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To inform decision making, we are also looking for feedback on how
to mitigate any unintended negative payment impacts to providers
serving patients with rare diseases or conditions that are represented
by low volumes in our claims data. In particular, we are interested in
hearing the perspectives of large urban hospitals, rural hospitals, and
other hospital types in regard to their experience. We also seek
comments on how factors such as hospital size and type might impact a
hospital's ability to develop protocols to better address these
conditions. We will take commenters' feedback into consideration in
future policy development.
II. Proposed Changes to Medicare Severity Diagnosis-Related Group (MS-
DRG) Classifications and Relative Weights
E. Recalibration of the FY 2023 MS-DRG Relative Weights
1. Data Sources for Developing the Relative Weights
Consistent with our established policy, in developing the MS-DRG
relative weights for FY 2023, we are proposing 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 bills. The FY 2021 MedPAR data used in this
proposed rule include discharges occurring on October 1, 2020, through
September 30, 2021, based on bills received by CMS through December 31,
2021, 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 2021 MedPAR file used in calculating the proposed relative
weights includes data for approximately 7,417,999 Medicare discharges
from IPPS providers. Discharges for Medicare beneficiaries enrolled in
a Medicare Advantage managed care plan are excluded from this analysis.
These discharges are excluded when the MedPAR ``GHO Paid'' indicator
field on the claim record is equal to ``1'' or when the MedPAR DRG
payment field, which represents the total payment for the claim, is
equal to the MedPAR ``Indirect Medical Education (IME)'' payment field,
indicating that the claim was an ``IME only'' claim submitted by a
teaching hospital on behalf of a beneficiary enrolled in a Medicare
Advantage managed care plan. In addition, the December 31, 2021 update
of the FY 2021 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
proposed relative weights for FY 2023 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 proposed FY 2023 relative weights are
based on the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes
from the FY 2021 MedPAR claims data, grouped through the ICD-10 version
of the proposed FY 2023 GROUPER (Version 40).
The second data source used in the cost-based relative weighting
methodology is the Medicare cost report data files from the HCRIS. In
general, we use the HCRIS dataset that is 3 years prior to the IPPS
fiscal year. Specifically, for this proposed rule, we used the December
31, 2021 update of the FY 2020 HCRIS for calculating the proposed FY
2023 cost-based relative weights. Consistent with our historical
practice, for this FY 2023 proposed rule, we are providing the version
of the HCRIS from which we calculated these proposed 19 CCRs on the CMS
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. Click on the link on the left side of the
screen titled ``FY 2023 IPPS Proposed Rule Home Page'' or ``Acute
Inpatient Files for Download.''
2. Methodology for Calculation of the Relative Weights
a. General
We continued to calculate the proposed FY 2023 relative weights
based on 19 CCRs. The methodology we are proposing to use to calculate
the FY 2023 MS-DRG cost-based relative weights based on claims data in
the FY 2021 MedPAR file and data from the FY 2020 Medicare cost reports
is as follows:
To the extent possible, all the claims were regrouped
using the proposed FY 2023 MS-DRG classifications discussed in sections
II.B. and II.D. of the preamble of this proposed rule.
The transplant cases that were used to establish the
relative weights for heart and heart-lung, liver and/or intestinal, and
lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively)
were limited to those Medicare-approved transplant centers that have
cases in the FY 2021 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
[[Page 28198]]
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 through 58842). For FY 2022 and subsequent years,
we 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 92.9 percent of the providers in the MedPAR file
had charges for 14 of the 19 cost centers. All claims of providers that
did not have charges greater than zero for at least 14 of the 19 cost
centers were deleted. In other words, a provider must have no more than
five blank cost centers. If a provider did not have charges greater
than zero in more than five cost centers, the claims for the provider
were deleted.
Statistical outliers were eliminated by removing all cases
that were beyond 3.0 standard deviations from the geometric mean of the
log distribution of both the total charges per case and the total
charges per day for each MS-DRG.
Effective October 1, 2008, because hospital inpatient
claims include a POA indicator field for each diagnosis present on the
claim, only for purposes of relative weight-setting, the POA indicator
field was reset to ``Y'' for ``Yes'' for all claims that otherwise have
an ``N'' (No) or a ``U'' (documentation insufficient to determine if
the condition was present at the time of inpatient admission) in the
POA field.
Under current payment policy, the presence of specific HAC codes,
as indicated by the POA field values, can generate a lower payment for
the claim. Specifically, if the particular condition is present on
admission (that is, a ``Y'' indicator is associated with the diagnosis
on the claim), it is not a HAC, and the hospital is paid for the higher
severity (and, therefore, the higher weighted MS-DRG). If the
particular condition is not present on admission (that is, an ``N''
indicator is associated with the diagnosis on the claim) and there are
no other complicating conditions, the DRG GROUPER assigns the claim to
a lower severity (and, therefore, the lower weighted MS-DRG) as a
penalty for allowing a Medicare inpatient to contract a HAC. While the
POA reporting meets policy goals of encouraging quality care and
generates program savings, it presents an issue for the relative
weight-setting process. Because cases identified as HACs are likely to
be more complex than similar cases that are not identified as HACs, the
charges associated with HAC cases are likely to be higher as well.
Therefore, if the higher charges of these HAC claims are grouped into
lower severity MS-DRGs prior to the relative weight-setting process,
the relative weights of these particular MS-DRGs would become
artificially inflated, potentially skewing the relative weights. In
addition, we want to protect the integrity of the budget neutrality
process by ensuring that, in estimating payments, no increase to the
standardized amount occurs as a result of lower overall payments in a
previous year that stem from using weights and case-mix that are based
on lower severity MS-DRG assignments. If this would occur, the
anticipated cost savings from the HAC policy would be lost.
To avoid these problems, we reset the POA indicator field to ``Y''
only for relative weight-setting purposes for all claims that otherwise
have an ``N'' or a ``U'' in the POA field. This resetting ``forced''
the more costly HAC claims into the higher severity MS-DRGs as
appropriate, and the relative weights calculated for each MS-DRG more
closely reflect the true costs of those cases.
In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013
and subsequent fiscal years, we finalized a policy to treat hospitals
that participate in the Bundled Payments for Care Improvement (BPCI)
initiative the same as prior fiscal years for the IPPS payment modeling
and ratesetting process without regard to hospitals' participation
within these bundled payment models (77 FR 53341 through 53343).
Specifically, because acute care hospitals participating in the BPCI
Initiative still receive IPPS payments under section 1886(d) of the
Act, we include all applicable data from these subsection (d) hospitals
in our IPPS payment modeling and ratesetting calculations as if the
hospitals were not participating in those models under the BPCI
initiative. We refer readers to the FY 2013 IPPS/LTCH PPS final rule
for a complete discussion on our final policy for the treatment of
hospitals participating in the BPCI initiative in our ratesetting
process. For additional information on the BPCI initiative, we refer
readers to the CMS' Center for Medicare and Medicaid Innovation's
website at https://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 2022, and consistent with how we have treated hospitals
that participated in the BPCI Initiative, for FY 2023, 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
[[Page 28199]]
hospitals are still receiving IPPS payments under section 1886(d) of
the Act. Consistent with the FY 2022 IPPS/LTCH PPS final rule, we are
also proposing 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 proposed national average CCRs
developed from the FY 2020 cost report data, consistent with our
proposed FY 2023 ratesetting discussed in section II.A.4. of the
Addendum of this proposed rule.
The 19 cost centers that we used in the proposed 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 proposed rule and available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The
supplemental data file shows the lines on the cost report and the
corresponding revenue codes that we used to create the proposed 19
national cost center CCRs. If we receive comments about the groupings
in this supplemental data file, we may consider these comments as we
finalize our policy.
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 2023 proposed rule, this
calculation was applied to address non-monotonicity for cases that
grouped to MS-DRG 504 and MS-DRG 505, as well as MS-DRG 793 and MS-DRG
794. In the supplemental file titled AOR/BOR File, we include
statistics for the affected MS-DRGs both separately and with cases
combined.
We are inviting public comments on our proposals related to
recalibration of the proposed FY 2023 relative weights and the changes
in relative weights from FY 2022.
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. Effective for FY 2022, we revised
MS-DRG 018 to include cases that report the procedure codes for CAR T-
cell and non-CAR T-cell therapies and other immunotherapies (86 FR
44798 through 448106). We refer the reader to section II.D.17. of this
proposed rule for discussion of the agenda items for the March 8-9,
2022 ICD-10 Coordination and Maintenance Committee meeting relating to
new procedure codes to describe the administration of a CAR T-cell or
another type of gene or cellular therapy product, as well as our
established process for determining the MS-DRG assignment for codes
approved at the March meeting.
For MS-DRG 018, we include a modification to our existing relative
weight methodology to ensure that the relative weight for MS-DRG 018
appropriately reflects the relative resources required for providing
CAR T-cell and non-CAR T-cell therapies and other immunotherapies
outside of a clinical trial, while still accounting for the clinical
trial cases in the overall average cost for all MS-DRGs. For cases that
group to MS-DRG 018, we do not include claims determined to be clinical
trial claims that group to MS-DRG 018 when calculating the average cost
for 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,
non-CAR T-cell or other immunotherapy product is purchased in the usual
manner, but the case involves a clinical trial of a different product,
we include the claim when calculating the average cost for MS-DRG 018
to the extent such claims can be identified in the historical data, and
(b) when there is expanded access use of the CAR T-cell, non-CAR T-cell
or other immunotherapy product, 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
calculate an adjustment to account for the CAR T-cell, non-CAR T-cell
and other immunotherapy cases determined to be clinical trial cases, as
described later in this proposed rule and include revenue center 891 in
our calculation of standardized drug charges for MS-DRG 018. We refer
the reader to the FY 2021 IPPS/LTCH PPS final rule for further
discussion of our modifications to the relative weight calculation for
MS-DRG 018.
We are proposing to continue to use the same process to identify
clinical trial claims in the FY 2021 MedPAR for purposes of calculating
the FY 2023 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 FY 2021 MedPAR data used for this proposed
rule. (As previously noted, effective beginning FY 2022, we revised MS-
DRG 018 to include cases that report the procedure codes for CAR T-cell
and non-CAR T-cell therapies and other immunotherapies (86 FR 44798
through 448106).) Using the same methodology from the FY 2021 IPPS/LTCH
PPS final rule, we are proposing 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:
Calculate the average cost for cases to be assigned to MS-
DRG 018 that contain ICD-10-CM diagnosis code Z00.6 or contain
standardized drug charges of less than $373,000.
Calculate the average cost for all other cases to be
assigned to MS-DRG 018
Calculate an adjustor by dividing the average cost
calculated in step 1 by the average cost calculated in step 2.
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)
[[Page 28200]]
When the CAR T-cell, non-CAR T-cell or other immunotherapy 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 2021
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.
Applying this previously finalized methodology, based on the
December 2021 update of the FY 2021 MedPAR file used for this proposed
rule, we estimated that the average costs of cases assigned to MS-DRG
018 that are identified as clinical trial cases ($61,356) were 20
percent of the average costs of the cases assigned to MS-DRG 018 that
are identified as non-clinical trial cases ($299,460). Accordingly, as
we did for FY 2022, we are proposing to adjust the transfer-adjusted
case count for MS-DRG 018 by applying the proposed adjustor of .20 to
the applicable clinical trial and expanded access use immunotherapy
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 this proposed rule, each
case identified as an applicable clinical trial or expanded access use
immunotherapy case was adjusted by .20. As we did for FY 2022, we are
applying this same adjustor for the applicable cases that group to MS-
DRG 018 for purposes of budget neutrality and outlier simulations. We
are also proposing to update the value of the adjustor based on more
recent data for the final rule.
c. Proposed Averaging of Relative Weights for FY 2023
In section I.F. of this proposed rule, we discuss our proposal to
use the FY 2021 MedPAR data for purposes of FY 2023 IPPS ratesetting,
with certain proposed modifications to our usual methodologies,
including a proposed averaging approach for calculating the FY 2023
relative weights. As discussed, we observed that COVID-19 cases were
impacting the relative weights as calculated using the FY 2021 claims
data for a few COVID-19-related MS-DRGs. For example, for MS-DRG 870
(Septicemia or Severe Sepsis with MV >96 hours), the relative weight
calculated using the FY 2021 MedPAR data was approximately 9 percent
higher than the relative weight calculated excluding the COVID-19 cases
in the FY 2021 data. As also discussed in that section, we believe it
is reasonable to assume that there will be fewer COVID-19
hospitalizations among Medicare beneficiaries in FY 2023 than there
were in FY 2021. However, we cannot know the precise number of COVID-19
hospitalizations among Medicare beneficiaries in FY 2023. To account
for the anticipated decline in COVID-19 hospitalizations of Medicare
beneficiaries as compared to FY 2021, we are proposing to determine the
MS-DRG relative weights for FY 2023 by averaging the relative weights
as calculated with and without COVID-19 cases in the FY 2021 data, as
described in greater detail below. Given the uncertainty in the number
of COVID-19 hospitalizations in FY 2023, we are proposing to use 50
percent of the relative weights calculated using all applicable cases
in the FY 2021 claims data and 50 percent of the relative weights
calculated without the COVID-19 cases in the FY 2021 claims data. We
believe this proposed approach would appropriately reduce, but not
remove entirely, the effect of COVID-19 cases on the relative weight
calculations, consistent with our expectation that Medicare inpatient
hospitalizations for COVID-19 will continue in FY 2023 at a lower level
as compared to FY 2021. By averaging the relative weights in this
manner, we believe the result would reflect a reasonable estimation of
the case mix for FY 2023 based on the information available at this
time, as discussed in section I.F. of the preamble to this proposed
rule, and more accurately estimate the relative resource use for the
cases treated in FY 2023 than if we were to calculate the proposed
relative weights based on 100% of the relative weights as calculated
for all applicable cases in the FY 2021 data. For this proposed rule,
our proposed calculation is as follows:
Step 1: Calculate a set of relative weights using all
applicable cases in the December 2021 update of the FY 2021 MedPAR
data, using the methodology as described earlier in this section, and
then applying a normalization adjustment factor as described later in
this section.
Step 2: Calculate a set of relative weights using the
December 2021 update of the FY 2021 MedPAR data excluding cases with a
principal or secondary diagnosis of COVID-19 (ICD-10-CM diagnosis code
U07.1), and otherwise using the methodology as described earlier in
this section, and then applying a normalization adjustment factor as
described later in this section.
Step 3: Average the results of step 1 and step 2 to
calculate a set of averaged relative weights, geometric mean length of
stays, and arithmetic mean length of stays.
Step 4: Calculate the proposed FY 2023 relative weights by
applying an additional normalization factor to these averaged relative
weights. This additional normalization factor is necessary to ensure
that the average case weight as calculated in step 3 of this proposed
averaging methodology for recalibration of the FY 2023 relative weights
is equal to the average case weight before recalibration. We note that
this factor is very close to 1 and is described later in this section.
We note that in Step 5 of this proposed calculation, we apply the
proposed 10 percent cap to the relative weights for those MS-DRGs for
which the relative weight as calculated in Step 4 would otherwise have
declined by more than 10 percent from the FY 2022 relative weight, as
discussed more fully later in this section. We also note that we intend
to update this calculation for the final rule using the March 2022
update of the FY 2021 MedPAR file.
The proposed relative weights, geometric mean length of stay, and
average length of stay as calculated using this proposed methodology
are set forth in Table 5 associated with this proposed rule, which is
available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. We are also making available
the relative weights, geometric mean length of stay, and average length
of stay as calculated in steps 1 and 2 of this proposed methodology on
our website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS.
As discussed in section I.O. of Appendix A of this proposed rule,
as an alternative to our proposed approach, we also considered
calculating the FY 2023 MS-DRG relative weights based on all applicable
cases in the FY 2021 MedPAR data, without the averaging approach we are
proposing to account for COVID-19 cases. We note, as an example, that
the proposed relative weight for MS-DRG 871 (Septicemia Or Severe
Sepsis Without MV >96 Hours with MCC) as calculated using our
[[Page 28201]]
proposed averaging of the relative weights as calculated with and
without the COVID-19 cases in the FY 2021 data is 1.9549, while the
relative weight as calculated without this proposed averaging would be
1.9954. We are making available supplemental information, including the
relative weights, average length of stay, and geometric mean length of
stay, calculated both with and without COVID-19 cases as noted
previously. We refer the reader to section I.O. of Appendix A of this
proposed rule for a discussion of the files that we are making
available with regard to our alternative approach.
d. Proposed Cap for Relative Weight Reductions
In the FY 2018 IPPS/LTCH PPS final rule, we summarized comments we
had received requesting a transition period for substantial reductions
in relative weights in order to facilitate payment stability.
Specifically, some commenters asked CMS to establish a cap on the
decline in a relative weight from FY 2017 to FY 2018, or a phase-in or
multi-year transition period in cases of substantial fluctuation of
payment rates (82 FR 38103).
After consideration of these comments, and for the reasons
discussed in the FY 2018 final rule, we adopted a temporary one-time
measure for FY 2018 for MS-DRGs where the relative weight would have
declined by more than 20 percent from the FY 2017 relative weight,
consistent with our general authority to assign and update appropriate
weighting factors under sections 1886(d)(4)(B) and (C) of the Act (82
FR 38103). Specifically, for these MS-DRGs, the relative weight for FY
2018 was set at 80 percent of the FY 2017 relative weight. In the FY
2019 IPPS/LTCH PPS final rule, in response to similar comments, we
adopted a temporary one-time measure for FY 2019 for an MS-DRG where
the FY 2018 relative weight declined by 20 percent from the FY 2017
relative weight and the FY 2019 relative weight would have declined by
20 percent or more from the FY 2018 relative weight (83 FR 41273).
Specifically, for an MS-DRG meeting this criterion, we set the FY 2019
relative weight equal to the FY 2018 relative weight. In the FY 2020
IPPS/LTCH PPS final rule, in response to similar comments, we adopted a
temporary one-time measure for FY 2020 for an MS-DRG where the FY 2018
relative weight declined by 20 percent from the FY 2017 relative weight
and the FY 2020 relative weight would have declined by 20 percent or
more from the FY 2019 relative weight, which was maintained at the FY
2018 relative weight (84 FR 42167). Specifically, for an MS-DRG meeting
this criterion, we set the FY 2020 relative weight equal to the FY 2019
relative weight, which was in turn set equal to the FY 2018 relative
weight.
In the FY 2021 IPPS/LTCH PPS proposed rule, we noted the one-time
measure adopted for FY 2020 and sought comment on whether we should
consider a similar policy for FY 2021, or an alternative approach such
as averaging the FY 2020 relative weight and the otherwise applicable
FY 2021 relative weight for MS-DRG 215, which was the only MS-DRG
impacted by the FY 2020 policy setting the FY 2020 relative weight
equal to the FY 2019 relative weight. Commenters generally supported
either setting the FY 2021 weight for MS-DRG 215 equal to the FY 2020
relative weight or an averaging approach. Some commenters requested
that CMS consider such an approach when the relative weight for an MS-
DRG is drastically reduced in a given year, particularly when it
follows a significant decline in prior years. After consideration of
comments received, and for the reasons discussed in the FY 2021 final
rule, we set the FY 2021 relative weight for MS-DRG 215 equal to the
average of the FY 2020 relative weight and the otherwise applicable FY
2021 weight. With regard to the concerns raised about other MS-DRGs
with significant reductions relative to FY 2020, we noted that these
other MS-DRGs were low volume in our claims data, and therefore
typically experience a greater degree of year-to-year variation. We
acknowledged the longstanding concerns related to low volume MS-DRGs
and stated that we would take into consideration the unique issues
relating to such MS-DRGs and the stability of their weights for future
rulemaking.
We have continued to consider the comments we received in response
to prior rulemaking recommending that CMS limit significant declines in
the relative weights for the MS-DRGs more broadly, including by
establishing a cap on the degree to which the relative weight for an
MS-DRG may decline from one fiscal year to the next. For prior fiscal
years, as previously discussed, we have adopted limited, temporary
measures to address potentially substantial declines in the relative
weights in certain outlier circumstances to mitigate the impacts of
such declines. However, we have also acknowledged commenters' concerns
related to significant reductions in the weights for other MS-DRGs, in
particular low volume MS-DRGs. For these low volume MS-DRGs,
fluctuations in the volume or mix of cases and/or the presence of a few
high cost or low cost cases can have a disproportionate impact on the
calculated relative weight, thus resulting in greater year-to-year
variation in the relative weights for these MS-DRGs. This variation may
reduce the predictability and stability of an individual hospital's
Medicare payments from year-to-year. We also recognize that significant
declines in the relative weights may occur for higher-volume MS-DRGs,
with such fluctuations likewise affecting the predictability and
stability of hospital payments.
In light of these concerns, we have further considered requests
made by commenters that we address year-to-year fluctuations in
relative weights, particularly for low volume MS-DRGs, and to mitigate
the financial impacts of significant fluctuations. In consideration of
the concerns that commenters have raised about year-to-year
fluctuations in relative weights and the financial impacts of
significant fluctuations, we believe it would be appropriate to limit
such fluctuations by applying a cap on reductions in the relative
weight for an MS-DRG for a given fiscal year. Therefore, consistent
with our statutory authority under section 1886(d)(4)(B) and (C) of the
Act to assign and update appropriate weighting factors, we are
proposing a permanent 10-percent cap on the reduction in a MS-DRG's
relative weight in a given fiscal year, beginning in FY 2023. This
proposal is consistent with our general authority to assign and update
appropriate weighting factors as part of our annual reclassification of
the MS-DRGs and recalibration of the relative weights under sections
1886(d)(4)(B) and (C)(i) of the Act, as well as the requirements of
section 1886(d)(4)(C)(iii) of the Act, which specifies that the annual
DRG reclassification and recalibration of the relative weights be made
in a manner that ensures that aggregate payments to hospitals are not
affected. In addition, we have authority to implement this proposed cap
and the associated budget neutrality adjustment under our special
exceptions and adjustments authority at section 1886(d)(5)(I)(i) of the
Act, which similarly gives the Secretary broad authority to provide by
regulation for such other exceptions and adjustments to the payment
amounts under section 1886(d) of the Act as the Secretary deems
appropriate. As discussed, we believe this cap on declines in the
relative weights would be appropriate in order to promote
predictability and
[[Page 28202]]
stability in hospital payments and to mitigate the financial impacts of
significant fluctuations in the weights. That is, by smoothing year-to-
year changes in the MS-DRG relative weights, this proposed policy would
provide greater predictability to hospitals, allowing time to adjust to
significant changes to relative weights. Moreover, consistent with the
budget neutrality requirement for annual updates to the relative
weights, including our implementation of similar caps on significant
declines in the relative weight for prior fiscal years, we believe that
application of this proposed 10-percent cap on relative weight
reductions should not increase estimated aggregate Medicare payments
beyond the payments that would be made had we never applied this cap.
Accordingly, we are proposing to apply a budget neutrality adjustment
to the standardized amount for all hospitals to ensure that application
of the proposed 10-percent cap does not result in an increase or
decrease of estimated aggregate payments. For a further discussion of
the proposed budget neutrality adjustment, we refer readers to the
Addendum of this proposed rule.
Under this proposal, in cases where the relative weight for a MS-
DRG would decrease by more than 10 percent in a given fiscal year, we
propose to limit the reduction to 10 percent for that fiscal year. For
example, if the relative weight for an MS-DRG in FY 2022 is 1.100 and
the relative weight for FY 2023 would otherwise be 0.9350, which would
represent a decrease of 15 percent from FY 2022, the reduction would be
limited to 10 percent, such that the proposed relative weight for FY
2023 for MS-DRG XYZ would be 0.9900 (that is, 0.90 x FY 2022 weight of
1.100). The proposed relative weights for FY 2023 as set forth in Table
5 associated with this proposed rule and available on the CMS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the application of this proposed cap.
As previously summarized, in the past, we have adopted a temporary
cap of 20 percent on the decline in an MS-DRG's relative weight to
address certain outlier circumstances. However, as also previously
discussed, we recognize that hospitals may benefit from the phase-in of
smaller declines in the relative weight that may nonetheless contribute
to less stability and predictability in hospital payment rates.
Accordingly, for purposes of this proposed permanent cap, we considered
that a higher cap, such as the twenty percent cap that we have applied
previously (see, for example, 82 FR 38103), would limit declines in the
relative weights for fewer MS-DRGs (5 MS-DRGs in our analysis of FY
2021 claims), while a lower cap, such as a five percent cap, would
limit declines in the relative weights for more MS-DRGs (89 MS-DRGs in
our analysis of FY 2021 claims), but with a larger associated budget
neutrality adjustment to the standardized amount. On balance, we
believe that a 10-percent cap would mitigate financial impacts
resulting from significant fluctuations in the relative weights,
particularly for low volume MS-DRGs, without the larger budget
neutrality adjustment associated with a smaller cap. We note that this
proposed policy would limit declines in the relative weight for 27 MS-
DRGs, based on the FY 2021 claims data used for this proposed rule.
We note that this proposed 10-percent cap on reductions to a MS-
DRG's relative weight would apply only to a given MS-DRG with its
current MS-DRG number. In cases where CMS creates new MS-DRGs or
modifies the MS-DRGs as part of its annual reclassifications resulting
in renumbering of one or more MS-DRGs, we are proposing that this limit
on the reduction in the relative weight would not apply to any MS-DRGs
affected by the renumbering (that is, the proposed 10 percent cap would
not apply to the relative weight for any new or renumbered MS-DRGs for
the fiscal year). We propose to modify the regulations at Sec.
412.60(b) to reflect this proposed permanent cap on relative weight
reductions. We are seeking comments on our proposal to apply a 10-
percent cap on decreases in a MS-DRG relative weight from one fiscal
year to the next.
3. Development of Proposed National Average CCRs
We developed the proposed national average CCRs as follows:
Using the FY 2020 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 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 proposed relative weight.
As discussed earlier in this section, we are proposing to (a) use
50 percent of the relative weights calculated using all cases in the FY
2021 MedPAR data and 50 percent of the relative weights calculated
without COVID-19 cases in the FY 2021 MedPAR data to calculate the
relative weights for FY 2023 and (b) apply a permanent 10-percent cap
on the reduction in a MS-DRG's relative weight in a given fiscal year,
beginning in FY 2023.
In developing the proposed relative weights consistent with these
proposals, we first created a set of relative weights using all
applicable cases in the December 2021 update of the FY 2021 MedPAR
data, using the methodology as described earlier in this section (Step
1). These relative weights were then normalized by an adjustment factor
of 1.947540 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.
Next, we created a set of relative weights using the December 2021
update of the FY 2021 MedPAR data
[[Page 28203]]
excluding cases with a principal or secondary diagnosis of COVID-19
(ICD-10-CM diagnosis code U07.1), and otherwise using the methodology
as described earlier in this section (Step 2). These relative weights
were then normalized by an adjustment factor of 1.915575.
We then averaged the results of Step 1 and Step 2 (Step 3), and
normalized these relative weights by applying an adjustment factor of
1.000308 (Step 4). This normalization adjustment is intended to ensure
that this proposed averaging methodology for recalibration of the FY
2023 relative weights neither increases nor decreases total payments
under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.
Finally, we applied the proposed 10 percent cap to the relative
weights for those MS-DRGs for which the relative weight as calculated
in Step 4 would otherwise have declined by more than 10 percent from
the FY 2022 relative weight (Step 5). Specifically, for those MS-DRGs
for which the relative weight as calculated in Step 4 declined by more
than 10 percent from the FY 2022 relative weight, we set the proposed
FY 2023 relative weight equal to 90 percent of the FY 2022 relative
weight. The proposed relative weights for FY 2023 as set forth in Table
5 associated with this proposed rule and available on the CMS website
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS reflect the application of this proposed cap. We are
also making available a supplemental file setting forth the relative
weights as calculated with all cases (Step 1), excluding cases with a
principal or secondary diagnosis of COVID-19 (Step 2), following
application of the normalization factor and prior to the application of
this proposed cap (Step 4), and with the application of this proposed
cap (Step 5) along with the other supplemental files for this proposed
rule, on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS. The proposed 19 national average
CCRs for FY 2023 are as follows:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.074
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 are proposing to use that same case
threshold in recalibrating the proposed MS-DRG relative weights for FY
2023. Using data from the FY 2021 MedPAR file, there were 7 MS-DRGs
that contain fewer than 10 cases. For FY 2023, because we do not have
sufficient MedPAR data to set accurate and stable cost relative weights
for these low-volume MS-DRGs, we are proposing to compute relative
weights for the low-volume MS-DRGs by adjusting their final FY 2022
relative weights by the percentage change in the average weight of the
cases in other MS-DRGs from FY 2022 to FY 2023. The crosswalk table is
as follows.
[[Page 28204]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.075
BILLING CODE 4120-01-C
F. Add-On Payments for New Services and Technologies for FY 2023
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. The regulations at
42 CFR 412.87 implement these provisions and Sec. 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 further discussion on the
new technology add-on payment criteria, we refer readers to the FY 2012
IPPS/LTCH PPS final rule (76 FR 51572 through 51574), the 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 whether: (1) A product uses the same or a similar
mechanism of action to achieve a therapeutic outcome; (2) a product is
assigned to the same or a different MS-DRG; and (3) 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
[[Page 28205]]
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 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 2023
are presented in a data file that is available, along with the other
data files associated with the FY 2022 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 2024 are
presented in a data file that is available on the CMS website, along
with the other data files associated with the FY 2023 proposed rule, by
clicking on the FY 2023 IPPS proposed rule home page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.
In the FY 2022 IPPS/LTCH PPS final rule, we finalized 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. Consistent with that final policy, we finalized our
proposal to use the FY 2019 claims data to set the thresholds for
applications for new technology add-on payments for FY 2023. We note
that, for the reasons discussed in section I.F. of the preamble of this
proposed rule, we are proposing to use the FY 2021 MedPAR claims data
for FY 2023 ratesetting, with certain proposed modifications to our
relative weight setting and outlier methodologies. Consistent with this
proposal, for the FY 2024 proposed threshold values, we are proposing
to use the FY 2021 claims data to set the proposed thresholds for
applications for new technology add-on payments for FY 2024. In
addition, as discussed in section III.E.1.c. of this proposed rule, we
are proposing to use an averaging approach for calculating the FY 2023
relative weights, to account for the anticipated decline in COVID-19
hospitalizations of Medicare beneficiaries as compared to FY 2021.
Specifically, we are proposing to average the relative weights as
calculated with and without COVID-19 cases in the FY 2021 data to
determine the MS-DRG relative weights for FY 2023. Certain steps of
calculating the thresholds for applications for new technology add-on
payments use the same charge data that is used to calculate the MS-DRG
weights. As a result, different average charges per MS-DRG are
calculated using the charge data for the relative weights as calculated
with and without COVID-19 cases. Therefore, for purposes of calculating
the FY 2024 thresholds, we are also proposing to average the data in
the steps of the calculation that use charge data from the calculation
of the MS-DRG weights. In addition, as discussed in section III.E.1.c.
of this proposed rule, we are also considering, as an alternative to
our proposal, calculating the FY 2023 MS-DRG relative weights without
this proposed averaging approach to account for COVID-19 cases. In
connection with this alternative approach, we are making available the
threshold values as calculated without this averaged data on the ``FY
2023 Proposed Rule Homepage'' at https://www.cms.gov/medicare/medicare-
fee-for-service-payment/acuteinpatientpps, as well as other
supplemental files as discussed further in section I.O. of Appendix A
of this proposed rule.
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 further
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,
[[Page 28206]]
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 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 do not question FDA's regulatory
responsibility for decisions related to marketing authorization (for
example, approval, clearance, etc.), we do not rely upon FDA criteria
in our evaluation of substantial clinical improvement for purposes of
determining what drugs, devices, or technologies qualify for new
technology add-on payments under Medicare. This criterion does not
depend on the standard of safety and effectiveness on which FDA relies
but on a demonstration of substantial clinical improvement in the
Medicare population.
b. 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 FDA as a Qualified Infectious Disease Product (QIDP),
and, beginning with FY 2022, a drug that is approved by 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 further 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 reviews the application based on the
information provided by the applicant only under the alternative
pathway specified by the applicant at the time of application
submission. 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 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. 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 requirements of Sec. 412.87(c). We note
that 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 further 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 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
[[Page 28207]]
treatment of Medicare beneficiaries. 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 requirements of Sec. 412.87(d).
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 further discussion on this policy. We note, in the
FY 2021 IPPS/LTCH PPS final rule (85 FR 58737 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.
c. 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
further 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.
d. 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 regulation 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/LTCH PPS 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/LTCH PPS 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
[[Page 28208]]
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.
e. New Technology Liaisons
Many stakeholders (including device/biologic/drug developers or
manufacturers, industry consultants, others) engage CMS for coverage,
coding, and payment questions or concerns. In order to streamline
stakeholder engagement by centralizing the different innovation
pathways within CMS including new technology add-on payments, CMS has
established a team of new technology liaisons that can serve as an
initial resource for stakeholders. This team is available to assist
with all of the following:
Help to point stakeholders to or provide information and
resources where possible regarding process, requirements, and
timelines.
Coordinate and facilitate opportunities for stakeholders
to engage with various CMS components.
Serve as a primary point of contact for stakeholders and
provide updates on developments where possible or appropriate.
We received many questions from stakeholders interested in pursuing
new technology add-on payments who may not be entirely familiar with
working with CMS. While we encourage stakeholders to first review our
resources available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech, we know that there may be
additional questions about the application process. Stakeholders with
further questions about Medicare's coverage, coding, and payment
processes, and about how they can navigate these processes, whether for
new technology add-on payments or otherwise, can contact the new
technology liaison team at [email protected].
f. Application Information for New Medical Services or Technologies
Applicants for add-on payments for new medical services or
technologies for FY 2024 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. CMS will review the application based on
the information provided by the applicant under the pathway specified
by the applicant at the time of application submission. 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 2024, 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 Paper
Reduction Act (PRA) and approved under OMB control number 0938-1347,
and has an expiration date of 11/30/2023.
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, with an
expiration date of November 30, 2023. 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. The process for evaluating new medical service
and technology applications requires the Secretary to do all of the
following:
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.
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 2023 prior
to publication of the FY 2023 IPPS/LTCH PPS proposed rule, we published
a notice in the Federal Register on September 24, 2021 (86 FR 53056),
and held a virtual town hall meeting on December 14, 2021. 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 2023 new medical
service and technology add-on payment applications before the
publication of the FY 2023 IPPS/LTCH IPPS proposed rule.
Approximately 378 individuals registered to attend the virtual town
hall meeting. We posted the recordings of the 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 27, 2021,
deadline, in our evaluation of the new technology add-on payment
applications for FY 2023 in the development of this FY 2023 IPPS/
[[Page 28209]]
LTCH PPS proposed rule. In response to the published notice and the
December 14, 2021, New Technology Town Hall meeting, we received
written comments regarding the applications for FY 2023 new technology
add on payments. As explained earlier and in the Federal Register
notice announcing the New Technology Town Hall meeting (86 FR 53056
through 53059), 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 2023. Therefore, we
are not summarizing those written comments in this proposed rule that
are unrelated to the substantial clinical improvement criterion. In
section II.F.6. of the preamble of this proposed rule, we are
summarizing comments regarding individual applications, or, if
applicable, indicating 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.
As discussed in more detail in section II.F.8. of the preamble of
this proposed rule, we are proposing to use NDCs instead of ICD-10-PCS
Section ``X'' codes to identify cases involving the use of therapeutic
agents approved for new technology add-on payments beginning with a
transitional period in FY 2023. We refer the reader to section II.F.8.
of the preamble of this proposed rule for a full discussion of this
proposal.
4. New COVID-19 Treatments Add-On Payment (NCTAP)
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 71157
through 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.
In the FY 2022 IPPS/LTCH PPS final rule, we finalized a change to
our policy to extend NCTAP through the end of the FY in which the PHE
ends for all eligible products 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 also finalized that, for a
drug or biological product eligible for NCTAP that is also approved for
new technology add-on payments, 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 (85 FR 45162).
Further information about NCTAP, including updates and a list of
currently eligible drugs and biologicals, is available on the CMS
website at https://www.cms.gov/medicare/covid-19/new-covid-19-treatments-add-payment-nctap.
5. Proposed FY 2023 Status of Technologies Receiving New Technology
Add-On Payments for FY 2022
In this section of the proposed rule, we discuss the proposed FY
2023 status of 37 technologies approved for FY 2022 new technology add-
on payments, including 2 technologies approved for 2 separate add-on
payments for different indications (RECARBRIOTM and
FETROJA[supreg]), 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 note that, as
discussed later in this section, we provided a 1-year extension of new
technology add-on payments for FY 2022 for 13 technologies for which
the new technology add-on payment would otherwise be discontinued
beginning in FY 2022 using our authority under section 1886(d)(5)(I) of
the Act.
Additionally, we note that we conditionally approved CONTEPO for FY
2022 new technology add-on payments under the alternative pathway for
certain antimicrobial products (86 FR 45155), subject to the technology
receiving FDA marketing authorization by July 1, 2022. As of the time
of the development of this proposed rule, CONTEPO has not yet received
FDA approval. If CONTEPO 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
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 CONTEPO for FY 2022. If CONTEPO receives FDA marketing
authorization prior to July 1, 2022, we are proposing to continue
making new technology add-on payments for CONTEPO for FY 2023. If
CONTEPO does not receive FDA marketing authorization by July 1, 2022,
then it would not be eligible for new technology add-on payments for FY
2022, and therefore would not be eligible for the continuation of new
technology add-on payments for FY 2023. We further note that the
applicant for CONTEPO did not submit an application for FY 2023 new
technology add on payments and, therefore, the technology also would
not be eligible for approval or conditional approval for
[[Page 28210]]
new technology add-on payments for FY 2023.
a. Proposed FY 2023 Status of Technologies Approved for FY 2022 New
Technology Add-On Payments
As noted previously, we used our authority under section
1886(d)(5)(I) of the Act to allow a 1-year extension of new technology
add-on payments for FY 2022 for 13 technologies for which the add-on
payments would otherwise be discontinued beginning in FY 2022 because
the technologies would no longer be considered ``new'' for FY 2022. In
this section, we discuss the proposed FY 2023 status for the remaining
24 technologies approved for FY 2022 new technology add-on payments.
Specifically, we present our proposals to continue the new technology
add-on payment for FY 2023 for those technologies that were approved
for the new technology add-on payment for FY 2022 and which would still
be considered ``new'' for purposes of new technology add-on payments
for FY 2023. We also present our proposals to discontinue new
technology add-on payment for FY 2023 for those technologies that were
approved for the new technology add-on payment for FY 2022 and which
would no longer be considered ``new'' for purposes of new technology
add-on payments for FY 2023.
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).
The following table lists the technologies for which we are
proposing to discontinue making new technology add-on payments for FY
2023 because they are no longer ``new'' for purposes of new technology
add-on payments. This table also presents the newness start date, new
technology add-on payment start date, the 3-year anniversary date of
the product's entry onto the U.S. market, relevant final rule citations
from prior fiscal years, and coding assignments for each technology. 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.
We are inviting public comments on our proposals to discontinue new
technology add-on payments for FY 2023 for the technologies listed in
the Table BBBB-A1.
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Table II.F.-02 lists the technologies for which we are proposing to
continue making new technology add-on payments for FY 2023 because they
are still considered ``new'' for purposes of new technology add-on
payments. This table also presents the newness start date, new
technology add-on payment start date, 3-year anniversary date of the
product's entry onto the U.S. market, relevant final rule citations
from prior
[[Page 28212]]
fiscal years, proposed maximum add-on payment amount, and coding
assignments for each technology. 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.
We note, as discussed in the FY 2022 IPPS/LTCH PPS final rule (86
FR 45104 through 45107), on May 1, 2020, VEKLURY[supreg] (remdesivir)
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. The applicant asserted that
between July 1, 2020 and September 30, 2020, it entered into an
agreement with the U.S. Government to allocate and distribute
commercially-available VEKLURY[supreg] across the country. 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. In the FY 2022 IPPS/LTCH PPS final
rule (86 FR 45107), we determined that VEKLURY[supreg] 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. We stated that
consistent with our longstanding policy, we considered the newness
period for VEKLURY[supreg] to begin on October 22, 2020, when the NDA
for VEKLURY[supreg] was approved by FDA 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. We also discussed
comments solicited regarding the newness period for products available
through an EUA for COVID-19 in section II.F.7. of the FY 2022 IPPS/LTCH
PPS final rule (86 FR 45159 through 45160), including comments we
received regarding the potential variability in cost estimates for
technologies available under an EUA due to government price subsidies
or variable treatment practices in the context of the global pandemic
and comments suggesting that CMS monitor pricing changes for products
available under an EUA once a product receives full marketing
authorization, instead of basing the newness period on data that may
have become available under an EUA, and indicated that we would
consider these comments for future rulemaking.
After further review of the information provided by the applicant,
we believe that additional information related to VEKLURY[supreg]'s
commercial availability is relevant to assessing the start of the
newness period for VEKLURY[supreg]. The applicant stated that once
VEKLURY[supreg] was issued an EUA, from May through June 2020, the
entire existing supply of VEKLURY[supreg] was donated worldwide and
distributed to hospitals free of charge.\26\ The applicant further
stated that the commercial list price of the technology was announced
when it entered into the agreement with the U.S. Government previously
described, in anticipation of the post-donation phase. Under this
agreement, the U.S. Government allocated VEKLURY[supreg] to each
hospital, and the hospitals would then choose to purchase quantities of
VEKLURY[supreg] directly from the applicant's subsidiary who was the
sole distributor.27 28
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\26\ https://stories.gilead.com/articles/an-update-on-covid-19-from-our-chairman-and-ceo.
\27\ Remdesivir for the Commercial Marketplace. https://www.phe.gov/emergency/events/COVID19/investigation-MCM/Pages/factsheet.aspx.
\28\ Department of Health and Human Services, Office of the
Assistant Secretary for Preparedness and Response (ASPR). 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.
---------------------------------------------------------------------------
We continue to believe this issue is complex, particularly as it
relates to VEKLURY[supreg] as a technology that has been available
under both an EUA and an NDA. As discussed in the FY 2022 IPPS/LTCH PPS
final rule (86 FR 45159 through 45160), while an EUA is not marketing
authorization within the meaning of Sec. 412.87(e)(2) for purposes of
eligibility for new technology add-on payments, 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. In the case of VEKLURY[supreg], we believe that
there may be unique considerations in determining the start of the
newness period in light of the donation period, during which the
technology was distributed at no cost. Accordingly, while we continue
to believe that data reflecting the costs of a product that has
received an EUA could become available as soon as the date of EUA
issuance for that product, we believe that with respect to
VEKLURY[supreg], such data may not have become available until after
the end of the donation period, when the technology became commercially
available, on July 1, 2020. For these reasons, after further
consideration, we believe the newness period for VEKLURY[supreg] may
more appropriately begin on July 1, 2020, the date on which the
technology became available for sale under the allocation agreement. We
note that VEKLURY[supreg] would still be considered new for FY 2023
regardless of whether the newness period began on May 1 (the date of
the EUA), July 1 (the date the donation phase ended), October 22 (the
date of the NDA), or some other date in between, as in all cases the
three-year anniversary date would occur after April 1, 2023, and
therefore the product would remain eligible for FY 2023 new technology
add-on payments.
Therefore, as reflected in the table that follows, we are proposing
to continue new technology add-on payments for VEKLURY[supreg] for FY
2023. We invite public comments on this proposal, including the newness
start date for VEKLURY[supreg]. As discussed, while we continue to
believe that data reflecting the costs of a product that has received
an EUA could become available as soon as the date of EUA issuance for
that product, we also recognize that there may be unique considerations
in determining the start of the newness period for a product available
under an EUA. We are continuing to consider the comments as discussed
in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45159) regarding the
newness period for products available through an EUA for COVID-19, and
we welcome additional comments in this proposed rule.
We further note that we are proposing to continue new technology
add-on payments for Caption Guidance for FY 2023, a technology sold on
a subscription basis. We continue 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 are inviting public comments on our proposals to continue new
technology add-on payments for FY 2023 for the technologies listed in
the following table.
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b. Status of Technologies Provided a One-Year Extension of New
Technology Add-On Payments in FY 2022
As stated in the FY 2022 IPPS/LTCH PPS final rule (86 FR 44789),
our goal is always to use the best available data overall for
ratesetting. The best available MedPAR data would typically 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.
In the FY 2022 IPPS/LTCH PPS final rule, for the reasons discussed,
we finalized that we would use FY 2019 MedPAR data instead of FY 2020
MedPAR data to develop the FY 2022 MS-DRG relative weights (86 FR 44789
through 44793). Because we finalized that we would use FY 2019 MedPAR
data instead of FY 2020 MedPAR data for the development of the FY 2022
MS-DRG relative weights, we stated that 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 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 this final policy, we
finalized 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 13 technologies (see table below) for which
the new technology add-on payment would have otherwise been
discontinued beginning with FY 2022. We refer the reader to the FY 2022
IPPS/LTCH PPS final rule (86 FR 44975 through 44979) for a complete
discussion regarding this 1-year extension for FY 2022.
For FY 2023 ratesetting, as we discuss in section I.F. of this
proposed rule, we believe the best available data would be the FY 2021
MedPAR file. As discussed in section I.F. of this proposed rule, for FY
2023, we are proposing to use the FY 2021 MedPAR (the best available
data at the time of this proposed rule) for FY 2023 ratesetting,
including for purposes of developing the FY 2023 relative weights. We
refer the reader to section I.F. of this proposed rule for a complete
discussion regarding our proposal to use the FY 2021 MedPAR for the FY
2023 ratesetting and recalibration of the FY 2023 MS-DRG relative
weights.
As noted previously, 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. For FY 2023, because we are
proposing to use FY 2021 MedPAR data to recalibrate the FY 2023 MS-DRG
relative weights, we believe the costs of the 13 technologies in the
following table, for which the 3-year anniversary date of the product's
entry onto the U.S. market occurs prior to FY 2023 (and therefore are
no longer ``new''), may now be fully reflected in the MedPAR data used
to recalibrate the MS-DRG relative weights for FY 2023. As a result, we
are proposing to discontinue new technology add on payments for these
13 technologies in FY 2023.
We are inviting public comments on our proposals to discontinue new
technology add-on payments for FY 2023 for these 13 technologies listed
in Table BBBB-A3.
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6. FY 2023 Applications for New Technology Add-On Payments (Traditional
Pathway)
We received 18 applications for new technology add-on payments for
FY 2023 under the traditional new technology add-on payment pathway. In
accordance with the regulations under Sec. 412.87(e), applicants for
new technology add-on payments must have received 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. Five applicants
withdrew their applications prior to the issuance of this proposed
rule. We are addressing the remaining 13 applications.
a. CARVYKTITM (ciltacabtagene autoleucel)
Janssen Biotech, Inc., submitted an application for new technology
add-on payments for CARVYKTITM (ciltacabtagene autoleucel)
for FY 2023. CARVYKTITM is an autologous chimeric-antigen
receptor (CAR) T-cell therapy directed against B cell maturation
antigen (BCMA) for the treatment of patients with multiple myeloma. We
note that Janssen Biotech, Inc. previously submitted an application for
new technology add-on payments for CARVYKTITM for FY 2022
under the name ciltacabtagene autoleucel, as summarized in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25233 through 25239), but withdrew
that application prior to the issuance of the FY 2022 IPPS/LTCH PPS
final rule (86 FR 44979).
The applicant stated that ciltacabtagene autoleucel refers to both
JNJ-4528, an investigational BCMA-directed CAR T-cell therapy for
previously treated patients with multiple myeloma, and LCAR-B38M, the
investigational product (ciltacabtagene autoleucel) being studied in
China. Both JNJ-4528 and LCAR-B38M are representative of the same CAR
T-cell therapy, ciltacabtagene autoleucel.
Multiple myeloma is an incurable blood cancer that affects a type
of white blood cell called plasma cells.\29\ Plasma cells, found in
bone marrow, make the antibodies that help the body attack and kill
various pathogens. According to the applicant, when damaged, malignant
plasma cells rapidly spread and replace the normal cells in the bone
marrow.\30\ The applicant asserted the median age of onset is 69 years
old and only 3% of patients are less than 45 at the age of diagnosis;
it was estimated that in 2021 nearly 35,000 people would be diagnosed
and more than 12,000 will die from multiple myeloma in the US.\31\
According to the applicant, multiple myeloma is associated with
substantial morbidity and mortality \32\ and median 5 year survival is
56%.\33\
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\29\ Ho, M., Chen, T., Liu, J. et al. Targeting histone
deacetylase 3 (HDAC3) in the bone marrow microenvironment inhibits
multiple myeloma proliferation by modulating exosomes and IL-6
trans-signaling. Leukemia 34, 196-209 (2020). https://doi.org/10.1038/s41375-019-0493-x.
\30\ Utley A, Lipchick B, Lee KP, Nikiforov MA. Targeting
Multiple Myeloma through the Biology of Long-Lived Plasma Cells.
Cancers (Basel). 2020 Jul 30;12(8):2117.
\31\ Surveillance, Epidemiology, and End Results (SEER) Program.
SEER database 2020; https://seer.cancer.gov/statfacts/html/mulmy.html.
\32\ Cowan AJ, Allen C, Barac A, Basaleem H, Bensenor I, Curado
MP, Foreman K, Gupta R, Harvey J, Hosgood HD, Jakovljevic M, Khader
Y, Linn S, Lad D, Mantovani L, Nong VM, Mokdad A, Naghavi M, Postma
M, Roshandel G, Shackelford K, Sisay M, Nguyen CT, Tran TT, Xuan BT,
Ukwaja KN, Vollset SE, Weiderpass E, Libby EN, Fitzmaurice C. Global
Burden of Multiple Myeloma: A Systematic Analysis for the Global
Burden of Disease Study 2016. JAMA Oncol. 2018 Sep 1;4(9):1221-1227.
\33\ SEER database 2020; https://seer.cancer.gov/statfacts/html/mulmy.html.
---------------------------------------------------------------------------
According to the applicant, introduction of new treatment options
in the last 2 decades has extended the median survival of multiple
myeloma patients. The applicant asserted that the introduction of
proteasome inhibitors (PI) (for example, bortezomib, carfilzomib, and
ixazomib), histone deacetylase inhibitors (for example, panobinostat,
vorinostat), immunomodulatory agents (IMiD) (for example, thalidomide,
lenalidomide, and pomalidomide), monoclonal antibodies (daratumumab and
elotuzumab), and stem cell transplantation, have allowed numerous
therapeutic options for patients with multiple myeloma (Rajkumar 2020).
According to the applicant, the National Comprehensive Cancer Network
(NCCN) recommended treatment regimen for first-line therapy of multiple
myeloma is bortezomib (a PI), lenalidomide (an IMiD) and
dexamethasone.\34\ According to the applicant, the strategy of triplet
therapies for patients with newly diagnosed multiple myeloma, followed
by high-dose chemotherapy and autologous stem-cell transplantation for
eligible patients, and subsequently consolidation and maintenance
therapy, is the current treatment roadmap for patients.\35\ However,
despite these treatments, according to the applicant, most patients
will relapse after first-line treatment and require further treatment
\36\ with only 50% survival of relapsed patients after 5
years.37 38 The applicant stated that as multiple myeloma
progresses, each subsequent line of treatment is associated with
shorter progression free survival (PFS) and decreased rate, depth, and
durability of response and worsening of quality of life.\39\ In
addition, cumulative and long-term toxicities are often associated with
long-term therapy (Ludwig, 2018). Thus, according to the applicant,
there remains an ongoing need for additional therapeutic approaches
when the disease is resistant to available therapy.
---------------------------------------------------------------------------
\34\ National Comprehensive Cancer Network (NCCN) NCCN clinical
practice guidelines in oncology. Multiple Myeloma. Version 2. 2021--
September 9, 2020.
\35\ Branagan A, Lei M, Lou U, Raje N. Current Treatment
Strategies for Multiple Myeloma. JCO Oncol Pract. 2020 Jan;16(1):5-
14.
\36\ Sonneveld P, Broij lA. Treatment of relapsed and refractory
multiple myeloma. Haematologica. 2016;101(4):396-406.
\37\ SEER database 2020; https://seer.cancer.gov/statfacts/html/mulmy.html.
\38\ Global Cancer Observatory. GLOBOCAN database 2018; https://gco.iarc.fr/today/data/factsheets/populations/900-world-fact-sheets.pdf.
\39\ Yong K, Delforge M, Driessen C, Fink L, Flinois A,
Gonzalez-McQuire S, Safaei R, Karlin L, Mateos MV, Raab MS, Schoen
P, Cavo M. Multiple myeloma: patient outcomes in real-world
practice. Br J Haematol. 2016 Oct;175(2):252-264.
---------------------------------------------------------------------------
The applicant asserted that relapsed and refractory (r/r) multiple
myeloma (RRMM) constitutes a specific unmet medical need. According to
the applicant, patients with r/r disease are defined as those who,
having achieved a minor response or better, relapse and then progress
while on therapy, or experience progression within 60 days of their
last therapy.40 41 The applicant stated the introduction of
a new class of agents, CD38-targeting monoclonal antibodies (CD38
MoAbs), daratumumab and isatuximab, have improved options in r/r
patients.\42\ The applicant asserted that given these advances,
guideline recommendations following first-line therapy are varied, with
treatment options including combinations of novel agents with existing
standard of care regimens, and include triplet and quadruplet regimens,
creating a complex treatment landscape.\43\ According to the applicant,
while triplet regimens should be used as the standard therapy for
patients with
[[Page 28219]]
multiple myeloma, elderly or frail patients may be treated with double
regimens.\44\ The applicant further states that for patients with RRMM
who have received at least three prior lines of therapy, including a
PI, an IMiD and an anti-CD38, there does not exist a standard or
consensus for treatment at this time, and often, supportive care/
palliative care is the only option.\45\
---------------------------------------------------------------------------
\40\ Castelli R, Orofino N, Losurdo A, Gualtierotti R, Cugno M.
Choosing treatment options for patients with relapsed/refractory
multiple myeloma. Expert Rev Anticancer Ther. 2014 Feb;14(2):199-
215.
\41\ Nooka AK, Kastritis E, Dimopoulos MA, Lonial S. Treatment
options for relapsed and refractory multiple myeloma. Blood. 2015
May 14;125(20):3085-99.
\42\ Van de Donk NWCJ, Richardson PG, Malavasi F. CD38
antibodies in multiple myeloma: back to the future. Blood. 2018 Jan
4;131(1):13-29.
\43\ National Comprehensive Cancer Network (NCCN) NCCN clinical
practice guidelines in oncology. Multiple Myeloma. Version 2. 2021--
September 9, 2020.
\44\ Ibid.
\45\ Maples KT, Joseph NS, Harvey RD. Current developments in
the combination therapy of relapsed/refractory multiple myeloma.
Expert Rev Anticancer Ther. 2020 Sep 24.
---------------------------------------------------------------------------
According to the applicant, multiple myeloma remains incurable and
most patients eventually relapse, even with the advent of new
treatments.\46\ The applicant further stated that novel, innovative
therapies are needed to improve long-term survival and outcomes. The
applicant asserted that CAR T-cell-based therapies offer potential
advantages over current therapeutic strategies. According to the
applicant, while other therapies require long-term repetitive
administration generally until progression of disease, CAR T-cell
therapy is a single infusion treatment due to live T-cell expansion in
the patient and long-term disease response. The applicant asserted that
CARVYKTITM is an autologous CAR T-cell therapy directed
against B cell maturation antigen (BCMA) for the treatment of patients
with multiple myeloma. The applicant stated that BCMA, a protein that
is highly expressed on myeloma cells \47\ and is a member of the tumor
necrosis factor (TNF) receptor family, plays a central role in
regulating B-cell maturation and differentiation into plasma
cells.48 49 The applicant stated BCMA is selectively
expressed on a subset of B cells (plasma cell neoplasms including
myeloma cells) and is more stably expressed specifically on the B cell
lineage, compared with key plasma cell marker CD138, which is also
expressed on normal fibroblasts and epithelial
cells.50 51 52 According to the applicant, these expression
characteristics make BCMA an ideal therapeutic target for the treatment
of multiple myeloma.53 54 CARVYKTITM, according
to the applicant, is a unique, structurally differentiated BCMA-
targeting chimeric antigen receptor with two distinct BCMA-binding
domains that can identify and eliminate myeloma cells.
---------------------------------------------------------------------------
\46\ Rajkumar SV, Kumar S. Multiple myeloma current treatment
algorithms. Blood Cancer J. 2020 Sep 28;10(9):94.
\47\ Cho SF, Anderson KC, Tai YT. Targeting B Cell Maturation
Antigen (BCMA) in Multiple Myeloma: Potential Uses of BCMA-Based
Immunotherapy. Front Immunol. 2018 Aug 10;9:1821.
\48\ Cho SF, Anderson KC, Tai YT. Targeting B Cell Maturation
Antigen (BCMA) in Multiple Myeloma: Potential Uses of BCMA-Based
Immunotherapy. Front Immunol. 2018 Aug 10;9:1821.
\49\ Tai YT, Anderson KC. Targeting B-cell maturation antigen in
multiple myeloma. Immunotherapy. 2015;7(11):1187-99.
\50\ Cho SF, Anderson KC, Tai YT. Targeting B Cell Maturation
Antigen (BCMA) in Multiple Myeloma: Potential Uses of BCMA-Based
Immunotherapy. Front Immunol. 2018 Aug 10;9:1821.
\51\ Tai YT, Anderson KC. Targeting B-cell maturation antigen in
multiple myeloma. Immunotherapy. 2015;7(11):1187-99.
\52\ Palaiologou M, Delladetsima I, Tiniakos D. CD138 (syndecan-
1) expression in health and disease. Histol Histopathol. 2014
Feb;29(2):177-89.
\53\ Ibid
\54\ Frigyesi I, Adolfsson J, Ali M, Christophersen MK, Johnsson
E, Turesson I, Gullberg U, Hansson M, Nilsson B. Robust isolation of
malignant plasma cells in multiple myeloma. Blood. 2014 Feb
27;123(9):1336-40.
---------------------------------------------------------------------------
The applicant asserted that CAR T-cell technology is a form of
immunotherapy and is a ``living drug'' that utilizes specially altered
T cells, part of the immune system, to fight cancer. According to the
applicant, a sample of the patient's T cells are collected from the
blood, then modified in a laboratory setting to express a CAR.\55\ The
applicant stated chimeric antigen receptors are specifically designed
receptor proteins that are made up of three distinct features: (1) A
target recognition domain (typically derived from a single domain of an
antibody) that sits on the cell's exterior; (2) a co-stimulatory domain
on the cell's interior that boosts activation, enhances survival and
expansion of the modified cells; and (3) an interior stimulatory domain
that supports activation and target killing.\56\ According to the
applicant, the binding domain expressed on the surface of T cells gives
them the new ability to target a specific protein. The applicant
stated, when the target is recognized, the intracellular portions of
the receptor send signals within the T cells to destroy the target
cells. The applicant asserted these engineered CAR T-cells are
reinfused back into the same patient, which enables these specialized T
cells to latch onto the target antigen and abolish the tumor cells.
---------------------------------------------------------------------------
\55\ June CH, Sadelain M. Chimeric Antigen Receptor Therapy. N
Engl J Med. 2018 Jul 5;379(1):64-73.
\56\ Sadelain M. Chimeric antigen receptors: driving immunology
towards synthetic biology. Curr Opin Immunol. 2016 Aug;41:68-76.
---------------------------------------------------------------------------
According to the applicant, CARVYKTITM is a CAR T-cell
immunotherapy designed to recognize myeloma cells and target their
destruction. According to the applicant, CARVYKTITM's CAR T-
cell technology consists of harvesting the patient's own T cells,
programming them to express a chimeric antigen receptor that identifies
BCMA, a protein highly expressed on the surface of malignant multiple
myeloma B-lineage cells, and reinfusing these modified cells back into
the patient where they bind to and eliminate myeloma tumor cells. The
applicant asserted that, unlike the chimeric antigen receptor design of
currently approved CAR T-cell immunotherapies, which are composed of a
single-domain antibody (sdAbs), CARVYKTITM is composed of
two antibody binding domains that allow for high recognition of human
BCMA (CD269) and elimination of BCMA expressing myeloma cells.
According to the applicant, the two distinct BCMA-binding domains
confer avidity and distinguish CARVYKTITM from other BCMA-
targeting products. The applicant stated the BCMA binding domains are
linked to the receptor's interior costimulatory (4-1BB) and signaling
(CD3[zeta]) domains through a transmembrane linker (CD8a). The
applicant asserted these intracellular domains are critical components
for T cell growth and anti-tumor activity \57\ in the body once CAR T-
cells are bound to a BCMA target on multiple myeloma cells.
---------------------------------------------------------------------------
\57\ Maher J, Brentjens RJ, Gunset G, Rivi[egrave]re I, Sadelain
M. Human T-lymphocyte cytotoxicity and proliferation directed by a
single chimeric TCRzeta/CD28 receptor.
---------------------------------------------------------------------------
With respect to the newness criterion, according to the applicant,
CARVYKTITM was granted Breakthrough Therapy designation in
December 2019 for the treatment of adult patients with relapsed or
refractory multiple myeloma, who previously received a proteasome
inhibitor, an immunomodulatory agent, and an anti-CD38 antibody. Per
the applicant, FDA approved the Biologics License Application (BLA) for
CARVYKTITM on February 28, 2022 for the treatment of adult
patients with relapsed or refractory multiple myeloma after four or
more prior lines of therapy, including a proteasome inhibitor, an
immunomodulatory agent, and an anti-CD38 monoclonal antibody. The
applicant stated that procedures involving the administration of
CARVYKTITM can be uniquely identified using the following
ICD-10-PCS procedure codes: XW033A7 (Introduction of ciltacabtagene
autoleucel into peripheral vein, percutaneous approach, new technology
group 7) and XW043A7 (Introduction of ciltacabtagene autoleucel into
central vein, percutaneous approach, new technology group 7). The
applicant also noted that they will submit a request for a Healthcare
Common Procedure Coding
[[Page 28220]]
System (HCPCS) code specific to the administration of
CARVYKTITM once the product is eligible for such a code.
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
CARVYKTITM has a unique mechanism of action because it has
two distinct binding domains that confer avidity to the BCMA antigen, a
4-1BB costimulatory domain and a CD3z signaling domain, whereas other
CAR T-cell products have only one target binding domain. The applicant
asserted that ABECMA[supreg] also targets BCMA, but does so by binding
to a single BCMA domain. In addition to detail provided in the
applicant's FY 2022 application (as discussed in 86 FR 25235 through
25236), the applicant asserted that CARVYKTITM differs
significantly from ABECMA[supreg] and other BCMA-targeting agents,
including Blenrep, because it targets BCMA with two distinct binding
domains. According to the applicant, the distinct BCMA-binding moieties
confer avidity and distinguish CARVYKTITM from other BCMA
CAR T-cell constructs providing a novel mechanism of action.\58\ The
applicant added, the 4-1BB and CD3z domains on the CAR optimize T cell
activation and proliferation.\59\ According to the applicant, non-
clinical pharmacology and toxicology have been used to characterize the
biological activity and mechanism of action of CARVYKTITM
and confirm the on-target specificity to BCMA through (1) in vitro
binding characterization; (2) in vitro co-culture assays to assess CAR
T-cell cytotoxicity and cytokine release; (3) in vivo efficacy studies
in mice with human CAR T- cells; and (4) an in vivo safety study.
According to the applicant, because CARVYKTITM has a novel
mechanism of action with two distinct BCMA-binding domains that confer
binding avidity and unprecedented clinical activity compared with other
novel anti-myeloma treatments in comparable study populations, it is
unlike any existing technology utilized to treat relapsed/refractory
multiple myeloma.
---------------------------------------------------------------------------
\58\ Xu J, Chen LJ, Yang SS, Sun Y, Wu W, Liu YF, Xu J, Zhuang
Y, Zhang W, Weng XQ, Wu J, Wang Y, Wang J, Yan H, Xu WB, Jiang H, Du
J, Ding XY, Li B, Li JM, Fu WJ, Zhu J, Zhu L, Chen Z, Fan XF, Hou J,
Li JY, Mi JQ, Chen SJ. Exploratory trial of a biepitopic CAR T-
targeting B cell maturation antigen in relapsed/refractory multiple
myeloma. Proc Natl Acad Sci U S A. 2019 May 7;116(19):9543-9551.
\59\ Weinkove R, George P, Dasyam N, McLellan AD. Selecting
costimulatory domains for chimeric antigen receptors: functional and
clinical considerations. Clin Transl Immunology. 2019 May
11;8(5):e1049.
---------------------------------------------------------------------------
With regard to whether a product is assigned to the same DRG when
compared to an existing technology, the applicant asserted that because
CMS has suggested that all inpatient hospitalizations involving a CAR
T-cell treatment will be assigned to DRG 018 (Chimeric Antigen Receptor
(CAR) T-Cell and Other Immunotherapies), CARVYKTITM is
expected to be assigned to the same DRG as other multiple myeloma cases
treated with a CAR T-cell therapy. We note that the DRG assignment was
finalized to Pre-MDC MS-DRG 018, effective October 1, 2022 and is
reflected in the V39.1 ICD-10 MS-DRG Grouper effective April 1, 2022
(86 FR 58021).\60\
---------------------------------------------------------------------------
\60\ CMS Manual System, Pub 100-04 Medicare Claims Processing,
Transmittal 11255. February 4, 2022; https://www.cms.gov/files/document/r11255cp.pdf.
---------------------------------------------------------------------------
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 in its application that CARVYKTITM is
indicated for a broader population than other available therapies,
specifically multiple myeloma patients having received three prior
therapies. The applicant asserted in its application that Blenrep and
ABECMA[supreg] are indicated only for those with at least 4 prior
therapies whereas CARVYKTITM had a proposed indication for
the treatment of patients with 3 or more prior therapies. According to
the applicant, CARVYKTITM could potentially be used in a
broader multiple myeloma population, that includes patients after 3
prior therapies as opposed to 4 for Blenrep and ABECMA[supreg].
According to the applicant, FDA is currently reviewing the
registrational trial CARTITUDE 1. The applicant stated that in this
trial, 17% (a total of 17 patients) of patients had only three prior
lines of therapy; results were presented at the American Society of
Hematology (ASH) 2021 meeting on fourth line patients. The applicant
stated that among those with three prior lines of therapy, the response
rate was 100%, the median duration of response (DoR) was 21.8 months,
minimal residual disease (MRD) negativity was found in 80%, the 18-
month progression free survival (PFS) was 75.6%, and the 18-month
overall survival (OS) was 88.2 months. According to the applicant,
because the sample size was small (17), median endpoints may not be as
rigorous as in the larger population.
According to the applicant, the distinction between three and four
previous lines of therapy is important. The applicant asserted with
each subsequent therapy patients generally become frailer and their
prognosis worsens. The applicant stated that studies comparing fourth
line to fifth line are not as common as trials studying earlier lines,
but in a real-world study by Yong et al. the percent of myeloma
patients who were able to move from third line therapy to fourth line
was 15% of all diagnosed myeloma patients, and only 1% of patients
moved to a fifth line.\61\ The applicant added that in the same study
of those patients in first line therapy, approximately 90% of patients
were able to discontinue treatment due to remission and/or planned end
of treatment while only 13% of those in fifth line ended treatment due
to stable disease/remission.
---------------------------------------------------------------------------
\61\ Yong et al. 2016. Multiple Myeloma: Patient outcomes in
real-world practice. British Journal of Haematology, 175; 252-264.
doi: 10.1111/bjh.14213.
---------------------------------------------------------------------------
The applicant asserted that for these reasons,
CARVYKTITM does not meet the third criterion and is
therefore a new technology with regards to the population having been
studied and being targeted for use.
In summary, the applicant asserted that CARVYKTITM meets
the newness criterion because it is not substantially similar to other
available therapies due to its unique mechanism of action, with two
distinct binding domains that confer avidity to the BCMA antigen, and
because it treats a different patient population, RRMM patients who
received three prior therapies. As we stated in the FY 2022 proposed
rule (86 FR 25236), we note that CARVYKTITM may have a
similar mechanism of action to that of ABECMA[supreg]. We note
ABECMA[supreg] received approval for new technology add-on payments for
FY 2022 for the treatment of adult patients with RRMM after four or
more prior lines of therapy, including an immunomodulatory agent, a
proteasome inhibitor, and an anti-CD38 monoclonal antibody (86 FR 45028
through 45035). Although the number of BCMA binding domains of
CARVYKTITM and ABECMA[supreg] differ, it appears that the
mechanism of action for both therapies is the binding to BCMA by a CAR
[[Page 28221]]
construct, which results in T-cell activation and killing of malignant
myeloma cells. We note that the applicant asserted that
CARVYKTITM's mechanism of action is unique due to its dual
binding domain which affects the therapy's clinical activity, as
compared to existing technologies with a single binding domain.
However, we are unclear how the additional BCMA binding domain
represents a change in the mechanism of action of this therapy, or if
it may instead relate to an assessment of whether the technology meets
the substantial clinical improvement criterion. Because of the
potential similarity with the BCMA antigen and other actions, we
believe that the mechanism of action for CARVYKTITM may be
the same or similar to that of ABECMA[supreg].
We note that the applicant stated that CARVYKTITM may
serve a new patient population if approved as a fourth line treatment,
as existing treatments are approved for fifth line treatment. However,
we note that CARVYKTITM's recent approval states that it is
indicated for fifth line treatment and we therefore question whether
CARVYKTITM treats a new patient population.\62\
---------------------------------------------------------------------------
\62\ https://www.fda.gov/media/156572/download.
---------------------------------------------------------------------------
Accordingly, as it appears that CARVYKTITM and
ABECMA[supreg] are purposed to achieve the same therapeutic outcome
using the same or similar mechanism of action, are assigned to the same
MS-DRG, and treat the same or similar patient population and disease,
we believe that these technologies may be substantially similar to each
other. We note that if this technology is substantially similar to
ABECMA[supreg], we believe the newness period for this technology would
begin on March 26, 2021, the date ABECMA[supreg] received FDA approval.
We are interested in information on how these two technologies may
differ from each other with respect to the substantial similarity
criteria and newness criterion. We are inviting public comment on
whether CARVYKTITM meets the newness criterion, including
whether CARVYKTITM is substantially similar to
ABECMA[supreg] for purposes of new technology add-on payments.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR final rule to identify potential cases representing
patients who may be eligible for treatment using CARVYKTITM.
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] TP10MY22.081
The applicant stated that it identified two cohorts for the cost
analysis: Cohort A limited the analysis to MS-DRG 016 (Autologous Bone
Marrow Transplant W CC/MCC or T-Cell Immunotherapy) because patients
receiving autologous bone marrow transplant (BMT) are generally
patients with relapsed or refractory multiple myeloma and are most
similar to patients who would be eligible to receive CAR T-cell
therapy; Cohort B limited the analysis to MS-DRG 018 (CAR T-Cell and
Other Immunotherapies). The applicant stated that the claim search
resulted in 1,215 claims in Cohort A and 268 claims in Cohort B using
the FY 2019 MedPAR. The applicant stated that it used the New
Technology Threshold for FY 2023 from the FY 2022 IPPS/LTCH PPS final
rule for MS-DRG 018. The applicant stated that it 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. Per the applicant, this is likely an
overestimate of the charges that would be replaced by the use of
CARVYKTITM. The applicant added that it then standardized
the charges using the FY 2022 IPPS/LTCH PPS final rule impact file.
Next, the applicant applied a 4-year inflation factor of 1.281834 or
28.1834%, based on the inflation factor used in the FY 2022 IPPS/LTCH
PPS final rule to update the outlier threshold) (86 FR 45542). To
calculate the charges for the new technology for both cohorts, the
applicant stated that it first used the inverse of a simulated
alternative cost-to-charge ratio (CCR) specifically for CAR T-cell
therapies and second used the national average drug CCR. The applicant
stated that a simulated alternative CCR was used to account for CAR T-
cell therapies' higher costs compared to other drugs and the potential
for hospitals' charging practices to differ for these drugs. To
determine this alternative CCR for CAR T-cell therapies, the applicant
referred to the FY 2021 IPPS final rule After Outliers Removed (AOR)/
Before Outliers Removed (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 stated that it
used the national average drug CCR of 0.187 from the FY 2022 IPPS/LTCH
PPS final rule (86 FR 44966). For Cohort A, with the CAR T-cell CCR,
the applicant calculated a final inflated average case-weighted
standardized charge per case of $1,695,406, which it stated exceeded
the average case-weighted threshold amount of $1,256,379. For Cohort A,
with the national average drug CCR, the applicant stated that it
calculated a final inflated average case-weighted standardized charge
per case of $2,595,169, which it stated exceeded the average case-
weighted threshold amount of $1,256,379. For Cohort B, with the CAR T-
cell CCR, the applicant stated that it calculated a final inflated
average case-weighted standardized charge per case of $1,713,723, which
it stated exceeded the average case-weighted threshold amount of
$1,256,379. The applicant stated that if CARVYKTITM meets
the cost criterion using the more conservative alternate CAR T-cell CCR
to inflate the cost of the treatment to charges, then it will also meet
the cost criterion using the national average drug CCR to inflate the
cost to charges. The applicant stated that because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, CARVYKTITM meets the cost
criterion.
In regard to the cost criterion, we question whether the ICD-10
codes used to identify potential cases are appropriately representative
of those who would receive CARVYKTITM.
[[Page 28222]]
Specifically, we are uncertain if the applicant's identification of
cases using the previously specified ICD-10 codes differentiated
between those treated with one, two, three, and four prior lines of
therapy. We are also seeking clarification on whether these cases are
appropriately representative of the technology. We note that while the
applicant provided a cost analysis for Cohort A, with a simulated
alternative CCR specifically for CAR T-cell therapies, the applicant
did not provide the cost analyses for Cohort B or Cohort A with the
national average drug CCR. We request these cost analyses as we are
unable to evaluate these analyses based on the information provided by
the applicant. As we have noted in previous discussions (86 FR 25237,
86 FR 25279), the submitted costs for CAR T-cell therapies vary widely
due to differences in provider billing and charging practices for this
therapy, and we are continuing to consider the use of this submitted
cost data for purposes of calculating a CAR T-cell CCR for use in the
applicant's cost analyses given this potential for variability.
Therefore, we request submission of the cost analyses with the national
average drug CCR, which the applicant referenced, but did not submit,
for cost criterion consideration.
We invite public comment on whether CARVYKTITM meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that it believes that CARVYKTITM
represents a substantial clinical improvement over existing
technologies because it: (1) Treats a new and expanded patient
population, (2) offers a treatment for a patient population with
limited options and continued disease progression, despite having been
treated with multiple prior therapies; and (3) provides a significantly
improved clinical outcome relative to other therapies, either approved
or still under FDA review, used in the relapsed and refractory multiple
myeloma setting.
With regard to the applicant's assertion that CARVYKTITM
treats a new and expanded patient population, the applicant stated that
other multiple myeloma therapies, such as Blenrep and ABECMA[supreg],
are indicated for patients with at least four prior therapies including
a PI, an IMiD, and a CD38 antibody. In its application, the applicant
asserted that CARVYKTITM may receive an indication for
patients with only three prior lines of therapy. The applicant cited
the CARTITUDE-1 trial where 17% of patients had three prior lines of
therapy.
With regard to the applicant's assertion that CARVYKTITM
offers a treatment for a patient population with limited options and
continued disease progression, despite having been treated with
multiple prior therapies, the applicant cited results from the
CARTITUDE-1 STUDY, a Phase 1b/2, open-label, multicenter, multi-
national (including US) study (n=113) to evaluate the safety and
efficacy of ciltacabtagene autoleucel in adult patients who have RRMM
who have previously received a PI, an IMiD, and an anti-CD38 antibody.
The applicant asserted that ciltacabtagene autoleucel was granted
Breakthrough Therapy designation for patients who have RRMM who have
previously received a PI, an IMiD, and an anti-CD38 antibody, based on
data from the Phase 1b/2 CARTITUDE-1 study. According to the applicant,
of the 113 enrolled patients, 16 discontinued the study, including 9
patients who died due to progressive disease. Ninety-seven patients
received ciltacabtagene autoleucel. The Phase 1b portion of the study
included 29 of the 97 patients.
Two patients died during the study: One due to cytokine release
syndrome (CRS) and one due to acute myeloid leukemia (not treatment-
related). According to the applicant, 24 patients were ongoing in the
phase 1b dose confirmation period with an additional 59 patients
ongoing in the phase 2 portion. The applicant stated the primary
objective of the Phase 1b portion of the trial was to confirm the
safety of the selected dose based on the data from the ongoing Phase 1
trial in China (Legend-2), as discussed later in this section. The
applicant asserted the primary objective of the Phase 2 portion of the
trial is to evaluate the efficacy of ciltacabtagene autoleucel.
The applicant asserted that at median follow-up of 18 months,
ciltacabtagene autoleucel led to a 98% overall response rate (ORR) in
all 97 study patients who received ciltacabtagene
autoleucel.63 64 The applicant asserted that this
unprecedented overall response rate of (98%), represents early, deep,
and durable responses in all patients, minimal residual disease
negativity (meaning minimal residual cancer cells after treatment to
the -nth degree) in the majority of patients who achieved a complete
response (CR) and a very manageable toxicity profile. The applicant
provided a comparison of the ORR in phase 1 studies for other therapies
used to treat RRMM and noted the following: Idecabtagene vicleucel ORR
60%, daratumumab ORR 31%, Selinexor ORR 26%, and Blenrep ORR 31%.\65\
According to the applicant, in addition to the CARTITUDE-1 trial ORR,
the Legend-2 study demonstrated an ORR of 87.8% (95% CI: 78.2, 94.3) at
a 2 year follow up time period. The applicant asserted that both of
these studies are ongoing and the depth and duration of response
continues to improve over time.\66\
---------------------------------------------------------------------------
\63\ Usmani SZ, et al. Ciltacabtagene Autoleucel, a B B-Cell
Maturation Antigen Antigen-Directed Chimeric Antigen Receptor T T-
Cell Therapy, in Relapsed/Refractory Multiple Myeloma: Updated
Results From CARTITUDE CARTITUDE-1. Oral presented at: ASCO Annual
Meeting; June 4 4-8, 2021. https://meetinglibrary.asco.org/.
\64\ Madduri D et al. CARTITUDE-1: Phase 1b/2 Study of
Ciltacabtagene Autoleucel, a B-Cell Maturation Antigen-Directed
Chimeric Antigen Receptor T-Cell Therapy, in Relapsed/Refractory
Multiple Myeloma.
\65\ Martin, T., et al. Comparison of outcomes with
ciltacabtagene autoleucel (cilta-cel) in CARTITUDE-1 vs real-world
standard of care (RW SOC) for patients (pts) with triple-class
exposed relapsed/refractory multiple myeloma (RRMM). Presented at
2021 American Society of Clinical Oncology (ASCO) Annual Meeting;
June 4-8, 2021; Poster #8045.
\66\ Berdeja, J. Ciltacabtagene autoleucel, a B-cell maturation
antigen-directed chimeric antigen receptor T-cell therapy in
patients with relapsed or refractory multiple myeloma (CARTITUDE-1):
A phase 1b/2 open-label study. Lancet. 2021 Jul 24;398(10297):314-
324.
---------------------------------------------------------------------------
The applicant further asserted that ciltacabtagene autoleucel led
to early and deep clinical responses in the phase1b/2 portion of the
CARTITUDE-1 study at median follow up of 18 months. The applicant
stated that results of CARTITUDE-1 showed 80% of patients attaining a
stringent complete response (sCR) and 93% of patients attaining a very
good partial response (VGPR) or better. According to the applicant, ORR
and depth of response were independent of BCMA expression on myeloma
cells at baseline. The median time to first response was one month
(range, 1-9).67 68
---------------------------------------------------------------------------
\67\ Usmani SZ, et al. Ciltacabtagene Autoleucel, a B B-Cell
Maturation Antigen Antigen-Directed Chimeric Antigen Receptor T T-
Cell Therapy, in Relapsed/Refractory Multiple Myeloma: Updated
Results From CARTITUDE CARTITUDE-1. Oral presented at: ASCO Annual
Meeting; June 4 4-8, 2021. https://meetinglibrary.asco.org/.
\68\ Berdeja JG, Madduri D, Usmani SZ, Singh I, Zudaire E, Yeh
TM, Allred AJ, Olyslager Y, Banerjee A, Goldberg JD, Schecter S,
Geng D, Wu X, Carrasco-Alfonso M, Rizvi S, Fan F, Jakubowiak AJ,
Jagannath S. Update of CARTITUDE-1: A phase Ib/II study of JNJ-4528,
a B-cell maturation antigen (BCMA)-directed CAR-T cell therapy, in
relapsed/refractory multiple myeloma. Journal of Clinical Oncology
(JCO). 2020 38:15_suppl, 8505-8505.
---------------------------------------------------------------------------
The applicant also asserted that most patients attained a status of
MRD-negativity by the time they were evaluable for a CR. According to
the applicant, of evaluable patients, 93.0% achieved MRD
10-5 negativity.\69\
[[Page 28223]]
According to the applicant, 58% of patients were both MRD negative and
in sCR at MRD detection level of 10-5. According to the
applicant, the median time to MRD 10-5 negativity was 1
month (0.8-7.7).\70\ The applicant stated, among patients with 6 months
individual follow-up, most had ciltacabtagene autoleucel CAR+ T-cells
below the level of quantification (2 cells/[mu]L) in peripheral
blood.\71\
---------------------------------------------------------------------------
\69\ Usmani SZ, et al. Ciltacabtagene Autoleucel, a B B-Cell
Maturation Antigen Antigen-Directed Chimeric Antigen Receptor T T-
Cell Therapy, in Relapsed/Refractory Multiple Myeloma: Updated
Results From CARTITUDE CARTITUDE-1. Oral presented at: ASCO Annual
Meeting; June 4 4-8, 2021. https://meetinglibrary.asco.org/.
\70\ Usmani SZ, et al. Ciltacabtagene Autoleucel, a B B-Cell
Maturation Antigen Antigen-Directed Chimeric Antigen Receptor T T-
Cell Therapy, in Relapsed/Refractory Multiple Myeloma: Updated
Results From CARTITUDE CARTITUDE-1. Oral presented at: ASCO Annual
Meeting; June 4 4-8, 2021. https://meetinglibrary.asco.org/.
\71\ Usmani SZ, et al. Ciltacabtagene Autoleucel, a B B-Cell
Maturation Antigen Antigen-Directed Chimeric Antigen Receptor T T-
Cell Therapy, in Relapsed/Refractory Multiple Myeloma: Updated
Results From CARTITUDE CARTITUDE-1. Oral presented at: ASCO Annual
Meeting; June 4 4-8, 2021. https://meetinglibrary.asco.org/.
---------------------------------------------------------------------------
The applicant added that PFS at 12 months was 77% (95% CI; 66.0-
84.37) with median PFS not having been reached.\72\ According to the
applicant, at median follow-up of 12.4 months, there were 14 deaths
during the Phase 1b/2 study: One due to CRS and hemophagocytic
lymphohistiocytosis (HLH), one due to neurotoxicity, and 12 due to
other causes.\73\ The applicant asserted that the CRS was manageable in
most patients; CRS was the most common adverse event (AE) (94.8%)
observed in the CARTITUDE-1 study. According to the applicant, the
median time to onset of CRS was 7 days (range 1-12 days) post
ciltacabtagene autoleucel infusion with a median duration of 4 days.
The applicant asserted that 90% of patients experienced Grade 1-2 CRS
and 5 patients (5%) experienced grade 3 or greater CRS.\74\ According
to the applicant there were 3 Grade 3 CRS, 1 Grade 4, and 1
aforementioned death due to CRS/HLH Grade 5 event.
---------------------------------------------------------------------------
\72\ Berdeja JG, Madduri D, Usmani SZ, Singh I, Zudaire E, Yeh
TM, Allred AJ, Olyslager Y, Banerjee A, Goldberg JD, Schecter S,
Geng D, Wu X, Carrasco-Alfonso M, Rizvi S, Fan F, Jakubowiak AJ,
Jagannath S. Update of CARTITUDE-1: A phase Ib/II study of JNJ-4528,
a B-cell maturation antigen (BCMA)-directed CAR-T cell therapy, in
relapsed/refractory multiple myeloma. Journal of Clinical Oncology.
2020 38:15_suppl, 8505-8505.
\73\ Berdeja JG, Madduri D, Usmani SZ, Singh I, Zudaire E, Yeh
TM, Allred AJ, Olyslager Y, Banerjee A, Goldberg JD, Schecter S,
Geng D, Wu X, Carrasco-Alfonso M, Rizvi S, Fan F, Jakubowiak AJ,
Jagannath S. Update of CARTITUDE-1: A phase Ib/II study of JNJ-4528,
a B-cell maturation antigen (BCMA)-directed CAR-T cell therapy, in
relapsed/refractory multiple myeloma. Journal of Clinical Oncology.
2020 38:15_suppl, 8505-8505.
\74\ Berdeja JG, Madduri D, Usmani SZ, Singh I, Zudaire E, Yeh
TM, Allred AJ, Olyslager Y, Banerjee A, Goldberg JD, Schecter S,
Geng D, Wu X, Carrasco-Alfonso M, Rizvi S, Fan F, Jakubowiak AJ,
Jagannath S. Update of CARTITUDE-1: A phase Ib/II study of JNJ-4528,
a B-cell maturation antigen (BCMA)-directed CAR-T cell therapy, in
relapsed/refractory multiple myeloma. Journal of Clinical Oncology.
2020 38:15_suppl, 8505-8505.
---------------------------------------------------------------------------
The applicant noted that in the CARTITUDE-1 trial, neurotoxicity
with immune effector cell-associated neurotoxicity syndrome (ICANS) was
infrequently observed in the context of CRS and was generally low
grade. Neurotoxicity with ICANS was observed in 20 patients (20.6%)
including 10 patients (10.3%) with Grade 3 or above toxicity.
According to the applicant, the LEGEND-2 study \75\ is an ongoing
Phase 1, single-arm, open-label, multicenter, first-in-human trial to
determine the safety and efficacy of ciltacabtagene autoleucel (LCAR-
B38M in China) in the treatment of patients with relapsed or refractory
multiple myeloma. The applicant stated enrollment in this investigator-
initiated study (study proposed, initiated, and conducted by an
investigator that is funded by industry) completed in November 2017; a
total of 74 patients with RRMM have been treated with ciltacabtagene
autoleucel CAR T-cell therapy. The applicant stated the clinical cutoff
for the analysis of these 74 patients was February 6, 2018 with updated
survival and efficacy data as of November 26, 2019 (which represents 2
years of follow-up from the date of the last subject's infusion). The
applicant stated in the LEGEND-2 study, at a median follow up of 25
months, the median PFS for all patients was 19.9 months and 28.2 months
for patients with CR. According to the applicant, 17 patients (17/57--
29%) died during the study and follow up period (19 months) mostly due
to progressive disease. The applicant asserted that none were related
to CRS or neurotoxicity, the two most common adverse events associated
with CAR T-cell therapy. At data cutoff, 57 patients had received LCAR-
B38M CAR T-cells.
---------------------------------------------------------------------------
\75\ Zhao, WH., Liu, J., Wang, BY. et al. A phase 1, open-label
study of LCAR-B38M, a chimeric antigen receptor T cell therapy
directed against B cell maturation antigen, in patients with
relapsed or refractory multiple myeloma. J Hematol Oncol 11, 141
(2018). https://jhoonline.biomedcentral.com/articles/10.1186/s13045-018-0681-6.
---------------------------------------------------------------------------
The applicant further asserted that outcomes from the LEGEND-2
study show that ciltacabtagene autoleucel provides a significantly
improved clinical outcome relative to other therapies, either approved
or still under FDA review, used in the RRMM setting. According the
applicant, at a median follow up of 19 months, the overall response
rate for ciltacabtagene autoleucel was 88%.\76\ The applicant stated
the overall survival (OS) rate at 18 months was 68% (54-79%) with a
median duration of response (mDOR) of 22 months (13-29). The applicant
stated that of MRD-negative patients with CR, 91% were still alive at
data cut, with a 27-month (95% CI, 14.3-NE) mDOR. The applicant added
that the median time to first response was 1.1 months. The applicant
asserted there was no relationship between best response and baseline
BCMA expression level or weight-adjusted CAR T-cells infused. We note
some inconsistencies between the citation provided and what the
applicant stated. Specifically, per the citation, the median time to
follow-up was 25 months, with a median overall survival among all
patients of 36.1 months (95% CI, 26.4-NE), and a MDOR of 29.1 months
(95% CI, 19.9-NE).\77\
---------------------------------------------------------------------------
\76\ Wang. Bai-Yan. 2019. Long-term follow-up of a phase 1,
first-in-human open-label study of LCAR-B38M, a structurally
differentiated chimeric antigen receptor T (CAR-T) cell therapy
targeting B-cell maturation antigen (BCMA), in patients (pts) with
relapsed/refractory multiple myeloma (RRMM). Abstract #579,
Presented at ASH Annual Meeting.
\77\ Ibid.
---------------------------------------------------------------------------
The applicant asserted that of patients in the LEGEND-2 study with
CR, 39 of 42 were minimal residual disease negative (MRD-neg) and
remained RRMM progression-free.\78\ According to the applicant, the
median PFS rate for all treated patients was 20 months (10-28); median
PFS for MRD-neg patients with CR was 28 months (20-31).\79\ The
applicant stated that at 18 months, the PFS rate was 50 (36-63%) for
all patients and 71% (52-84%) for MRD-neg patients with CR.\80\ The
applicant stated that 17 patients died during the study and the follow-
up period. The causes of death included progressive disease (PD; n=11),
disease relapse, PD with lung infection, suicide after PD, esophageal
carcinoma, infection, pulmonary embolism and acute coronary syndrome
(n=1 each). Of these, 4 did not achieve partial response (PR) or
better; and 1 was not evaluable.
---------------------------------------------------------------------------
\78\ Ibid.
\79\ Ibid.
\80\ Ibid.
---------------------------------------------------------------------------
According to the applicant, from the LEGEND-2 study, the median
time to onset of CRS was 9 days (range, 1-19) with a median duration of
9 days (range, 3-57); all but 1 CRS events resolved.\81\ Tocilizumab
(46%), oxygen (35%), vasopressor (11%), and intubation (1 patient) were
used to treat CRS.\82\ Neurotoxicity with Grade 1 aphasia, agitation
and seizure-like activity was
[[Page 28224]]
observed in 1 patient in the LEGEND-2 study.\83\ The applicant believes
that since ciltacabtagene autoleucel displayed a manageable CRS safety
profile that it represents a substantial clinical improvement over
existing therapies.
---------------------------------------------------------------------------
\81\ Ibid.
\82\ Ibid.
\83\ Ibid.
---------------------------------------------------------------------------
The applicant lastly discussed multiple unpublished studies which
used matching-adjusted indirect treatment comparison (MAIC) and other
matching techniques to compare ciltacabtagene autoleucel to other
existing therapies. The applicant stated that while there are no
randomized head-to-head trials comparing ciltacabtagene autoleucel to
ABECMA[supreg], there is a peer-reviewed, published MAIC where
individual patient data from CARTITUDE-1 (ciltacabtagene autoleucel)
and published summary-level data for ABECMA[supreg] from the KarMMA
trial are compared.\84\ According to the applicant, the authors
concluded that ciltacabtagene autoleucel demonstrated clinically
superior results for all outcomes studied (ORR, CR rate, DoR, PFS, and
OS), and these were robust across all sensitivity analyses. The
applicant provided, as an example, results from one study by Martin et
al. (2021) which, when comparing ciltacabtagene autoleucel to
ABECMA[supreg], found that the former had a 34% higher chance of
response, a 220% higher chance of a CR, a hazard ratio of 0.5 for the
DoR, 0.37 for PFS, and 0.55 for OS.\85\ The applicant asserted that
based on these findings, ciltacabtagene autoleucel offers substantial
clinical benefits for patients with triple-class exposed RRMM compared
to ABECMA[supreg].
---------------------------------------------------------------------------
\84\ Martin et al, 2021. Matching-adjusted indirect comparison
of efficacy outcomes for ciltacabtagene autoleucel in CARTITUDE-1
versus idecabtagene vicleucel in KarMMa for the treatment of
patients with relapsed or refractory multiple myeloma.
\85\ Ibid.
---------------------------------------------------------------------------
According to the applicant, there are several unpublished studies
employing MAIC and other matching techniques comparing clinical
outcomes for patients receiving ciltacabtagene autoleucel and the
standard of care, or other conventional therapies, such as belantamab
mafadotin or selinexor and dexamethasone.86 87 88 The
applicant stated that in a comparison to patients receiving various
conventional therapies, the authors conclude that treatment with
ciltacabtagene autoleucel is associated with higher response rate and
superior PFS and OS.\89\ The applicant stated that in a comparison with
treatment with selinexor and dexamethasone, the study authors conclude
that the analysis shows that ciltacabtagene autoleucel ``offers
substantially more clinical benefit'' for patients with triple-class
exposed RRMM.\90\ The applicant also asserted that in a study that
assessed the comparative effectiveness of ciltacabtagene autoleucel to
physician's choice of treatment (PCT) using an external real-world
control arm from the Flatiron Health multiple myeloma cohort registry,
authors found that ciltacabtagene autoleucel offers substantial
clinical benefits for PFS, time to next treatment (TTNT), and OS over
PCT for patients with triple class exposed RRMM.\91\ According to the
applicant, patients receiving ciltacabtagene autoleucel were 3.2 times
more likely to achieve overall response than patients receiving
belantamab mafodotin after adjusting for refractory status, cytogenetic
profile, International Staging System (ISS) stage, and extramedullary
disease.
---------------------------------------------------------------------------
\86\ Costa L, et al. Ciltacabtagene Autoleucel Versus
Conventional Treatment in Patients With Relapsed/Refractory Multiple
Myeloma. ASCO 2021. Poster #8030.
\87\ Weisel et al. Matching-Adjusted Indirect Comparison of
Ciltacabtagene Autoleucel Versus Belantamab Mafodotin in Patients
With TripleClass Exposed Relapsed/Refractor y Multiple Myeloma. EHA
2021. Poster #EP978.
\88\ Martin 2021, eJHaem accepted manuscript.
\89\ Costa L, et al. Ciltacabtagene Autoleucel Versus
Conventional Treatment in Patients With Relapsed/Refractory Multiple
Myeloma. ASCO 2021. Poster #8030.
\90\ Weisel et al. Matching-Adjusted Indirect Comparison of
Ciltacabtagene Autoleucel Versus Belantamab Mafodotin in Patients
With TripleClass Exposed Relapsed/Refractor y Multiple Myeloma. EHA
2021. Poster #EP978.
\91\ Martin 2021, eJHaem accepted manuscript.
---------------------------------------------------------------------------
Lastly, the applicant summarized data from 22 months follow-up for
CARTITUDE-1, which was presented at ASH 2021.\92\ The applicant
asserted that compared to the previous 12-month and 18-month data, 2-
year data showed responses deepening over time. The applicant stated
the ORR continued at 98% (up from 96% at 12 months) and the sCR at 22
months was 82.5%, compared to 67% at 12 months and 80.4% at 18 months.
According to the applicant, at 22 months, 92% of the patients with MRD
status noted were MRD negative, which is consistent with 18-month data
(92%) and 12-month data (93%), illustrating persistent ability for the
treatment to maintain MRD negativity over time. According to the
applicant, the two-year PFS was 60.5% and 71% when a sCR was achieved
and the two-year OS for all patients was 74%. The applicant stated that
at the 2-year median follow up, no new treatment-related deaths had
occurred since the median approximately 1-year follow-up, and there
were no new safety signals reported. The applicant added that adverse
events were generally low grade, well tolerated and managed with
standard treatment algorithms employing drugs such as tocilizumab,
corticosteroids, and anakinra.
---------------------------------------------------------------------------
\92\ Martin et al. 2021. Updated Results From CARTITUDE-1: Phase
1b/2 Study of Ciltacabtagene Autoleucel, a B-cell Maturation
Antigen-Directed Chimeric Antigen Receptor T Cell Therapy, in
Patients With Relapsed/Refractory Multiple Myeloma. Presented at the
63rd American Society of Hematology (ASH) Annual Meeting &
Exposition; December 11-14, 2021; Oral Presentation #549.
---------------------------------------------------------------------------
After reviewing the information submitted by the applicant as part
of its FY 2023 application for new technology add-on payments for
CARVYKTITM, we have the following concerns regarding the
substantial clinical improvement criterion. We note that in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25238 through 25239), we expressed
concern regarding a lack of comparisons between CARVYKTITM
and other existing therapies. We note that the applicant provided new
references in its FY 2023 application to compare CARVYKTITM
to other therapies.93 94 However, we further note that many
of the references provided are in abstract or presentation format with
limited data on the overall study design and methodology used to
achieve the presented results. With respect to the LEGEND-2 study, the
authors stated that for the initial patient sample (n=57), the median
number of prior lines of therapy was 3, with a range of 1 to 9.\95\
Furthermore, we note that in the LEGEND-2 study only 11 (19%) of the
respondents were 65 and older in the sample. As only 60% of this
patient sample had received both a proteasome inhibitor and an
immunomodulatory agent, and no patients had received a CD38 antibody,
we question the true refractoriness of the test population in the
LEGEND-2 study and whether the results are generalizable to the
Medicare population for which this treatment is intended.
---------------------------------------------------------------------------
\93\ Martin et al,. Matching-adjusted indirect comparison of
efficacy outcomes for ciltacabtagene autoleucel in CARTITUDE-1
versus idecabtagene vicleucel in KarMMa for the treatment of
patients with relapsed or refractory multiple myeloma.
\94\ Martin T, et al. Ciltacabtagene Autoleucel Versus
Selinexor+ Dexamethasone in Triple-Class Exposed Patients With
Relapsed/Refractory Multiple Myeloma: A Matching Adjusted Indirect
Comparison.
\95\ Zhao, WH., Liu, J., Wang, BY. et al. A phase 1, open-label
study of LCAR-B38M, a chimeric antigen receptor T cell therapy
directed against B cell maturation antigen, in patients with
relapsed or refractory multiple myeloma. J Hematol Oncol 11, 141
(2018). https://doi.org/10.1186/s13045-018-0681-6.
---------------------------------------------------------------------------
In addition, we request clarification on any potential
inconsistencies between the statements in the
[[Page 28225]]
applicant's new technology add-on payment application and the citation
which explains the LEGEND-2 study, including inconsistencies in median
time to follow-up, median OS, and mDOR, as previously noted.\96\
---------------------------------------------------------------------------
\96\ Wang. Bai-Yan. 2019. Long-term follow-up of a phase 1,
first-in-human open-label study of LCAR-B38M, a structurally
differentiated chimeric antigen receptor T (CAR-T) cell therapy
targeting B-cell maturation antigen (BCMA), in patients (pts) with
relapsed/refractory multiple myeloma (RRMM). Abstract #579,
Presented at ASH Annual Meeting.
---------------------------------------------------------------------------
Finally, while the applicant has asserted that
CARVYKTITM treats a new and expanded patient population
since existing treatments are indicated for patients with at least four
prior therapies, we note that CARVYKTITM was recently
approved with an indication for patients with at least four prior lines
of therapy as well. Therefore, we would appreciate additional
clarification on any differences between CARVYKTITM and
existing therapies with respect to the patient populations indicated
for treatment.
We are inviting public comment on whether CARVYKTITM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
CARVYKTITM.
b. DARZALEX FASPRO[supreg] (daratumumab and hyaluronidase-fihj)
Janssen Biotech, Inc., submitted an application for new technology
add-on payments for DARZALEX FASPRO[supreg] for FY 2023. DARZALEX
FASPRO[supreg] is a combination of daratumumab (a monoclonal CD38-
directed cytolytic antibody), and hyaluronidase (an endoglycosidase)
indicated for the treatment of light chain (AL) amyloidosis in
combination with bortezomib, cyclophosphamide and dexamethasone
(CyBorD) in newly diagnosed patients and is administered through a
subcutaneous injection.
According to the applicant, AL amyloidosis is a life-threatening
blood disorder caused by increased production of misfolded
immunoglobulin light chains by an abnormal proliferation of malignant
CD38+ plasma cells. Per the applicant, these deficient immunoglobulin
light chains aggregate into highly ordered amyloid fibrils that deposit
in tissues, eventually resulting in progressive organ dysfunction and
damage due to the toxic effect of the misfolded proteins
(proteotoxicity) and the distortion of the normal tissue architecture
by the amyloid deposits.\97\ The applicant stated that the most
frequently affected organs are the heart, kidney, liver, spleen,
gastrointestinal tract and nervous system. Per the applicant, patients
often have a poor prognosis, and as many as 30% of patients with AL
amyloidosis die within the first year after diagnosis. The applicant
stated that approximately 4,500 people in the US develop AL amyloidosis
each year.\98\ The applicant stated that while there were no FDA
approved therapies prior to daratumumab, a number of therapies were
used clinically to treat AL amyloidosis including combination therapies
like cyclophosphamide-bortezomib-dexamethasone (CyBorD), bortezomib-
lenalidomide-dexamethasone (VRd), bortezomib-melphalan-dexamethasone
(VMd), melphalan-dexamethasone (Md), and bortezomib-dexamethasone (Vd).
The applicant further noted that none of these combination regimens are
approved for use by FDA in this specific indication.
---------------------------------------------------------------------------
\97\ Merlini et al. Systemic immunoglobin light chain
amyloidosis. Nat Rev Dis Primers. 2018; 4:38-19.
\98\ Amyloidosis Foundation. AL amyloidosis facts. http://www.amyloidosis.org/facts/al/. Accessed September 2021
---------------------------------------------------------------------------
According to the applicant, DARZALEX FASPRO[supreg] is the first
and only FDA-approved treatment for patients with AL amyloidosis and is
also approved for multiple indications for treatment of patients with
multiple myeloma. The applicant stated that the indication for the
technology for which it is submitting a new technology add-on payment
application is for the treatment of adult patients with AL amyloidosis
in combination with bortezomib, cyclophosphamide and dexamethasone in
newly diagnosed patients. The applicant noted that DARZALEX
FASPRO[supreg] is not indicated nor recommended to be used in patients
with AL amyloidosis who have NYHA Class IIIB or Class IV cardiac
disease or Mayo Stage IIIB, except in the context of controlled
clinical trials.
According to the applicant, DARZALEX FASPRO[supreg] is the
subcutaneous formulation of daratumumab, which is a human IgG- kappa
monoclonal antibody that targets CD38, an enzymatic protein that is
uniformly expressed on human plasma cells. Per the applicant, in
DARZALEX FASPRO[supreg], daratumumab is co-formulated with recombinant
human hyaluronidase (rHuP20), which critically allows daratumumab to be
administered in a volume of 15 mL by a 3-5 minute injection under the
skin, compared to the 500-1000 mL volume and 3-7 hour administration
time required for IV daratumumab. The applicant further noted that
given the cardiac and renal dysfunction which afflicts many AL
amyloidosis patients and makes them poor candidates for large volume IV
administration, rHuP20 is a critical component of DARZALEX
FASPRO[supreg]. Per the applicant, daratumamab binds to the CD38
protein on the surface of the malignant plasma cells which are
responsible for abnormal amyloid protein production in AL amyloidosis,
directly killing the malignant CD38+ plasma cells and/or directing the
immune system to destroy them. The immunomodulatory response consists
of CD8+ clonal expansion, CD38 enzymatic inhibition, complement
activation and cell recruitment to enable antibody dependent cellular
phagocytosis (ADPC) and antibody dependent cellular cytotoxicity
(ADCC). Per the applicant, the mechanism of actions of daratumumab in
AL amyloidosis are the same as the mechanisms of action of daratumumab
in multiple myeloma, since both disease entities are disorders of
malignant CD38+ plasma cells.99 100 101
---------------------------------------------------------------------------
\99\ de Weers et al. Daratumumab, a Novel Therapeutic Human CD38
Monoclonal Antibody, Induces Killing of Multiple Myeloma and Other
Hematogical Tumors. J Immunol 2011;186:1840-1848).
\100\ Overdijk et al. Antibody-mediated phagocytosis contributes
to the anti-tumor activity of the therapeutic antibody daratumumab
in lymphoma and multiple myeloma. MAbs.2015;7:311-321).
\101\ Krejcik J, Casneuf T, Nijhof IS, et al. Daratumumab
depletes CD38+ immune regulatory cells, promotes T-cell expansion,
and skews T-cell repertoire in multiple myeloma. Blood 2016; 128:
384-94.
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The applicant stated that without hyaluronidase, it is not possible
to inject more than 2-3 mL of drug directly into the subcutaneous
tissue under the skin. Per the applicant rHuPH20 naturally mimics
natural hyaluronidase and increases the permeability of subcutaneous
tissue by degrading hyaluronan. By co-formulating daratumumab with
rHuPH20, it becomes possible for 15 mL containing 1,800 mg of
daratumamab to be administered subcutaneously in approximately 3 to 5
minutes. The applicant stated that the ability to administer
daratumumab subcutaneously reduces the reaction rate to daratumumab,
may improve convenience and patient satisfaction, and greatly reduces
the volume of administration, which is critical in light of the cardiac
dysfunction and kidney dysfunction which afflict many patients with AL
amyloidosis.
[[Page 28226]]
With respect to the newness criterion, the applicant stated that
DARZALEX FASPRO[supreg] was granted accelerated approval from FDA on
January 15, 2021, indicated for the treatment of adult patients with
light chain (AL) amyloidosis in combination with bortezomib,
cyclophosphamide and dexamethasone in newly diagnosed patients. Per the
applicant, DARZALEX FASPRO[supreg] is not indicated and recommended for
the treatment of patients with AL amyloidosis who have NYHA Class IIIB
or Class IV cardiac disease or Mayo Stage IIIB outside of controlled
clinical trials.\102\ The applicant also stated that DARZALEX
FASPRO[supreg] received FDA approval on September 26, 2019, for the
treatment of adult patients with multiple myeloma as part of a
combination therapy in newly diagnosed patients eligible for autologous
stem cell transplant, and on May 1, 2020, for the treatment of patients
with multiple myeloma. As stated previously, the indication for which
the applicant submitted an application for new technology add-on
payments is for the treatment of adult patients with AL amyloidosis in
combination with bortezomib, cyclophosphamide and dexamethasone in
newly diagnosed patients. The applicant stated that DARZALEX
FASPRO[supreg] for newly diagnosed AL amyloidosis was commercially
available immediately following the accelerated approval granted by
FDA. The recommended dosage for DARZALEX FASPRO[supreg] for newly
diagnosed AL amyloidosis is 1,800 mg of daratumumab and 30,000 units of
hyaluronidase administered subcutaneously over approximately 3 to 5
minutes in combination with bortezomib, cyclophosphamide and
dexamethasone. According to the applicant, patients receiving DARZALEX
FASPRO[supreg] for this indication receive a weekly dose for the first
8 weeks (week 1 to week 8), one dose every 2 weeks from week 9 to week
24, followed by one dose monthly from week 25 onward until disease
progression for a maximum of 2 years.
---------------------------------------------------------------------------
\102\ According to the applicant, continued approval for this
indication may be contingent upon verification and description of
clinical benefit in confirmatory trials.
---------------------------------------------------------------------------
The applicant stated that ICD-10-PCS code 3E013GC (Introduction of
other therapeutic substance into subcutaneous tissue, percutaneous
approach) may currently be used to identify DARZALEX FASPRO[supreg]
under the ICD-10-PCS coding system but that there are currently no ICD-
10-PCS procedure codes that uniquely identify the use of DARZALEX
FASPRO[supreg]. The applicant submitted a request for a unique ICD-10-
PCS code to identify procedures involving the administration of
DARZALEX FASPRO[supreg]. The applicant stated that E85.81 (Light chain
(AL) amyloidosis) may be used to currently identify the indication for
DARZALEX FASPRO[supreg] under the ICD-10-CM coding system but that
there is no ICD-10-CM diagnosis code that is specific to DARZALEX
FASPRO[supreg] for newly diagnosed AL amyloidosis.
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 purposes of new technology add-on
payments.
With respect to the first criterion, whether a technology uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that it does not use the same or similar mechanism
of action as existing technologies. The applicant stated that DARZALEX
FASPRO[supreg] was the first drug approved by FDA for treatment of AL
amyloidosis and its mechanism of action is different from that of any
other drug previously used to treat AL amyloidosis. According to the
applicant, the other therapies currently used to treat amyloidosis off-
label (for example, bortezomib, cyclophosphamide, melphalan,
lenlidomide) all have different mechanisms of action; none of them are
monoclonal antibodies that specifically bind to CD38 on malignant
plasma cells. The applicant stated that bortezomib induces cell death
of the malignant plasma cell by inhibition of the 26S proteasome which
plays a key role in cell survival by regulating protein breakdown in a
controlled fashion. The applicant further stated that when bortezomib
inhibits proteasome function, the normal balance within a cell is
disrupted, resulting in a buildup of cell cycle and regulatory proteins
which eventually leads to cell death.103 104 Per the
applicant, lenalidomide is an immunomodulator which modulates the E3
ubiquitin ligase complex. Modulation of this E3 ubiquitin ligase
complex by lenalidomide eventually leads to enhanced function of
specific immune cells and induction of cell death and the exact
mechanism of action of lenalidomide is still not fully
understood.105 106 The applicant stated that both melphalan
and cyclophosphamide are alkylating chemotherapy drugs that add an
alkyl group to the guanine base of the DNA molecule, preventing the
strands of the double helix from linking, which causes breakage of the
DNA strands, affecting the ability of the cancer cell to multiply. Per
the applicant, like bortezomib and lenalidomide, melphalan and
cyclophosphamide are not approved by FDA for the use in patients with
AL amyloidosis. The applicant also noted that while the National
Comprehensive Cancer Network[supreg] (NCCN[supreg]) Guidelines for
Systemic Light Chain Amyloidosis state that both IV and SQ daratumumab
can be used to treat previously treated amyloidosis,\107\ IV
daratumumab is not approved by FDA for the treatment of patients with
amyloidosis (newly diagnosed and previously treated). The applicant
also stated that DARZALEX FASPRO[supreg] is the more appropriate option
in the AL amyloidosis patient population due to the fact that
subcutaneous dosing has a negligible volume administration (15 ml for
SC vs up to 1000ml for IV), which is particularly important in patients
with AL amyloidosis who often have compromised cardiac and renal
function due to the amyloid deposition in cardiac and kidney tissue.
---------------------------------------------------------------------------
\103\ Adams et al. Proteasome Inhibitors: A Novel Class of
Potent and Effective Antitumor Agents. Cancer Res 1999;55; 2615-
2622.
\104\ Adams et al. The proteasome: A suitable antineoplastic
target. Nat Rev Cancer 2004; 4:349-360.
\105\ Kastritis et al. Primary treatment of light chain
amyloidosis with Bortezomib, lenalidomide and dexamethasone. Blood
Adv 2019;3:3002-3009.
\106\ Revlimid Prescribing Info.
\107\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines[supreg]): Systemic Light Chain amyloidosis (Version
1.2022). National Comprehensive Cancer Network. www.nccn.org.
Published August 29 June 2021. Accessed July 21, 2021.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that this
product is not expected to change the DRG assignment of a case when
used for the treatment of AL amyloidosis.
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 DARZALEX FASPRO[supreg]
does not meet this criterion because it was the first approved drug to
treat patients with AL amyloidosis. The applicant also stated that the
NCCN[supreg] Guidelines for Systemic Light Chain Amyloidosis reflect
the limited treatment options for this specific disease. The applicant
further stated that DARZALEX FASPRO[supreg] in combination with CyBorD
is the only
[[Page 28227]]
treatment with a Category 1 recommendation \108\ in the NCCN[supreg]
Guidelines for patients with newly diagnosed AL amyloidosis.\109\
---------------------------------------------------------------------------
\108\ Per the NCCN[supreg], a Category 1 recommendation is
``Based upon high-level evidence, there is uniform NCCN[supreg]
consensus that the intervention is appropriate.''
\109\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines[supreg]): Systemic Light Chain amyloidosis (Version
1.2022). National Comprehensive Cancer Network. www.nccn.org.
Published August 29 June 2021. Accessed July 21, 2021.
---------------------------------------------------------------------------
In summary, the applicant believes that DARZALEX FASPRO[supreg] is
not substantially similar to other currently available therapies and/or
technologies because it has a unique mechanism of action and because it
is the first FDA approved treatment for AL amyloidosis.
We are inviting public comments on whether DARZALEX FASPRO[supreg]
is substantially similar to existing technologies and whether DARZALEX
FASPRO[supreg] meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analysis to demonstrate that DARZALEX FASPRO[supreg] meets
the cost criterion. To identify cases representing patients who may be
eligible for treatment with DARZALEX FASPRO[supreg], the applicant
searched the FY 2019 MedPAR database released with the FY 2022 IPPS
final rule and stated that it used fee-for-service IPPS discharges,
plus Maryland hospital discharges. The applicant searched for claims
reporting ICD-10-CM diagnosis code E85.81 (Light chain amyloidosis) in
conjunction with at least one of the following additional ICD-10-CM
diagnosis codes:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.082
The applicant excluded cases with a length of stay greater than 7
days from the analysis. According to the applicant, administration of
DARZALEX FASPRO[supreg] would likely be delayed if a patient becomes
seriously ill during the course of treatment, so it is unlikely a
patient would receive DARZALEX FASPRO[supreg] during an inpatient stay
lasting longer than 7 days. The applicant indicated that based on the
advice of clinical experts, it also excluded cases mapped to the
following MS-DRGs, as DARZALEX FASPRO[supreg] would not be an
appropriate treatment for patients receiving treatment for such
conditions:
[[Page 28228]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.083
[[Page 28229]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.084
After applying the case selection and exclusion criteria, the
applicant's search resulted in the identification of 114 MS-DRGs using
the FY 2019 MedPAR file dataset. The applicant imputed a case count of
11 for 104 MS-DRGs with fewer than 11 cases, resulting in a total of
1,494 cases mapping to the 114 MS-DRGs.
[[Page 28230]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.085
[[Page 28231]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.086
[[Page 28232]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.087
BILLING CODE 4120-01-C
The applicant determined an average unstandardized case weighted
charge per case of $47,599.
The applicant did not remove charges for related or prior
technologies because, per the applicant, DARZALEX FASPRO[supreg] would
not replace other therapies a patient may receive during an inpatient
stay. Next, the applicant standardized the charges using the FY 2022
IPPS/LTCH PPS final rule impact file and applied a 4-year inflation
factor of 1.281834 or 28.1834% based on the inflation factor used in
the FY 2022 IPPS/LTCH PPS final rule to update the outlier threshold
(86 FR 45542). The applicant then added charges for the new technology
by multiplying the per treatment cost of DARZALEX FASPRO[supreg] by the
inverse of the national average drug CCR of 0.187 from the FY 2022
IPPS/LTCH PPS final rule (86 FR 44966).
The applicant calculated a final inflated average case-weighted
standardized charge per case of $92,916, which exceeded the average
case-weighted threshold amount of $61,426. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that DARZALEX
FASPRO[supreg] meets the cost criterion.
We are inviting public comment on whether DARZALEX FASPRO[supreg]
meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that DARZALEX FASPRO[supreg] represents a
substantial clinical improvement over existing technologies because it
offers a treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments. The applicant also
asserted that DARZALEX FASPRO[supreg] demonstrates significant
improvement in a number of clinical outcomes including hematologic
complete response (hemCR), prolonged survival free from major organ
deterioration, increased cardiac and renal response rates, with a
demonstrated safety and tolerability profile and no negative impact to
health-related quality of life based on patient-reported outcomes.
With regard to the claim that DARZALEX FASPRO[supreg] offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments, the applicant stated
that the initial standard of therapy (CyBorD) is considered inadequate,
as most patients do not respond adequately to the CyBorD regimen alone.
Furthermore, according to the applicant, the ANDROMEDA data shows that
>80% of patients do not achieve a hemCR, >75% of patients with cardiac
disease do not have an organ response, and >75% of patients with renal
disease do not have an organ response when treated with the initial
standard of therapy CyBorD. Per the applicant, there is a high unmet
need to improve treatment for AL amyloidosis patients. The applicant
stated that rapid and deep response like hemCR are critical and are
strongly associated with organ response and improved survival in AL
amyloidosis.\110\ Per the applicant, adding DARZALEX FASPRO[supreg] to
CyBorD increases the hemCR rate by three-fold and doubles the cardiac
and renal response rates, thereby addressing this high unmet medical
need.
---------------------------------------------------------------------------
\110\ Comenzo RL, Reece D, Palladini G, et al. Consensus
guidelines for the conduct and reporting of clinical trials in
systemic light chain amyloidosis. Leukemia. 2012;26: 2317-2325.
---------------------------------------------------------------------------
With regard to the claim that the use of DARZALEX FASPRO[supreg]
significantly improves clinical outcomes for a patient population as
compared to currently available treatments, as stated previously, the
applicant asserted that DARZALEX FASPRO[supreg] represents a
substantial clinical improvement over existing technologies because it:
(1) Demonstrates a consistent safety profile; (2) significantly
improves hematologic complete response (hemCR rates); (3) maintains the
increased hemCR rates for pre-specified subgroups; (4) shortens the
time to hemCR; (5) improves very good partial response (VGPR) or better
rates; (6) substantially improves cardiac response at 6 and at 12
months; (7) improves renal response at 6 and at 12 months; (8) improves
major-organ deterioration or progression-free survival (MOD-PFS); (9)
improves Global Health status and fatigue as of cycle 6 of treatment,
and maintains health-related quality of life (HRQoL); and (10) provides
important advantages for the population with AL.
In support of these claims, the applicant submitted the ANDROMEDA
phase 3 trial as well as presentations related to these trials. The
applicant stated that data in the ANDROMEDA study demonstrated that
DARZALEX FASPRO[supreg] led to significantly better outcomes both at
the time of the primary analysis \111\ as well as at the time of
updated analyses which were presented at the 2021 ASCO annual meeting
and 2021 EHA annual meeting.\112\
---------------------------------------------------------------------------
\111\ Kastritis et al. Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis. New England Journal of
Medicine (NEJM). 2021; 385:46-58.
\112\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
---------------------------------------------------------------------------
ANDROMEDA was a randomized, open-label, phase 3 study of 388
patients with newly diagnosed AL amyloidosis randomized 1:1 to receive
6 cycles of CyBorD, either alone (control group, n=193) or in
combination with daratumumab SC (that is, DARZALEX FASPRO[supreg]),
followed by DARZALEX FASPRO[supreg] monotherapy every 4 weeks for up to
24 additional cycles (daratumumab group, n=195). The study enrolled
patients between May 3, 2018 and August 15, 2019. Median age was 64
(range 34-87). The study reported a median 11.4 month follow-up for the
published trial, and 20.3 months for the follow-up data. The primary
endpoint was hemCR, defined as having negative serum and urine
immunofixation and a free light chain ratio (FLCr) within the reference
range or abnormal free light-chain ratio if the uninvolved free light
chain (uFLC) is higher than the involved free light chain (iFLC).
According to the applicant, this definition of hemCR is in line with a
recent clarification of the Internal Society of Amyloidosis
guidelines.\113\ Secondary endpoints were survival free from major
organ deterioration or hematologic progression (composite end point
that included end-stage cardiac or renal failure,
[[Page 28233]]
hematologic progression), or death, organ response, overall survival,
hematologic complete response at 6 months, VGPR or better, time to and
duration of hematologic complete response, time to next treatment, and
reduction in fatigue. The applicant noted that the safety population in
the ANDROMEDA study consisted of 193 patients in the daratumumab arm
and 188 patients in the control arm.
---------------------------------------------------------------------------
\113\ Palladini et al. Daratumumab plus CyBord for patients with
newly diagnosed AL amyloidosis: safety run-in results of ANDROMEDA.
Blood.2020;136:71-80.
---------------------------------------------------------------------------
The applicant also cited an oral presentation, presented at the
American Society of Clinical Oncology (ASCO) 2021 and European
Hematology Association (EHA) 2021 annual meetings, with updated data
from the ANDROMEDA study after 20.3 months of follow-up, which
described sustained primary outcome of higher rates of hemCR across
subgroups as well as improved secondary endpoints of cardiac and renal
response rate at 12 months. In the intent to treat population, there
were 11 deaths in the CyBorD group compared to 7 deaths in the control
group.\114\
---------------------------------------------------------------------------
\114\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
---------------------------------------------------------------------------
In support of its assertion that DARZALEX FASPRO[supreg]
demonstrates a consistent safety profile, the applicant cited Kastritis
et al., discussed previously, stating that the safety profiles of
daratumumab and bortezomib, cyclophosphamide, and dexamethasone in the
ANDROMEDA trial were consistent with their known profiles and the
underlying disease from previous trials.\115\ To support its assertion
that DARZALEX FASPRO[supreg] significantly improves hemCR rate, the
applicant stated that the trial results showed that patients treated
with DARZALEX FASPRO[supreg] demonstrated a statistically significant
increase in hemCR compared to control (53.3% versus 18.1%; relative
risk ratio, 2.9; 95% CI, 2.1 to 4.1; odds ratio, 5.1; 95% CI, 3.2 to
8.2; p<0.001 for both comparisons) at the 11.4 month median follow-up.
To support its assertion that DARZALEX FASPRO[supreg] results in a
shorter time to hemCR, the applicant noted that in the trial, median
time to hemCR was 60 days in the daratumumab group and 85 days in the
control group. In support of its assertion that the increased hemCR
rate was maintained for pre-specified subgroups, the applicant also
stated that hemCR remained consistent in most prespecified subgroups
(for example, sex, age, weight, race, cardiac stage, etc.) receiving
daratumumab.\116\ The applicant also cited results from the oral
presentation, discussed previously, stating that after a median follow
up of 20.3 months, the percentage of patients who achieved hemCR
increased to 59% in the daratumumab group vs 19% in the control group
(odds ratio: 5.9; 95% CI, 3.7 to 9.4; P<0.001), and that this advantage
was seen consistently across all prespecified subgroups.\117\ The
applicant stated that rapid and deep hematologic responses are critical
and are strongly associated with organ response and improved survival
in AL amyloidosis.\118\
---------------------------------------------------------------------------
\115\ Kastritis E, et al., Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis, N Eng J Med. 2021; 385:46-
58.
\116\ Kastritis E, et al., Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis, N Eng J Med. 2021; 385:46-
58.
\117\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
\118\ Comenzo RL, Reece D, Palladini G, et al. Consensus
guidelines for the conduct and reporting of clinical trials in
systemic light chain amyloidosis. Leukemia. 2012;26: 2317-2325.
---------------------------------------------------------------------------
In support of its assertion that DARZALEX FASPRO[supreg] improved
VGPR or better rates, the applicant also stated that the trial
demonstrated that the secondary endpoint of VGPR or better was 78.5% in
the daratumumab group and 49.2% in the control group (relative risk
ratio, 1.6; 95% CI, 1.4 to 1.9; odds ratio, 3.8; 95% CI, 2.4 to
5.9).\119\ Per the applicant, the substantial improvements in
hematologic response rates and other endpoints like cardiac and renal
response and MOD-PFS indicate the clinical meaningfulness of these
efficacy results.
---------------------------------------------------------------------------
\119\ Kastritis et al., Daratumumab for immunoglobulin light-
chain amyloidosis. N Eng J Med 2021; 385:48-58.
---------------------------------------------------------------------------
In support of its assertion that DARZALEX FASPRO[supreg]
substantially improves cardiac response at 6 and at 12 months,
according to the applicant, of the subgroup that was evaluated for
cardiac response (118 in the daratumumab group and 117 in the control
group), 41.5% in the daratumumab group and 22.2% in the control group
(odds ratio, 2.44; 95% CI: 1.35 to 4.42) demonstrated a cardiac
response at 6 months.\120\ The applicant noted that at a median follow
up of 20.3 months, cardiac response rates were higher with in the
daratumumab group compared to CyBorD alone at 6 months (42% versus 22%,
odds ratio 2.4, 95% CI 1.4 to 4.4; P=0.0029) and at 12 months (57%
versus 28%, odds ratio 3.5 95% CI 2.0 to 6.2; P<0.0001).\121\ In
addition, in support of its assertion that DARZALEX FASPRO[supreg]
improves renal response at 6 and at 12 months, the applicant noted that
in the subgroup evaluated for renal response (117 in the daratumumab
group and 113 in the control group), 53.0% of patients in the
daratumumab group and 23.9% in the control group (odds ratio, 3.34; 95%
CI:1.88 to 5.94) demonstrated a renal response at 6 months.\122\ The
applicant noted that at a median follow up of 20.3 months, renal
response rates were higher with in the daratumumab group compared to
CyBorD alone at 6 months (54% vs 27%; odds ratio 3.3 95% CI 1.9 to 5.9;
P<0.0001) and at 12 months (57% vs 27%; odds ratio 4.1 95% CI 2.3 to
7.3; P<0.0001).\123\ The applicant noted that the percentages of
patients who had a cardiac or renal response were substantially higher
in the daratumumab group than in the control group, which it stated was
an important finding given that organ responses are also a predictor of
improved survival.
---------------------------------------------------------------------------
\120\ Kastritis E, et al., Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis, N Eng J Med. 2021; 385:46-
58.
\121\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
\122\ Kastritis E, et al., Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis, N Eng J Med. 2021; 385:46-
58.
\123\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
---------------------------------------------------------------------------
In support of its assertion that DARZALEX FASPRO[supreg] improves
MOD-PFS, the applicant noted significant findings of secondary endpoint
survival free from major organ deterioration or hematologic progression
in the daratumumab group compared to control (hazard ratio for major
organ deterioration, hematologic progression, or death, 0.58; 95% CI,
0.36 to 0.93; P = 0.02).\124\
---------------------------------------------------------------------------
\124\ Kastritis et al. Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis. NEJM. 2021;385:46-58.
---------------------------------------------------------------------------
With regard to the claim that DARZALEX FASPRO[supreg] improves
Global
[[Page 28234]]
Health status (GHS) and fatigue as of cycle 6 of treatment, as well as
maintains HRQoL, the applicant cited a poster presentation of a
subgroup analysis on patient reported outcomes (PRO) for patients
participating in the ANDROMEDA study.\125\ The applicant noted that the
patients were provided with PRO questionnaires and assessed on day 1 of
cycles -1-6 as well as every 8 weeks thereafter in the daratumumab
group. The applicant stated that of the 388 patients randomized in the
study, compliance rates for all PRO questionnaires were >90% at
baseline and >83% through Cycle 6. The questionnaires included the
European Organization for Research and Treatment of Cancer Quality of
Life Questionnaire Core 30-item (EORTC QLQ-C30), the EuroQol 5-
dimensional descriptive system (EQ-5D-5L), and Short Form-36 (SF-36).
Secondary endpoints centered around improvements in EORTC QLQ-C30
global health status (GHS), fatigue scale scores, and SF-36 mental
component summary (MCS) score. Exploratory outcomes included physical
function assessment, symptom improvement, functional improvement, and
health utility as measured by the SF-36, EORTC QLQC30 with supplemental
symptom items, and the EQ-5D-5L.
---------------------------------------------------------------------------
\125\ Sanchorawala et al., Health-Related Quality of Life in
Patients with AL Amyloidosis Treated with Daratumumab, Bortezomib,
Cyclophosphamide, and Dexamethasone: Results from the Phase 3
ANDROMEDA Study, Poster presentation at: American Society of
Hematology (ASH) Annual Virtual Meeting; December 5-8, 2020.
---------------------------------------------------------------------------
The applicant stated that the results from this presentation show
that following Cycle 6, improvements in GHS and fatigue were reported
in patients in the treatment group, and that these findings further
support the value of daratumumab SQ plus CyBorD (Dara-CyBorD) in
patients with AL amyloidosis. The applicant also stated that patients
with AL amyloidosis treated with Dara-CyBorD experienced clinical
improvements without any decrement in HRQoL over 6 cycles. The
applicant noted that the findings demonstrated that the median time to
improvement was shorter in the treatment group than in the control
group for EORTC QLQ-C30 GHS (CyBorD: 16.79 months, 95% CI:11.79 to NE,
Dara-CyBorD: 7.82 months, 95% CI: 3.94 to 17.58, HR 1.53; 95% CI: 1.10
to 2.13), fatigue scales (CyBorD: NE, 95% CI:8.44 to NE, Dara-CyBorD:
9.30 months, 95% CI: 5.55 to 13.01, HR 1.39; 95% CI: 1.00 to 1.93) and
EQ-5D-5L visual analog scale (CyBorD: NE, 95% CI:16.79 to NE, Dara-
CyBorD: 10.05 months, 95% CI: 8.41 to NE, HR 1.21; 95% CI: 0.86 to
1.71). The applicant also noted that the findings demonstrated that
median time to worsening was longer in the treatment group than in the
control group for EORTC QLQ-C30 GHS (CyBorD: 2.89 months, 95% CI:2.23
to 3.78, Dara-CyBorD: 4.70 months, 95% CI: 2.83 to 7.36, HR 0.87; 95%
CI: 0.66 to 1.13) and fatigue scales (CyBorD: 3.75 months, 95% CI: 2.86
to 4.76 Dara-CyBorD: 8.84 months, 95% CI: 3.75 to NE, HR 0.78; 95% CI:
0.58 to 1.04) and EQ-5D-5L visual analog scale (CyBorD: 3.38 months,
95% CI:2.79 to 4.67, Dara-CyBorD: 4.14 months, 95% CI: 2.86 to 7.66, HR
0.89; 95% CI: 0.67 to 1.19).\126\
---------------------------------------------------------------------------
\126\ Sanchorawala et al., Health-Related Quality of Life in
Patients with AL Amyloidosis Treated with Daratumumab, Bortezomib,
Cyclophosphamide, and Dexamethasone: Results from the Phase 3
ANDROMEDA Study, Poster presentation at: American Society of
Hematology (ASH) Annual Virtual Meeting; December 5-8, 2020.
---------------------------------------------------------------------------
Finally, the applicant stated that DARZALEX FASPRO[supreg] provides
important advantages to the population with AL amyloidosis because the
subcutaneous administration allows for a negligible volume of
administration and a reduced rate of systemic administration-related
reactions.\127\
---------------------------------------------------------------------------
\127\ Kastritis et al. Daratumumab-Based Treatment for
Immunoglobulin Light-Chain Amyloidosis. NEJM. 2021;385:46-58.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether DARZALEX FASPRO[supreg] meets
the substantial clinical improvement criterion. First, with respect to
the ANDROMEDA trial, we note that the study's open label and unblinded
design adds a potential risk of bias which may affect the treatment
effect reported by the applicant. Additionally, we note that the
ANDROMEDA trial used stratified randomization which resulted in
potentially substantive differences between the treatment and control
group at baseline; for example, the control group was slightly older,
with more males, and more people at higher cardiac stage (based on N-
terminal pro-B-type natriuretic peptide and high-sensitivity cardiac
troponin T). The groups also differed by Eastern Cooperative Oncology
Group (ECOG) performance-status scores and uninvolved free light chain
(dFLC) levels, and renal function. Additionally, compared to control,
the daratumumab group appeared to have higher rates of peripheral
sensory neuropathy, upper respiratory infection, and neutropenia in the
longer term data.\128\ We question whether these differences noted at
baseline are in fact significant and would have the potential to impact
the treatment effect seen in this study. In terms of study outcomes,
the ANDROMEDA study relied on hematologic and organ-based laboratory-
based outcomes, but we question whether a primary endpoint of overall
survival would have provided stronger evidence.
---------------------------------------------------------------------------
\128\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
---------------------------------------------------------------------------
Second, we have concerns about the generalizability of the
ANDROMEDA population and subgroups. As clarified by the applicant
during the New Technology Town Hall meeting, all subjects in the
ANDROMEDA trial received DARZALEX FASPRO[supreg] in the outpatient
setting. As such, we question whether the outcomes for this outpatient
population are generalizable to patients who are sufficiently ill to
require hospitalization. In regard to subpopulations, we note that the
prespecified groups and the studies of cardiac stage and Asian cohorts
exhibit the same potential limitations of the main trial with small
sample size, open-label, and limited follow-up. We note that small
sample size resulted in wider confidence intervals in some subgroups,
which may limit the generalizability of the treatment results. For
example, in the ANDROMEDA prespecified groups, the subgroups `other'
race, cardiac stage I at baseline, and renal stage III had wider
confidence intervals than other subgroups. Finally, while the applicant
provided a phase 2 poster presentation in support of DARZALEX
FASPRO[supreg] we question the extent to which these results are
generalizable to the indication for which the applicant has applied for
the new technology add-on payment (that is, the treatment of adult
patients with light chain (AL) amyloidosis in combination with
bortezomib, cyclophosphamide and dexamethasone in newly diagnosed
patients) given that the indication within this source (that is
monotherapy in patients with Stage 3B AL amyloidosis), does not
match.\129\
---------------------------------------------------------------------------
\129\ Kastritis E, et al., Subcutaneous Daratumumab +
Cyclophosphamide, Bortezomib, and Dexamethasone (CyBorD) in Patients
with Newly Diagnosed Light Chain (AL) Amyloidosis: Updated Results
from the Phase 3 ANDROMEDA Study, Oral presentation at: American
Society for Oncology (ASCO) Annual Virtual Meeting; June 4-8, 2021 &
Oral presentation at: European Hematology Association (EHA) Annual
Virtual Meeting; June 9-17, 2021.
---------------------------------------------------------------------------
We note that the applicant provided the outcomes of secondary
endpoints
[[Page 28235]]
which appear to be exploratory or novel for some of the data presented
in posters in support of its claims, such as the quality of life
assessments \130\ and hematologic response as measured by involved and
uninvolved free light chain,\131\ and we note that some of the
endpoints are still being studied and validated. Specifically, we
question whether these surrogate endpoints may be used to appropriately
evaluate the measure for which they are intended to assess. We request
further information on whether these secondary endpoints have been
appropriately validated in relevant clinical settings.
---------------------------------------------------------------------------
\130\ Sanchorawala et al., Health-Related Quality of Life in
Patients with AL Amyloidosis Treated with Daratumumab, Bortezomib,
Cyclophosphamide, and Dexamethasone: Results from the Phase 3
ANDROMEDA Study, Poster presentation at: American Society of
Hematology (ASH) Annual Virtual Meeting; December 5-8, 2020.
\131\ Comenzo et al., Reduction in Absolute Involved Free Light
Chain and Difference Between Involved and Uninvolved Free Light
Chain is Associated with Prolonged Major Organ Deterioration
Progression Free survival in Patient with Newly Diagnosed AL
Amyloidosis Receiving Bortezomib, Cyclophosphamide and Dexamethasone
with or without Daratumumab: Results from ANDROMEDA, Oral
presentation at: American Society of Hematology (ASH) Annual Virtual
Meeting; December 5-8, 2020.
---------------------------------------------------------------------------
We are inviting public comments on whether DARZALEX FASPRO[supreg]
meets the substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for DARZALEX FASPRO[supreg].
Comment: The applicant provided a supplemental written response
pertaining to data from the ANDROMEDA trial. The applicant clarified
that the ITT population represented all patients that underwent
randomization, while the safety population represented patients who
received at least one dose of study treatment. Per the applicant, among
the 388 patients who underwent randomization (ITT population--195 vs.
193 in the treatment vs. control group, respectively), 381 received at
least one dose of trial treatment (safety population--193 vs. 188 in
the treatment vs. control group, respectively).
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for DARZALEX FASPRO[supreg].
c. Hemolung Respiratory Assist System (Hemolung RAS)
ALung Technologies, Inc. submitted an application for new
technology add-on payments for the Hemolung Respiratory Assist System
(Hemolung RAS) for FY 2023. The applicant stated that the Hemolung RAS
is the first and only FDA authorized technology for the treatment of
acute, hypercapnic respiratory failure using an extracorporeal circuit
to remove CO2 directly from the blood. Per the applicant,
patients experiencing acute, hypercapnic respiratory failure are unable
to remove excess CO2 waste molecules from their blood via
their lungs, resulting in accumulation of CO2 in their blood
(hypercapnia), acid/base derangement (respiratory acidosis), and life-
threatening clinical sequelae.\132\ The applicant stated that the
Hemolung RAS does not treat a specific disease but removes
CO2 directly from the blood to treat a variety of underlying
respiratory disease states, including, but not limited to, cystic
fibrosis (CF), chronic obstructive pulmonary disease (COPD), and
asthma, where CO2 retention (hypercapnia) is the primary
cause of continued clinical deterioration.
---------------------------------------------------------------------------
\132\ Nin, N. et al. Severe hypercapnia and outcome of
mechanically ventilated patients with moderate or severe acute
respiratory distress syndrome. Intensive Care Med 43, 200-208
(2017).
---------------------------------------------------------------------------
Per the applicant, the Hemolung RAS provides low-flow, veno-venous
extracorporeal carbon dioxide removal (ECCO2R) using a 15.5
French dual lumen catheter inserted percutaneously in the femoral or
jugular vein, providing partial ventilatory lung support independent of
the lungs as an alternative or supplement to invasive mechanical
ventilation. The applicant stated that the Hemolung RAS removes up to
50% of basal metabolic carbon dioxide (CO2) production at
circuit blood flows of 350-550 mL/min. According to the applicant, the
Hemolung RAS is not intended to provide therapeutic levels of
oxygenation. The applicant stated that during the Hemolung RAS therapy,
blood passing through the circuit is oxygenated; however, at low
extracorporeal blood flows, the limited oxygen-carrying capacity of
blood precludes meaningful oxygenation of mixed venous blood.
Extracorporeal therapy with the Hemolung RAS requires continuous
systemic anticoagulation with unfractionated heparin or a standard of
care alternative to prevent clotting of blood in the circuit.
With respect to the newness criterion, the applicant stated that
the Hemolung RAS received Breakthrough Device Designation from FDA in
2015 specific to COPD patients experiencing acute, refractory,
hypercapnic respiratory failure. The applicant stated it is not
applying under the Breakthrough Device Alternative Pathway in the
current application for new technology add-on payments, as the
Breakthrough Device indication is different from its FDA De Novo
indication. The applicant explained that the Hemolung RAS was
classified as a Class III device and received a Breakthrough Device
designation for COPD only. According to the applicant, on April 22,
2020, the Hemolung RAS received an Emergency Use Authorization (EUA) to
treat lung failure due to COVID-19 when used as an adjunct to
noninvasive or invasive mechanical ventilation in reducing hypercapnia
and hypercapnic acidosis due to COVID-19 and/or maintaining normalized
levels of partial pressure of carbon dioxide (PCO2) and pH
in patients suffering from acute, reversible respiratory failure due to
COVID-19 for whom ventilation of CO2 cannot be adequately,
safely, or tolerably achieved. The applicant further explained Hemolung
RAS was later classified as a Class II device under the De Novo
pathway. The applicant indicated its De Novo classification request
(DEN210006) was granted on November 13, 2021, for the indication of
respiratory support providing extracorporeal carbon dioxide
(CO2) removal from the patient's blood for up to five days
in adults with acute, reversible respiratory failure for whom
ventilation of CO2 cannot be adequately or safely achieved
using other available treatment options and continued clinical
deterioration is expected. According to the applicant, the De Novo
classified Hemolung RAS became available on the market on November 15,
2021, the first business day following the FDA authorization. The
applicant indicated that it is seeking new technology add-on payments
for FY 2023 for the FDA De Novo indication for the treatment of
hypercapnic respiratory failure due to all causes in adults, which
would include the EUA indication for the use of the Hemolung RAS in
patients with respiratory failure caused by COVID-19. The applicant
stated that the following ICD-10-PCS code may be used to uniquely
describe procedures involving the use of the Hemolung RAS: 5A0920Z
(Assistance with respiratory filtration, continuous,
ECCO2R).
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be
[[Page 28236]]
considered substantially similar to an existing technology and would
not be considered ``new'' for the purposes of new technology add-on
payments. According to the applicant, patients experiencing acute,
hypercapnic respiratory failure are treated pharmacologically and with
non-invasive ventilatory support as a first line treatment. The
applicant stated that if these treatments are insufficient to support
the failing lungs, escalation of ventilatory support via intubation and
invasive mechanical ventilation (IMV) are the only available treatment
options. According to the applicant, patients who are intubated and
invasively mechanically ventilated are at significant risk for
increased morbidity and mortality. The applicant stated that no
additional treatments are available if IMV is insufficient to correct
refractory hypercapnia and respiratory acidosis, which ultimately lead
to cardiopulmonary collapse and death. Furthermore, the applicant
stated that no treatment options are available for patients who have a
Do Not Intubate (DNI) order.
With respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that the Hemolung RAS has a different mechanism of
action compared to existing technologies. According to the applicant,
IMV, the only existing technology used to treat acute, refractory,
hypercapnic respiratory failure, utilizes positive airway pressure to
deliver oxygen and remove CO2 from the lungs, whereas the
Hemolung RAS removes CO2 directly from the blood,
independent of the lungs and allowing the lungs to rest and recover.
Thus, the applicant asserted that the Hemolung RAS uses a different
mechanism of action when compared to the existing therapeutic option
(that is, IMV). The applicant also stated that extracorporeal membrane
oxygenation (ECMO) is a rescue therapy for patients experiencing
refractory hypoxemic respiratory failure, where insufficient
oxygenation is the source of the respiratory failure. However, the
applicant stated that ECMO is not suitable, nor FDA-approved, as a
treatment for acute, hypercapnic respiratory failure. Therefore, the
applicant asserted that ECMO and the Hemolung RAS are fundamentally
different technologies used to treat different patient populations.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG when compared to an existing
technology, the applicant stated that the Hemolung RAS is assigned to
the same MS-DRGs when compared to an existing technology. Per the
applicant, the Hemolung RAS is an escalation therapy to be used when
current therapies are unable to support a patient's failing lungs and
continued clinical deterioration is expected. The applicant noted that
MS-DRGs 207 and 208 (Respiratory System Diagnosis with Ventilator
Support > 96 Hours and Respiratory System Diagnosis with Ventilator
Support <= 96 Hours, respectively) relate to the treatment of
respiratory failure using mechanical ventilation, so the Hemolung RAS
may be assigned to the same MS-DRGs if mechanical ventilation is unable
to safely or adequately remove CO2 from the blood.
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 Hemolung RAS and IMV
are both used to treat patients experiencing acute, refractory,
hypercapnic respiratory failure due to numerous disease etiologies and
pathophysiologies. However, the applicant noted that the Hemolung RAS
is indicated for use as an escalation therapy when IMV is unable to
safely or adequately remove CO2 from the blood and continued
clinical deterioration is expected.
In summary, the applicant maintained that the Hemolung RAS is not
substantially similar to currently available therapies and/or
technologies because it uses a new mechanism of action and therefore
the technology meets the ``newness'' criterion.
As noted previously, the applicant received an FDA De Novo
classification for the device on November 13, 2021 (with the product
becoming commercially available on November 15, 2021), for the FDA De
Novo indication that is the subject of this application, for the
treatment of hypercapnic respiratory failure due to all causes in
adults. This De Novo indication would include use of the product for
the indication for which the applicant initially received an EUA from
FDA, for the use of the Hemolung RAS in patients with respiratory
failure caused by COVID-19. In the FY 2005 IPPS/LTCH PPS final rule, we
stated that 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 two to three 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 MS-DRG weights (69 FR 49002). While
our policy is, generally, 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 as discussed in prior rulemaking (77 FR
53348), we have noted that 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 (86 FR
45159). We refer readers to section II.F.7. of the FY 2022 IPPS/LTCH
PPS final rule (86 FR 45159 through 45160), for discussion of our
solicitation of comments regarding the newness period for products
available through an EUA for COVID-19. As discussed in section II.F.4
of the preamble of this proposed rule, we are continuing to consider
the comments we received regarding the newness period for products
available through an EUA for COVID-19 as discussed in the FY 2022 IPPS/
LTCH PPS final rule (86 FR 45159), and we welcome additional comments
in this proposed rule.
Therefore, because data reflecting the costs of the Hemolung RAS
used for the indication of COVID-19 could be available beginning with
the EUA on April 22, 2020, we question whether the newness period for
the use of the Hemolung RAS for patients with COVID-19 should begin
with the date of EUA issuance, April 22, 2020, while the newness period
for the use of Hemolung RAS for patients with other causes of
hypercapnic respiratory failure unrelated to COVID-19 should begin on
the date of commercial availability of the De Novo classified device,
November 15, 2021. As discussed in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45159 through 45160), 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, a product available only
through an EUA would not be eligible for new technology add-on
payments. Therefore, cases involving pediatric patients, or cases
involving the use of the Hemolung RAS for greater than 5 days, would
not be eligible for new technology add-on payment if the Hemolung RAS
is approved for new technology add-on payment for the patient
population indicated in its FDA De Novo marketing authorization.
We invite public comments on whether the newness period for the
Hemolung RAS when used for patients with COVID-19 should begin on April
22, 2020 (the date of its EUA), when the product became available on
the market for this indication. We are inviting
[[Page 28237]]
public comments on whether the Hemolung RAS is substantially similar to
existing technologies and whether the Hemolung RAS meets the newness
criterion.
With respect to the cost criterion, the applicant presented the
following analysis. The applicant searched the FY 2019 MedPAR Limited
Data Set (LDS) for cases that received ventilator support to identify
patients who may have been eligible for the Hemolung RAS. The applicant
reviewed multiple ICD-10-CM and ICD-10-PCS codes related to respiratory
failure and hypercapnic disease and determined that two ICD-10-PCS
codes were most applicable: 5A1955Z (Respiratory ventilation, greater
than 96 consecutive hours) and 5A1945Z (Respiratory ventilation, 24-96
consecutive hours). We note that, in the applicant's analysis, it
listed ICD-10-PCS code 5A1955Z as 5A1935Z (Respiratory ventilation,
greater than 96 consecutive hours), but we believe the applicant
intended to reference the correct ICD-10-PCS code 5A1955Z (Respiratory
ventilation, greater than 96 consecutive hours) to correctly map to MS-
DRG 207 (Respiratory System Diagnosis with Ventilator Support > 96
Hours).
The applicant identified 68,317 cases mapping to MS-DRGs 207
(Respiratory System Diagnosis with Ventilator Support > 96 Hours) and
208 (Respiratory System Diagnosis with Ventilator Support <= 96 Hours).
MS-DRG 207 contained 24.6% of the cases and MS-DRG 208 contained the
remaining 75.4% of cases.
Next, the applicant removed 100% of the inhalation charges and
charges associated with a 1-day length of stay (LOS) in the intensive
care unit (ICU). The applicant explained that it removed the 1 day of
routine care plus ICU day charges based on an assumed LOS reduction
associated with the use of the Hemolung RAS from relevant cases (as
compared to cases without the Hemolung RAS) to estimate the potential
decrease in costs as a result of the use of the Hemolung RAS.\133\ The
applicant then standardized the charges and applied a 4-year inflation
factor of 1.281834 or 28.1834%, based on the inflation factor used in
the FY 2022 IPPS/LTCH PPS final rule and correction notice to calculate
outlier threshold charges (86 FR 45542). The applicant then added
charges for the new technology, which it calculated by dividing the
cost of the Hemolung RAS by the national average CCR for inhalation
therapy, which is 0.147 (86 FR 44966).
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\133\ Tiruvoipati, et al., ``Effects of Hypercapnia and
Hypercapnic Acidosis on Hospital Mortality in Mechanically
Ventilated Patients:'' Crit Care Med. Vol 456(7). e649-e656.
---------------------------------------------------------------------------
The applicant calculated a final inflated average case-weighted
standardized charge per case of $178,436, which exceeded the average
case-weighted threshold amount of $102,867. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that the
Hemolung RAS meets the cost criterion.
After review of the cost analysis provided by the applicant, we
question whether the analysis should have included patients who would
also require a tracheostomy, which could result in cases mapping to the
Pre-Major Diagnostic Category (Pre-MDC) MS-DRGs 003 or 004 if used with
mechanical ventilation, and whether the inclusion of those additional
MS-DRGs would impact the cost analysis. We are seeking comments on
whether the Hemolung RAS meets the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that the Hemolung RAS offers a treatment option for
patients unresponsive to non-invasive mechanical ventilation (NIV),
patients unresponsive to invasive mechanical ventilation (IMV), and
patients ineligible for currently available treatments (that is,
failure of NIV with DNI order). Further, the applicant asserted that
the Hemolung RAS significantly improves clinical outcomes relative to
available services or technologies.
With regard to the claim that the Hemolung RAS offers a treatment
option for patients unresponsive to NIV, the applicant noted that while
acute respiratory failure can often be treated with NIV, which does not
require intubation and is typically safe and well tolerated, 12-50% of
patients are unresponsive to NIV as a result of several factors,
including elevated respiratory rates, uncorrected respiratory acidosis,
and reduced level of consciousness.134 135 136 Further, the
applicant stated that if a patient fails NIV, the only currently
indicated treatment is escalation to IMV; however, per the applicant,
intubation and IMV following NIV failure is associated with a 200%
increase in mortality compared to patients successfully treated with
NIV; 27% vs 9% mortality rate, respectively.\137\
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\134\ Conti, V. et al. Predictors of outcome for patients with
severe respiratory failure requiring noninvasive mechanical
ventilation. Eur Rev Med Pharmacol Sci 19, 3855-3860 (2015).
\135\ Bott, J. et al. Randomised controlled trial of nasal
ventilation in acute ventilatory failure due to chronic obstructive
airways disease. Lancet 341, 1555-1557 (1993).
\136\ Phua, J., Kong, K., Lee, K.H., Shen, L. & Lim, T.K.
Noninvasive ventilation in hypercapnic acute respiratory failure due
to chronic obstructive pulmonary disease vs. other conditions:
Effectiveness and predictors of failure. Intensive Care Med 31, 533-
539 (2005).
\137\ Chandra, D. et al. Outcomes of noninvasive ventilation for
acute exacerbations of chronic obstructive pulmonary disease in the
United States, 1998-2008. Am. J. Respir. Crit. Care Med. 185, 152-
159 (2012).
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The applicant asserted that the Hemolung RAS can be an effective
tool for patients unresponsive to NIV by rapidly correcting respiratory
acidosis (pH and arterial partial pressure of carbon dioxide
(PaCO2)), thereby reducing respiratory drive and improving
NIV efficacy. In support of this claim, the applicant submitted a
consensus paper by Combes et al.\138\ In this consensus paper, 14
clinical experts in critical care and respiratory support using
ECCO2R convened to determine how ECCO2R therapy
is applied, identify how patients are selected, and discuss how
treatment decisions are made. Per the applicant, the results of the
paper showed that there were two groups of patients where
ECCO2R therapy was indicated--patients with acute
respiratory distress syndrome (ARDS) or patients with COPD. The
treatment goal for ECCO2R therapy in patients with ARDS is
to provide ultra-protective lung ventilation via managing
CO2 levels. The criteria for initiating ECCO2R
therapy in patients with ARDS and on NIV is when there was no decrease
in PaCO2 and no decrease in respiratory rate. In patients
with acute COPD exacerbation, treatment targets were patient comfort,
pH between 7.30-7.35, respiratory rate less than 20-25 breaths per
minute, decrease of PaCO2 by 10-20%, weaning from NIV,
decrease in bicarbonate levels (HCO3), and maintaining
hemodynamic stability. The clinical experts came to the consensus that
ECCO2R therapy may be an effective support treatment for
adults with ARDS or COPD exacerbation, but noted the need for further
evidence from randomized clinical trials and/or high quality
prospective studies to better guide decision-making.
---------------------------------------------------------------------------
\138\ Combes, A. et al. ECCO2R therapy in the ICU:
Consensus of a European round table meeting. Critical Care 24,
(2020).
---------------------------------------------------------------------------
The applicant also submitted three peer-reviewed publications in
support of this claim. First the applicant cited Bonin et al.,\139\ a
case study of a 50-year-
[[Page 28238]]
old male awaiting a bilateral lung transplant, admitted for COPD
exacerbation caused by infection. The patient was initially treated
with antibiotics and continuous NIV, which he tolerated for three days.
After three days, the patient decompensated due to a spontaneous
pneumothorax. The lung was emergently reinflated, but the patient's
respiratory status continued to decline with a PaCO2 between
72-85 mmHg, pH of less than 7.3, and a respiratory rate of 30-40. The
patient showed signs of exhaustion but did not qualify for intubation
due to the recent pneumothorax. The patient consented to the Hemolung
RAS therapy and within the first hour of treatment, the patient's
respiratory rate improved to around 10 breaths/minute. However, the
patient was no longer able to tolerate the NIV minimum set breathing
rate, so the minimum set breathing rate was turned off. The
PaCO2 decreased to 55-60 mmHg for the duration of therapy (6
days). The patient was able to be successfully weaned from continuous
NIV. The patient was also able to take oral nutrition and participate
in interventions against pressure sores. After day 6, the patient was
able to wean from the Hemolung RAS support and continue with
intermittent NIV support.
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\139\ Bonin, F., Sommerwerck, U., Lund, L. & Teschler, H.
Avoidance of intubation during acute exacerbation of chronic
obstructive pulmonary disease for a lung transplant candidate using
extracorporeal carbon dioxide removal with the Hemolung. The Journal
of Thoracic and Cardiovascular Surgery 145, e43-e44 (2013).
---------------------------------------------------------------------------
Second, the applicant cited a multi-national pilot study done by
Burki et al.\140\ in India and Germany. There were 20 COPD patients
with hypercapnic respiratory failure treated with ECCO2R
therapy and placed into 1 of 3 groups. Group 1 had seven patients on
NIV with a high likelihood of requiring IMV; Group 2 had two patients
who could not be weaned from NIV; and Group 3 had 11 patients on IMV
who failed weaning attempts. The authors found that the device was
well-tolerated with complications and rates similar to those seen with
central venous catheterization. The patients in Group 1 successfully
avoided IMV as a result of ECCO2R therapy, although three
patients died within 30 days of ECCO2R therapy due to
underlying disease states. The patients in Group 2 were successfully
weaned from continuous NIV after receiving ECCO2R therapy
and were alive 30 days after ECCO2R therapy, but remained on
intermittent non-invasive, positive-pressure ventilation (NIPPV)
support. Of the patients in Group 3, nine of the 11 patients had been
on IMV for greater than 15 days prior to ECCO2R therapy. In
Group 3, three patients were weaned from IMV, three patients had
decreased IMV support, one patient expired from retroperitoneal bleed
following catheterization, and one patient remained on the same level
of ventilatory support despite receiving ECCO2R therapy. The
authors concluded that the single catheter, low-flow ECCO2R
system, provided clinically useful levels of CO2 removal in
patients with COPD and could be a potentially valuable addition to the
treatment of hypercapnic respiratory failure.
---------------------------------------------------------------------------
\140\ Burki, N. et al. A novel extracorporeal CO2
removal system: Results of a pilot study of hypercapnic respiratory
failure in patients with COPD. Chest 143, 678-686 (2013).
---------------------------------------------------------------------------
Third, the applicant cited a case series by Tiruvoipati et al.
(2016),\141\ which retrospectively reviewed 15 patients among three
Australian ICUs treated with the Hemolung RAS who had severe
hypercapnic respiratory failure due to COPD, ARDS, asthma, or
bronchiolitis obliterans syndrome (BOS), to show that ECCO2R
was safe and effective in the removal of CO2. For five
patients (four with COPD and one with BOS), the indication for the
Hemolung RAS was to avoid intubation, whereas for the other 10 patients
(five with acute lung injury/ARDS, three with asthma, and two with
COPD), the indication was to institute lung-protective ventilation. The
median age of the patients was 61.5 years; 12 patients were men, the
median Acute Physiology and Chronic Health Evaluation III (APACHE III)
score was 85, and the median duration of ECCO2R was 5 days.
The primary outcome measures of the study were clearance of
CO2 and change in pH with the use of ECCO2R.
Secondary outcome measures included complications associated with
Hemolung RAS use, survival to weaning from the Hemolung RAS, and
survival to ICU and hospital discharge. There was no specified protocol
for managing mechanical ventilation across the three centers; however,
all centers used low-pressure ventilation for ARDS. For asthma, the
mechanical ventilation was characterized by low tidal volume, low
respiratory rate, and short inspiratory time associated with prolonged
expiratory time to avoid dynamic hyperinflation. Four of the five
patients treated for this indication, as well as all 10 patients who
were treated to institute lung-protective ventilation, avoided
intubation; successful lung-protective ventilation was achieved by a
reduction in peak inspiratory pressure, tidal volume, and minute
ventilation. The clearance of CO2 and return of
PaCO2 to near-normal levels was achieved within 6 hours, and
there was significant reduction in minute ventilation and peak airway
pressures. Complications reported during the study included hemorrhage,
thrombocytopenia, and compartment syndrome, none of which required
cessation of the Hemolung RAS therapy. Overall, 93.3% of the patients
survived to discontinuation of ECCO2R, 73.3% of patients
survived to ICU discharge, and 66.66% of patients survived to hospital
discharge. In conclusion, the study authors stated that the Hemolung
RAS appears to be safe and effective for managing hypercapnic
respiratory failure of various etiologies, but noted that more research
is needed to clarify which patients may benefit most from this therapy.
---------------------------------------------------------------------------
\141\ Tiruvoipati, R. et al. Early experience of a new
extracorporeal carbon dioxide removal device for acute hypercapnic
respiratory failure. Crit Care Resusc 18, 261-269 (2016).
---------------------------------------------------------------------------
In addition to the previous peer-reviewed studies, the applicant
also cited the Hemolung RAS Registry Program Analysis in support of its
claim.\142\ Per the applicant, the voluntary Hemolung RAS Registry
Program collected data from commercial use of the Hemolung RAS outside
of the US as well as US EUA therapies. 176 patients from the Hemolung
RAS Registry were analyzed to evaluate the benefits and safety of the
Hemolung RAS therapy. The applicant stated that the Hemolung RAS
Registry Program Analysis demonstrated that 86% (19/22) of patients
failing NIV avoided intubation due to the Hemolung RAS therapy.
---------------------------------------------------------------------------
\142\ Alung, Inc., HL-CA-1600, Hemolung RAS Registry. A
Retrospective Registry Involving Voluntary Reporting of De-
identified, Standard of Care Data Following the Commercial Use of
the Hemolung Respiratory Assist System (RAS). ClinicalTrials.gov.
Retrieved December 21, 2021, from Hemolung RAS Registry Program--
Full Text View--ClinicalTrials.gov.
---------------------------------------------------------------------------
With respect to the applicant's assertion that the Hemolung RAS
offers a treatment option for patients unresponsive to IMV and are
retaining CO2, the applicant stated that the Hemolung RAS
de-couples CO2 removal from the mechanical ventilator
thereby allowing correction of hypercapnia and hypercapnic acidosis
without a dangerous escalation of ventilator settings. The applicant
provided 10 publications that document the use of the Hemolung RAS in
patients unresponsive to IMV to significantly reduce ventilator
settings to lung safe levels or to significantly correct and control
hypercapnic acidosis, including
[[Page 28239]]
Tiruvoipati et al. (2016) \143\ and Combes et al.,\144\ discussed
previously.
---------------------------------------------------------------------------
\143\ Tiruvoipati, R. et al. Early experience of a new
extracorporeal carbon dioxide removal device for acute hypercapnic
respiratory failure. Crit Care Resusc 18, 261-269 (2016).
\144\ Combes, A. et al. ECCO2R therapy in the ICU:
Consensus of a European round table meeting. Critical Care 24,
(2020).
---------------------------------------------------------------------------
In the first case study, a 44-year-old male with acute asthma
exacerbation went into respiratory arrest and was intubated in the
emergency department (ED).\145\ The patient was found to have a left
tension pneumothorax, which was decompressed, and then developed a
second tension pneumothorax on the right side, which was also
decompressed. The patient was transferred to the ICU for further
management. The patient continued to deteriorate over the subsequent 48
hours due to subcutaneous emphysema and ongoing air leaks, and after 72
hours had uncontrollable hypercapnia (PaCO2 73, pH 7.22)
despite optimal medical management with corticosteroids, nebulized and
intravenous bronchodilators, magnesium, ketamine, and muscle relaxants.
ECCO2R was indicated for hypercapnia and to facilitate de-
escalation of IMV. After initiating ECCO2R, it was possible
to decrease the support on the IMV while maintaining satisfactory gas
exchange and allowing the withdrawal of muscle relaxants. Within 1 hour
of initiation of ECCO2R, the pH improved from 7.22 to 7.28,
and the PaCO2 went from 68.1 to 60.6. The patient remained
on ECCO2R for a total of 7 days mainly due to ongoing air
leaks from three chest drains and a bleeding complication that was
managed with transfusion. After discontinuing ECCO2R
therapy, the patient received a tracheostomy to assist in weaning from
IMV. The patient was successfully weaned from IMV after 23 days in the
ICU and was ultimately discharged home. The authors discussed that
while this patient could have been treated with ECMO, the use of ECMO
is limited to specialized centers and requires a multidisciplinary
approach for a successful outcome.
---------------------------------------------------------------------------
\145\ Tiruvoipati R, et al. Low-flow veno-venous extracorporeal
carbon dioxide removal in the management of severe status
asthmatics: A case report. Clin Respir J. 2014;10(5):653-656.
---------------------------------------------------------------------------
In the second case study, the Hemolung RAS system was used to treat
hypercapnia in a 58-year-old male patient with an out-of-hospital
cardiac arrest where mechanical ventilation failed to achieve
normocapnia.\146\ The patient was intubated in the ED and treated with
nebulized bronchodilators, corticosteroids, and therapeutic
hypothermia. Initially, the PaCO2 was 82 mmHg (baseline 50
mmHg) with a pH of 7.20, but as the next few hours progressed, the
patient became more difficult to ventilate and the PaCO2
increased to 94 mmHg. ECCO2R therapy was indicated to
prevent lung injury and secondary brain injury. After initiating the
Hemolung RAS, the minute ventilation and the respiratory rate could be
decreased and the team was able to optimize the inspiratory and
expiratory time ration to minimize the risk of barotrauma. The patient
was on the Hemolung RAS therapy for 3 days and was able to de-escalate
the ventilator settings, but still required mechanical ventilation.
After cessation of the Hemolung RAS therapy, the patient started to
show signs of significant hypoxic brain injury. Despite maximal medical
treatment, the neurological prognosis was considered to be very poor,
and all life-sustaining therapies were withdrawn. The authors stated
that ECCO2R therapy is safe to use in a metropolitan
hospital where the staff have a limited period of education, and that
the extracorporeal therapy was delivered without complications. The
authors also stated that ECMO is not an option in every health care
center since it requires a specialized team including cardiac surgeons
and perfusionists and is costly. The authors stated that
ECCO2R is less invasive and able to provide partial
respiratory support. Thus, the authors concluded that ECCO2R
may have a role in patients with severe respiratory failure when IMV
alone is inadequate and in centers that are not capable of initiating
ECMO in the management of severe hypercapnic respiratory failure.
---------------------------------------------------------------------------
\146\ Tiruvoipati R, et al. Management of severe hypercapnia
post cardiac arrest with extracorporeal carbon dioxide removal.
Anaesth Intensive Care. 2014;42(2):248-252.
---------------------------------------------------------------------------
Next, the applicant cited a United Kingdom case study about a 48-
year-old male presenting to the ED with 7 days of cough, fever, and
shortness of breath.\147\ He tested positive for COVID-19 via
respiratory viral swab and had a chest x-ray demonstrating bilateral
infiltrates. He initially required supplemental oxygen via facemask and
oral doxycycline to treat possible bacterial co-infection. He continued
to deteriorate, was trialed on NIV and failed, and was then
transitioned to IMV on day four of the hospitalization and transferred
to the ICU for further management. The patient continued to deteriorate
and within a week and was found to be in ARDS due to COVID-19
pneumonitis. The patient was treated with several strategies for lung
recruitment, and was referred to ECMO but was declined on the basis of
futility. The treatment team felt that continuing to treat the patient
with high airway pressure was contributing to the progression of the
ARDS, so the Hemolung RAS was initiated as a rescue therapy. After
initiation, the PaCO2 and pH improved, which allowed the
treatment team to reduce the tidal volume and respiratory rate. The
patient spent 6 days on the Hemolung RAS without bleeding events or
vasopressors and could continue to receive prone position ventilation
without complication. The patient was successfully weaned from the
Hemolung RAS and then completed a slow respiratory wean followed by a
percutaneous tracheostomy. The patient was ultimately discharged from
the ICU to home with mobility and cognition intact. The authors
concluded that ECCO2R can be used as a rescue therapy for
patients with hypercapnic respiratory failure resulting from ARDS in
COVID-19 pneumonitis and to facilitate lung protective ventilation in
patients on IMV. According to the authors, refractory hypercapnia is an
acceptable indication for ECMO in ARDS and that ECCO2R can
be considered as rescue therapy if ECMO is deemed inappropriate or
cannot be delivered due to resource constraints. Per the authors,
potential advantages of using ECCO2R over ECMO include lack
of requirement for transfer to an ECMO center, smaller catheter size,
and lower blood flow rate which may reduce the likelihood of
complications.
---------------------------------------------------------------------------
\147\ Tully RP, et al. The successful use of extracorporeal
carbon dioxide removal as a rescue therapy in a patient with severe
COVID-19 pneumonitis. Anaesthesia Reports 2020; 8:113-115.
---------------------------------------------------------------------------
The applicant also cited a case study of an 18-year-old male with
solitary mediastinal metastasis and ARDS, in which the Hemolung RAS was
used to facilitate de-escalation of mechanical ventilation.\148\ Post-
treatment with chemotherapy, a residual mediastinal mass was found with
extension to the left lung hilum. The patient underwent lung resection
and was extubated postoperatively without issue. The patient became
febrile and developed a progressively extensive right lung infiltrate.
On postoperative day five, the patient developed severe hypercapnia,
hypoxemia, and hypotension, necessitating re-intubation and invasive
mechanical ventilation. The Hemolung RAS was initiated to provide
ECCO2R. Arterial PCO2 decreased from 73 to 53
[[Page 28240]]
mmHg within 4 hours (with a concomitant pH increase from 7.28 to 7.44),
permitting tidal volume reduction to 3.5 mL/kg, and plateau airway
pressure to 25 cm H2O, with simultaneous hemodynamic improvement.
ECCO2R was titrated to maintain an arterial PCO2
between 45 and 50 mmHg, and the patient was weaned and decannulated
after 71 hours of support. The patient was removed from mechanical
ventilation within 24 hours and then transferred to an intermediate
care unit. No ECCO2R-related complications were observed.
The authors stated the Hemolung RAS has a conceptual advantage over
ECMO as the Hemolung RAS uses one small dual-lumen venous catheter,
without additional arterial access and its attendant risks. The authors
concluded that in appropriately selected patients, a minimally invasive
ECCO2R approach may be useful.
---------------------------------------------------------------------------
\148\ Akkanti B, et al. Low-flow extracorporeal carbon dioxide
removal using the Hemolung Respiratory Dialysis System[supreg] to
facilitate lung-protective mechanical ventilation in acute
respiratory distress syndrome. J Extra Corpor Technol.
2017;49(2):112-114.
---------------------------------------------------------------------------
Next, the applicant cited a case study by Saavedra-Romero et
al.,\149\ which describes the use of ECCO2R immediately
administered with lung-protective mechanical ventilation on a patient
with COVID-19 ARDS in her mid-60s. The authors stated that, upon
arrival to the ICU, on inpatient day 5, the patient's oxygen saturation
by pulse oximeter (SpO2) was 77%, blood pressure (BP) 90/40
on norepinephrine at 10 mcg/min, and the patient's initial arterial
blood gas (ABG) results were pH = 7.14, PaCO2 = 90 mmHg,
PaO2 = 52 mmHg, and HCO3 = 30mEq/L. The patient
had significant whole-body subcutaneous crepitus, and the chest x-ray
(CXR) showed an inflated right lung, subcutaneous emphysema, and an
appropriately positioned endotracheal tube (ETT). The patient became
increasingly tachycardic and tachypneic due to further worsening of
hypercapnia and respiratory acidosis. ECCO2R was initiated
using the Hemolung RAS and was administered for 17 days without
complications. Ventilator settings were maintained at PEEP of 14, rate
of 26, and minute ventilation at 7.8 liters during the first 24 hours.
Respiratory rate and tidal volumes were subsequently titrated downward,
maintaining adequate oxygen levels and permissive hypercapnia. The
patient's chest tubes were removed 4 days after the Hemolung RAS
decannulation, and the patient was weaned from mechanical ventilation
28 days from ICU admission, and discharged 47 days after admission. The
authors stated that this case report highlights the use of
ECCO2R to facilitate effective treatment of a patient with
severe hypercapnic respiratory failure secondary to COVID-19 ARDS and
multiple risk factors for death. The authors stated that treatment with
ECCO2R allowed a lung-protective ventilator management
strategy with ultralow tidal volumes, minimizing the risk of
ventilator-induced lung injury, attenuating severe hypercapnia and
acidosis, and limiting the expansion of an existing pneumothorax. The
authors concluded that ECCO2R facilitates early lung-
protective ventilation and control of refractory hypercapnia and can be
safely utilized to increase the likelihood of survival among patients
with severe COVID-19 ARDS.
---------------------------------------------------------------------------
\149\ Saavedra-Romero R, et al. Treatment of Severe Hypercapnic
Respiratory Failure Caused by SARS-CoV-2 Lung Injury with
ECCO2R Using the Hemolung Respiratory Assist System. Case
Reports in Critical Care 2021; 1-5.
---------------------------------------------------------------------------
Finally, the applicant cited a case study by Bermudez et al.,\150\
in which a 33-year-old male with cystic fibrosis (CF), post double lung
transplantation who developed severe hypercarbic respiratory failure
due to adenovirus pneumonia requiring hospitalization, tracheostomy,
and prolonged IMV for greater than 30 days. The patient was transferred
to a tertiary care center and was treated with the Hemolung RAS because
of persistent hypoxemia and hypercarbia. The patient was not a
candidate for ECMO because of frail clinical condition, volume
overload, and need for a redo lung transplantation. After 4 days of the
Hemolung RAS support, the patient was weaned from vasopressors, and
after 9 days, the patient was accepted as a candidate for redo lung
transplantation because of considerable clinical improvement.
---------------------------------------------------------------------------
\150\ Bermudez, et al. ``Prolonged Use of the Hemolung
Respiratory Assist System as a Bridge to Redo Lung Transplantation''
Annals of Thorac Surg. 2015 Vol 100 (6). P. 2330-2333.
---------------------------------------------------------------------------
Lastly, the applicant provided a retrospective, multicenter study
of 31 patients placed on the Hemolung RAS at 8 sites across the
U.S.\151\ The cohort was comprised of patients with COVID-19 who were
mechanically ventilated with severe hypercapnia and respiratory
acidosis and treated with low-flow extracorporeal CO2
removal treated between March 4 and September 30, 2020. Two patients
underwent cannulation but were never started on therapy due to a
vascular access failure in one patient and immediate circuit clotting
in the other. For the 29 patients who received the Hemolung RAS
treatment, analysis of covariance revealed a significant improvement
trend in both pH and PaCO2 (p<0.0001). Comparison of time
intervals yielded a statistically significant improvement in pH (7.24
0.12 to 7.35 0.07; p<0.0001) and decrease in
PCO2 (79 23 to 58 14; p<0.0001)
from baseline to 24 hours after start of therapy. There were numerical,
but not significant, decreases from baseline to 24 hours in respiratory
rate (26.6 5.4 to 23.4 4.9), tidal volume
(407 100 to 386 75 mL), and minute
ventilation (10.2 3.2 to 8.7 2.2 L/min). The
authors indicated that this is the first reported use of
ECCO2R in the U.S. for this patient population. The authors
reported that limitations of the study are its small size and single-
cohort retrospective nature. The applicant stated that the study
results demonstrated the efficacy of ECCO2R using the
Hemolung RAS to improve respiratory acidosis in patients with severe
hypercapnic respiratory failure due to COVID-19.
---------------------------------------------------------------------------
\151\ Akkanti B, et al. Physiologic Improvement in Respiratory
Acidosis Using Extracorporeal CO2 Removal With Hemolung
Respiratory Assist System in the Management of Severe Respiratory
Failure From Coronavirus Disease 2019. Critical Care Explorations.
2021;3:e0372.
---------------------------------------------------------------------------
In addition to the case reports and retrospective study, the
applicant also cited to the Hemolung RAS Registry Program Analysis,
discussed previously, in support of its claim.\152\ The applicant
stated that the Hemolung RAS Registry Program Analysis demonstrated
clinically and statistically significant correction of pH and
PaCO2 within the first day of the Hemolung RAS therapy
(p<0.05).\153\ Additionally, the applicant noted that the statistical
analysis showed this correction in pH and PaCO2 was
independent of the patient's primary diagnosis.
---------------------------------------------------------------------------
\152\ Alung, Inc., HL-CA-1600, Hemolung RAS Registry. A
Retrospective Registry Involving Voluntary Reporting of De-
identified, Standard of Care Data Following the Commercial Use of
the Hemolung Respiratory Assist System (RAS). ClinicalTrials.gov.
Retrieved December 21, 2021, from Hemolung RAS Registry Program--
Full Text View--ClinicalTrials.gov.
\153\ Ibid. ClinicalTrials.gov. Retrieved December 21, 2021,
from Hemolung RAS Registry Program--Full Text View--
ClinicalTrials.gov.
---------------------------------------------------------------------------
With respect to the applicant's assertion that the Hemolung RAS
offers a treatment option for patients ineligible for currently
available treatments (for example, patients with a DNI order), the
applicant reiterated that intubation with IMV is the only currently
available treatment option for patients failing NIV; however, the
applicant indicated that these patients have no other therapeutic
options if they were to fail NIV because of their preference to not be
intubated. According to the applicant, the CO2 removal by
the Hemolung RAS would rapidly correct the pH and PaCO2
which would reduce the respiratory drive and improve NIV
[[Page 28241]]
efficacy and prevent continued clinical
deterioration.154 155
---------------------------------------------------------------------------
\154\ Burki, N. et al. A novel extracorporeal CO2
removal system: Results of a pilot study of hypercapnic respiratory
failure in patients with COPD. Chest 143, 678-686 (2013).
\155\ Tiruvoipati, R. et al. Early experience of a new
extracorporeal carbon dioxide removal device for acute hypercapnic
respiratory failure. Crit Care Resusc 18, 261-269 (2016).
---------------------------------------------------------------------------
The applicant submitted three peer-reviewed case reports that have
documented the use of the Hemolung RAS in patients failing NIV with a
DNI order. In the first case study done in Germany,\156\ a 72-year-old
female with a past medical history of severe COPD (GOLD 4, nocturnal
home ventilation therapy) with a DNI order presented to an ED in a
hypercapnic coma. The patient had a Glasgow Coma Score of 3, pH of
6.97, and PaCO2 greater than 150 mm Hg. The patient was
hemodynamically stable on NIV with a respiratory rate of 28, oxygen
saturation of 88% on supplemental oxygen with an inspired fraction
(FiO2) of 30%. After 30 minutes of NIV treatment, the
patient's PaCO2 improved, but the patient was nearly
unconscious and was transferred to the ICU. Because of the high
predictive mortality for patients with severe COPD who fail NIV and
require intubation and invasive mechanical ventilation, combined with
the patient's DNI order, the Hemolung RAS was initiated to supplement
treatment. Within the first hour of treatment with both NIV and
Hemolung RAS, the PaCO2 levels continued to decrease from
109 mmHg to 89 mmHg and the patient's level of consciousness improved
after about 25 minutes. Ultimately, the patient was able to start oral
nutrition, communicate, and start mobilizing early because of her
improved mental state within four hours of starting the Hemolung RAS
and was discharged to rehabilitation.
---------------------------------------------------------------------------
\156\ Engel, M., Albrecht, H. & Volz, S. Use of Extracorporeal
CO2 Removal to Avoid Invasive Mechanical Ventilation in
Hypercapnic Coma and Failure of Noninvasive Ventilation. J Pulm
Respir Med 6, 1-3 (2016).
---------------------------------------------------------------------------
The second case study by Mani et al. described two patients with
severe COPD admitted to the ICU with an acute COPD exacerbation
requiring NIV, but failed NIV treatments.\157\ A 69-year-old female in
India was admitted with acute COPD exacerbation, waning consciousness
and a pH of 7.20 and PaCO2 of 101 mmHg. After starting NIV
for 2 hours, the PaCO2 had risen to 105 mmHg and pH had
dropped to 7.193. After 1 hour of the Hemolung RAS treatment and NIV,
the PaCO2 declined to 93 mmHg with a pH 7.25. After 6 hours
of treatment with the Hemolung RAS and NIV, the patient was awake with
a PaCO2 of 68 mmHg and a pH of 7.35. Ultimately, she was
discharged to home on home oxygen and nocturnal NIV. There was also a
report of a 78-year-old male with COPD and other comorbidities who had
a DNI order in Germany. He was admitted with an acute COPD exacerbation
and treated with NIV after his initial arterial blood gas (ABG) showed
PaCO2 92 mmHg and pH of 7.24. After treatment with both the
Hemolung RAS and NIV for 1 hour, the patient's PaCO2 dropped
to 68 mmHg and pH 7.33. Ultimately, the patient was discharged to home
on nocturnal NIV. Both patients were both diagnosed with
thrombocytopenia as a known complication of extracorporeal therapy, but
neither required transfusion.
---------------------------------------------------------------------------
\157\ Mani, R.K., Schmidt, W., Lund, L.W. & Herth, F.J.F.
Respiratory dialysis for avoidance of intubation in acute
exacerbation of COPD. ASAIO J 59, 675-678 (2013).
---------------------------------------------------------------------------
The applicant submitted a third case study in which Cole et al.
describe a 62-year-old female with past medical history of COPD (GOLD
class 3) and 2 recent hospitalizations for COPD exacerbations in the
past 60 days.\158\ The patient had hypercapnic respiratory failure for
which she did not want to be intubated, so she was started on NIV. She
initially improved, but by day four of NIV treatment, she deteriorated,
as evidenced by tachypnea and fatigue due to increased work of
breathing. She was started on the Hemolung RAS and within two hours
therapy with the Hemolung RAS alone (patient requested to stop NIV with
the initiation of the Hemolung RAS), the patient's respiratory rate
improved. Within 6 hours, the patient was able to converse and fully
engage with her treatment. Ultimately the patient was discharged to
home at her baseline activity level and did not require home oxygen
therapy, and was not readmitted to hospital within 30 days of
discharge.
---------------------------------------------------------------------------
\158\ Cole, S. et al. Extracorporeal carbon dioxide removal as
an alternative to endotracheal intubation for noninvasive
ventilation failure in acute exacerbation of COPD. J Int Care Soc
15, 344-346 (2014).
---------------------------------------------------------------------------
Furthermore, the applicant claimed that the Hemolung RAS
significantly improves clinical outcomes relative to services or
technologies previously available by mitigating the harmful clinical
sequelae from hypercapnic acidosis and facilitates de-escalation of
high pressure and high volume ventilatory support or prevent
intubation, both of which are known predictors for poor clinical
outcomes. Thus, per the applicant, the correction of hypercapnia and
hypercapnic acidosis (that is, pH and PaCO2) are appropriate
surrogate markers for improved clinical outcomes in critically ill,
mechanically ventilated patients. Per the applicant, the use of
correction of hypercapnia and hypercapnic acidosis as surrogate markers
for improved clinical outcomes was accepted by FDA as evidence of the
clinical benefit of the Hemolung RAS as part of FDA's clearance of its
De Novo request.
The applicant asserted that the pH and PaCO2 correction
due to the Hemolung RAS therapy provide the following six improved
outcomes: (1) Reduced mortality in intubated and IMV patients; (2)
reduced length of stay in IMV patients; (3) de-escalation of mechanical
ventilation settings (decreased rate of subsequent diagnostic or
therapeutic interventions); (4) avoidance of intubation following NIV
failure; (5) reduced mortality in NIV patients; and (6) improvement in
activities of daily living/quality of life.
In support of its assertion that the Hemolung RAS reduces mortality
in intubated and IMV patients, the applicant cited two background
studies.159 160 In the study by Nin et al., the authors
completed a secondary analysis of 3 prospective, non-interventional
cohort studies in 1,899 patients with ARDS among 40 ICUs. The goal of
the study was to determine the relationship between severe hypercapnia
(PaO2 >=50 mmHg) in the first 48 hours following onset of
ARDS and mortality. The applicant stated that the study results
demonstrate that severe hypercapnia in IMV patients was independently
associated with increased risk of ICU mortality (odds ratio: 1.93, 95%
CI: 1.32-2.81, p=0.001). The second study by Tiruvoipati et al (2017),
was a multicenter, binational, retrospective study that included
252,812 patients of 3 cohorts: Normocapnia and normal pH (n=110,104),
compensated hypercapnia (n=20,463), and hypercapnic acidosis
(n=122,245), that aimed to determine the relationship between these
states and Acute Physiology and Chronic Health Evaluation (APACHE) III
score and mortality. The study found that those with compensated
hypercapnia and hypercapnic acidosis had higher APACHE III scores (49.2
vs. 53.2 vs. 68.6, p<0.01); mortality was highest in the hypercapnic
acidosis patients (OR: 1.18, 95% CI: 1.1-1.25) and lowest in the
normocapnia and normal pH,
[[Page 28242]]
p<0.001. The applicant stated that the adjusted odds ratio for hospital
mortality remained significantly higher in compensated hypercapnia and
hypercapnic acidosis when compared with patients with normocapnia and
normal pH irrespective of their P/F ratios.
---------------------------------------------------------------------------
\159\ Nin, et al., ``Severe hypercapnia and outcome of
mechanically ventilated patients with moderate or severe acute
respiratory distress syndrome'' Intensive Care Med. 2017. p. 200-
208.
\160\ Tiruvoipati, et al., ``Effects of Hypercapnia and
Hypercapnic Acidosis on Hospital Mortality in Mechanically
Ventilated Patients'' Crit Care Med. 2017. Vol 456 (7). e649-e656.
---------------------------------------------------------------------------
In support of the applicant's second assertion that use of the
Hemolung RAS contributes to reduced LOS in IMV patients, the applicant
cited Tiruvoipati et al (2017), previously discussed.\161\ The median
hospital LOS was 10.5 days in the normocapnia and normal pH group, 12
days in the compensated hypercapnia group and 11 days in the
hypercapnic acidosis group (p<0.001). The median ICU LOS was 1.9 days
vs 2.2 days vs. 2.9 days in the normocapnia/normal pH group vs.
compensated hypercapnia group vs. the hypercapnic acidosis group,
respectively (p<0.001). The authors noted that that there was increased
mortality in patients with hypercapnic acidosis and compensated
hypercapnia with unclear cause.
---------------------------------------------------------------------------
\161\ Ibid.
---------------------------------------------------------------------------
In support of the applicant's assertion that use of the Hemolung
RAS results in de-escalation of mechanical ventilation settings and
decreased rate of subsequent diagnostic or therapeutic interventions,
the applicant cited the Tully et al. case report,\162\ discussed
previously, in which intubated patients had a 20% decrease in peak
airways pressure and 30% decrease in driving pressure during the
Hemolung RAS therapy. The applicant also cited the Tiruvoipati et al.
(2016) study, discussed previously, in which 10 patients showed a 19%
decrease in peak respiratory pressure and a 26% decrease in minute
ventilation within 1 day of the Hemolung RAS therapy.\163\ The
applicant also cited the Hemolung RAS Registry Program Analysis,\164\
which demonstrated statistically significant correction of pH and
PaCO2 within the first day of the Hemolung RAS therapy
(p<0.05).
---------------------------------------------------------------------------
\162\ Tully RP, et al. The successful use of extracorporeal
carbon dioxide removal as a rescue therapy in a patient with severe
COVID-19 pneumonitis. Anaesthesia Reports 2020; 8:113-115.
\163\ Tiruvoipati, R, et al. Effects of Hypercapnia and
Hypercapnic Acidosis on Hospital Mortality in Mechanically
Ventilated Patients*: Critical Care Medicine. 2017;45(7):e649-e656.
\164\ Alung, Inc., HL-CA-1600, Hemolung RAS Registry. A
Retrospective Registry Involving Voluntary Reporting of De-
identified, Standard of Care Data Following the Commercial Use of
the Hemolung Respiratory Assist System (RAS). ClinicalTrials.gov.
Retrieved December 21, 2021, from Hemolung RAS Registry Program--
Full Text View--ClinicalTrials.gov.
---------------------------------------------------------------------------
In support of its assertion that use of the Hemolung RAS
contributes to avoidance of intubation following NIV failure, the
applicant noted that respiratory acidosis is the primary determinant of
NIV failure citing risk charts using a background study from
Confalonieri et al.,\165\ in which data from 1,033 patients admitted to
experienced hospital units was used to predict the likelihood of
failure of noninvasive positive pressure ventilation (NPPV). The
prediction charts were calculated using the APACHE II, GCS, pH, and
respiratory rate data of 1,033 patients admitted with acute respiratory
failure due to exacerbation of COPD treated with NIV. The applicant
stated that the study results show that pH < 7.25 (acidosis) after 2
hours of NIV is the primary determinant of NIV failure [odds ratio:
21.02; 95% CI: 10.07-43.87], and that additionally, a pH between 7.25
and 7.29 (acidosis) after 2 hours of NIV is also significant predictor
of NIV failure [odds ratio: 2.92; 95% CI: 1.62-5.28]. The applicant
stated that accuracy and generalizability of the model's ability to
predict NIV failure was validated on an independent group of 145 COPD
patients treated with NIV.
---------------------------------------------------------------------------
\165\ Confalonieri M, et al. A chart of failure risk for
noninvasive ventilation in patients with COPD exacerbation. European
Respiratory Journal. 2005;25(2):348-355.
---------------------------------------------------------------------------
In a prospective, single-arm feasibility study, Burki et al.,
previously discussed, stated that 100% (\7/7\) patients failing NIV and
treated with the Hemolung RAS therapy avoided intubation and 100% (\2/
2\) patients failing NIV with a DNI and treated with the Hemolung RAS
therapy were successfully weaned from NIV.\166\ The applicant cited a
retrospective review by Tiruvoipati et al. (2016), also previously
discussed, in which 80% (\4/5\) of patients failing NIV and treated
with Hemolung RAS therapy avoided intubation.\167\ Furthermore, the
applicant cited an unpublished study of the Hemolung RAS Registry
Program Analysis,\168\ in which 86% of patients (19 of the 22 patients
in the analysis) who failed NIV and were treated with the Hemolung RAS
therapy avoided intubation.
---------------------------------------------------------------------------
\166\ Burki N, et al. A novel extracorporeal CO2
removal system: Results of a pilot study of hypercapnic respiratory
failure in patients with COPD. Chest. 2013;143(3):678-686.
\167\ Tiruvoipati R, et al. Early experience of a new
extracorporeal carbon dioxide removal device for acute hypercapnic
respiratory failure. Crit Care Resusc. 2016;18(4):261-269.
\168\ The applicant cited an unpublished study using data
collected from physicians as part of the Hemolung Registry Program.
We believe information regarding the Hemolung Registry Program is
available here: Alung, Inc., HL-CA-1600, Hemolung RAS Registry. A
Retrospective Registry Involving Voluntary Reporting of De-
identified, Standard of Care Data Following the Commercial Use of
the Hemolung Respiratory Assist System (RAS). ClinicalTrials.gov.
Retrieved December 21, 2021, from Hemolung RAS Registry Program--
Full Text View--ClinicalTrials.gov.
---------------------------------------------------------------------------
In support of the assertion that the Hemolung RAS reduced mortality
in NIV patients, the applicant submitted two retrospective studies as
background studies, in addition to two case studies that utilized the
technology. The first background study \169\ was a retrospective
analysis of data from the Healthcare Cost and Utilization Project's
Nationwide Inpatient Sample between 1998 and 2008 to assess the pattern
and NIPPV use for acute exacerbations of COPD. The patient cohort was
defined as people greater than 35-years-old admitted with a primary
diagnosis of COPD or a primary diagnosis of respiratory failure with a
secondary diagnosis of COPD. The study demonstrated a decline over time
in overall in-hospital mortality for those patients treated with NIPPV
without a subsequent need for IMV. Mortality was high and increased
over time in patients who transitioned from NIPPV to IMV (27%) compared
to those patients who did not transition (9%). Charges for
hospitalization increased from 1998 to 2008, especially for patients
who transitioned from NIPPV to IMV. LOS decreased in all patients
except those who transitioned from NIPPV to IMV. The authors noted a
few limitations that would have allowed for a more detailed examination
of predictors of NIPPV failure and death, including the lack of
information on the severity of the exacerbation, response to NIPPV
treatment, end-of-life decision-making, or location of the patient in
the hospital (ICU vs. medical ward vs. ED, etc.).
---------------------------------------------------------------------------
\169\ Chandra, et al, ``Outcomes of noninvasive ventilation for
acute exacerbations of chronic obstructive pulmonary disease in the
United States, 1998-2008'' Am J Respir Crit Care Med. 2012. Vol 185
(2). p. 152-159.
---------------------------------------------------------------------------
The applicant also cited a retrospective study by Sprooten et
al.\170\ as background, that looked at patients admitted to the
Respicare Unit located in Maastricht University Medical Center (MUMC)
in the Netherlands between 2009 and 2011 who met the criteria of
admitted for exacerbation of COPD requiring NIV therapy and a
definitive COPD diagnosis. In-hospital mortality was 14% with a median
LOS of 16.5 days. Overall, this single-center study showed that
patients who are admitted to the hospital for a first hospitalization
requiring NIV for acute respiratory due to COPD exacerbation have a
high short-
[[Page 28243]]
and long-term mortality rate. According to the article, older age, NIV
use greater than eight days and lack of successful NIV response were
independent prognostic factors to two-year mortality rather than
response of levels of PaCO2 or pH.
---------------------------------------------------------------------------
\170\ Sprooten, et al. ``Predictors for long-term mortality in
COPD patients requiring non-invasive positive pressure ventilation
for the treatment of acute respiratory failure'' Clinical Resp J.
2020. Vol 14 (12). p. 1144-1152.
---------------------------------------------------------------------------
The applicant also cited two case studies where the Hemolung RAS
was used to successfully treat patients in hypercapnic respiratory
failure caused by COPD. The applicant stated that in these case
reports, the Hemolung RAS therapy prevented imminent death in COPD
patients with a DNI order who were failing NIV. In a case study by
Engel et al., previously described,\171\ a 72-year-old female with
hypercapnic coma due to COPD exacerbation was administered the Hemolung
RAS; after 4 hours, PaCO2, pH, and clinical parameters
improved, and the patient was weaned off therapy after 7 days.
---------------------------------------------------------------------------
\171\ Engel, et al. ``Use of Extracorporeal CO2
Removal to Avoid Invasive Mechanical Ventilation in Hypercapnic Coma
and Failure of Noninvasive Ventilation'' J. Pulm & Resp Med. 2016
Vol 6 (3) p.1-3.
---------------------------------------------------------------------------
In a second study by Mani et al., previously described,\172\ the
Hemolung RAS was used to treat two patients. The first patient, a 69-
year-old female with COPD, was placed on the Hemolung RAS after failing
NIV treatment. After 66 hours of treatment, the patient was weaned off
the Hemolung RAS, and was discharged home 4 days later. The second
patient, a 78-year-old male with COPD, was placed on the Hemolung RAS
after failing NIV treatment. After 48 hours of treatment, the patient
was weaned off the Hemolung RAS, and was discharged home 10 days later.
---------------------------------------------------------------------------
\172\ Mani, R.K., Schmidt, W., Lund, L.W. & Herth, F.J.F.
Respiratory dialysis for avoidance of intubation in acute
exacerbation of COPD. ASAIO J 59, 675-678 (2013).
---------------------------------------------------------------------------
In support of the assertion that the Hemolung RAS improves
activities of daily living/quality of life, the applicant submitted one
randomized controlled trial (RCT) abstract and three case studies. In
the RCT abstract by Barrett at al.,\173\ 18 patients (median age: 67.5
years) with acute hypercapnic respiratory failure due to exacerbations
of COPD were randomized to receive NIV alone or ECCO2R and
NIV. The applicant stated that the study included patients who were at
high risk of failing NIV (pH<7.30 after >=1 hour of NIV). The applicant
stated that the control arm continued to be treated with NIV only (n=9)
and the test arm was treated with ECCO2R (n=9). The primary
endpoint was the time to cessation of NIV. Secondary outcomes included
device tolerance and complications, changes in arterial blood gases
(ABGs) and hospital survival. The time to NIV discontinuation was
shorter in the ECCO2R arm (7 hours) vs in the NIV alone arm
(24.5 hours), p = 0.004. The study claimed that dyspnea rapidly
improved with ECCO2R, but that ICU and hospital LOS were
longer with the ECCO2R group and there was no difference in
mortality or functional outcomes at follow-up. The authors concluded
that ECCO2R can be an alternative to NIV for patients who
are at risk of failing or cannot tolerate NIV, or for patients in whom
a more rapid correction of hypercapnia is desirable.
---------------------------------------------------------------------------
\173\ Barrett, N, et al. A randomized controlled trial of Non-
Invasive Ventilation compared with ECCO2R for Acute
Hypercapnic Exacerbations of COPD. ASAIO J. 2021; 67 (Supp 3)
Presented at the 32nd Annual ELSO Conference.
---------------------------------------------------------------------------
The applicant referred to three case studies using the Hemolung RAS
to treat hypercapnic respiratory failure, to demonstrate improvement in
activities of daily living/quality of life. In the case study by Engel
et al., previously described,\174\ the applicant stated that early
mobilization, communication, and nutrition were facilitated with
Hemolung therapy. In the Bermudez et al. case study, previously
discussed,\175\ the Hemolung RAS was successfully used to bridge a
patient with COPD to a lung transplantation. The applicant stated that
considerable clinical improvement attributed to Hemolung therapy
permitted the patient to be awake and mobilized to sit on the edge of
the bed. In the Bonin et al. case study, previously discussed,\176\ the
applicant stated that drinking and recovery from pressure sores were
possible by day three of the Hemolung RAS.
---------------------------------------------------------------------------
\174\ Engel, et al. ``Use of Extracorporeal CO2
Removal to Avoid Invasive Mechanical Ventilation in Hypercapnic Coma
and Failure of Noninvasive Ventilation'' J. Pulm & Resp Med. 2016
Vol 6 (3) p.1-3.
\175\ Bermudez, et al. ``Prolonged Use of the Hemolung
Respiratory Assist System as a Bridge to Redo Lung Transplantation''
Annals of Thorac Surg. 2015 Vol 100 (6). p. 2330-2333.
\176\ Bonin, et al. ``Avoidance of intubation during acute
exacerbation of chronic obstructive pulmonary disease for a lung
transplant candidate using extracorporeal carbon dioxide removal
with the Hemolung''. J Thorac Cardiovac Surg. 2013. Vol 145 (5).
e43-e44.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether the Hemolung RAS meets the
substantial clinical improvement criterion. We note that the evidence
provided for several of the claims of substantial clinical improvement
include small, non-randomized studies without the use of comparators or
controls, including case studies, which may affect the ability to draw
meaningful conclusions about treatment outcomes from the results of the
studies. The benefits of avoiding intubation or de-escalating IMV
settings are described in case studies, but the absence of comparative
data may make it more difficult to determine whether there are
clinically meaningful changes in these outcomes. We also note that in
the one abstract of an RCT using the Hemolung RAS,\177\ although the
time to NIV discontinuation was shorter in the ECCO2R arm
than in the NIV alone arm, the ICU and hospital length of stay were
longer with the ECCO2R group and there were no differences
in mortality or functional outcomes at follow-up. Additionally, while
the applicant states that the Hemolung RAS results in improved clinical
outcomes, such as reducing mortality in NIV patients compared to
continuing the patient's previous treatment, given that many of the
case studies provided as evidence to support improved clinical outcomes
included only one or two patients, it is not clear whether or not the
results of these studies are generalizable to the Medicare population.
We also note that several of the case studies, for example, Bonin et
al., Mani et al., Tully et al., etc., mentioned by the applicant
included patients and cases from outside the U.S., and we question if
there may be differences in treatment guidelines between these
countries that may have affected clinical outcomes. Lastly, we note
that for several of the claims of substantial clinical improvement, the
applicant provided evidence from background studies that did not
utilize the Hemolung RAS to support the use of the technology to
improve clinical outcomes. For example, in support of its assertion
that the Hemolung RAS reduces mortality in NIPPV patients, the study
cited by the applicant only addressed NIPPV as a treatment option to
treat exacerbations in patients with COPD, but did not directly address
the use of the Hemolung RAS as an intervention.
---------------------------------------------------------------------------
\177\ Barrett, N, et al. A randomized controlled trial of Non-
Invasive Ventilation compared with ECCO2R for Acute
Hypercapnic Exacerbations of COPD. ASAIO J. 2021; 67 (Supp 3)
Presented at the 32nd Annual ELSO Conference.
---------------------------------------------------------------------------
We are inviting public comments on whether the Hemolung RAS meets
the substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for the Hemolung RAS.
[[Page 28244]]
Comment: The applicant submitted a public comment from a commenter
who supported the use of the Hemolung RAS. The commenter explained that
they have treated five patients with the Hemolung RAS (two in the
Investigational Device Exemption (IDE) clinical trial for the Hemolung
RAS in patients with COPD and three via the EUA for COVID-19 pneumonia)
and found the Hemolung RAS to be reliable and safe. They noted that
they found that it consistently removed roughly 80 ml of CO2
per minute with a blood flow rate of 300-400 mL/min and it allowed the
reduction of ventilator settings including tidal volume and rate while
maintaining or lowering the PaCO2. They further commented
that the nurses and staff found it easy to use and comparable to
continuous veno-venous hemofiltration (CVVHD). The commenter also
offered that they anticipate using the Hemolung RAS in a number of
clinical scenarios, such as to avoid intubation or facilitate
extubation in patients with hypercapnic respiratory failure due to COPD
or other forms of acute chronic hypercapnic respiratory failure.
Lastly, the commenter explained that the randomized controlled trial
(RCT) was very difficult to enroll due to a number of factors including
the challenges of getting rapid consent when trying to enroll patients
failing NIV, consent concerns by proxies, difficulties enrolling at
night and on weekends, and many others. However, the commenter believed
that when it is available outside of the context of a clinical trial,
the Hemolung RAS will be used more often to reduce the need for IMV in
hypercapnic patients, enhance comfort, and permit more efficient use of
ICU resources.
The applicant also submitted a second public comment from a
commenter who supported the Hemolung RAS for release for clinical use,
especially during the COVID-19 pandemic during which the commenter had
seen an increase in the admission rate for COPD patients infected with
COVID-19. The commenter stated they believe that the Hemolung RAS can
reduce LOS and ICU ventilation days. In support, the commenter stated
that its site has been involved in the Hemolung RAS trial in the US and
has a large population of COPD patients who are admitted with
exacerbation of COPD, with the majority requiring mechanical
ventilation. The commenter stated that the Hemolung RAS had allowed
them to avoid mechanical ventilation or successfully extubate patients
enrolled in the study. They further stated that they have not had any
serious adverse side effects with the use of the device and that the
nursing and respiratory therapy staff acquired the needed skill to use
the device with minimal training.
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for the Hemolung RAS.
d. Lifileucel
Iovance Biotherapeutics submitted an application for new technology
add-on payments for lifileucel for FY 2023. According to the applicant,
lifileucel is a proprietary, one-time autologous Tumor Infiltrating
Lymphocytes (TIL) cell-based therapy for the treatment of unresectable
or metastatic melanoma. TIL cell therapy with lifileucel involves the
adoptive cell transfer (ACT) of autologous T-cells directly isolated
from the tumor tissue and expanded ex vivo without any prior selection
or genetic modification. Tumor antigen-specific T-cells are located
within tumor lesions, where a dysfunctional state and low numbers
prevent them from effectively eradicating the tumor. By isolating
autologous TIL from the tumor microenvironment and expanding them, the
lifileucel manufacturing process produces large numbers of
reinvigorated T-cells. Following the infusion of lifileucel, the TIL
migrate back into the tumor, including metastases, where they trigger
specific tumor cell killing upon recognition of tumor antigens. We note
that Iovance Biotherapeutics previously submitted an application for
new technology add-on payments for lifileucel for FY 2022, as
summarized in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25272
through 25282), but withdrew the application prior to the issuance of
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44979).
As noted in our prior review, the applicant stated relapsed and
refractory metastatic melanoma presents a high unmet medical need with
low survival rates and limited durable treatment options.\178\ Despite
the advances in available treatments, responses in patients with
metastatic melanoma are at times inadequate, with many patients either
not responding (40% to 65%) 179 180 or displaying primary or
acquired resistance (>70%) and the disease
progresses.181 182 183 184 185 The applicant stated there
are currently no approved agents for the treatment of patients with
metastatic melanoma who fail available standard-of-care therapies,
which include immune checkpoint inhibitors (ICI) and BRAF/MEK
inhibitors. According to the applicant, the only commonly used
available therapy for these patients post progression is chemotherapy.
The applicant stated that as demonstrated in the literature referenced
previously, retreatment with chemotherapy 186 187 188 or
experimental combined ICIs \189\ offers a poor Objective Response Rate
(ORR) \190\ of 4%-10%,191 192 193 a median
[[Page 28245]]
PFS of 2.7-3.7 months 194 195 196 and a median OS of ~7-8
months.197 198
---------------------------------------------------------------------------
\178\ Sarnaik A, et al. Safety and efficacy of lifileucel (LN-
144) tumor infiltrating lymphocyte therapy in metastatic melanoma
patients after progression on multiple therapies--independent review
committee data update. Poster presented at SITC 2019. Poster Number:
P865 and abstract; Journal: J Immunotherapy Cancer 2020;8:A12.
\179\ Mooradian MJ and Sullivan RJ. What to do when anti-PD-1
therapy fails in patients with melanoma. Oncology (Williston Park)
2019;33:141-8.
\180\ Gide TN, et al. Primary and acquired resistance to immune
checkpoint inhibitors in metastatic melanoma. Clin Cancer Res
2018;24:1260-70.
\181\ Luke JJ, et al. Targeted agents and immunotherapies:
Optimizing outcomes in melanoma. Nature Reviews Clinical Oncology.
Doi:10.1038/ncrclinonc.2017.43. Published online April 4, 2017.
\182\ Mooradian MJ and Sullivan RJ. What to do when anti-PD-1
therapy fails in patients with melanoma. Oncology (Williston Park)
2019;33:141-8.
\183\ Gide TN, et al. Primary and acquired resistance to immune
checkpoint inhibitors in metastatic melanoma. Clin Cancer Res
2018;24:1260-70.
\184\ Schachter J, et al. Pembrolizumab versus ipilimumab for
advanced melanoma: Final overall survival results of a multicenter,
randomized, open-label phase 3 study (KEYNOTE-006). Lancet 2017;
390:1853-62.
\185\ Ugurel S, et al. Survival of patients with advanced
metastatic melanoma: The impact of novel therapies-update 2017. Eur
J Cancer 2017; 83:247-257.
\186\ Goldinger SM, et al. The utility of chemotherapy after
immunotherapy failure in metastatic melanoma: A multicenter case
series. J Clin Oncol 2018;36:e21588-e.
\187\ Larkin J, et al. Overall survival in patients with
advanced melanoma who received nivolumab versus investigator's
Choice chemotherapy in CheckMate 037: A randomized, controlled,
open-label Phase III trial. J Clin Oncol 2018;36:383-90.
\188\ Ribas A, et al. Pembrolizumab versus investigator-choice
chemotherapy for ipilimumab-refractory melanoma (KEYNOTE-002): A
randomised, controlled, phase 2 trial. Lancet Oncol. 2015; 16(8):
908-18.
\189\ Kirchberger MC, et al. Combined low-dose ipilimumab and
pembrolizumab after sequential ipilimumab and pembrolizumab failure
in advanced melanoma. Eur J Cancer. 2016;65:182-184. doi:10.1016/
j.ejca. 2016.07.003.
\190\ As used by the applicant and the studies provided,
Objective Response Rate (ORR) is the combination of Complete and
Partial Responses.
\191\ Weichenthal M, et al. Salvage therapy after failure from
anti-PD-1 single agent treatment: A study by the German ADOReg
melanoma registry. J Clin Oncol 37, 2018 (suppl; abstr 9505).
\192\ Larkin J, et al. Overall survival in patients with
advanced melanoma who received nivolumab versus investigator's
Choice chemotherapy in CheckMate 037: A randomized, controlled,
open-label Phase III trial. J Clin Oncol 2018;36:383-90.
\193\ Ribas A, et al. Pembrolizumab versus investigator-choice
chemotherapy for ipilimumab-refractory melanoma (KEYNOTE-002): A
randomised, controlled, phase 2 trial. Lancet Oncol. 2015; 16(8):
908-18.
\194\ Goldinger SM, et al. The utility of chemotherapy after
immunotherapy failure in metastatic melanoma: A multicenter case
series. J Clin Oncol 2018;36:e21588-e.
\195\ Larkin J, et al. Overall survival in patients with
advanced melanoma who received nivolumab versus investigator's
Choice chemotherapy in CheckMate 037: A randomized, controlled,
open-label Phase III trial. J Clin Oncol 2018;36:383-90.
\196\ Ribas A, et al. Pembrolizumab versus investigator-choice
chemotherapy for ipilimumab-refractory melanoma (KEYNOTE-002): A
randomised, controlled, phase 2 trial. Lancet Oncol. 2015; 16(8):
908-18.
\197\ Kirchberger MC, et al. Combined low-dose ipilimumab and
pembrolizumab after sequential ipilimumab and pembrolizumab failure
in advanced melanoma. Eur J Cancer. 2016;65:182-184. doi:10.1016/
j.ejca. 2016.07.003.
\198\ Goldinger SM, et al. The utility of chemotherapy after
immunotherapy failure in metastatic melanoma: A multicenter case
series. J Clin Oncol 2018;36:e21588-e.
---------------------------------------------------------------------------
According to the applicant, lifileucel is being studied for
effectiveness in solid tumors. The applicant stated that in addition to
the pivotal programs researching metastatic melanoma (C-144-01) and
advanced cervical cancer (C-145-04) patients, TIL cell therapy is being
investigated in the treatment of patients with locally advanced,
recurrent, or metastatic non-small-cell lung cancer (IOV-COM-202 and
IOV-LUN-202) as well as in peripheral blood lymphocyte (PBL) blood
cancers. The applicant asserted lifileucel is expected to be
administered primarily in the hospital inpatient setting to assure
appropriate patient monitoring and to ensure the supervision of a
qualified physician experienced with the use and administration of IL-2
(for example, aldesleukin). However, the applicant added, some
treatment centers may make the clinical decision to infuse lifileucel
as an outpatient procedure.
With respect to the newness criterion, the applicant indicated that
they are pursuing a Biologics License Application (BLA) for lifileucel
from FDA. The applicant added that the proposed prescribing information
for lifileucel is currently in development and will be submitted upon
BLA submission to FDA. The applicant stated the proposed indication for
lifileucel is as a one-time autologous TIL immunotherapy for the
treatment of patients with unresectable or metastatic melanoma who have
been previously treated with at least one systemic therapy, including a
PD-1 blocking antibody and, if BRAF V600 mutation positive, a BRAF
inhibitor or BRAF inhibitor with MEK inhibitor. The applicant stated
lifileucel has received Regenerative Medicine Advanced Therapy (RMAT),
Orphan Drug, and Fast Track designations from FDA for the treatment of
advanced melanoma. The applicant stated that currently, the following
ICD-10-PCS procedure codes, effective October 1, 2021, uniquely
identify procedures involving the administration of lifileucel in the
inpatient setting: XW033L7 (Introduction of lifileucel immunotherapy
into peripheral vein, percutaneous approach, new technology group 7)
and XW043L7 (Introduction of lifileucel immunotherapy into central
vein, percutaneous approach, new technology group 7). Based on their
clinical trial protocol and proposed label, the applicant stated a
single dose of lifileucel contains between 1 x 109 and 150 x 109
autologous TIL suspended in up to four patient-specific infusion bags
for intravenous infusion. The applicant stated patients receive pre-
treatment in the form of a nonmyeloablative lymphodepleting
chemotherapy regimen of cyclophosphamide 60 mg/kg intravenously daily
for 2 days followed by fludarabine 25 mg/m\2\ intravenously daily for 5
days before infusion of lifileucel administration within 24 hours of
the last dose. The applicant stated that 3 to 24 hours following the
administration of lifileucel, patients should receive a post-treatment
of a short course of high dose IL-2 (600,000 IU/kg every 8-12 hours for
up to a maximum of six doses).
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 lifileucel does not use the same or similar
mechanism of action as compared to currently available products used in
the treatment of advanced melanoma. The applicant stated that clinical
studies suggest that TIL therapy lyses tumor cells via the following
mechanism: \199\
---------------------------------------------------------------------------
\199\ Ch[aacute]vez-Gal[aacute]n L, et al. Cell death mechanisms
induced by cytotoxic lymphocytes. Cell Mol Immunol. 2009; 6(1): 15-
25.
---------------------------------------------------------------------------
Reinfused TIL circulate in the blood until they recognize
tumor-specific antigens (TSAs) on the surface of the tumor cells via
chemokines produced by the tumor. The TIL depart the capillaries,
migrate to the tumor, and recognize tumor antigen peptides presented by
MHC molecules on the surface of the tumor cells via their T cell
receptors.
Upon tumor antigen recognition, the TIL are activated and
release perforin, a pore-forming protein.
TIL then release granzyme, a pro-apoptotic protease, which
enters the tumor via the pores, causing lysis of the tumor cells.
TIL also release IFN-[gamma], which promotes macrophage
activation to phagocytize (that is, engulf and internalize) the lysed
tumor cell debris and present tumor antigens.
TIL therapy mediates regression of tumors both by direct
cell lysis and by inducing cytokine- (IFN-[gamma]) mediated tumor cell
killing.
According to the applicant, the currently available first and
second line treatments for advanced melanoma include kinase inhibitors
(BRAF and MEK inhibitors) and immune checkpoint inhibitors (anti-CTLA-4
antibody and anti-PD-1 antibody).200 201 The applicant
explained that kinase inhibitors selectively inhibit the mutated BRAF
V600E- or V600K kinase and MEK inhibitors are used in combination with
BRAF inhibitors to interfere with the signaling of the MEK-1 and MEK-2
protein within the cancer cell.202 203 204 205 The applicant
next explained that immune checkpoint inhibitors include CTLA-4
blocking antibodies and PD-1 blocking antibodies that are humanized
monoclonal or recombinant IgG4 kappa immunoglobulin produced in
recombinant Chinese hamster ovary cell lines.206 207 208 The
applicant asserted that there are no approved treatment options for
patients with metastatic melanoma that have progressed after two lines
of therapy but stated that some patients may receive high-dose IL-2 or
[[Page 28246]]
cytotoxic agents per NCCN clinical practice guidelines.\209\
---------------------------------------------------------------------------
\200\ Luke JJ, et al. Targeted agents and immunotherapies:
Optimizing outcomes in melanoma. Nature Reviews Clinical Oncology.
Doi:10.1038/ncrclinonc.2017.43. Published online April 4, 2017.
\201\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines. Melanoma: Cutaneous. V2.2021--February 19, 2021. https://www.nccn.org.
\202\ Zelboraf (vemurafenib) prescribing information. Genentech,
2011.
\203\ Tafinlar (dabrafenib) prescribing information. Novartis,
2013.
\204\ Mekinst (trametinib) prescribing information. Novartis,
2013.
\205\ Cotellic (cobinmetnib) prescribing information. Novartis,
2015.
\206\ Keytruda (pembrolizumab) presecribing information. Merck &
Co., Inc.; 2019.
\207\ Yervoy (ipilmumab) prescribing information. Bristol Myers
Squibb, 2011.
\208\ Opdivo (nivolumab) prescribing information. Bristol Myers
Squibb, 2014.
\209\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines. Melanoma: Cutaneous. V2.2021--February 19, 2021. https://www.nccn.org.
---------------------------------------------------------------------------
According to the applicant, TIL cell therapy with lifileucel uses a
novel and distinct mechanism of action which delivers a highly
customized, personalized, and targeted treatment for unresectable or
metastatic melanoma. According to the applicant, lifileucel TIL cell
therapy involves the Adoptive Cell Therapy (ACT) of autologous T-cells
directly isolated from the patient's tumor tissue and expanded ex vivo.
The applicant added that following the infusion of lifileucel, the TIL
migrates back into the patient's tumor deposits, including metastases,
where they trigger specific tumor cell killing upon recognition of
tumor antigens. According to the applicant, after approval, lifileucel
will be the only personalized, cellular therapy indicated for the
treatment of unresectable or metastatic melanoma.
The applicant stated that as well as having tumor recognition,
discussed previously, TIL therapy is personalized, polyclonal, and
neoantigen-specific. According to the applicant, TIL is inherently
personalized because it is derived from the patient's tumor tissue.
According to the applicant, theoretically, tumor tissue TIL recognize a
multitude of an individual's tumor specific antigens (TSAs) as opposed
to CAR T-cell therapies which recognize only one TSA.\210\ The
applicant asserted that TIL therapy is polyclonal because it can
recognize an array of different tumor antigens which best addresses the
high mutational diversity of solid tumors.211 212 According
to the applicant, TIL is neoantigen-specific because the TIL therapy
process ensures the inclusion of neoantigen-specific T cell clones
without prior knowledge of the number or identity of those
neoantigens.\213\
---------------------------------------------------------------------------
\210\ Raskov H, et al. British Journal of Cancer (2021) 124:359-
367; https://doi.org/10.1038/s41416-020-01048-4.
\211\ Fardis M, et al. Current and future directions for tumor
infiltrating lymphocyte therapy for the treatment of solid tumors.
Cell and Gene Therapy Insights, 2020; 6(6), 855-863.
\212\ Schumacher TN and Schreiber RD. Neoantigens in cancer
immunotherapy. Science 2015; (6230): 69-74.
\213\ Fardis M, et al. Current and future directions for tumor
infiltrating lymphocyte therapy for the treatment of solid tumors.
Cell and Gene Therapy Insights, 2020; 6(6), 855-863.
---------------------------------------------------------------------------
The applicant asserted TIL cell therapy with lifileucel is also
highly differentiated from currently approved CAR T-cell therapies
which treat liquid tumors: YESCARTA[supreg] (axicabtagene ciloleucel)
and KYMRIAH[supreg] (tisagenlecleucel), both approved for the treatment
of large B-cell lymphoma in adults, and recently approved
TECARTUSTM (brexucabtagene autoleucel) indicated for the
treatment of relapsed/refractory mantle cell lymphoma (MCL) and
ABECMA[supreg] (idecabtagene vicleucel) indicated for the treatment of
relapsed/refractory multiple myeloma. The applicant stated that while
other ACT, including CAR T-cell therapies, utilize circulating T-cells
from the blood, TIL therapy harvests neoantigen-directed T-cells that
are isolated from a tumor biopsy. The applicant stated that whereas T-
cells are genetically altered to have special receptors called chimeric
antigen receptors in CAR T-cell therapy, TIL from tumor tissue
fragments are cultured with IL-2 to allow outgrowth of TIL cell
population during pre-rapid expansion (pre-REP). The applicant asserted
that TIL cells obtained at the end of the pre-REP are subsequently
cultured with IL-2, anti-CD-2 and feeder cells to start REP which is
lastly cryopreserved.
According to the applicant, CAR T-cell therapies mainly target only
single/surface tumor antigens, versus TIL cell therapy which targets
multiple tumor antigens. The applicant added that CAR T-cells return to
the bloodstream and lymphatic system and have more contact with blood
tumor cells which may reduce their ability to penetrate tumor tissue
through the vascular endothelium. The applicant stated another obstacle
with the use of CAR T-cell therapy in the treatment of solid tumors is
a phenomenon known as ``tumor antigen escape'' where a tumor expresses
alternative forms of the target antigen that lack the extracellular
epitopes recognized by CAR T-cells.\214\ The applicant stated that
there are no examples of successful utility of CAR T-cell therapy in
solid tumors. The applicant further stated that the TIL mechanism of
action does not rely on genetically engineered receptors, but maintains
some physiologic control and therefore avoids hyperactivation that may
be responsible for complications from CAR T-cell therapy such as
cytokine release syndrome (CRS) or neurotoxicity.\215\ Per the
applicant, there have been no off-tissue effects found to date
following treatment with TIL cell therapy, and TIL therefore offers a
differentiated safety profile compared to CAR T-cell products or ICIs
and confirms the mechanism of action differentiation discussed
previously.
---------------------------------------------------------------------------
\214\ Qu J, et al.: Chimeric antigen receptor (CAR)-T-cell
therapy in non-small-cell lung cancer (NSCLC): Current status and
future perspectives. Cancer Immunol Immunother 70:619-631, 2021.
\215\ Fardis M, et al. Current and future directions for tumor
infiltrating lymphocyte therapy for the treatment of solid tumors.
Cell and Gene Therapy Insights, 2020; 6(6), 855-863.
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With respect to the second criterion, whether a product is assigned
to the same or different MS-DRG, the applicant stated that in the FY
2022 IPPS/LTCH PPS final rule (86 FR 44798 through 44806), CMS
finalized its proposal to assign existing procedure codes describing
CAR T-cell, non-CAR T-cell and other immunotherapies to Pre-MDC 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.
The applicant stated their appreciation and support for CMS' final
decision to assign lifileucel ICD-10-PCS codes to Pre-MDC MS-DRG 018.
The applicant agreed that while the clinical and resource intensity of
lifileucel is comparable to that of CAR T-cell therapy inpatient
episodes of care, the TIL cell therapy mechanism of action and patient
population differ from autologous CAR T-cell therapy.
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 if FDA grants approval, lifileucel will be the only FDA-
approved cellular treatment for patients with unresectable or
metastatic melanoma who have been previously treated with at least one
systemic therapy, including a PD-1 blocking antibody and, if BRAF V600
mutation positive, a BRAF inhibitor or BRAF inhibitor with MEK
inhibitor. The applicant asserted lifileucel will be the first and only
FDA-approved cellular treatment for this challenging to treat patient
population.
After review of the information provided by the applicant, we note
that in regard to the MS-DRG assignment, while the applicant stated
that lifileucel is assigned to the same MS-DRG as CAR T-cell therapies,
it seems that lifileucel maps to a different MS-DRG than existing
treatments for metastatic melanoma. We also note that there are
currently other therapies for the treatment of metastatic melanoma and
we are not certain that the distinction of being the first cellular
treatment is relevant to the third criterion. We are seeking public
comment on whether lifileucel would indeed be the only FDA approved
treatment for the patient population identified here.
We are inviting public comments on whether lifileucel is
substantially
[[Page 28247]]
similar to other currently available therapies and/or technologies and
whether this technology meets the newness criterion.
With regard to the cost criterion, the applicant provided the
following analyses to demonstrate the technology meets the cost
criterion: (1) A primary cohort, (2) a cohort with a principle or
admitting diagnosis of melanoma and metastasis, and (3) a cohort with
any diagnosis of melanoma and metastasis. The ICD-10 codes used to
identify melanoma and metastasis and MS-DRGs identified by the
applicant (for the primary cohort) are listed in the following tables.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.088
[[Page 28248]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.089
[[Page 28249]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.090
[[Page 28250]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.091
[[Page 28251]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.092
[GRAPHIC] [TIFF OMITTED] TP10MY22.093
BILLING CODE 4120-01-C
To conduct the primary analysis, the applicant identified a cohort
of patients that would be eligible for lifileucel that met the criteria
of having any ICD-10 diagnosis of melanoma from ICD-10-CM codes C43.XXX
and D03.XXX (where XXX represents all codes in the broader category)
also noted in the prior tables, and any ICD-10 diagnosis of metastasis
from ICD-10-CM codes C77.X, C78.XX, and C79.XX (where the X and XX
represent all codes in the
[[Page 28252]]
broader categories respectively) and in the prior tables, and any ICD-
10 procedure code indicating administration of IL-2 or other
chemotherapy via central or peripheral vein from the previous tables.
The applicant used the FY 2019 MedPAR file dataset with the FY 2019
final rule with Correction Notice IPPS Impact File and the FY 2023 New
Technology Thresholds to perform their cost analyses. Using the FY 2019
MedPAR file dataset, the applicant's search resulted in the
identification of 20 MS-DRGs to which cases in the primary cohort
mapped, as previously listed. The applicant provided two sensitivity
cohorts: (1) A principal or admitting ICD-10 diagnosis of melanoma and
metastasis; and (2) any ICD-10 diagnosis of melanoma and metastasis.
The applicant stated that the analysis was limited to Medicare
discharges from facilities paid under the IPPS by only including
hospitals listed in the FY 2019 IPPS/LTCH PPS final rule IPPS Impact
File. The previously discussed criteria resulted in 39 claims from 20
MS-DRGs in the primary cohort, 387 claims from 80 MS-DRGs in the
sensitivity cohort 1, and 4,985 claims from 372 MS-DRGs in sensitivity
cohort 2. The applicant imputed a case count of 11 for those MS-DRGs
with fewer than 11 cases. For each cohort, the applicant provided two
analyses, first using the national pharmacy CCR of 0.187 from the FY
2022 IPPS/LTCH PPS final rule (86 FR 44966) to calculate charges, and
second using the applicant-calculated CAR T-cell CCR (0.2936) to
calculate charges. The applicant first calculated a case weighted
threshold of $1,256,379 for the primary, sensitivity one, and
sensitivity two cohorts where the MS-DRG 018 threshold was applied for
all MS-DRGs identified. We note, in the FY 2022 IPPS/LTCH PPS final
rule (86 FR 44806) we finalized our proposal to assign other
immunotherapies to MS-DRG 018 (for example, Introduction of lifileucel
immunotherapy into peripheral vein, percutaneous approach, new
technology group 7), in addition to CAR T-cell therapies. Therefore, it
seems the appropriate threshold for comparison is that of MS-DRG 018,
with an average case-weighted threshold amount of $1,256,379.
For these analyses, to calculate the average charge per case, the
applicant used the cases identified based on the claims data search and
mapped them to the MS-DRG 018 threshold. To determine the charges for
lifileucel, the applicant converted cost to charges by dividing by the
national average pharmacy CCR of 0.187 from the FY 2022 IPPS/LTCH PPS
final rule (86 FR 44966), and in secondary analyses, by a CAR T-cell
CCR of 0.2936 calculated by the applicant. To estimate the CAR T-cell
CCR, the applicant obtained the total drug charges for cases in MS-DRG
018 from the FY 2022 IPPS final rule AOR/BOR file. Next the applicant
divided the total drug charges ($184,237,653.25) by the number of cases
(145) to get an average drug charge per case of $1,270,605. Using the
acquisition cost of YESCARTA[supreg] and KYMRIAH[supreg] ($373,000) as
the cost per case, the applicant divided by the charge per case
($1,270,605) to get a CCR of 0.2936.
The applicant stated no charges were removed for the prior
technology because previous treatments will continue to be reflected in
cases where lifileucel is administered. Next the applicant calculated
the average standardized charge per case using the FY 2019 IPPS/LTCH
PPS final rule impact file. A 3-year inflation factor of 20.4686% was
obtained from the FY 2022 IPPS/LTCH PPS final rule (86 FR 45542) and
applied to the average standardized charge per case.
The applicant calculated the final inflated average case-weighted
standardized charge per case by adding the estimated charges for the
technology to the inflated average standardized charge per case. The
applicant determined a final inflated average case-weighted
standardized charge per case of $2,196,319 and $1,448,803 from the
primary cohort, pharmacy and CAR T-cell CCR analyses with CAR T-cell
thresholds respectively, which both exceed the average case-weighted
threshold amount of $1,256,379.
The applicant determined a final inflated average case-weighted
standardized charge per case of $2,139,220 and $1,391,704 from the
sensitivity cohort one using the pharmacy and CAR T-cell CCR analyses
with CAR T-cell thresholds respectively, which both exceed the average
case-weighted threshold amount of $1,256,379.
The applicant determined a final inflated average case-weighted
standardized charge per case of $2,136,701 and $1,389,185 from the
sensitivity cohort two using the pharmacy and CAR T-cell CCR analyses
with CAR T-cell thresholds respectively, which both exceed the average
case-weighted threshold amount of $1,256,379.
Because the final inflated average case-weighted standardized
charge per case for all the analyses exceeded the average case-weighted
threshold amount, the applicant asserted that the technology meets the
cost criterion.
As we have noted in previous discussions (86 FR 25237, 86 FR
25279), the submitted costs for CAR T-cell therapies vary widely due to
differences in provider billing and charging practices for this
therapy, and we are continuing to consider the use of this submitted
cost data for purposes of calculating a CAR T-cell CCR for use in the
applicant's cost analyses given this potential for variability. We
invite public comments on whether lifileucel meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that lifileucel represents a substantial clinical
improvement over existing technologies. The applicant asserted that the
one-time administration of lifileucel, an autologous TIL immunotherapy,
has demonstrated substantial clinical improvement compared to current
therapies used to treat patients with unresectable or metastatic
melanoma who have been previously treated with at least one systemic
therapy; that patients with unresectable or metastatic melanoma who
have failed at least one prior systemic therapy will have substantially
improved ORRs compared with patients treated with currently available
therapies; that responses continue to deepen over time after a single
infusion of lifileucel; and that efficacy and safety data have shown
lifileucel is an effective therapy for advanced melanoma patients.
The applicant asserted that when approved by FDA, lifileucel will
provide a treatment option for patients with advanced melanoma who
relapse on or do not tolerate treatment with immune checkpoint
inhibitors and BRAF-targeted therapies and who respond poorly to a
subsequent round of therapy with these agents or chemotherapy. The
applicant stated metastatic melanoma is capable of rapidly
metastasizing to distant organs and accounts for the majority of skin
cancer-related deaths.216 217 According to the applicant,
despite the advances in available treatments, there are currently no
treatment options based on data from patients with advanced melanoma
who have progressive disease after one line of immune checkpoint
inhibitor therapy (for BRAF wild-type tumors), or two
[[Page 28253]]
lines of therapy (for BRAF V600 mutation-positive tumors).\218\ The
applicant added, patients recurring with advanced melanoma after
adjuvant anti-PD-1 therapy for high-risk disease represent an emerging
unmet need.\219\ As the applicant stated previously, patient outcomes
are consistently poor for this population. Based on the C-144-01 study,
the applicant concluded that treatment with lifileucel represents
substantial clinical improvement over published, poor outcomes for
retreatment with chemotherapy.
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\216\ Luke JJ, et al. Targeted agents and immunotherapies:
Optimizing outcomes in melanoma. Nature Reviews Clinical Oncology.
Doi:10.1038/ncrclinonc.2017.43. Published online April 4, 2017.
\217\ American Cancer Society. Cancer Facts and Figures 2020.
https://www.cancer.org/content/dam/cancerorg/research/cancer-facts-and-statistics/annual-cancer-facts-and-figures/2020/cancer-facts-and-figures-2020.pdf. Accessed April 6, 2020.
\218\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10.1200/
JCO.21.00612, Published online May 12, 2021.
\219\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10.1200/
JCO.21.00612, Published online May 12, 2021.
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The applicant next stated that lifileucel significantly improves
clinical outcomes compared to current therapies. In support of this
assertion, the applicant provided data from two of four cohorts of the
C-144-01 study, an ongoing phase 2 multicenter study (NCT02360579) to
assess the efficacy and safety of autologous TIL in patients with stage
IIIc-IV metastatic melanoma. Those 4 cohorts are:
Cohort 1 (n=30 generation 1 non-cryopreserved TIL
product), not included for review as part of the applicant's
application for new technology add-on payments.
Cohort 2 (n=66 generation 2 cryopreserved TIL product),
included for review as part of the applicant's application for new
technology add-on payments.
Cohort 3 (a sub-sample of n=10 from cohorts 1, 2, and 4),
not included for review as part of the applicant's application for new
technology add-on payments.
Cohort 4 (n=75 generation 2 cryopreserved TIL product),
will be provided to FDA as part of the applicant's BLA and will be
provided to CMS upon FDA approval.
The applicant stated that patients were enrolled between April 2017
and January 2019 at 26 sites.
According to the applicant, the primary objective of this study was
to evaluate the efficacy of lifileucel in patients with unresectable or
metastatic melanoma using the ORR, as assessed by the independent
review committee (IRC) per Response Evaluation Criteria in Solid Tumors
(RECIST) version 1.1.\220\ The applicant added that secondary
objectives were to: (1) Evaluate the efficacy endpoints of duration of
response (DOR), disease control rate (DCR), and progression free
survival (PFS); (2) further evaluate the efficacy of lifileucel in
patients with unresectable or metastatic melanoma by assessing DOR,
DCR, and PFS; (3) to evaluate overall survival (OS); and (4) to
characterize the safety profile of lifileucel. For cohort 2, 60
patients were determined to allow estimation of the ORR using the
maximum half width of the two-sided 95% confidence limit of less than
13.2% when ORR is expected to range from 20-50%. For cohort 4,
approximately 75 patients were planned to be infused based on the null
hypothesis of 10% ORR (based on historical control) which resulted in
over 90% power to demonstrate superiority to this control. Patients
included in this study were 18 years or older, had an ECOG (Eastern
Cooperative Oncology Group) performance status of 0 or 1 upon entry, an
estimated life expectancy of greater than or equal to 3 months, and had
unresectable or metastatic melanoma (stage IIIC or IV) treated with at
least one prior systemic therapy including an anti-PD-1 antibody and a
BRAF/MEK inhibitor. Patients had at least one measurable target lesion,
as defined by RECIST v1.1 (which was not used for tumor resection), and
at least one resectable lesion (or aggregate of lesions resected).
Patients were required to have a washout period of at least 28 days
from prior anticancer therapy(ies) to the start of the planned
nonmyeloablative lymphodeletion (NMA-LD) preconditioning regimen.
According to the applicant, all patients were to receive the pre-
treatment, pre-medication, and post-treatment as described in the
discussion of the newness criterion, in combination with the infusion
of lifileucel. The applicant explained that prior to the infusion of
lifileucel, the patients received NMA-LD with cyclophosphamide (60 mg/
kg) intravenously daily for 2 days followed by fludarabine (25 mg/m2)
intravenously for 5 days to eliminate potentially suppressive immune
cells which support the tumor and to maximize engraftment and potency
of the lifileucel therapy through homeostatic proliferation.\221\
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\220\ Eisenhauer EA, et al. New response evaluation criteria in
solid tumours: Revised RECIST guideline (version 1.1). European
Journal of Cancer. 45 (2009) 228-247.
\221\ Rosenberg, SA and Restifo, N. Adoptive cell transfer as
personalized immunotherapy for human cancer, Science. 2015;348
(6230):62-68.
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The applicant stated that the patients in this study had a high
tumor burden at baseline and had received a mean of 3.3 lines (range,
1-9) of prior therapies. Twenty-eight patients (42%) had liver and/or
brain lesions at baseline. Each prior line of therapy was defined as
any concomitant therapy given to the patient even if more than one
target for each treatment was involved.\222\ The applicant added that
77% of patients had progressed on prior anti-CTLA-4 blockade therapy,
99% had progressed on prior anti-PD-1/PD-L1 therapy, and 88% had
received BRAF/MEK inhibitors. All patients had received PD on their
prior therapy before study entry.
---------------------------------------------------------------------------
\222\ Ghate S, et al. Patterns of treatment and BRAF testing
with immune checkpoint inhibitors and targeted therapy in patients
with metastatic melanoma presumed to be BRAF positive. Melanoma Res
2019;29:301-10.
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Next, the applicant discussed the efficacy results from the C-144-
01 study. The applicant stated that regardless of location of tumor
resected and BRAF mutational status, and across ages (20-79 years),
patients responded to lifileucel therapy. According to the applicant,
at the data cutoff of April 2020 patients in cohort 2 (n=66) had an ORR
of 36% (95% CI 25, 49) and a DCR of 80% (95% CI 69, 89). When
considering best overall response, two patients (3%) achieved complete
response (CR), 22 patients (33%) achieved partial response (PR), 29
patients (44%) achieved stable disease (SD), 9 patients (14%) had
progressive disease (PD), and 4 patients (6%) were non-evaluable. The
applicant highlighted that the ORR (36.5% for those less than 65 years
and 35.7% for those 65 and older) and DCR (71.2% for those less than 65
years and 78.6% for those 65 and older) were consistent across age
groups. The applicant contends that these results following the one-
time, single infusion of lifileucel represent a substantial improvement
over chemotherapy which offers poor ORR of 4%-10%.223 224
The applicant added that the primary-refractory subset (n=42), defined
as patients who had a best overall response of progressive disease to
first immune checkpoint inhibitor, had an ORR of 41% (95% CI, 26, 57)
with 2 CRs (5%), 15 PRs (36%), 17 (41%) SD, and 5 (12%) having PD. The
applicant asserted that this subset is important because 40%-65% of all
patients with metastatic melanoma and >70% of those treated with anti-
CTLA-4 therapy have disease that is primary
[[Page 28254]]
refractory to initial immune checkpoint inhibitor
therapy.225 226 227 228 229
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\223\ Larkin J, et al. Overall survival in patients with
advanced melanoma who received nivolumab versus investigator's
Choice chemotherapy in CheckMate 037: A randomized, controlled,
open-label Phase III trial. J Clin Oncol 2018;36:383-90.
\224\ Ribas A, et al. Pembrolizumab versus investigator-choice
chemotherapy for ipilimumab-refractory melanoma (KEYNOTE-002): A
randomised, controlled, phase 2 trial. Lancet Oncol. 2015; 16(8):
908-18.
\225\ Mooradian MJ and Sullivan RJ. What to do when anti-PD-1
therapy fails in patients with melanoma. Oncology (Williston Park)
2019;33:141-8.
\226\ Gide TN, et al. Primary and acquired resistance to immune
checkpoint inhibitors in metastatic melanoma. Clin Cancer Res
2018;24:1260-70.
\227\ Larkin J, et al. Combined nivolumab and ipilimumab or
monotherapy in untreated melanoma. N Engl J Med 2015;373:23-34.
\228\ Wolchok JD, et al. Overall survival with combined
nivolumab and ipilimumab in advanced melanoma. N Engl J Med
377:1345-1356, 2017.
\229\ Gide TN, et al. Primary and acquired resistance to immune
checkpoint inhibitors in metastatic melanoma. Clin Cancer Res
2018;24:1260-70.
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Next, the applicant asserted that, because the median duration of
response (DOR) had not been reached at a median follow-up of 33 months,
the treatment effect will be durable and provide long-term benefit to
those treated with lifileucel. The applicant added that the median time
from infusion to best response was 1.4 months (1.3-8.7 months). At 18.7
months the median OS was 17.4 months (95% CI, 11.0 to not reached),
with 1-year OS of 58% (95% CI, 45 to 69).\230\ The applicant stated
that a univariable Cox proportional hazards regression model was used
to estimate hazard ratios with 95% confidence intervals between
subgroups on DOR which found that for every 6-month decrease in
cumulative duration of prior anti-PD-1/anti-PD-L1 therapy, the median
DOR to lifileucel was nearly doubled.\231\ The applicant concluded from
these results that shorter duration of prior anti-PD-1 therapy
maximizes DOR to lifileucel treatment and that all newly diagnosed
patients should be closely monitored for progression on anti-PD-1
therapy.\232\
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\230\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10. 1200/
JCO.21.00612, Published online May 12, 2021.
\231\ Larkin JMG, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced melanoma: Evaluation of impact of prior anti-PD-1
therapy. Abstract 9505, oral session; 2021 American Society of
Clinical Oncology's (ASCO) Annual Meeting. Abstract 9505, oral
session. JCO, DOI: 10.1200/JCO/2021.39.15_suppl.9505, JCO 39, no.
15_suppl (May 20, 2021) 9505-9505. Published online May 28, 2021.
\232\ Larkin JMG, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced melanoma: Evaluation of impact of prior anti-PD-1
therapy. Abstract 9505, oral session; 2021 American Society of
Clinical Oncology's (ASCO) Annual Meeting. Abstract 9505, oral
session. JCO, DOI: 10.1200/JCO/2021.39.15_suppl.9505, JCO 39, no.
15_suppl (May 20, 2021) 9505-9505. Published online May 28, 2021.
---------------------------------------------------------------------------
Lastly, the applicant stated that the safety profile of lifileucel
was consistent with the underlying advanced disease and the known
toxicities associated with the single course of lymphodepleting
preconditioning regimen and IL-2. The applicant stated that all
patients experienced at least one treatment-emergent adverse event
(TEAE) during the course of the study with the most common adverse
event of any grade being hematologic along with chills, pyrexia,
fatigue, tachycardia, and hypotension.\233\ The applicant added that
the most common grade \3/4\ TEAEs included thrombocytopenia (89%),
chills (80%), anemia (68%), pyrexia (59%), neutropenia (56%), febrile
neutropenia (55%), hypophosphatemia (46%), leukopenia (42%),
lymphopenia (35%), and tachycardia (35%) \234\ which were consistent
with the lymphodepletion regimen and known profile of IL-
2.235 236 237 One patient died due to intra-abdominal
hemorrhage reported as possibly related to TIL and one due to acute
respiratory failure assessed as not related to TIL.\238\ The applicant
stated that there was no difference in the incidence of TEAEs (for
example any grade, among grades 3 to 4, and among grade 5) in patients
65 or older as compared to those younger than 65. The applicant
asserted that this profile of the incidence of TEAEs over time,
including grade \3/4\ TEAEs that decreased rapidly over time reaching
background rate by approximately day 10 post lifileucel administration,
is reflective of the potential benefit of the one-time treatment with
lifileucel.
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\233\ Sarnaik A, et al. Long-term follow up of lifileucel (LN-
144) cryopreserved autologous tumor infiltrating lymphocyte therapy
in patients with advance melanoma progressed on multiple prior
therapies. Oral presentation at ASCO2020. Abstract Number: 10006;
Journal: J Clin Oncol 38:2020.
\234\ Sarnaik A, et al. Long-term follow up of lifileucel (LN-
144) cryopreserved autologous tumor infiltrating lymphocyte therapy
in patients with advance melanoma progressed on multiple prior
therapies. Oral presentation at ASCO2020. Abstract Number: 10006;
Journal: J Clin Oncol 38:2020.
\235\ Rosenberg SA, et al. Durable complete responses in heavily
pretreated patients with metastatic melanoma using Tcell transfer
Immunotherapy. Clinical Cancer Research. 2011;17(13):4550-4557.
doi:10.1158/1078-0432.CCR-11- 0116. 2,75,101
\236\ Goff SL, et al. Randomized, prospective evaluation
comparing intensity of lymphodepletion before adoptive transfer of
tumor-infiltrating lymphocytes for patients with metastatic
melanoma. J Clin Oncol. 2016 Jul 10;34(20):2389-97. PubMed PMID:
27217459. Pubmed Central PMCID:PMC4981979.
\237\ Dudley ME, et al. Adoptive cell therapy for patients with
metastatic melanoma: Evaluation of intensive myeloablative
chemoradiation preparative regimens. J Clin Oncol. 2008; 26(32):
5233-5239.
\238\ Sarnaik A, et al. Long-term follow up of lifileucel (LN-
144) cryopreserved autologous tumor infiltrating lymphocyte therapy
in patients with advance melanoma progressed on multiple prior
therapies. Oral presentation at ASCO2020. Abstract Number: 10006;
Journal: J Clin Oncol 38:2020.
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In addition to the evidence summarized previously and in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25281), the applicant submitted
one article \239\ and two presentations with abstracts
240 241 in support of its claims regarding substantial
clinical improvement. The published article discussed the C-144-01
trial previously summarized and provided greater detail on Cohort 2;
\242\ the authors described the study design, patient sample, and study
endpoints for Cohort 2. In addition to previously discussed
information, the authors stated that 78 patients underwent tumor
resection in preparation for participation in this trial, however only
66 patients received lifileucel. The article stated that three of the
patients either received a low dosage or did not receive TIL and nine
patients could not be treated because of other causes; while it is not
directly stated in the article it is likely that these patients were
not included in the analysis. The authors added that only 25% of
patients had progressed after achieving a response from lifileucel. The
authors stated that the median DOR had not been reached with a 1-year
DOR of 69% (95% CI, 46-84). The authors stated that 34 (52%) of
patients received anti-PD-1 plus anti-CTLA-4 combination therapy,
either as frontline (n=5, 23%) or after failing frontline therapy (n=9,
29%); the ORRs for these subsets were 33% and 32%, respectively.
According to the authors, the ORRs for patients with primary resistance
(n=17) or acquired resistance (n=11) to anti-PD-1 plus anti-CTLA-4
combination therapy were 35% and 27%, respectively. The article lastly
discussed similar safety outcomes as previously discussed by the
applicant.
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\239\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10. 1200/
JCO.21.00612, Published online May 12, 2021.
\240\ Larkin JMG, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced melanoma: Evaluation of impact of prior anti-PD-1
therapy. Abstract 9505, oral session; 2021 American Society of
Clinical Oncology's (ASCO) Annual Meeting. Abstract 9505, oral
session. JCO, DOI: 10.1200/JCO/2021.39.15_suppl.9505, JCO 39, no.
15_suppl (May 20, 2021) 9505-9505. Published online May 28, 2021.
\241\ Chesney JA, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced (unresectable or metastatic melanoma: Sustained
duration of response at 28 month follow up. Oral presentation CT008;
American Association for Cancer Research (AACR) Annual Meeting 2021.
Oral presentation. Cancer Research, DOI: 10.1158/1538-7445.AM2021-
CT008 Published July 2021.
\242\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10. 1200/
JCO.21.00612, Published online May 12, 2021.
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[[Page 28255]]
Finally, the applicant discussed presentations from the American
Association for Cancer Research (AACR) 2021 annual meeting (28-month
follow-up data) \243\ and the 2021 American Society of Clinical
Oncology (ASCO) annual meeting (33-month follow-up data).\244\ The
first presentation provided 28-month follow up data from the C-144-01
study of the efficacy and safety of lifileucel cohort 2.\245\ Data
presented is similar to the preceding presentation and article
discussed previously. According to the second presentation, 81% (50/62)
of patients had a reduction in tumor burden while 11 patients (17.7%)
had further sum of diameters (SOD) reduction since April 2020.\246\ The
presentation stated that 79% of responders to lifileucel received prior
ipilimumab. The presentation provides a brief case study of a patient
who achieved PR at day 42 and CR at day 84. The presentation concluded
that: Lifileucel resulted in a 36.4% ORR with a median DOR not reached
at 33.1 months; patient responses deepened over time with continued
decrease in tumor size for 11 patients (17.7%); and that early
intervention with lifileucel at the time of initial progression on
anti-PD-1 agents may maximize the benefit seen.
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\243\ Chesney JA, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced (unresectable or metastatic melanoma: Sustained
duration of response at 28 month follow up. Oral presentation CT008;
American Association for Cancer Research (AACR) Annual Meeting 2021.
Oral presentation. Cancer Research, DOI: 10.1158/1538-7445.AM2021-
CT008 Published July 2021.
\244\ Larkin JMG, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced melanoma: Evaluation of impact of prior anti-PD-1
therapy. Abstract 9505, oral session; 2021 American Society of
Clinical Oncology's (ASCO) Annual Meeting. Abstract 9505, oral
session. JCO, DOI: 10.1200/JCO/2021.39.15_suppl.9505, JCO 39, no.
15_suppl (May 20, 2021) 9505-9505. Published online May 28, 2021.
\245\ Chesney JA, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced (unresectable or metastatic melanoma: Sustained
duration of response at 28 month follow up. Oral presentation CT008;
American Association for Cancer Research (AACR) Annual Meeting 2021.
Oral presentation. Cancer Research, DOI: 10.1158/1538-7445.AM2021-
CT008 Published July 2021.
\246\ Larkin JMG, et al. Lifileucel (LN-144), a cryopreserved
autologous tumor infiltrating lymphocyte (TIL) therapy in patients
with advanced melanoma: Evaluation of impact of prior anti-PD-1
therapy. Abstract 9505, oral session; 2021 American Society of
Clinical Oncology's (ASCO) Annual Meeting. Abstract 9505, oral
session. JCO, DOI: 10.1200/JCO/2021.39.15_suppl.9505, JCO 39, no.
15_suppl (May 20, 2021) 9505-9505. Published online May 28, 2021.
---------------------------------------------------------------------------
In response to concerns expressed by CMS in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25281 and 25282) about the appropriateness of
the ORR as the primary outcome, the applicant stated the ORR was
determined to be the appropriate primary endpoint for C-144-01
following a review of studies in patients with advanced cancers where
FDA approval has been granted and in consultation with key opinion
leaders in oncology. The applicant next summarized their June 17, 2021,
public comment letter to CMS.\247\ In their comment the applicant
stated that FDA has described the significance of ORR as assessed by
its magnitude and duration of effect. The comment added that ORR can
represent direct clinical benefit based on the specific disease,
context of use, magnitude of the effect, the number of CRs, the
durability of response, the disease setting, the location of the
tumors, available therapy, and the risk-benefit relationship. According
to the comment, the surrogate endpoint of ORR has allowed for earlier
measurement of lifileucel results and has demonstrated direct, ongoing
clinical benefit for patients with metastatic melanoma with limited
treatment options. Furthermore, the comment stated further evidence of
ORR as an accepted and important efficacy measure for metastatic or
unresectable melanoma is that it has been recognized by the National
Comprehensive Cancer Network (NCCN) in the NCCN Clinical Practice
Guidelines in Oncology, Melanoma: Cutaneous, Version 2.2021.\248\ The
comment concluded that given the limited treatment options and poor
response rates for patients, lifileucel has demonstrated a favorable
risk-benefit profile and represents a substantial clinical improvement
for patients with metastatic melanoma who otherwise have limited
treatment options.
---------------------------------------------------------------------------
\247\ Sarnaik A. Public comment letter, CMS 1752-P. June 20,
2020. www.regulations.gov.
\248\ NCCN Clinical Practice Guidelines in Oncology (NCCN
Guidelines. Melanoma: Cutaneous. V2.2021--February 19, 2021. https://www.nccn.org.
---------------------------------------------------------------------------
The applicant next addressed the second concern raised by CMS in
the FY 2022 PPS/LTCH PPS proposed rule in response to the FY 2022
application for new technology add-on payments, that CMS was unable to
verify the appropriateness of a historical control because the evidence
describing it was not provided. According to the applicant, only
dacarbazine (DTIC) is an appropriate comparator for Cohort 4 as it is
the only chemotherapy agent approved for the treatment of metastatic
melanoma. The applicant added that other published studies provide
evidence on other treatment options without prior anti-PD-1 and are not
pertinent comparators for the C-144-01 study population (weighted
average ORR of DTIC alone was 15.3% across 24 studies).\249\ The
applicant stated that a more recent study in the post-immune checkpoint
inhibitor era reported ORR of 4% from the investigator's choice
arm.\250\ While not appropriate for direct comparison to Cohort 4, the
applicant asserted that these studies do provide historical ORR
information in metastatic melanoma in general and demonstrate that the
ORR in these historical studies approximates the 10% ORR from the DTIC
arm of the Goldinger 2018 study.\251\ According to the applicant, at
the End-of-Phase 2 (EOP2) meeting held in September 2018, FDA concluded
that a controlled trial likely could not be concluded in the patient
population of interest. The applicant stated the precedence for a 10%
historical control rate in the metastatic melanoma population was
established in FDA's approval of BLA 125514 for KEYTRUDA, a PD-1
indicated for the treatment of patients with unresectable or metastatic
melanoma, among other oncologic indications. According to the
applicant, FDA's Medical Review Summary dated August 2, 2014 stated,
``There are no historical data of the response rate of chemotherapies
in patients who are refractory to ipilimumab; however, response rate of
chemotherapies ranged from 5% to 10% in three recently completed Phase
3 studies (ipilimumab in 1st line melanoma patients, and trametinib and
vemurafenib in patients with BRAF V600E mutation). Therefore, the
applicant stated that it is reasonable to use 10% as the null
hypothesis for testing the anti-tumor activity of MK-3475 against
putative chemotherapies in this population.'' \252\ The applicant
concluded that the chemotherapy control arms of the original
registration study of pembrolizumab (KEYTRUDA) and nivolumab (OPDIVO)
provide further support for the 10% historical control rate for Study
C-144-01. According to the applicant, these two studies provide a
substantial and
[[Page 28256]]
coherent data set for response to chemotherapy following treatment with
ipilimumab, an immune checkpoint inhibitor, as well as a BRAF
inhibitor, where indicated. The applicant reported that these studies
had ORRs of 4% (95% CI 2,9) (n=179) \253\ and 10.6% (95% CI 3.5, 23.1)
(n=47).\254\
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\249\ Lui P, et al. Treatments for metastatic melanoma:
Synthesis of evidence from randomized trials. Cancer treatment
reviews. 2007;33(8):665-680.
\250\ Ribas A, et al. Pembrolizumab versus investigator-choice
chemotherapy for ipilimumab-refractory melanoma (KEYNOTE-002): A
randomised, controlled, phase 2 trial. Lancet Oncol 16:908-918,
2015.
\251\ Goldinger SM, et al. The utility of chemotherapy after
immunotherapy failure in metastatic melanoma: A multicenter case
series. J Clin Oncol 36, 2018 (suppl; abstr e21588).
\252\ Center for Drug Evaluation and Research (CDER),
Application #125514Orig1s000 Medical Review. (Keytruda) https://www.accessdata.fda.gov/drugsatfda_docs/nda/2014/125514Orig1s000MedR.pdf.
\253\ Hamid O, et al. Final Analysis of a randomized trial
comparing pembrolizumab versus investigator-choice chemotherapy for
ipilimumab-refractory advanced melanoma. Eur J Cancer. 2017
Nov;86:37-45. Doi: 10.1016/j.ejca.2017.07.022.
\254\ Weber JS, et al. Nivolumab versus chemotherapy in patients
with advanced melanoma who progressed after anti-CTLA-4 treatment
(Checkmate 037); a randomized, controlled, open-label, phase 3
trial. Lancet Oncol 2015: 16:375-384.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding the substantial clinical improvement
criterion. We note that while multiple references were provided in
support of substantial clinical improvement, those that evaluate
lifileucel are based solely on the C-144-01 trial. We question whether
there are methods by which lifileucel might be compared to existing
treatments which were used to construct the historical controls in the
studies provided. Similar to the discussion in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25279 through 25282) we also note that a
historical control is used for all of the studies provided and that the
analyses using this historical control do not account for baseline
differences between the groups being compared. This makes it difficult
to determine if the results seen are due to the treatment, random
occurrences, or bias. We also question whether the patient sample or
samples used to construct the historical control are representative of
the C-144-01 cohort.
We note a low sample size in the primary reference which is used to
explain the findings of C-144-01.\255\ First, we note that the study
enrolled 66 of 78 patients who underwent tumor resection. Given the
small sample size, the 12 patients who withdrew represent a substantial
proportion of the total patients evaluated and may make it even more
difficult to determine whether the results of the patients remaining in
the study are generalizable, especially to the Medicare patient
population. We are concerned that those patients who were not included
in the study may have had poorer clinical outcomes as compared to those
evaluated in the study which would potentially bias the results seen in
the study. Second, in regard to the sample studied, we note a median
age of 55 with males represented at 59%; data on race, ethnicity, and
other demographics are not presented. We question whether the sample
evaluated is appropriately representative of the Medicare population
and whether this sample has a disease burden similar to that seen in
Medicare beneficiaries.
---------------------------------------------------------------------------
\255\ Sarnaik A, et al. Lifileucel, a tumor-infiltrating
lymphocyte therapy, in metastatic melanoma. JCO, DOI: 10. 1200/
JCO.21.00612, Published online May 12, 2021.
---------------------------------------------------------------------------
Next, we note that according to the applicant, high-dose IL-2 has
been used to treat MM in the past and is given as a post-treatment to
lifileucel. The applicant asserted that the occurrence of grade 3 and 4
TEAEs was early and consistent with the lymphodepletion regimen (NMA-
LD) and known profile of IL-2. If lifileucel is always given in
conjunction with the pre- and post-treatments, we question how it is
possible to determine the cause of the TEAEs which are categorized as
severe based on the Common Terminology Criteria for Adverse Events
v4.03. We further note that we have not received any analyses which
controlled for the amount of IL-2 used per patient. There did not
appear to be a discussion of how the number of doses of IL-2
administered to a patient interacted with lifileucel and impacted the
treatment effects (for example, CR, PR, SD), and TEAEs. We believe it
is important to understand the effect of IL-2 on the response rate and
these values as it may be possible for higher doses of IL-2 leading to
better patient outcomes or worse TEAEs as compared to those with fewer
doses of IL-2. Specifically, we question whether the effect seen in C-
144-01 is due to lifileucel itself or due to other factors such as the
use of IL-2, general changes in medical practice over time, and the
specific sample identified for the trial at hand.
Separate from our concern about the use of a historical comparator,
we note that according to the applicant, based on data from 1985
through 1993 analyzing 270 patients across 8 clinical trials, high dose
IL-2 resulted in an ORR of 16% and CR of 6%, as compared to an ORR of
36% for the C-144-01 trial. However, we question whether the
differences in the studies, the samples, and the time period in which
the studies were conducted may account for this difference in the ORR
values as opposed to the use of lifileucel itself.
We are inviting public comments on whether lifileucel meets the
substantial clinical improvement criterion.
We received a comment from the applicant in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
lifileucel.
Comment: In response to CMS' question related to the level of
therapeutic effect of IL-2 which is administered following the one-
time, single administration of lifileucel TIL therapy, the applicant
described IL-1 and discussed its approved therapeutic use. The
applicant asserted that IL-2 is a naturally occurring cytokine that has
been shown to drive T cell activation and effector function. The
applicant added that IL-2 plays a role in the maintenance of CD4
regulatory T cells and differentiation of CD8+ T cells into mature
cytotoxic cells. According to the applicant, to support T-cell activity
after the lifileucel infusion, a short course of high-dose IL-2 (for
example, aldesleukin) is administered in vivo at 600,000 IU/kg every 8
to 12 hours for up to 6 doses beginning 3 to 24 hours after lifileucel
is infused. The applicant stated this short course of high-dose IL-2
differs substantially from the typical high-dose IL-2 antineoplastic
regimens discussed previously: 79% lower dose IL-2 is instead
administered to support the migration, antitumor cytotoxicity and
persistence of the infused TIL, not for antineoplastic effect.
According to the applicant, the methodology of adoptive cell
transfer (ACT), giving autologous ex vivo expanded TIL to
nonmyeloablated lymphodepleted cancer patients followed by a short
course of high-dose IL-2 was developed in 1988.256 257 The
applicant stated that in a phase I trial which evaluated the anti-tumor
effect of TIL therapy with varying IL-2 doses in 15 patients with
metastatic melanoma, tumor response was not seen in patients that did
not receive any IL-2 (n=6).\258\ The applicant next stated that in a
second study, patients who experienced an objective response received
fewer doses of high-dose IL-2 as compared to non-responders.\259\
According to the applicant, this might be explained by the fact that
IL-2 administration
[[Page 28257]]
significantly increased the number of CD4+FoxP3+regulatory T-cells
(Tregs) with a direct correlation between the number of IL-2 doses
given and reconstitution of Treg numbers in the blood and an inverse
correlation between reconstitution of the Tregs and the probability of
achieving an anti-tumor response. The applicant summarized that the use
of IL-2 in TIL therapy is not for antineoplastic effect, but instead
for the sole purpose of creating the right cytokine environment and
supporting T-cell activity after the lifileucel infusion.
---------------------------------------------------------------------------
\256\ Rosenberg SA, Packard BS, Aebersold PM, et al. Use of
Tumor-Infiltrating Lymphocytes and Interleukin-2 in the
Immunotherapy of Patients with Metastatic Melanoma. A Preliminary
Report. N Engl J Med. 1988; 319(25):1676-80.
\257\ Topalian SL, Solomon D, Avis FP, et al. Immunotherapy of
Patients with Advanced Cancer Using Tumor-Infiltrating Lymphocytes
and Recombinant Interleukin-2: A Pilot Study. J Clin Oncol.
1988;6(5):839-53.
\258\ Dudley ME, Wunderlich JR, Robbins PF, et al. Cancer
Regression and Autoimmunity in Patients after Clonal Repopulation
with Antitumor Lymphocytes. Science. 2002;298(5594):850-4.
\259\ Yao, X., Ahmadzadeh, M., Lu, Y.C., Liewehr, D.J., Dudley,
M.E., Liu, F., Schrump, D.S., Steinberg, S.M., Rosenberg, S.A.,
Robbins, P.F., 2012. Levels of peripheral CD4([thorn])FoxP3([thorn])
regulatory T cells are negatively associated with clinical response
to adoptive immunotherapy of human cancer. Blood 119, 5688e5696.
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Next the applicant stated that the purpose of the comment letter
was to respond to CMS' question on whether a multivariate analysis had
been conducted to determine the impact of independent predictors on the
efficacy results of lifileucel and, specifically, if the impact of IL-2
had been analyzed in such a univariable analysis. The applicant noted
that the updated analyses are proprietary until further notice. We note
that we are therefore unable to discuss them in this proposed rule or
consider them in support of this application.
Response: We appreciate the applicant's comments. We will take
these comments into consideration when deciding whether to approve new
technology add-on payments for lifileucel.
e. LIVTENCITYTM (maribavir)
Takeda Pharmaceuticals U.S.A., Inc. submitted an application for
new technology add-on payments for LIVTENCITYTM (maribavir)
for FY 2023. LIVTENCITYTM is a cytomegalovirus (CMV) pUL97
kinase inhibitor indicated for the treatment of adults and pediatrics
(12 years of age and older and weighing at least 35 kg) with post-
transplant CMV infection/disease that is refractory to treatment (with
or without genotypic resistance) to ganciclovir, valganciclovir,
cidofovir, or foscarnet.
According to the applicant, LIVTENCITYTM is the only
antiviral therapy indicated to treat post-transplant patients with CMV
in solid organ transplant (SOT) and hematopoietic stem cell transplant
(HCT). Per the applicant, LIVTENCITYTM provides multi-
targeted anti-CMV activity by inhibiting protein kinase UL97 and its
natural substrates, which subsequently inhibits CMV DNA replication,
encapsidation, and nuclear egress of viral capsids.
The applicant stated that CMV is one of the most common viral
infections experienced by transplant recipients, with an estimated
incidence rate between 16%-56% in SOT recipients and 30%-70% in HCT
recipients.\260\ CMV is a beta herpesvirus that commonly infects
humans; serologic evidence of prior infection can be found in 40%-100%
of various populations.\261\ CMV typically resides latent and
asymptomatic in the body but may reactivate during periods of
immunosuppression. The applicant estimated that there are approximately
200,000 adult transplants per year globally and an estimated 1,435
cases of CMV post-transplant in the Medicare population per year. The
applicant stated that in transplant patients, reactivation of CMV can
potentially lead to serious consequences including loss of the
transplanted organ and, in extreme cases, death.
---------------------------------------------------------------------------
\260\ Azevedo L, Pierrotti L, Abdala E, et al. Cytomegalovirus
infection in transplant recipients. Clinics.2015;70(7):515-523.
doi:10.6061/clinics/2015(07)09; World Health Organization (WHO).
International Report on Organ Donation and Transplantation
Activities-Executive Summary 2018.
\261\ Krech U. Complement-fixing antibodies against
cytomegalovirus in different parts of the world. Bull WHO.
1973(49):103-106.
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Per the applicant, there are four FDA-approved therapies for the
treatment and/or prevention (that is, prophylaxis) of CMV disease:
Valganciclovir, ganciclovir, foscarnet, and cidofovir. The applicant
stated that ganciclovir and valganciclovir are approved for prevention
of CMV disease in transplant recipients and for treatment of CMV
retinitis in immunocompromised hosts, including those with Acquired
Immune Deficiency Syndrome (AIDS); and foscarnet and cidofovir are
approved for treatment of CMV retinitis in AIDS patients. Per the
applicant, none of these four therapies are FDA-approved for the
treatment of resistant or refractory CMV infection and disease. The
applicant provided a table that included the therapy, transplant type,
mechanism of action, approved indications that were CMV-related, and
the formulation(s).
BILLING CODE 4120-01-P
[[Page 28258]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.094
BILLING CODE 4120-01-C
With respect to the newness criterion, the applicant stated that
LIVTENCITYTM was granted Breakthrough Therapy, Priority
Review, and Orphan Drug designations from FDA, and subsequently
received FDA approval for its New Drug Application on November 23,
2021. LIVTENCITYTM is indicated for the treatment of adults
and pediatric patients (12 years of age or older and weighing at least
35 kg) with post-transplant CMV infection/disease that is refractory to
treatment (with or without genotypic resistance) with ganciclovir,
valganciclovir, cidofovir, or foscarnet. Per the applicant,
LIVTENCITYTM became commercially available on December 2,
2021. The applicant did not explain the reason for the delay between
market authorization and commercial availability. The recommended
dosing is 400 mg (two 200 mg tablets) orally twice daily with or
without food. The applicant stated that if LIVTENCITYTM is
co-administered with carbamazepine, then the dosage is increased to 800
mg twice daily; if co-administered with phenytoin or phenobarbital, the
dosage is increased to 1,200 mg twice daily.
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\262\ VALCYTE[supreg] (valganciclovir) United States Prescribing
Information (2018).
\263\ CYTOVENE-IV[supreg] (ganciclovir) United States
Prescribing Information (2018).
\264\ FOSCAVIR[supreg] (foscarnet) United States Prescribing
Information (2017).
\265\ VISTIDE[supreg] (cidofovir) United States Prescribing
Information (2010).
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According to the applicant, ICD-10-PCS code 3E0DX29 (Introduction
of other anti-infective into mouth and pharynx, external approach) may
be used to identify administration of LIVTENCITYTM but does
not uniquely identify it. The applicant submitted a request for
approval for a unique ICD-10-PCS procedure code for
LIVTENCITYTM beginning in FY 2023.
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 purposes of new technology add-on
payments.
With respect to the first criterion, whether a technology uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that LIVTENCITYTM targets a different
gene locus (pUL97 vs. pUL54) than the existing therapies to treat CMV
infection, including those resistant or refractory to conventional
therapy. Specifically, LIVTENCITYTM inhibits CMV DNA
replication, encapsidation, and nuclear egress of viral capsids
[[Page 28259]]
through inhibition of pUL97 and its natural substrates. The applicant
provided the mechanisms of action for the other existing anti-CMV
drugs, namely valganciclovir ganciclovir, foscarnet, and cidofovir in
the table previously listed and concluded that the
LIVTENCITYTM uses a different mechanism of action compared
to existing anti-CMV drugs.
With respect to the second criterion, whether a technology is
assigned to the same or a different MS-DRG when compared to an existing
technology, the applicant stated that LIVTENCITYTM is
expected to be assigned to the same MS-DRGs as therapies that are
currently used off-label for the treatment of CMV infection or disease.
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 noted that there are no other
existing therapies indicated to treat the same or similar type of
disease or patient population as LIVTENCITYTM. The applicant
noted that currently available therapies are used off-label to treat
patients with refractory or resistant CMV infection or disease. Thus,
the applicant maintained that LIVTENCITYTM is indicated to
treat a different patient population compared to existing technologies.
In summary, the applicant asserted that LIVTENCITYTM is
not substantially similar to other currently available therapies
because it uses a new mechanism of action and is indicated to treat a
unique patient population and/or disease and, therefore, the technology
meets the newness criterion. We are inviting public comments on whether
LIVTENCITYTM is substantially similar to existing
technologies and whether LIVTENCITYTM meets the newness
criterion. As noted previously, the applicant did not explain the
reason for the delay between market authorization and commercial
availability, and we therefore also request additional information
regarding this point.
With respect to the cost criterion, the applicant presented the
following analysis. To identify patients who may be eligible to receive
LIVTENCITYTM as a treatment, the applicant searched the 2019
MedPAR dataset for cases with the following ICD-10-CM codes for CMV and
post-transplant SOT and HCT infection. The applicant included inpatient
discharges under Medicare fee-for-service (FFS) and excluded Medicare
Advantage discharges.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.095
BILLING CODE 4120-01-C
The applicant identified 1,435 claims mapping to 108 MS-DRGs. For
MS-DRGs where the case volume was below 11, the applicant imputed a
count of 11 cases. The table lists the nine MS-DRGs with the highest
volume of cases.
[[Page 28260]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.096
The applicant did not remove charges for a prior technology, as the
applicant claimed that any current treatment that is used off-label to
treat CMV patients post-transplant SOT and HCT may not be reflected in
claims data. The applicant further explained that in cases where an
off-label treatment is reflected on the claim, LIVTENCITYTM
might be used as a second-line treatment rather than to replace the
off-label treatment. The applicant then standardized the charges and
applied a 4-year inflation factor of 1.281834 or 28.1834%, based on the
inflation factor used in the FY 2022 IPPS/LTCH PPS final rule and
correction notice to update the outlier threshold (86 FR 45542). The
applicant added charges for the new technology by dividing the cost of
LIVTENCITYTM by the national average CCR for drugs which is
0.187 (86 FR 44966). The applicant estimated the costs of
LIVTENCITYTM based on 8-week dosing regimens to complete the
full treatment.
The applicant calculated a final inflated average case-weighted
standardized charge per case of $508,855 which exceeded the average
case-weighted threshold amount of $76,739.
We invite public comments on whether LIVTENCITYTM meets
the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that LIVTENCITYTM represents a new
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments. To support this claim,
the applicant reiterated that there are no existing therapies that are
approved by FDA to treat post-transplant patients with refractory or
resistant CMV infection or disease. The applicant also asserted that
the use of LIVTENCITYTM may significantly improve clinical
outcomes by improving efficacy and reducing adverse effects compared to
available therapies.
To support the claim of improved efficacy, the applicant cited
results from SOLSTICE, a phase III, open-label, randomized controlled
trial in which 352 transplant recipients [HCT (n=211) and SOT (n=141)]
with refractory \266\ or resistant \267\ CMV were assigned 2:1 to
receive 400 mg of LIVTENCITYTM twice daily (n=235) or
investigator-assigned therapy (IAT) with drug-specific dosing (n=117)
for 8 weeks, with 12 weeks of follow-up.\268\ The choice of specific
IAT was at the investigators' discretion and included mono- or
combination therapy (<=2 drugs) with intravenous (IV) ganciclovir, oral
valganciclovir, IV foscarnet or IV cidofovir, where switching between
ganciclovir and valganciclovir was permitted. The median (range)
duration of exposure was 57 (2-64) days in the LIVTENCITYTM
arm and 34 (4-64) days with IAT. The primary endpoint was the
proportion of patients achieving CMV clearance at 8 weeks, and the key
secondary endpoint was achievement of CMV clearance \269\ and symptom
control \270\ at the end of week 8, maintained through week 16. With
respect to the primary endpoint, the applicant indicated that CMV
clearance at 8 weeks was achieved in 55.7% (n=131/235) of the
LIVTENCITYTM group and 23.9% (n=28/117) of the IAT group
with an adjusted difference of 32.8%, where the results achieved
statistical significance [95% CI, 22.8-42.7%, p<0.001]. With respect to
the secondary endpoint, the applicant indicated that 18.7% (n=44/235)
of the LIVTENCITYTM-treated group and 10.3% (n=12/117) of
IAT-treated group maintained CMV viremia clearance and symptom control
through week 16 (p=0.013).\271\ The applicant stated that, based on
these results, LIVTENCITYTM is superior to conventional
antiviral therapies in achieving and maintaining CMV viremia clearance
and symptom control.
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\266\ Failure to achieve >1 log10 decrease in CMV DNA
after at least 14 days of anti-CMV treatment.
\267\ At least 1 genetic mutation associated with resistance to
ganciclovir/valganciclovir, foscarnet, and/or cidofovir.
\268\ Avery RK, Alain S, Alexander B, et al. Maribavir for
refractory cytomegalovirus infections with or without resistance
post-transplant: Results from a phase 3 randomized clinical trial
(accepted manuscript). Clin Infect Dis. 2021; ciab988, https://doi.org/10.1093/cid/ciab988.
\269\ Measured as CMV DNA level less than lower limit of
quantification.
\270\ Resolution or improvement in tissue-invasive CMV disease
or syndrome for participants symptomatic at baseline or no new
symptoms of tissue-invasive CMV disease or syndrome for participants
asymptomatic at baseline.
\271\ Avery RK, Alain S, Alexander B, et al. Maribavir for
refractory cytomegalovirus infections with or without resistance
post-transplant: Results from a phase 3 randomized clinical trial
(accepted manuscript). Clin Infect Dis. 2021; ciab988, https://doi.org/10.1093/cid/ciab988.
---------------------------------------------------------------------------
The applicant also claimed that the efficacy of
LIVTENCITYTM is consistent across SOT types, as evidenced by
an unpublished subgroup analysis by Avery et al.\272\ which evaluated
211 SOT patients from the SOLSTICE trial for CMV clearance
(LIVTENCITYTM vs. conventional) by transplant type, with the
following results: Heart: 42.9% (n=6/14) vs. 11.1% (n=1/9) (adjusted
difference: 30.7% [95% CI, -1.72-63.15%]); lung: 47.5% (n=19/40) vs.
13.6% (n=3/22), adjusted difference: 38.2% [95% CI, 16.89-59.53%];
kidney: 59.5% (n=44/74) vs. 34.4% (n=11/32); adjusted difference: 26.7%
[95% CI, 7.48-45.85%].
---------------------------------------------------------------------------
\272\ Avery RK, Blumberg EA, Florescu D, et al. A randomized
phase 3 open-label study of maribavir vs. investigator-assigned
therapy for refractory/resistant cytomegalovirus infection in
transplant recipients: Subgroup analyses of efficacy by organ. in:
The 2021 American Transplant Congress; 2021. Abstract LB 9.
---------------------------------------------------------------------------
Finally, with regard to efficacy, the applicant stated that
LIVTENCITYTM is active against refractory or resistant CMV
infections and tolerable across doses. To support this claim, the
applicant pointed to a randomized, dose-ranging, open-label, phase II
study by Papanicolaou et al.,\273\ in which HCT
[[Page 28261]]
and SOT recipients with refractory or resistant CMV infections (n=120)
were randomized 1:1:1 to twice-daily LIVTENCITYTM doses of
400 mg (n=40), 800 mg (n=40), or 1,200 mg (n=40) for up to 24 weeks.
The primary efficacy endpoint was the proportion of patients with
confirmed undetectable plasma CMV DNA within 6 weeks of treatment.
About two-thirds (n=80/120) of the patients achieved undetectable
plasma CMV DNA within 6 weeks of treatment among all doses [95% CI, 57-
75%], and 70% of patients receiving 400 mg of LIVTENCITYTM
twice daily [95% CI, 53-83]; 62% of patients receiving 800 mg twice
daily [95% CI, 46-77%], and 68% of patients receiving 1,200 mg twice
daily [95% CI, 51-81%] achieved the primary endpoint. About a third of
patients experienced recurrent CMV infection while on
LIVTENCITYTM (n=25) and 13 patients developed mutations
conferring LIVTENCITYTM resistance.
---------------------------------------------------------------------------
\273\ Papanicolaou GA, Silveira FP, Langston AA, et al. MBV for
r/r CMV infections in HCT or SOT recipients: A randomized, dose-
ranging, double-blind, phase 2 study. Clin Infect Dis.
2019;68(8):1255-1264. doi:10.1093/cid/ciy706.
---------------------------------------------------------------------------
To support the claim of decreased adverse effects, the applicant
cited the results of two secondary endpoints from the SOLSTICE trial.
Per the applicant, neutropenia and acute kidney injury are known,
common adverse effects associated with valganciclovir/ganciclovir and
foscarnet, respectively. The applicant noted that the rates of
treatment-related neutropenia and acute kidney injury were both 1.7%
(n=4/234), separately, in the LIVTENCITYTM treatment group.
The applicant also noted that the rate of neutropenia was 25% (n=14/56)
in the valganciclovir/ganciclovir group, and the rate of acute kidney
injury was 19.1% (n=9/47) in the foscarnet group.\274\ The applicant
maintained that the rate of treatment-related neutropenia and acute
kidney injury was lower in the LIVTENCITYTM group vs.
conventional therapy group. The applicant asserted that, based on these
results, LIVTENCITYTM has a lower incidence of treatment-
related toxicities than existing therapies.
---------------------------------------------------------------------------
\274\ Avery RK, Alain S, Alexander B, et al. Maribavir for
refractory cytomegalovirus infections with or without resistance
post-transplant: Results from a phase 3 randomized clinical trial
(accepted manuscript). Clin Infect Dis. 2021; ciab988, https://doi.org/10.1093/cid/ciab988.
---------------------------------------------------------------------------
The applicant more specifically claimed that transplant patients
treated with LIVTENCITYTM for CMV infection experienced a
lower incidence of treatment-related neutropenia compared with
valganciclovir. To support this claim, the applicant cited the primary
safety endpoint from Maertens et al.,\275\ a parallel-group, phase II
study. In this open-label, LIVTENCITYTM-blinded trial, 120
HCT or SOT recipients with CMV reactivation were randomly assigned to
receive LIVTENCITYTM at a dose of 400 mg (n=40), 800 mg
(n=40), or 1,200 mg (n=40) twice daily or the standard dose of
valganciclovir for 12 weeks for preemptive treatment. The primary
efficacy endpoint was the percentage of patients with a response to
treatment, defined as confirmed undetectable CMV DNA in plasma, within
3 weeks and 6 weeks after the start of treatment. The primary safety
endpoint was the incidence of adverse events that occurred or worsened
during treatment. Specifically, the applicant cited the rate of
treatment-emergent neutropenia in this study which was identified in 4%
(n=5/118) of patients administered LIVTENCITYTM versus 15%
(n=6/39) of patients administered valganciclovir through week 6.
Similar results were found through week 12: 5% (n=6/118) vs. 18% (n=7/
39). The statistical significance of the difference in treatment-
emergent neutropenia between the two groups was not reported in the
study.
---------------------------------------------------------------------------
\275\ Maertens J, Cordonnier C, Jaksch P, et al. Maribavir for
preemptive treatment of cytomegalovirus reactivation. N Engl J Med.
2019;381(12):1136-1147. doi:10.1056/NEJMoa1714656.
---------------------------------------------------------------------------
Finally, the applicant stated that LIVTENCITYTM had a
lower incidence of adverse events leading to discontinuation. To
support this assertion, the applicant cited the rate of treatment-
emergent adverse effects (TEAEs) leading to discontinuation from
SOLSTICE, which was lower in the LIVTENCITYTM group (13.2%
(n=31/324)) vs. the conventional group (31.9% (n=37/116)).\276\
---------------------------------------------------------------------------
\276\ Avery RK, Alain S, Alexander B, et al. Maribavir for
refractory cytomegalovirus infections with or without resistance
post-transplant: Results from a phase 3 randomized clinical trial
(accepted manuscript). Clin Infect Dis. 2021; ciab988, https://doi.org/10.1093/cid/ciab988.
---------------------------------------------------------------------------
After reviewing the information provided by the applicant, we have
the following concerns regarding whether LIVTENCITYTM meets
the substantial clinical improvement criterion. First, while the
applicant provided data to demonstrate that the proportion of patients
achieving CMV clearance at 8 weeks was higher among patients using
LIVTENCITYTM, we note similar rates of mortality and new-
onset CMV between the 2 treatment groups in this trial:
LIVTENCITYTM vs. comparator: 11% (n=27/235) vs. 6% (n=13/
117) and 6% (n=14/235) vs. 6% (n=7/113), respectively.\277\ We also
note that it is unclear whether the SOLSTICE study was sufficiently
powered to detect a difference in CMV viremia clearance at week 16, one
of the study's secondary endpoints.\278\ We further note that while the
rate of TEAEs leading to discontinuation was lower in the
LIVTENCITYTM group, the rate of overall TEAEs and serious
TEAEs in the SOLSTICE trial was similar between the two treatment
groups [LIVTENCITYTM vs. comparator: Any TEAE: 97.4% (n=229/
234) vs. 91.4% (n=106/116), serious TEAE: 38.5% vs. 37.1%].\279\
Furthermore, we would appreciate additional information from the
applicant regarding safeguards taken to minimize or prevent bias from
the treating physician in choosing the conventional therapy for
patients in the investigator-assigned therapy group of the phase III
trial.
---------------------------------------------------------------------------
\277\ Ibid.
\278\ Ibid.
\279\ Ibid.
---------------------------------------------------------------------------
We are inviting public comments on whether LIVTENCITYTM
meets the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
LIVTENCITYTM.
f. Mosunetuzumab
Genentech, Inc. submitted an application for new technology add-on
payments for mosunetuzumab for FY 2023. According to the applicant,
mosunetuzumab is an investigational drug that is anticipated to be a
novel first-in class therapy for the treatment of any non-Hodgkin
lymphoma (NHL). The applicant stated that it intends to seek FDA
approval for the use of mosunetuzumab in adults with relapsed or
refractory (r/r) follicular lymphoma (FL) who have received at least
two prior systemic therapies.
According to the applicant, mosunetuzumab is a humanized bispecific
monoclonal antibody (BsAb) that exhibits potential antineoplastic
activity. The applicant stated that mosunetuzumab contains two antigen-
recognition sites: One for human CD3 (a T cell surface antigen) and one
for human CD20 (a tumor-associated antigen expressed on B cells, and
often overexpressed in B cell malignancies). Per the applicant,
mosunetuzumab binds to both patients' existing T cells and CD20-
expressing tumor cells, linking them, which can cause a cytotoxic T-
lymphocyte response against CD20-expressing tumor B cells. According to
the applicant, mosunetuzumab's dual targeting design,
[[Page 28262]]
due to two fragment antigen-binding or `Fab' binding regions, activates
and redirects engagement of a lymphoma patient's T cells to eliminate
malignant B cells by releasing cytotoxic proteins into the B cells. The
applicant further stated that target B cell killing occurs only upon
simultaneous binding to both targets, as it is a conditional agonist.
According to the applicant, clinical trials of mosunetuzumab are
ongoing with different dosing regimens including subcutaneous and
intravenous administration.
FL is the second most prevalent form of non-Hodgkins lymphoma
(NHL), affecting approximately 16,000 individuals annually in the
US.\280\ According to the National Institute of Health (NIH), the rate
of new cases of FL was 2.7 per 100,000 men and women per year based on
2014-2018 cases, age-adjusted.\281\ According to the applicant, the
vast majority of patients treated for FL will have an initial response
to therapy with 40 to 80 percent demonstrating a complete response,
depending on the initial regimen used. In addition, less than 10
percent of patients treated with initial chemoimmunotherapy will not
respond to treatment (that is, have refractory disease).\282\
---------------------------------------------------------------------------
\280\ Shi Q, Flowers CR, Hiddemann W, Marcus R, Herold M,
Hagenbeek A, Kimby E, Hochster H, Vitolo U, Peterson BA, Gyan E,
Ghielmini M, Nielsen T, De Bedout S, Fu T, Valente N, Fowler NH,
Hoster E, Ladetto M, Morschhauser F, Zucca E, Salles G, Sargent DJ.
Thirty-Month Complete Response as a Surrogate End Point in First-
Line Follicular Lymphoma Therapy: An Individual Patient-Level
Analysis of Multiple Randomized Trials. J Clin Oncol. 2017 Feb
10;35(5):552-560. doi: 10.1200/JCO.2016.70.8651.
\281\ https://seer.cancer.gov/statfacts/html/nhl.html.
\282\ Freedman, A.S., Friedberg, Jonathan, et.al. (2022).
Treatment of relapsed or refractory follicular lymphoma. UpToDate.
Retrieved February 7, 2022, from https://www.uptodate.com/contents/
treatment-of-relapsed-or-refractory-follicular-
lymphoma?search=relapsed%20refractory%20follicular%20lymphoma&source=
search_result&selectedTitle=1~150&usage_type=default&display_rank=1.
---------------------------------------------------------------------------
According to the applicant, FL is an indolent, incurable disease
and patients are expected to have relapses. Based on a 10-year
retrospective study of follicular NHL patients treated with first line
(1L) therapy between 1998-2009, 50% progressed to second line (2L)
therapy. Of those who completed 2L treatment, 65% progressed to third
line (3L) therapy, and 65% of those patients then progressed to fourth
line (4L).\283\ An observational National LymphoCare Study also noted
that of patients undergoing 1L, 37% progressed to 2L, 18% received 3L,
and 9% and 5% went on to 4L and 5L, respectively.\284\ The applicant
stated that multiply relapsed FL has a high unmet medical need
especially in patients who are relapsed or refractory to different
classes of agents and have limited treatment options with challenging
safety profiles. Therefore, per the applicant, novel treatments with
improved efficacy and tolerability are needed.
---------------------------------------------------------------------------
\283\ Hubel K, Ghielmini M, Ladetto M, Gopal A. Controversies in
the Treatment of Follicular Lymphoma. HemaSphere. 2020;4(1): e317.
doi:10.1097/HS9.0000000000000317.
\284\ Link et al. Br. J. Haematol. 2019;184:634-696 https://doi.org/10.1111/bjh.15149.
---------------------------------------------------------------------------
The applicant stated that the NCCN provides suggested treatment
regimens for existing agents in FL. According to the applicant, choice
of therapy requires consideration of several factors, including age and
comorbidities, as well as refractory status to prior therapies.
However, per the applicant, there is no established standard of care
for FL in third-line or later (3L+) settings. The applicant stated that
the currently FDA approved treatments for r/r FL include anti-CD20-
based treatment regimens (including the combination of lenalidomide +
rituximab known as the R2 regimen), phosphatidylinositol 3-kinase
(PI3K) inhibitors, enhancer of zeste homolog 2 (EZH2) inhibitors, and
CAR T-cell therapy.
According to the applicant, chemoimmunotherapy with anti-CD20
monoclonal antibodies (mAb) approved for FL includes rituximab, a Type
I antibody, and obinutuzumab, a Type II antibody.\285\ The applicant
stated that while the anti-CD20 antibodies are NCCN Guidelines
Preferred treatments for 2L and subsequent therapy, they are not
considered the most beneficial treatment for 3L+ FL; most patients are
treated with rituximab-based therapies in the early lines (1L and 2L)
of treatment, which the applicant stated leads to decreasing duration
of response (DOR) and increasing refractoriness to therapies in the
later lines of treatment. The applicant further asserted that the
predominantly elderly FL population, together with the fact that many
patients have typically been through multiple rounds of therapy, limits
their ability to tolerate anti-CD20 mAb plus chemotherapy-based
regimens.
---------------------------------------------------------------------------
\285\ Salles GA, Morschhauser F, Solal-Ce[acute]ligny P, et al.
obinutuzumab (GA101) in patients with relapsed/refractory indolent
non-Hodgkin lymphoma: Results from the phase II GAUGUIN study. J.
Clin. Oncol. 2013;31(23):2920-2926. doi:10.1200/JCO.2012.46.9718.
---------------------------------------------------------------------------
According to the applicant, since anti-CD20 mAbs alone or with
chemotherapy are not curative, show decreasing efficacy with repeated
administrations, and because chemotherapy-based regimens are associated
with long-term toxic effects, leading to limited tolerability
especially for the elderly population, different targets were sought in
the treatment of r/r FL.\286\ Per the applicant, the FDA has granted
accelerated approval for idelalisib \287\ \288\ copanlisib,\289\ and
duvelisib \290\ as single agent inhibitors of PI3K delta, alpha/delta,
and delta/gamma isoforms, respectively, for the treatment of patients
with r/r FL who have received >=2 prior therapies. More recently, the
dual PI3K delta and casein kinase 1 epsilon inhibitor umbralisib \291\
gained accelerated approval for treatment of patients with r/r FL who
have received at least three prior lines of systemic therapy. The
applicant asserted that balancing tumor target inhibition with dose-
limiting toxicities has presented a challenge for PI3K inhibitors, and
that although these PI3K inhibitors have shown efficacy, they have also
been associated with significant toxicities. The applicant further
stated that these treatments provide important options to physicians
and patients, but their side-by-side evaluation for FL in cross-trial
comparisons is challenging due to variability in patient selection and
treatments. The applicant noted that both duvelisib and idelalisib have
recently been voluntarily withdrawn from the US market for the
treatment of FL.\292\ \293\
---------------------------------------------------------------------------
\286\ Bachy E, Houot R, Morschhauser F, et al. Long-term follow
up of the FL2000 study comparing CHVP-interferon to CHVP-interferon
plus rituximab in follicular lymphoma. Haematologica.
2013;98(7):1107-1114. doi:10.3324/haematol.2012.082412.
\287\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N. Engl.
J. Med. 2014;370:1008-1018. doi:10.1056/NEJMoa1314583.
\288\ Salles G, Schuster SJ, de Vos S, et al. Efficacy and
safety of idelalisib in patients with relapsed, rituximab-and
alkylating agent-refractory follicular lymphoma: A subgroup analysis
of a phase 2 study. Haematologica. 2017;102:156-159. doi:10.3324/
haematol.2016.151738.
\289\ Dreyling M, Santoro A, Mollica L, et al.
Phosphatidylinositol 3-kinase inhibition by copanlisib in relapsed
or refractory indolent lymphoma. J. Clin. Oncol. 2017;35:3898-3905.
doi:10.1200/JCO.2017.75.4648.
\290\ Flinn IW, Miller CB, Ardeshna KM, et al. DYNAMO: A phase
II study of duvelisib (IPI-145) in patients with refractory indolent
non-Hodgkin lymphoma. J. Clin. Oncol. 2019;37(11):912-922.
doi:10.1200/JCO.18.00915. Erratum in: J. Clin. Oncol.
2019;37(16):1448. doi:10.1200/JCO.19.00976.
\291\ Fowler NH, Samaniego F, Jurczak W, et al. umbralisib, a
dual PI3K[delta]/CK1[egr] inhibitor in patients with relapsed or
refractory indolent lymphoma. J. Clin. Oncol. 2021;39:1609-1618.
doi:10.1200/JCO.20.03433,
\292\ Gilead statement on zydelig[supreg] U.S. indication for
follicular lymphoma and small lymphocytic leukemia. https://www.gilead.com/news-and-press/company-statements/gilead-statement-on-zydelig-us-indication-for-follicular-lymphoma-and-small-lymphocytic-leukemia. Accessed January 25, 2022.
\293\ Inc SB. Secura bio announces copiktra[supreg] (Duvelisib)
strategic focus on t-cell lymphoma and voluntary U.S. withdrawal of
the relapsed or refractory follicular lymphoma indication. https://www.prnewswire.com/news-releases/secura-bio-announces-copiktra-duvelisib-strategic-focus-on-t-cell-lymphoma-and-voluntary-us-withdrawal-of-the-relapsed-or-refractory-follicular-lymphoma-indication-301436834.html. Accessed January 25, 2022.
---------------------------------------------------------------------------
[[Page 28263]]
According to the applicant, a newer therapeutic approach to treat
FL includes EZH2 inhibitor therapy, a catalytic subunit of the
chromatin remodeling Polycomb Repressive Complex 2 (PRC2).\294\
According to the applicant, the FDA granted accelerated approval to
tazemetostat,\295\ a first-in-class EZH2 inhibitor for patients with r/
r FL who received >=2 prior therapies whose tumors are positive for an
EZH2 mutation, and for patients with r/r FL who have no satisfactory
alternative treatment options. The applicant stated that EZH2 exhibits
somatic, gain-of-function activating mutations in 7-29% of FL
patients.\296\ \297\ \298\ EZH2 mutations represent an early event in
FL, and in the majority of cases are maintained throughout disease
transformation. The applicant further stated that considering the high
overall incidence of EZH2 mutations in FL, their stability during
disease progression, and that EZH2 selective inhibitors can be made, it
follows that efforts would be placed on developing FL therapies
targeting the inhibition of EZH2.
---------------------------------------------------------------------------
\294\ Morin RD, Johnson NA, Severson TM, et al. Somatic
mutations altering EZH2 (Tyr641) in follicular and diffuse large B-
cell lymphomas of germinal-center origin. Nat. Genet. 2010;42:181-
185. doi: 10.1038/ng.518
\295\ Morschhauser F, Tilly H, Chaidos A, et al. tazemetostat
for patients with relapsed or refractory follicular lymphoma: An
open-label, single-arm, multicentre, phase 2 trial. Lancet Oncol.
2020;21:1433-1442. doi:10.1016/S1470-2045(20)30441-1.
\296\ Morin RD, Johnson NA, Severson TM, et al. Somatic
mutations altering EZH2 (Tyr641) in follicular and diffuse large B-
cell lymphomas of germinal-center origin. Nat. Genet. 2010;42:181-
185. doi: 10.1038/ng.518.
\297\ B[ouml]d[ouml]r C, Grossmann V, Popov N, et al. EZH2
mutations are frequent and represent an early event in follicular
lymphoma. Blood. 2013;122:3165-3168. doi:10.1182/blood-2013-04-
496893.
\298\ Huet S, Xerri L, Tesson B, et al. EZH2 alterations in
follicular lymphoma: Biological and clinical correlations. Blood
Cancer J. 2017;7:e555. doi:10.1038/bcj.2017.32.
---------------------------------------------------------------------------
The applicant stated that recent developments have supported the
effectiveness of therapies that utilize T cells in the treatment of B-
cell malignancies, such as the ex vivo manipulation of T lymphocytes to
express chimeric antigen receptors (CARs) that target lineage-specific
surface molecules such as CD19.\299\ According to the applicant,
axicabtagene ciloleucel (YESCARTA[supreg]) was the second approved
gene-altering cancer treatment, first-in-class for aggressive lymphoma,
and was approved by FDA based on clinical study results \300\ for the
treatment of patients with r/r FL who have received >=2 prior
therapies. The applicant asserted that while offering strong efficacy,
CAR T-cell therapy has significant limitations as it adds complexities
in manufacturing and treatment which the applicant states negatively
impact patient access significantly. The applicant stated that CAR T-
cell therapy requires mandatory hospitalization and is only available
at one of only approximately 100 authorized treatment centers (ATCs)
across the United States,\301\ adding cost and travel burdens on
patients, particularly older patients who may be on limited incomes and
have difficulty traveling long distances. Per the applicant, CAR T-cell
therapy also raises risks for serious toxicities and prominent side
effects like neurotoxicity and cytokine release syndrome (CRS).\302\
---------------------------------------------------------------------------
\299\ Viardot A, Wais V, Sala E, et al. Chimeric antigen
receptor (CAR) T-cell therapy as a treatment option for patients
with B-cell lymphomas: Perspectives on the therapeutic potential of
axicabtagene ciloleucel. Cancer Manag. Res. 2019;11:2393-2404.
doi:10.2147/CMAR.S163225.
\300\ Jacobson C, Chavez JC, Sehgal AR, et al. Primary analysis
of zuma-5: A phase 2 study of axicabtagene ciloleucel (axi-cel) in
patients with relapsed/refractory (r/r) indolent non-hodgkin
lymphoma (iNHL). Blood. 2020;136 (Supplement 1):40-41. doi:10.1182/
blood-2020-136834.
\301\ Yescarta[supreg] (axicabtagene ciloleucel) Authorized
Treatment Centers. YESCARTA HCP website, 10 Sept. 2021, https://www.yescartahcp.com/large-b-cell-lymphoma/authorized-treatment-centers.
\302\ Jacobson C, Chavez JC, Sehgal AR, et al. Primary analysis
of zuma-5: A phase 2 study of axicabtagene ciloleucel (axi-cel) in
patients with relapsed/refractory (r/r) indolent non-hodgkin
lymphoma (iNHL). Blood. 2020;136(Supplement 1):40-41. doi:10.1182/
blood-2020-136834.
---------------------------------------------------------------------------
The applicant stated that for these reasons, there is a high unmet
need for patients with r/r FL who have received >=2 prior therapies,
particularly for patients who are refractory to different classes of
agents and are left with limited treatment options that may have
challenging safety profiles. Per the applicant, new treatment options
are needed that will significantly extend the duration of remission and
can overcome resistance to existing therapies, while providing
acceptable safety and tolerability.
With respect to the newness criterion, the applicant stated that
mosunetuzumab was granted Breakthrough Therapy designation by FDA. The
applicant indicated that it expects to receive FDA approval by June 30,
2022 and stated that the final review pathway has yet to be determined.
Additionally, the applicant stated they may be limited in their ability
to make mosunetuzumab available immediately following FDA approval and
pointed to printing and labeling requirements as the reason. Per the
applicant, while the drug has not yet been FDA-approved, the
recommended dosage is presented in the following table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.097
The applicant described a dose escalation for mosunetuzumab to be
administered intravenously for eight cycles unless there is
unacceptable toxicity or disease progression. For patients who achieve
a complete response (CR), no further treatment beyond eight cycles is
required. For patients who achieve a partial response
[[Page 28264]]
(PR) or have stable disease control in response to treatment with
mosunetuzumab after eight cycles, an additional nine cycles of
treatment (17 cycles total) should be administered. Additionally, if
there is any dose delay >7 days in cycle 1, the previous tolerated dose
should be repeated prior to resuming the planned treatment schedule. If
a dose interruption occurs between cycles 1 and 2 that results in a
treatment-free interval of >=6 weeks, mosunetuzumab is recommended to
be administered as 1 mg on day 1 and 2 mg on day 8, and then the
planned cycle 2 treatment of 60 mg is resumed on day 15. If a dose
interruption occurs that results in a treatment-free interval of >=6
weeks between any cycles in cycle 3 onwards, mosunetuzumab is to be
administered at 1 mg on day 1 and 2 mg on day 8, and then the planned
treatment schedule of 30 mg is resumed on day 15.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify procedures involving
administration of mosunetuzumab. The applicant submitted a request for
approval for a unique ICD-10-PCS code to identify procedures involving
the administration of mosunetuzumab for FY 2023. The applicant also
listed the following diagnosis codes that could be used to identify the
indications associated with the technology:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.098
[[Page 28265]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.099
[[Page 28266]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.100
BILLING CODE 4120-01-C
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 respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that mosunetuzumab does not use the same or a
similar mechanism of action when compared to other therapies approved
in the treatment of 3L+ r/r FL. The applicant stated that mosunetuzumab
is a bispecific CD20xCD3 monoclonal antibody. The applicant asserted
that mosunetuzumab has a mechanism of action that is unique and
different from that of existing technologies used to treat FL. The
applicant asserted that mosunetuzumab is a novel, full-length,
humanized, IgG1 bispecific antibody that concomitantly binds CD3 on T-
cells and CD20 on malignant B-cells. Importantly, according to the
applicant, 98-100% of FL cases are positive for CD20.303 304
Per the applicant, crosslinking leads to T-cell activation, which
redirects T-cells to engage and eliminate malignant B-cells. The
applicant stated that an amino acid substitution in the Fc region of
mosunetuzumab results in a non-glycosylated heavy chain with minimal
binding to Fc-[gamma] receptors, significantly reducing Fc effector
functions.
---------------------------------------------------------------------------
\303\ Ray S, Craig FE, Swerdlow SH. Abnormal patterns of
antigenic expression in follicular lymphoma: A flow cytometric
study. Am. J. Clin. Pathol. 2005;124(4):576-583. doi:10.1309/
2GFKU23XA1DH38L7.
\304\ Liu Q, Weaver LS, Liewehr D, Venzon D, Stetler-Stevenson
M, Yuan CM. Increased expression of CD20 and CD45 and diminished
expression of CD19 are features of follicular lymphoma. PLMI.
2013;5:21-30. doi:10.2147/PLMI.S43597.
---------------------------------------------------------------------------
The applicant provided a summary of the currently available
treatments, their respective mechanisms of action and FDA approval
dates in the following table:
BILLING CODE 4120-01-P
[[Page 28267]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.101
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[GRAPHIC] [TIFF OMITTED] TP10MY22.102
BILLING CODE 4120-01-C
The applicant stated that regimens using monospecific, anti-CD20
antibodies, including lenalidomide + rituximab (R2), are approved for
r/r FL, but data for R2 was derived from less pre-treated and
refractory patients. According to the applicant, rituximab alone, or
anti-CD20 mAbs combined with chemotherapy, are critical mainstay
therapies used in earlier lines of FL, but patients become refractory
or have short DOR to them as they go through relapses. According to the
applicant, PI3K inhibitors, EZH2 inhibitors, and CAR T-cell therapies
all have different mechanisms of action when compared to mosunetuzumab.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that with the
exception of CAR T-cell therapies, which are assigned to a separate MS-
DRG (MS-DRG 018 Chimeric Antigen Receptor (CAR) T-cell Immunotherapy
and Other Immunotherapies), mosunetuzumab may be assigned to the same
MS-DRG as existing technologies. The applicant stated that with respect
to PI3K inhibitors, however, they are often provided in outpatient care
and it is unlikely that they would be used in inpatient care such that
they would be wrapped into an existing MS-DRG. The applicant stated
that although mosunetuzumab might be assigned to the same MS-DRG as
existing technologies, this does not mean that mosunetuzumab is not
new. The applicant stated that the MS-DRG payment system cannot
differentiate between patients with r/r FL who could be grouped to MS-
DRGs included in the MDC 17 (Myeloproliferative Diseases and Disorders,
Poorly Differentiated Neoplasms). The applicant stated they have not
requested new or different MS-DRGs for mosunetuzumab for FY 2023.
According to the applicant, procedures involving the use of
mosunetuzumab are expected to map to the following MS-DRGs:
[GRAPHIC] [TIFF OMITTED] TP10MY22.103
The applicant further noted that MDC 17 includes ICD-10 CM
diagnosis codes that are not specific to FL and that for patients
diagnosed with FL, according to the applicant, the current MS-DRG
payment system does not factor in whether the patient has received
previous treatment.\305\ As a result, according to the applicant,
mosunetuzumab and an existing technology used to treat r/r FL could be
assigned to any of the aforementioned MS-DRGs. The applicant asserted
that the assignment of mosunetuzumab to the same MS-DRGs mentioned
previously is a result of the lack of specificity in the current MS-DRG
system with respect to its classification of lymphomas rather than
because mosunetuzumab is not new.
---------------------------------------------------------------------------
\305\ MDC 17 Myeloproliferative Diseases & Disorders, Poorly
Differentiated Neoplasm. In: ICD-10-CM/PCS MS-DRGv37.2 Definitions
Manual. Centers for Medicare & Medicaid Services. https://www.cms.gov/icd10m/version372-fullcode-cms/fullcode_cms/P0309.html.
Accessed September 09, 2021.
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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 mosunetuzumab will not
involve the treatment of the same type of disease and the same or
similar patient population when compared to existing technologies. The
applicant asserted that mosunetuzumab would treat FL 3+ line patients
for whom there is no current standard of care. The applicant asserted
that in the U.S., there are no therapies with full FDA approval for the
specific indication of r/r FL patients who have received 2 or more
prior systemic therapies.306 307 308 309 310 The applicant
further stated that available options used in practice are primarily
composed of approved therapies in earlier lines,
[[Page 28269]]
including anti-CD20 monoclonal antibody plus chemotherapy or
lenalidomide, or therapies under accelerated approval including pathway
inhibitors and cellular therapies.\311\ According to the applicant,
each of these options presents several limitations for the treatment of
multiple relapsed FL, particularly for patients who are relapsed or
refractory to different classes of
agents.312 313 314 315 316
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\306\ Freedman, A, Jacobsen, E. Follicular lymphoma: 2020 update
on diagnosis and management. Am. J. Hematol. 2020; 95:316-
327.doi:10.1002/ajh.25696.
\307\ Luminari S, Trotman J, Federico M. Advances in Treatment
of Follicular Lymphoma. Cancer J. 2020; 26(3):231-240 doi:10.1097/
PPO.0000000000000444.
\308\ Carbone A, Roulland S, Gloghini A, et al. Follicular
lymphoma. Nat. Rev. Dis. Primers. 2019;(5):83. doi:10.1038/s41572-
019-0132-x.
\309\ Batlevi CL, Sha F, Alperovich A, et al. Follicular
lymphoma in the modern era: survival, treatment outcomes, and
identification of high-risk subgroups. Blood Cancer J. 2020;10:74.
doi:10.1038/s41408-020-00340-z.
\310\ Matasar MJ, Luminari S, Barr PM, et al. Follicular
Lymphoma: Recent and Emerging Therapies, Treatment Strategies, and
Remaining Unmet Needs. The Oncol. 2019;24:e1236-e1250. doi:10.1634/
theoncologist.2019-0138.
\311\ National Comprehensive Cancer Network B-cell Lymphomas
(version 5 2021) https://www.nccn.org/professionals/physician_gls/pdf/b-cell.pdf. Accessed Oct 27, 2021 [i] National Comprehensive
Cancer Network. B-Cell Lymphomas (Version 5.2021). https://www.nccn.org/professionals/physician_gls/pdf/b-cell.pdf. Accessed
Oct 27, 2021.
\312\ Freedman, A, Jacobsen, E. Follicular lymphoma: 2020 update
on diagnosis and management. Am. J. Hematol. 2020; 95:316-
327.doi:10.1002/ajh.25696.
\313\ Luminari S, Trotman J, Federico M. Advances in Treatment
of Follicular Lymphoma. Cancer J. 2020; 26(3):231-240. doi:10.1097/
PPO.0000000000000444.
\314\ Carbone A, Roulland S, Gloghini A, et al. Follicular
lymphoma. Nat. Rev. Dis. Primers. 2019;(5):83. doi:10.1038/s41572-
019-0132-x.
\315\ Batlevi CL, Sha F, Alperovich A, et al. Follicular
lymphoma in the modern era: Survival, treatment outcomes, and
identification of high-risk subgroups. Blood Cancer J. 2020;10:74.
doi:10.1038/s41408-020-00340-z.
\316\ Matasar MJ, Luminari S, Barr PM, et al. Follicular
Lymphoma: Recent and Emerging Therapies, Treatment Strategies, and
Remaining Unmet Needs. The Oncol. 2019;24:e1236-e1250. doi:10.1634/
theoncologist.2019-0138.
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In summary, the applicant asserted that mosunetuzumab is new
because it does not use the same or a similar mechanism of action
compared to other technologies currently available to Medicare
beneficiaries to treat FL, and that upon FDA approval, mosunetuzumab
would treat FL in 3L+ settings, for which there is no established
standard of care. According to the applicant, all existing options have
limitations that emphasize the need for a better solution.
We note that the applicant asserted that use of mosunetuzumab will
not involve the treatment of the same or similar type of disease and
the same or similar patient population when compared to existing
technologies. The applicant asserted that mosunetuzumab would treat FL
in 3L+ settings, for which there is no established standard of care and
that there are no therapies with full FDA approval for the specific
indication of r/r FL patients who have received 2 or more prior
systemic therapies. We note that FL in 3L+ settings is not a new
population because there are FDA approved therapies indicated in the
treatment of patients with r/r FL after two or more lines of systemic
therapy. We also note that CAR T-cell therapies, such as
Yescarta[supreg], are FDA approved therapies. We believe that
mosunetuzumab would be used for the same disease and patient population
when compared to other therapies approved to treat FL in 3L+ settings.
We are inviting public comments on whether mosunetuzumab is
substantially similar to existing technologies and whether
mosunetuzumab meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analyses to demonstrate that mosunetuzumab meets the cost
criterion across four different cohorts. For each cohort, the applicant
searched the FY 2019 MedPAR database for cases representing patients
who may be eligible for mosunetuzumab. To identify cases for patients
with a diagnosis of FL, the applicant searched for claims with ICD-10-
CM diagnosis codes C82.00-C82.99. Per the applicant, because a
potential patient would need to fail an established prior therapy and
not be engaged in active treatment, the applicant then removed cases
with the following ICD-10-CM diagnosis codes to exclude cases for
patients still actively in the bone marrow transplant process for all
four cohorts:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.104
Per the applicant, as mosunetuzumab would not be administered
concomitant to an allogenic bone marrow transplant or CAR T-cell
therapy, the applicant also excluded cases with the following ICD-10-
PCS procedure codes related to allogenic bone marrow transplants or CAR
T-cell therapy for all four cohorts.
[[Page 28270]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.105
Per the applicant, as mosunetuzumab is being evaluated as a
monotherapy for 3L+ r/r FL, cases with at least one ICD-10-PCS
procedure code related to chemotherapy administration were removed in
Cohort 1 and Cohort 2. Cases with these ICD-10-PCS procedure codes
related to chemotherapy administration were maintained in Cohort 3 and
Cohort 4. Per the applicant, as the exclusion criteria for one portion
of one clinical trial excluded grade IIIb FL patients, cases with at
least one ICD-10-CM diagnosis code associated with grade IIIb FL were
removed in Cohort 2 and Cohort 4. Cases with these ICD-10-CM diagnosis
codes associated with grade IIIb FL were maintained in Cohort 1 and
Cohort 3.
[GRAPHIC] [TIFF OMITTED] TP10MY22.106
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Per the applicant, the top five MS-DRGs covering the greatest case
volume in each of the four cohorts were 840 (Lymphoma and Non-Acute
Leukemia with MCC), 841 (Lymphoma and Non-Acute Leukemia with CC), 824
(Lymphoma and Non-Acute Leukemia with Other Procedure with CC), 823
(Lymphoma and Non-Acute Leukemia with Other Procedure with MCC), and
825 (Lymphoma and Non-Acute Leukemia with Other Procedure without CC/
MCC).
The applicant did not remove charges for prior technology. The
applicant stated that the predominate prior technologies identified
were associated with pain and inflammation relief or contrast agents
for radiology, and patients receiving mosunetuzumab may also benefit
from the use of these technologies. The applicant standardized the
charges across all four cohorts using the FY 2019 IPPS/LTCH PPS final
rule and Correction Notice Impact File, and conducted separate analyses
on each cohort using both the three-year inflation factor (rounded to
20.5%) and four-year inflation factor (rounded to 28.2%) based on the
inflation factor from the FY 2022 IPPS/LTCH PPS final rule (86 FR
45542) to calculate outlier threshold charges. The applicant stated
that it did not add any charges for the new technology.
In the first analysis (Cohort 1), the applicant computed a final
inflated average case-weighted standardized charge per case of $85,452
using the three-year inflation factor, and $90,912 using the four-year
inflation factor, both of which exceeded the average case-weighted
threshold amount of $80,433.
In the second analysis (Cohort 2), the applicant computed a final
inflated average case-weighted standardized charge per case of $84,849
using the three-year inflation factor, and $90,271 using the four-year
inflation factor, both of which exceeded the average case-weighted
threshold amount of $80,008.
In the third analysis (Cohort 3), the applicant computed a final
inflated average case-weighted standardized charge per case of $103,236
using the three-year inflation factor, and $109,833 using the four-year
inflation factor, both of which exceeded the average case-weighted
threshold amount of $82,688.
In the fourth analysis (Cohort 4), the applicant computed a final
inflated average case-weighted standardized charge per case of $102,520
using the three-year inflation factor, and $109,071 using the four-year
inflation factor, both of which exceeded the average case-weighted
threshold amount of $82,325.
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount
under all analyses without the addition of any costs related to the new
technology, the applicant asserted that the technology meets the cost
criterion.
Based on the information provided by the applicant, we have the
following concerns regarding the cost criterion. We note that the
applicant did not specify the list of ICD-10-PCS procedure codes noted
in its analysis related to chemotherapy administration used for
exclusion of cases. Separately, while the applicant provided ICD-10-CM
diagnosis codes listed previously, the applicant did not specifically
list out which diagnoses were used to exclude grade IIIb FL from Cohort
2 and Cohort 4. We invite public comments on whether mosunetuzumab
meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that mosunetuzumab represents a substantial clinical
improvement over existing technologies because--(1) mosunetuzumab
offers a treatment option for patients with r/r FL who are relapsed or
refractory to different classes of agents and are left with limited
treatment options; and (2) mosunetuzumab significantly improves
clinical outcomes relative to previously available therapies,
demonstrating high overall and CR rates, high DOR, deep durable
responses, and safety.
According to the applicant, mosunetuzumab demonstrates robust
efficacy and complete response rates in the context of the r/r FL after
two or more prior lines of therapy, a disease setting with high unmet
medical need for which novel treatments are needed. According to the
applicant, mosunetuzumab also demonstrates complete response (CR) and
overall response rates (ORR) approaching those observed with CAR T-cell
therapy. The applicant asserted that mosunetuzumab demonstrates
efficacy for those who have had prior systemic therapies, including an
anti-CD20 (aCD20) antibody, alkylator, PI3K inhibitor, immunomodulatory
drug (IMiD), and/or CAR T-cell therapy, as well >=2 prior therapies,
and that the therapy also shows antitumor response for those having
prior autologous stem cell transplant (ASCT). According to the
applicant, mosunetuzumab demonstrates efficacy for those who are
refractory to their last prior therapy, refractory to any prior aCD20,
or double refractory to any prior aCD20 therapy + alkylator therapy.
The applicant further stated that mosunetuzumab shows responses for FL
patients who experience progression of disease within 2 years of
initial chemoimmunotherapy.
To support the assertion that mosunetuzumab offers a treatment
option for patients who are relapsed or refractory to different classes
of agents and are left with limited treatment options, the applicant
described an abstract and presentation from Budde, et al. of an open-
label, uncontrolled pivotal Phase II trial of 90 patients with r/r FL
(Grade 1 to 3a) and >2 prior therapies that were treated with
mosunetuzumab.317 318 The median age of enrolled patients
was 60 years (range 29 to 90), and these patients had a median of 3
prior therapies (range 2-10). Mosunetuzumab doses started with 1 mg on
days 1 and 8, stepping up dosing to mitigate CRS. On day 15 of the
first 21-day cycle, 60 mg was administered. In the second cycle, 60 mg
was administered, but on subsequent cycles, the day 1 dose was 30 mg.
This could be repeated up to 17 cycles, depending upon whether a
patient had a CR, a PR, or stable disease. The response was assessed
both by the investigators and by an independent reviewer. The
investigators noted that there was no mandatory hospitalization for
administration of mosunetuzumab.\319\ The authors noted that the CR
rate assessed by PET/CT was 60% (n=54; CI 49%, 70%) as compared to a
historical control of 14% CR rate
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\317\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (r/r) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study.
Oral Presentation at the 63rd ASH Annual Meeting and Exposition.
2021.
\318\ Budde E, et al. ASH Abstract 2021. Mosunetuzumab
Monotherapy Is an Effective and Well-Tolerated Treatment Option for
Patients with Relapsed/Refractory (R/R) Follicular Lymphoma (FL) Who
Have Received >=2 Prior Lines of Therapy: Pivotal Results from a
Phase I/II Study. https://ash.confex.com/ash/2021/webprogram/Paper145872.html.
\319\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
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[[Page 28272]]
(from a 2017 article on copanlisib \320\). The ORR was 80% (n=72). The
median DOR in complete responders was 22.8 months (CI 18.7, NE) and the
same for all responders (CI 9.7, NE). The median progression free
survival (PFS) was 17.9 months (CI 10.1, NE).
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\320\ Dreyling M, et al. Phosphatidylinositol 3-kinase
inhibition by copanlisib in relapsed or refractory indolent
lymphoma. J. Clin. Oncol. 2017; 35:3898-3905.
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To support the assertion that monsunetuzumab is efficacious in
high-risk subgroups and in patients with prior systemic therapies, the
applicant pointed to a CR of 74% and ORR of 85% among patients who have
had 2 prior therapies (n=34), and a CR of 52% and ORR of 77% among
patients who have had >3 prior therapies (n=56).\321\ According to the
applicant, mosunetuzumab demonstrated responses for FL patients who
experience progression of disease within 2 years of initial
chemoimmunotherapy (POD24) (N=47, CR =57% and ORR = 85%) and those who
were not POD24 (N=43, CR = 63%,ORR=74%). The applicant also asserted
that mosunetuzumab demonstrated efficacy for patients who are
refractory to their last prior therapy (N=62, CR =52% and ORR = 77%)
and those who were not refractory (N=28, CR =79% and ORR= 86%). The
applicant asserted that mosunetuzumab demonstrated efficacy for
patients who are double refractory to any prior aCD20 therapy +
alkylator therapy (N=48, CR =50% and ORR =71%) and those who were not
double refractory to any prior aCD20 therapy + alkylator therapy (N=42,
CR = 71% and ORR =71%). Lastly, the applicant asserted that
mosunetuzumab demonstrated efficacy for elderly patients (> 65 years)
(N=30, CR of 70% and ORR = 87%).
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\321\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
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To support the assertion that mosunetuzumab offers a manageable
safety profile with fewer discontinuations or treatment-ending
toxicities when compared to PI3K inhibitors, as well as a low rate of
CRS and neurotoxicity when compared to CAR T-cell therapies, the
applicant again cited data from the Budde et al. pivotal Phase II
trial, in which 83 patients had mosunetuzumab-related adverse events.
The most common were CRS, fatigue, pyrexia, pruritus, neutropenia,
hypophosphatemia, and headache. None of the mosunetuzumab-related
adverse events were fatal; however, 30 were described as serious and 2
led to the discontinuation of mosunetuzumab. The applicant also cited
the Budde et al. article to support features of access to treatment,
wide availability, off-the-shelf therapy, potential for administration
without mandatory hospitalization, fixed treatment duration, and no
requirement of lymphodepleting chemotherapy. The applicant asserted
that mosunetuzumab will be immediately available for patients and
avoids the ex-vivo T-cell manipulation and the resulting delay in
treatment that may be prohibitive in patients with rapidly progressing
disease.
According to the applicant, while the therapies used in the
treatment of r/r FL have not been tested in a head-to-head trial, when
looking at the independent results in the treatment of patients with r/
r FL after >=2 prior systemic therapies, the CR rate and ORR achieved
by mosunetuzumab (N=90, CR=60% and ORR=80%) are greater than those for
the PI3K and EZH2 inhibitors (N=72, CR=6% and ORR=54%) and are
approaching the response rates observed with CAR T-cell therapy (N=84,
CR= 80% and ORR =94%).\322\ The applicant states, compared to the CAR
T-cell therapy axicabtagene ciloleucel, CRS events reported for
mosunetuzumab were less frequent and less severe, and that the
management of CRS in patients treated with mosunetuzumab enabled more
than 95% of affected patients to continue therapy and potentially
benefit from its efficacy.\323\
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\322\ Jacobson C, Chavez JC, Sehgal AR, et al. Primary analysis
of zuma-5: A phase 2 study of axicabtagene ciloleucel (axi-cel) in
patients with relapsed/refractory (R/R) indolent non-hodgkin
lymphoma (iNHL). Blood. 2020; 136(Supplement 1):40-41. doi:10.1182/
blood-2020-136834.
\323\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
---------------------------------------------------------------------------
According to the applicant, compared to axicabtagene ciloleucel,
which the applicant asserts is only available at authorized treatment
centers, mosunetuzumab may potentially be available in community
clinics and hospital-based outpatient departments (HOPDs) with the
potential for AEs that can be treated at local hospitals. Therefore,
according to the applicant, mosunetuzumab is not expected to present
significant barriers for widespread implementation of emerging cellular
therapies such as CAR T-cell. In addition, the applicant stated that
since mosunetuzumab may potentially be administered in a local
community setting with no mandatory hospitalization, those unable to
travel may still obtain treatment. The applicant states mosunetuzumab
is an immediately available, off-the-shelf therapy, enabling critically
ill patients with urgent need of treatment access to the drug without
delay administered as a fixed treatment duration regimen.
To support the claim that mosunetuzumab improves clinical outcomes,
the applicant cited data from the Budde et al. pivotal Phase II trial
of mosunetuzumab. The applicant stated that mosunetuzumab showed a
complete response (CR) of 60% \324\ as compared to 14% for historical
control,\325\ 1.2% for duvelisib,\326\ 6% for P13k,\327\ 20.2% for
copanlisib,\328\ 5.1% for umbralisib,\329\ and 6% for idelalisib.\330\
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\324\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
\325\ Dreyling M, et al. Phosphatidylinositol 3-kinase
inhibition by copanlisib in relapsed or refractory indolent
lymphoma. J. Clin. Oncol. 2017; 35:3898-3905.
\326\ Flinn IW, Miller CB, Ardeshna KM, et al. DYNAMO: A Phase
II Study of Duvelisib (IPI-145) in Patients With Refractory Indolent
Non-Hodgkin Lymphoma [published correction appears in J Clin Oncol.
2019 Jun 1;37(16):1448]. J Clin Oncol. 2019; 37(11):912-922.
doi:10.1200/JCO.18.00915.
\327\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
\328\ Dreyling M, Santoro A, Mollica L, et al. Long-term safety
and efficacy of the PI3K inhibitor copanlisib in patients with
relapsed or refractory indolent lymphoma: 2-year follow-up of the
CHRONOS-1 study. Am J Hematol. 2020; 95(4):362-371. doi:10.1002/
ajh.25711.
\329\ Fowler NH, Samaniego F, Jurczak W, et al. Umbralisib, a
Dual PI3K[delta]/CK1[egr] Inhibitor in Patients With Relapsed or
Refractory Indolent Lymphoma. J Clin Oncol. 2021; 39(15):1609-1618.
doi:10.1200/JCO.20.03433.
\330\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
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[[Page 28273]]
The applicant stated that mosunetuzumab showed an ORR of 80% \331\ as
compared to 42.2% for duvelisib,\332\ 54% for P13k,\333\ 58.7% for
copanlisib,\334\ 45.3% for umbralisib,\335\ and 54.0% for
idelalisib.\336\ The applicant stated that mosunetuzumab showed an mDOR
of 22.8 months \337\ as compared to 10.0 months for duvelisib,\338\
12.5 months for P13k,\339\ 14.1 months for copanlisib,\340\ 11.1 months
for umbralisib,\341\ and 12.5 months for idelalisib.\342\ According to
the applicant, while the mDOR for mosunetuzumab is still maturing, the
estimate of patients who remain in remission at 12 months compares
favorably with mDORs ranging from 10-13 months for therapies under
accelerated approval to treat patients with r/r FL after >=2 prior
systemic therapies.
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\331\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
\332\ Flinn IW, Miller CB, Ardeshna KM, et al. DYNAMO: A Phase
II Study of Duvelisib (IPI-145) in Patients With Refractory Indolent
Non-Hodgkin Lymphoma [published correction appears in J Clin Oncol.
2019 Jun 1;37(16):1448]. J Clin Oncol. 2019; 37(11):912-922.
doi:10.1200/JCO.18.00915.
\333\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
\334\ Dreyling M, Santoro A, Mollica L, et al. Long-term safety
and efficacy of the PI3K inhibitor copanlisib in patients with
relapsed or refractory indolent lymphoma: 2-year follow-up of the
CHRONOS-1 study. Am J Hematol. 2020; 95(4):362-371. doi:10.1002/
ajh.25711.
\335\ Fowler NH, Samaniego F, Jurczak W, et al. Umbralisib, a
Dual PI3K[delta]/CK1[egr] Inhibitor in Patients With Relapsed or
Refractory Indolent Lymphoma. J Clin Oncol. 2021; 39(15):1609-1618.
doi:10.1200/JCO.20.03433.
\336\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
\337\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
\338\ Flinn IW, Miller CB, Ardeshna KM, et al. DYNAMO: A Phase
II Study of Duvelisib (IPI-145) in Patients with Refractory Indolent
Non-Hodgkin Lymphoma [published correction appears in J Clin Oncol.
2019 Jun 1;37(16):1448]. J Clin Oncol. 2019; 37(11):912-922.
doi:10.1200/JCO.18.00915.
\339\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
\340\ Dreyling M, Santoro A, Mollica L, et al. Long-term safety
and efficacy of the PI3K inhibitor copanlisib in patients with
relapsed or refractory indolent lymphoma: 2-year follow-up of the
CHRONOS-1 study. Am J Hematol. 2020; 95(4):362-371. doi:10.1002/
ajh.25711.
\341\ Fowler NH, Samaniego F, Jurczak W, et al. Umbralisib, a
Dual PI3K[delta]/CK1[egr] Inhibitor in Patients With Relapsed or
Refractory Indolent Lymphoma. J Clin Oncol. 2021; 39(15):1609-1618.
doi:10.1200/JCO.20.03433.
\342\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
---------------------------------------------------------------------------
According to the applicant, the overall safety profile of
mosunetuzumab appears manageable with no unexpected safety signals,
considering the advanced nature of the disease and the heavily
pretreated patient population under study. The applicant asserted that
the tolerability of mosunetuzumab is evident by the lack of mandatory
hospitalization, the low proportion of patients who discontinue
mosunetuzumab due to AEs, and the ability to adequately manage and
resolve AEs. As an example, the applicant states, CRS events, as the
most common AE, were generally low-grade (Gr 1 or 2), mostly confined
to cycle 1, manageable, and resolved after a median duration of three
days.\343\ According to the applicant, dose interruptions generally do
not prevent patients continuing to receive their planned mosunetuzumab
dose for most of the duration of treatment.
---------------------------------------------------------------------------
\343\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
---------------------------------------------------------------------------
To support the claim that mosunetuzumab improves clinical outcomes
related to safety, the applicant asserted that mosunetuzumab has a
manageable safety profile with grade 3/4 AEs at 51.1%, SAEs at 33.3%
and no grade 5 (fatal) AEs.\344\ According to the applicant,
mosunetuzumab had fewer discontinuations of treatment at 4.4% as
compared to idelalisib at 20.0%,\345\ copanlisib at 21.1%,\346\
duvelisib at 31.0%,\347\ umbralisib at 14.9% \348\ and EZH2 inhibitors
at 8.0%.\349\ According to the applicant, mosunetuzumab has a lower
rate of CRS and severe neurotoxicity in comparison to CAR T-cell
therapy as evidenced by a CRS adverse event rate of any grade at 44.0%
compared to 99% for axicabtagene ciloleucel.350 351
---------------------------------------------------------------------------
\344\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
\345\ Gopal AK, Kahl BS, de Vos S, et al. PI3K[delta] inhibition
by idelalisib in patients with relapsed indolent lymphoma. N Engl J
Med. 2014; 370(11):1008-1018. doi:10.1056/NEJMoa1314583.
\346\ Dreyling M, Santoro A, Mollica L, et al. Long-Term
Efficacy and Safety from the Copanlisib CHRONOS-1 Study in Patients
with Relapsed or Refractory Indolent B-Cell Lymphoma. Blood. 2018;
132:1595. doi:10.1182/blood-2018-99-114842.
\347\ Flinn IW, Miller CB, Ardeshna KM, et al. DYNAMO: A Phase
II Study of Duvelisib (IPI-145) in Patients with Refractory Indolent
Non-Hodgkin Lymphoma [published correction appears in J Clin Oncol.
2019 Jun 1;37(16):1448]. J Clin Oncol. 2019; 37(11):912-922.
doi:10.1200/JCO.18.00915.
\348\ Fowler NH, Samaniego F, Jurczak W, et al. Umbralisib, a
Dual PI3K[delta]/CK1[egr] Inhibitor in Patients with Relapsed or
Refractory Indolent Lymphoma. J Clin Oncol. 2021; 39(15):1609-1618.
doi:10.1200/JCO.20.03433.
\349\ Morschhauser F, Tilly H, Chaidos A, et al. Tazemetostat
for patients with relapsed or refractory follicular lymphoma: An
open-label, single-arm, multicentre, phase 2 trial. Lancet Oncol.
2020; 21(11):1433-1442. doi:10.1016/S1470-2045(20)30441-1.
\350\ Budde LE, et al. Mosunetuzumab Monotherapy is an Effective
and Well-Tolerated Treatment Option for Patients with Relapsed/
Refractory (R/R) Follicular Lymphoma (FL) who have Received >=2
Prior Lines of Therapy: Pivotal Results from a Phase I/II Study. ASH
Presentation. 2021.
\351\ Jacobson C, Chavez JC, Sehgal AR, et al. Primary analysis
of zuma-5: A phase 2 study of axicabtagene ciloleucel (axi-cel) in
patients with relapsed/refractory (R/R) indolent non-hodgkin
lymphoma (iNHL). Blood. 2020; 136(Supplement 1):40-41. doi:10.1182/
blood-2020-136834.
---------------------------------------------------------------------------
The applicant summarized that fixed-duration mosunetuzumab
monotherapy results in high response rates and durable disease control
with a tolerable safety profile in heavily pretreated, multiply
relapsed patients with FL, including known high-risk subgroups.
According to the applicant, mosunetuzumab offers a new treatment option
with a novel mechanism of action and demonstrates clinically meaningful
advantages over available therapies for the treatment of patients with
r/r FL who have received >=2 prior therapies, a patient population with
a high unmet medical need for which novel treatments are needed. The
applicant asserted that the benefit-risk assessment of mosunetuzumab is
considered to be positive based on the high unmet need in this disease
setting and the compelling results from the Budde et.al. study compared
to available therapies, in particular the complete response rates and
durable remissions observed with current study follow-up. The applicant
asserted that mosunetuzumab demonstrates high clinical efficacy and
tolerability in 3L+ r/r FL and is a substantial clinical improvement.
According to the applicant it is the first T-cell-engaging bispecific
antibody to demonstrate clinically meaningful outcomes for patients
with r/r FL who have received >=2 prior lines of therapy in the pivotal
Phase II setting, and offers potentially promising off-the-shelf,
outpatient therapy.
After review of the information provided by the applicant, we have
the following concerns regarding whether
[[Page 28274]]
mosunetuzumab meets the substantial clinical improvement criterion. We
note that the applicant provided the abstract for one single-arm, phase
II trial of 90 patients to support all of its claims of substantial
clinical improvement. The applicant compared outcomes of the phase II
trial with mosunetuzumab to outcomes, including CR and ORR, from
background studies of other technologies. However, we note limitations
in comparing to rates found in other clinical trials that were
conducted in earlier time periods and under different circumstances of
patient enrollment and treatment options. Additionally, the historical
rates were compared directly to those from mosunetuzumab, without more
detailed adjustment for patient characteristics. As an example, the
applicant compared rates of AEs to NHL patients in trials for
idelalisib, copanlisib, and duvelisib. In those studies, FL subtype
data was not available for direct comparison and we are concerned that
there may be potential for selection bias. Without a direct comparison
of outcomes between these therapies, we are concerned as to whether the
differences in outcomes such as CR, ORR, mDOR, AEs and treatment
discontinuation identified by the applicant translate to clinically
meaningful differences or improvements for patients treated with
mosunetuzumab as compared to historical rates for other treatments. In
addition, durability of response is still maturing per the applicant,
and we would appreciate additional information regarding treatment
durability when available. We note that the applicant stated that
mosunetuzumab has a lower rate of CRS and severe neurotoxicity in
comparison to CAR T-cell therapy as evidenced by a CRS adverse event
rate of any grade at 44.0% compared to 99% for axicabtagene ciloleucel.
However, the study provided by the applicant to support this claim,
Jacobson et.al., referenced an any-grade AE rate of 99% for
axicabtagene ciloleucel and did not include a value for any-grade CRS
for axicabtagene ciloleucel. We would appreciate further clarification
of this claim. Lastly, while we understand that there may be potential
benefits related to mosunetuzumab potentially being available in
community clinics and HOPDs, we question 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 are inviting public comments on whether mosunetuzumab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
mosunetuzumab.
g. Narsoplimab
The Omeros Corporation submitted an application for new technology
add-on payments for narsoplimab for FY 2023. Narsoplimab is a fully
human monoclonal antibody for the treatment of hematopoietic stem cell
transplantation-associated thrombotic microangiopathy (HSCT-TMA), also
known as transplant-associated thrombotic microangiopathy (TA-TMA).
According to the applicant, narsoplimab inhibits mannan-binding
lectin serine protease 2 (MASP-2), the effector enzyme of the lectin
pathway of the complement system, and activation of the lectin pathway
that prevents complement-mediated inflammation and exhibits
anticoagulant effects while leaving intact the respective functions of
the classical and alternative pathways of innate immunity. According to
the applicant, there are currently no FDA-approved products indicated
for the treatment of HSCT-TMA. We note that the Omeros Corporation
previously submitted an application for new technology add-on payments
for narsoplimab for FY 2022, as summarized in the FY 2022 IPPS/LTCH PPS
proposed rule (86 FR 25282 through 25286), that it withdrew prior to
the issuance of the FY 2022 IPPS/LTCH PPS final rule (86 FR 44979).
According to the applicant, HSCT-TMA is a lethal complication of
hematopoietic stem cell transplantation (HSCT) that results in
thrombosis in the small blood vessels, leading to organ failure.\352\
\353\ \354\ According to the applicant, clinical guidelines for the
treatment of HSCT-TMA are being developed by members of the American
Society for Transplant and Cellular Therapy (ASTCT) and are expected to
be published in 2021. The applicant stated that current management of
HSCT-TMA includes modification or cessation of any immune-suppressive
regimen, appropriate treatment of infections and/or graft-versus-host
disease (GvHD) if present, aggressive control of hypertension, and
other supportive therapy as deemed appropriate by the treating
physician.\355\ However, according to the applicant, the withdrawal of
immunosuppressive therapies and ongoing monitoring for resolution of
TMA symptoms has been determined to be ineffective.\356\ The applicant
stated that there are multiple off-label treatments for HSCT-TMA which
have either not been reviewed by FDA or have been reviewed and not
deemed adequate for registration purposes; these unapproved treatments
include therapeutic plasma exchange (TPE), eculizumab, defibrotide
sodium, rituximab, and vincristine sulfate. The applicant asserted that
available evidence for agents used off-label to treat HSCT-TMA is
derived from observational studies and case series with mixed results,
and none of the agents have been evaluated for efficacy or safety in a
robust clinical trial in patients with HSCT-TMA.\357\ In summary, the
applicant stated with regard to these unapproved therapies that: (1)
The use of TPE is based on the extrapolation of its effectiveness for
thrombocytopenic purpura with poor outcomes leading the Blood and
Marrow Transplant Clinical Trials Network Toxicity Committee in 2005 to
recommend that TPE not be considered as a standard of care for HSCT-
TMA; \358\ (2) eculizumab is a C5 inhibitor that blocks activation of
the terminal cascade of complement,\359\ the use of which is
constrained by lack of efficacy and
[[Page 28275]]
safety evaluations by FDA \360\ and associated increased susceptibility
to infections; 361 362 (3) defibrotide (Defitelio[supreg]),
an oligonucleotide mixture with profibrinolytic properties whose
mechanism of action has not been fully elucidated \363\ is not approved
by FDA for the treatment of HSCT-TMA nor considered a standard of care;
(4) rituximab (Rituxan[supreg]), a monoclonal antibody that targets the
CD20 antigen expressed on the surface of pre-B and mature B-
lymphocytes,\364\ is not approved by FDA for the treatment of HSCT-TMA;
and (5) vincristine sulfate, a vinca alkaloid isolated as a 1:1 sulfate
salt from the periwinkle plant is not approved by FDA for the treatment
of HSCT-TMA.\365\
---------------------------------------------------------------------------
\352\ Gavriilaki, E et al. Transplant-associated thrombotic
microangiopathy: Opening Pandora's box. Bone Marrow Transplantation
(2017) 52, 1355-1360.
\353\ Jodele, S et al (2016). New approaches in the diagnosis,
pathophysiology, and treatment of pediatric hematopoietic stem cell
transplantation-associated thrombotic microangiopathy. Transfus
Apher Sci. 2016 April; 54(2): 181-190.
\354\ Rosenthal, J Hematopoietic cell transplantation-associated
thrombotic microangiopathy: A review of pathophysiology, diagnosis,
and treatment. Journal of Blood Medicine 2016:7 181-186.
\355\ Khosla J et al. Hematopoietic stem cell transplant-
associated thrombotic microangiopathy: Current paradigm and novel
therapies. Bone Marrow Transplant. 2018; 53(2):129-137.
\356\ Li A et al. Transplant-associated thrombotic
microangiopathy is a multifactorial disease unresponsive to
immunosuppressant withdrawal. Biol Blood Marrow Transplant.
2019;25(3):570-576.
\357\ Li A et al. Transplant-associated thrombotic
microangiopathy is a multifactorial disease unresponsive to
immunosuppressant withdrawal. Biol Blood Marrow Transplant.
2019;25(3):570-576.
\358\ Schwatz, J et al. Guidelines on the Use of Therapeutic
Apheresis in Clinical Practice--Evidence-Based Approach from the
Writing Committee of the American Society for Apheresis: The Seventh
Special Issue. Journal of Clinical Apheresis 31:149-338 (2016).
\359\ FDA. (2019, June). Soliris Prescribing Information.
Retrieved from Highlights of Prescribing Information: https://www.accessdata.fda.gov/drugsatfda_docs/label/2019/125166s431lbl.pdf.
\360\ Li A et al. Transplant-associated thrombotic
microangiopathy is a multifactorial disease unresponsive to
immunosuppressant withdrawal. Biol Blood Marrow Transplant.
2019;25(3):570-576.
\361\ Bohl SR, Kuchenbauer F, von Harsdorf S, Kloevekorn N,
Schonsteiner SS, Rouhi A, et al. Thrombotic Microangiopathy after
Allogeneic Stem Cell Transplantation: A Comparison of Eculizumab
Therapy and Conventional Therapy. Biol Blood Marrow Transplant.
2017;23(12):2172-7.
\362\ Khosla J et al. Hematopoietic stem cell transplant-
associated thrombotic microangiopathy: Current paradigm and novel
therapies. Bone Marrow Transplant. 2018; 53(2):129-137.
\363\ FDA. (2016, March). Defitelio Prescribing Information.
Retrieved from Highlights of Prescribing Information: https://www.accessdata.fda.gov/drugsatfdadocs/label/2016/208114lbl.pdf
Defitelio PI. 3/2016.
\364\ FDA. (2019, September). Rituxan Prescribing Information.
Retrieved from Highlights of Prescribing Information: https://www.accessdata.fda.gov/drugsatfda_docs/label/2018/103705s5450lbl.pdf
Rituxan PI. 9/2019.
\365\ FDA. (2020, July). Vincristine Prescribing Information.
Retrieved from Highlights of Prescribing Information: https://www.accessdata.fda.gov/drugsatfda_docs/label/2020/202497s011lbl.pdf
Vincristine PI. 7/2020.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant stated in its
application that FDA has accepted the Biologics License Application
(BLA) for narsoplimab for the treatment of HSCT-TMA with a PDUFA date
of October 17, 2021. The applicant stated that as of November 2021 they
have received a Complete Response Letter (CRL) from FDA regarding the
BLA for narsoplimab. The applicant stated they intend to resubmit the
pending application soon. According to the applicant, narsoplimab has
received Orphan Drug designation, Breakthrough Therapy Designation, and
Priority Review. The applicant stated that the recommended dosage of
narsoplimab is 4 mg/kg given as a 30-minute intravenous infusion (up to
a maximum of 370 mg per infusion) once weekly. The applicant stated
that effective October 1, 2021, the following ICD-10-PCS codes may be
used to uniquely describe procedures involving the use of narsoplimab:
XW03357 (Introduction of narsoplimab monoclonal antibody into
peripheral vein, percutaneous approach, new technology group 7) and
XW04357 (Introduction of narsoplimab monoclonal antibody into central
vein, percutaneous approach, new technology group 7). The applicant
stated that effective October 1, 2021, the following ICD-10-CM code is
used to identify the indication of narsoplimab: M31.11 (Hematopoietic
stem cell transplant-associated thrombotic microangiopathy (HSCT-TMA)).
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 narsoplimab has a unique mechanism of action
which inhibits the key effector enzyme of the lectin pathway of
complement, MASP-2, provides an upstream (relative to other complement
inhibitors) and targeted effect inhibiting complement-mediated
inflammation and coagulation while leaving fully intact the alternative
and classical pathways to fight infection. The applicant stated that
narsoplimab binds with high affinity and specificity to, and blocks,
MASP-2, the key effector enzyme of the lectin pathway of complement,
inhibiting the inflammatory and pro-thrombotic responses to endothelial
injury found in HSCT-TMA.366 367 The applicant stated that
although all pathways of complement (lectin, alternative, and
classical) result in production of pro-inflammatory anaphylatoxins and
activation of membrane attack complex on targeted cells, each pathway
is triggered in a unique manner.\368\
---------------------------------------------------------------------------
\366\ Rambaldi, A et al. ``Improved survival following OMS721
treatment following hematopoietic stem cell transplant associated
thrombotic microangiopathy (HCTTMA).'' European Hematology Society.
Stockholm, June 15, 2018; Abstract PF724.
\367\ Kozarcanin, et al. 2016. ``The lectin complement pathway
serine proteases (MASPs) represent a possible crossroad between the
coagulation and complement systems in thromboinflammation''. Journal
of Thrmobosis and Haemostasis. 14;531-545. DOI: 10.1111/jth.13208.
\368\ Gavriilaki E, Brodsky RA. Complementopathies and precision
medicine. J Clin Invest. 2020 May 1;130(5):2152-2163. doi: 10.1172/
JCI136094. PMID: 32310222; PMCID: PMC719
---------------------------------------------------------------------------
According to the applicant, the lectin pathway of complement has a
role that is different from the classical and alternative pathways in
that it serves as a ``surveillance system'' responsible for the
identification and removal of damaged host cells or microbes. The
applicant asserted that upon host tissue injury or microbe exposure,
lectins (MBLs and other pattern recognition molecules including
ficolins and collections) recognize damage-associated molecular
patterns (DAMPs) on the surface of injured cells or pathogen-associated
molecular patterns on microbes, initiating the lectin
cascade.369 370 371 372 According to the applicant, the
alternative pathway is a signal amplification system that is
consistently engaged at low levels through the presence of a small
amount of autoactivated C3 in the blood, so-called ``C3
tickover''.\373\ Lastly, the applicant stated the classical pathway is
mainly responsible for the antigen-antibody innate immune response
necessary to protect against infection and is activated by antibody-
antigen complexes recognized by complement component C1q.\374\
---------------------------------------------------------------------------
\369\ Anders HJ, Schaefer L. Beyond tissue injury-damage-
associated molecular patterns, toll-like receptors, and
inflammasomes also drive regeneration and fibrosis. J Am Soc
Nephrol. 2014 Jul;25(7):1387-400. doi: 10.1681/ASN.2014010117. Epub
2014 Apr 24. PMID: 24762401; PMCID: PMC407.
\370\ Bohlson SS, O'Conner SD, Hulsebus HJ, et al. Complement,
c1q, and c1q-related molecules regulate macrophage polarization.
Front Immunol. 2014 Aug 21;5:402. doi: 10.3389/fimmu.2014.00402.
PMID: 25191325; PMCID: PMC413.
\371\ Eriksson O, Chiu J, Hogg PJ, et al. Thiol isomerase ERp57
targets and modulates the lectin pathway of complement activation. J
Biol Chem. 2019 Mar 29;294(13):4878-4888. doi: 10.1074/
jbc.RA118.006792. Epub 2019 Jan 22. PMID: 30670593; PMCID: PMC644.
\372\ Farrar CA, Zhou W, Sacks SH. Role of the lectin complement
pathway in kidney transplantation. Immunobiology. 2016
Oct;221(10):1068-72. doi: 10.1016/j.imbio.2016.05.004. Epub 2016 May
24. PMID: 27286.
\373\ Barnum SR. Complement: A primer for the coming therapeutic
revolution. Pharmacol Ther. 2017 Apr;172:63-72. doi: 10.1016/
j.pharmthera.2016.11.014. Epub 2016 Dec 1. PMID: 27914.
\374\ Reid KB, Porter RR. Subunit composition and structure of
subcomponent C1q of the first component of human complement. Biochem
J. (1976) 155:19-23. doi: 10.1042/bj1550019.
---------------------------------------------------------------------------
The applicant stated that MASP-2 inhibition specifically blocks the
lectin pathway of complement but does not inhibit the classical and
alternative pathways, leaving the complement system's effector function
in adaptive immunity intact, which is important for fighting
infection.375 376 According to the
[[Page 28276]]
applicant, the mechanism of action of narsoplimab not only results in
inhibition of lectin pathway-mediated activation of complement, but
also blocks the MASP-2 mediated procoagulant activities in the
coagulation cascade. The procoagulant effects of MASP-2, independent of
its role in the complement system, include the conversion of
prothrombin to thrombin as well as the activation of Factor XII to
XIIa.377 378 379 In addition, MASP-2 is activated by fibrin
and activated platelets, further augmenting a procoagulant state.\380\
The applicant asserted that by inhibiting these procoagulant activities
of MASP-2, narsoplimab provides important anticoagulant benefits,
without affecting bleeding parameters (that is, prothrombin time,
activated partial thromboplastin time, international normalized ratio,
or bleeding time). According to the applicant, narsoplimab is the only
drug that addresses all the components of HSCT-TMA and is the only
product that inhibits complement activation and has anticoagulant
activity. Therefore, the applicant asserted that the mechanism of
action of narsoplimab differs from that of the products occasionally
used off label: Eculizumab, defibrotide sodium, rituximab, and
vincristine.
---------------------------------------------------------------------------
\375\ Rambaldi, A et al. Improved survival following OMS721
treatment following hematopoietic stem cell transplant-associated
thrombotic microangiopathy (HCTTMA). European Hematology Society.
Stockholm, June 15, 2018. Abstract PF724.
\376\ Elhadad, S et al 2020. MASP2 levels are elevated in
thrombotic microangiopathies: Association with microvascular
endothelial cell injury and suppression by anti-MASP2 antibody
narsoplimab. Clinical and Experimental Immunology, 0: 2-9.
\377\ Demopulos, Gregory, A. Dudler, Thomas, Nilsson, Bo.
Compositions and methods of inhibiting MASP-2 for the treatment of
various thrombotic diseases and disorders. WO2019246367
(US20200140570A1). World International Property Organization. 26
December 2019.
\378\ Krarup, A et al. Simultaneous Activation of Complement and
Coagulation by MBLAssociated Serine Protease 2. 2007. PLoS ONE 2(7):
e623.
\379\ Gulla, KC et al. Activation of mannan-binding lectin-
associated serine proteases leads to generation of a fibrin clot.
Immunology, 2009. 129, 482-495.
\380\ Kozarcanin, H et al. The lectin complement pathway serine
proteases (MASPs) represent a possible crossroad between the
coagulation and complement systems in thromboinflammation. Journal
of Thrombosis and Haemostasis, 2016. 14: 531-545.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or different MS-DRG, the applicant stated that patients who
receive narsoplimab will be assigned to the same DRGs as patients who
are diagnosed with HSCT-TMA/TA-TMA regardless of the treatment.
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 narsoplimab treats HSCT-TMA, a serious multi-factorial
syndrome for which no current FDA-approved technology exists. The
applicant asserted that HSCT-TMA is a distinctly different TMA
characterized by endothelial injury and microvascular thrombosis caused
by pre-HSCT conditioning regimens and exposure to immunosuppressants
and is further aggravated by potential complications of HSCT including
GVHD and infections.
The applicant next differentiated between thrombotic
microangiopathies (TMAs) and HSCT-TMA. According to the applicant, TMAs
are a group of disorders with hallmark features of thrombocytopenia,
microangiopathic hemolytic anemia (MAHA), and end organ damage. The
applicant asserted that two specific TMAs, atypical hemolytic uremic
syndrome (aHUS) and thrombotic thrombocytopenic purpura (TTP), exhibit
clinical presentations similar to HSCT-TMA; however, their underlying
mechanism set their diagnosis and treatment apart from that of HSCT-
TMA. The applicant stated that HSCT-TMA is a distinct TMA arising from
treatment and complications of HSCT, diagnosis of which requires a
constellation of findings. According to the applicant HSCT-TMA is a
distinctive endothelial injury syndrome (EIS) commonly associated with
transplant conditioning (chemotherapy and total body irradiation),
transplant complications such as infection and GVHD, and
immunosuppressive agents (CNI and mTOR inhibitors). The applicant
asserted that there is no approved treatment for HSCT-TMA.\381\
---------------------------------------------------------------------------
\381\ Li A et al. Transplant-associated thrombotic
microangiopathy is a multifactorial disease unresponsive to
immunosuppressant withdrawal. Biol Blood Marrow Transplant.
2019;25(3):570-576.
---------------------------------------------------------------------------
In summary, the applicant believes that narsoplimab is not
substantially similar to other currently available therapies and/or
technologies and meets the ``newness'' criterion. Similar to our
discussion in the FY 2022 IPPS/LTCH PPS final rule (86 FR 25283-25284),
we note that the applicant asserted that there are no FDA-approved
products indicated for the treatment of HSCT-TMA and we are inviting
public comment on whether narsoplimab therefore has a unique mechanism
of action. In addition, we note that although the cause or triggers of
thrombotic microangiopathy may be different between HSCT and for
example HUS or TTP, the resulting disease may be similar. We welcome
public comments on whether HSCT-TMA is a similar disease to other forms
of TMA. We are inviting public comments on whether narsoplimab is
substantially similar to other currently available therapies and/or
technologies and whether this technology meets the newness criterion.
With regard to the cost criterion, the applicant provided the
following analysis to demonstrate the technology meets the cost
criterion. The applicant used the FY 2019 MedPAR inpatient claims data
file released with the FY 2022 IPPS proposed rule to identify patients
with a combined diagnosis of history of stem cell transplantation (SCT,
ICD-10 code Z94.84) OR complications of stem cell transplant (ICD-10
code T86.5) AND thrombotic microangiopathy (TMA, ICD-10 code M31.1) OR
hemolytic-uremic syndrome (HUS, ICD-10 code D59.3). Claims from PPS-
exempt hospitals were excluded. The applicant stated that given the
nature of HSCT-TMA, patient claims map to many MS-DRGs. The applicant
identified a total of 27 MS-DRGs with fewer than 11 patients in any one
MS-DRG; the applicant stated the top four MS-DRGs by volume are 871
(Septicemia or Severe Sepsis without MV >96 Hours with MCC), 919
(Complications of Treatment with MCC), 546 (Connective Tissue Disorders
with CC), and 545 (Connective Tissue Disorders with MCC). In the cost
analysis, a total of 54 cases across 27 MS-DRGs were identified. The
applicant imputed a case count of 11 for those MS-DRGs with fewer than
11 cases, which increased the number of claims from 54 to 297 because
all MS-DRGs had fewer than 11 claims.
The applicant first calculated a case weighted threshold of $89,095
for all scenarios based upon the dollar threshold for each MS-DRG
grouping and the proportion of cases in each MS-DRG. The applicant then
calculated the average charge per case. The applicant stated that
because narsoplimab is an adjunctive therapy, no charges for a prior
technology or a technology being replaced were removed. Next the
applicant calculated the average standardized charge per case using the
FY 2022 IPPS/LTCH PPS final rule Impact file. The 4-year inflation
factor of 1.281834 or 28.1834% was obtained from the FY 2022 IPPS/LTCH
PPS final rule (86 FR 45542) and applied to the average standardized
charge per case.
According to the applicant, because narsoplimab has not yet
received FDA approval, the price has not yet been established.
Therefore, the applicant did not include the charges for the new
technology in the cost analysis. Next, the applicant calculated the
final inflated average case-weighted standardized charge per case of
$508,855, which exceeded the average
[[Page 28277]]
case-weighted threshold amount of $76,739.
We invite public comments on whether narsoplimab meets the cost
criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that narsoplimab represents a substantial clinical
improvement over existing technologies because it offers a treatment
option for a patient population unresponsive to currently available
treatments due to filling an unmet need for patients with HSCT-TMA
where supportive care and/or off-label therapies have been ineffective.
The applicant also asserted that narsoplimab has demonstrated a
substantial clinical improvement in the treatment of HSCT-TMA in the
clinical trial setting and has demonstrated substantial improvement in
TMA complete response.
With respect to the assertion that narsoplimab fills an unmet need,
the applicant stated that FDA awarded narsoplimab Breakthrough Therapy
designation for the treatment of patients with HSCT-TMA who have
persistent TMA despite modification of immunosuppressive therapy and if
approved by FDA, narsoplimab will be the only drug or biological
approved for the treatment of HSCT-TMA.
In support of the assertion that narsoplimab offers a treatment
option for patients unresponsive to currently available treatments as
demonstrated in the clinical trial setting, the applicant described the
pivotal single-arm, open label trial OMS721-TMA-001 which included a
high-risk sample (n=28) including patients with persistent TMA
following calcineurin inhibitors (CNI) modification and other
transplant features or complications such as GVHD, mismatched
transplants, female-to-male transplants, and multiple organ
involvement. According to the applicant, the study design allowed
evaluation of patients at high risk for poor outcomes, including
mortality.382 383 384 385 386 387 According to the
applicant, 28 patients with HSCT-TMA received narsoplimab intravenously
once weekly for four to eight weeks with an eight-week follow-up
period. The applicant stated the primary end point of the study was a
response defined by improvements in both TMA laboratory markers (LDH
and platelet count) and clinical status (improvement in organ function
[renal, pulmonary, gastrointestinal, or neurological] or freedom from
transfusion). According to the applicant, patients had multiple risk
factors for poor outcomes at baseline, including significant infection
(85.7%), renal dysfunction (75%), GVHD (67.9%), neurological
dysfunction (57.1%), multiple organ involvement (50%), and pulmonary
dysfunction (17.9%). Because the primary response endpoint is novel,
the applicant asserted that historical response data using the endpoint
are not available.
---------------------------------------------------------------------------
\382\ Rambaldi, A et al. ``Improved survival following OMS721
treatment following hematopoietic stem cell transplant associated
thrombotic microangiopathy (HCTTMA).'' European Hematology Society.
Stockholm, June 15, 2018; Abstract PF724.
\383\ Rambaldi, A et al. ``Narsoplimab (OMS721) for the
Treatment of Adult Hematopoietic Stem Cell TransplantAssociated
Thrombotic Microangiopat hy.'' European Hematology Association.,
June 12, 2020; Abstract S2626.
\384\ Rambaldi A, Claes K, Goh YT, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplantassociated thrombotic
microangiopathy (HSCT-TMA): Subgroup analyses.'' Abstracts from the
47th Annual Meeting of the;
\385\ Khaled SK, Boelens JJ, Cairo MS, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplantassociated thrombotic
microangiopathy (HSCT-TMA).'' Transplantation and Cellular Therapy.
2021;27(3):S24-S26. h
\386\ Perales M, Cairo M, Duarte R, et al. ``Narsoplimab
(OMS721) treatment contributes to improvements in organ function in
adult patients with high-risk transplant associated thrombotic
microangiopathy.'' Presented at: 26th European Hematology
Association Congress; June 9-17, 2021. Oral presentation S241.
https://library.ehaweb.org/eha/2021/eha2021-virtualcongress/324649/.
\387\ Whitaker, Steve. OMS721-TMA-001. ``A Phase 2,
Uncontrolled, Three-Stage, Dose-Escalation Cohort Study to Evaluate
the Safety, Pharmacokinetics, Pharmacodynamics, Immunogenicity, and
Clinical Activity of OMS721 in Adults with Thrombotic
Microangiopathies''. October 12, 2018.
---------------------------------------------------------------------------
According to the applicant, patients receiving narsoplimab in the
full analysis set (FAS) (patients receiving at least 1 dose of
narsoplimab) demonstrated a 61% complete response rate (17/28; 95% CI
40.6% to 78.5%), and patients receiving per protocol dosing (>= 4
doses) demonstrated a 74% complete response rate (17/23; 95% CI 51.6%
to 89.8%).388 389 390 391 392 393 The applicant stated that
the 100-day survival was demonstrated in 68% (19/28) of narsoplimab-
treated patients in the FAS, 83% (19/23) for patients receiving per
protocol dosing, and 94% for patients determined to be complete
responders (16/17). The applicant added that median overall survival
for the full analysis population was demonstrated at 274 days (95% CI
103, NE), 361 days (95% CI 176, NE) for the per protocol analysis, and
median survival for the responder population was not reached (95% CI
273, NE) because more than half of the patients were still alive.
According to the applicant, similar populations described in the
literature have demonstrated much shorter overall survival and much
lower 100-day survival rates.
---------------------------------------------------------------------------
\388\ Rambaldi, A et al. ``Improved survival following OMS721
treatment following hematopoietic stem cell transplant associated
thrombotic microangiopathy (HCTTMA).'' European Hematology Society.
Stockholm, June 15, 2018; Abstract PF724.
\389\ Rambaldi, A et al. ``Narsoplimab (OMS721)for the Treatment
of Adult Hematopoietic Stem Cell TransplantAssociated Thrombotic
Microangiopat hy.'' European Hematology Association., June 12, 2020;
Abstract S2626.
\390\ Rambaldi A, Claes K, Goh YT, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplantassociated thrombotic
microangiopathy (HSCT-TMA): Subgroup analyses.'' Abstracts from the
47th Annual Meeting of the European Society for Blood and Marrow
Transplantation (EBMT). Bone Marrow Transplant. 2021;56:147-149.
https://doi.org/10.1038/s41409-021-01342-6;
\391\ Khaled SK, Boelens JJ, Cairo MS, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplantassociated thrombotic
microangiopathy (HSCT-TMA).'' Transplantation and Cellular Therapy.
2021;27(3):S24-S26.
\392\ Perales M, Cairo M, Duarte R, et al. ``Narsoplimab
(OMS721) treatment contributes to improvements in organ function in
adult patients with high-risk transplant associated thrombotic
microangiopathy.'' Presented at: 26th European Hematology
Association Congress; June 9-17, 2021. Oral presentation S241.
https://library.ehaweb.org/eha/2021/eha2021-virtualcongress/324649/.
\393\ Whitaker, Steve. OMS721-TMA-001. ``A Phase 2,
Uncontrolled, Three-Stage, Dose-Escalation Cohort Study to Evaluate
the Safety, Pharmacokinetics, Pharmacodynamics, Immunogenicity, and
Clinical Activity of OMS721 in Adults with Thrombotic
Microangiopathies''. October 12, 2018.
---------------------------------------------------------------------------
Next the applicant addressed clinical laboratory markers,
improvement in clinical status, and key secondary objectives. According
to the applicant, statistically significant (p < 0.01) and clinically
relevant improvements from baseline were observed in platelet count,
LDH, and haptoglobin.394 395 396 397 398 399 The
[[Page 28278]]
applicant stated that platelet count increased from baseline over time.
The applicant stated that LDH, an adverse predictor for HSCT outcomes,
decreased from baseline with narsoplimab treatment, consistent with
clinical improvement. The applicant stated that haptoglobin, a marker
for hemolysis which is often decreased in HSCT-TMA, steadily increased
from baseline with narsoplimab treatment. The applicant stated that
hemoglobin also increased with narsoplimab treatment. According to the
applicant, the response across all key laboratory parameters was rapid
and progressive over time. The applicant noted that overall freedom
from transfusion was 48% in the FAS and 55% in the Per-Protocol
Analysis Set (PAS).
---------------------------------------------------------------------------
\394\ Rambaldi, A et al. ``Improved survival following OMS721
treatment following hematopoietic stem cell transplant associated
thrombotic microangiopathy (HCTTMA).'' European Hematology Society.
Stockholm, June 15, 2018;
\395\ Rambaldi, A et al. ``Narsoplimab (OMS721) for the
Treatment of Adult Hematopoietic Stem Cell TransplantAssociated
Thrombotic Microangiopat hy.'' European Hematology Association.,
June 12, 2020; Abstract S2626.;
\396\ Rambaldi A, Claes K, Goh YT, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplantassociated thrombotic
microangiopathy (HSCT-TMA): Subgroup analyses.'' Abstracts from the
47th Annual Meeting of the European Society for Blood and Marrow
Transplantation (EBMT). Bone Marrow Transplant. 2021;56:147-149.
https://doi.org/10.1038/s41409-021-01342-6;
\397\ Khaled SK, Boelens JJ, Cairo MS, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplant-associated thrombotic
microangiopathy (HSCT-TMA).'' Transplantation and Cellular Therapy.
2021;27(3):S24-S26.
\398\ Perales M, Cairo M, Duarte R, et al. ``Narsoplimab
(OMS721) treatment contributes to improvements in organ function in
adult patients with high-risk transplant associated thrombotic
microangiopathy.'' Presented at: 26th European Hematology
Association Congress; June 9-17, 2021. Oral presentation S241.
https://library.ehaweb.org/eha/2021/eha2021-virtualcongress/324649/.
\399\ Whitaker, Steve. OMS721-TMA-001. ``A Phase 2,
Uncontrolled, Three-Stage, Dose-Escalation Cohort Study to Evaluate
the Safety, Pharmacokinetics, Pharmacodynamics, Immunogenicity, and
Clinical Activity of OMS721 in Adults with Thrombotic
Microangiopathies''. October 12, 2018.
---------------------------------------------------------------------------
The applicant also asserted that narsoplimab was well-tolerated in
this very sick population with multiple comorbidities. The applicant
stated that the most common adverse events in the pivotal trial were
nausea, vomiting, diarrhea, hypokalemia, neutropenia, and fever, which
are comparable to those typically seen in the post-transplant
population. Six deaths (21%) occurred, collectively, from sepsis, AML
progression, and GVHD, which according to the applicant are causes of
death common in patients with HSCT. The applicant asserted that across
all clinical trials, including trials in aHUS and IgA nephropathy
(IgAN), with narsoplimab, no safety signal of concern has been
observed.
With respect to the claim that use of narsoplimab significantly
improves clinical outcomes relative to existing treatments, the
applicant stated that there is a lack of effective treatment options
for TMA following HSCT. Per the applicant, in order to provide a
comparison group for the HSCT-TMA patients treated in the narsoplimab
study, a protocol-driven systematic (retrospective) literature review
was conducted evaluating clinical outcomes in adult patients with HSCT-
TMA following allogeneic transplant. The applicant stated that
publications dating from 2000-2020 which described the clinical course
and outcomes of HSCT-TMA patients were identified by electronic
database search (PubMed) using pre-specified search terms. The
applicant stated the literature search identified 459 papers of which
25 manuscripts describing 149 patient outcomes in HSCT-TMA were
identified. The applicant stated that to facilitate data comparisons
with the narsoplimab clinical trial, random effects logistic regression
and propensity score analyses were performed. The applicant stated that
they examined various imputation methods to ensure the robustness of
findings and then evaluated the following: Age and days from HSCT to
TMA diagnosis as continuous variables, and GVHD, infection, renal
dysfunction, and neurologic dysfunction as categorical variables.
According to the applicant, where only a minority of patients
responded to treatment in the literature review, a majority of patients
responded to narsoplimab. The applicant asserted that the comparison
was conservative and biased toward the literature group, since the
endpoint used in the narsoplimab pivotal trial is novel and rigorous,
requiring a composite of laboratory and clinical measures, and none of
the literature studies used this response endpoint. According to the
applicant, many of the studies identified in the literature review used
only one or two components of the narsoplimab primary endpoint or
simply reported ``response''. According to the applicant, narsoplimab-
treated patients had an overall response rate of 61% (95% CI 40.6% to
78.5%) for the full analysis set as compared to the literature-reported
results with 23.3% (95% CI, 15.1% to 34.2%) response. According to the
applicant, 62.5% of narsoplimab-treated patients had significant
infection and responded to treatment as compared to 23.9% of the
literature review dataset. The applicant asserted that propensity score
analyses and sensitivity analyses, including all 4 imputation methods,
comparing response rates of the narsoplimab-treated patients to those
in the literature-based group, yielded odds ratios (ORs) that are all
greater than 1 (2- to 8-fold and, with few exceptions, p-values <
0.05), supporting superiority of narsoplimab. The applicant concluded
that the results demonstrate that the response observed with
narsoplimab is a marked deviation from the natural history of HSCT-TMA,
and is especially notable given that the patients in the narsoplimab
pivotal trial were at high risk for poor outcomes, yet the majority
achieved a complete response with significant improvement in laboratory
markers and in clinical status.
In support of the application, the applicant submitted three new
references in the form of abstracts.400 401 402 The first
abstract discusses results from the single-arm open-label pivotal trial
(NCT02222545) (n=28) involving adult TA-TMA patients.\403\ The authors
stated that patients were at high risk for poor outcomes and had
multiple comorbidities. Patients received 6.3 doses on average (2 to 8
range) of narsoplimab for a median duration of treatment of 8 weeks.
The authors discussed many of the outcomes discussed by the applicant
previously adding that six patients died during the core study period:
1 of septic shock, 2 of progressive AML, 2 of neutropenic sepsis, and 1
of GVHD and TMA. The authors stated that these deaths occurred 3-42
days following the last narsoplimab dose. The second and third
abstracts also discuss the single-arm open-label pivotal trial
(NCT02222545) (n=28) involving adult TA-TMA patients, as previously
described.404 405
---------------------------------------------------------------------------
\400\ Perales M, Cairo M, Duarte R, et al. ``Narsoplimab
(OMS721) treatment contributes to improvements in organ function in
adult patients with high-risk transplant-associated thrombotic
microangiopathy.'' Presented at: 26th European Hematology
Association Congress; June 9-17, 2021. Oral presentation S241.
https://library.ehaweb.org/eha/2021/eha2021-virtual-congress/324649/.
\401\ Rambaldi A, Claes K, Goh YT, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplant-associated thrombotic
microangiopathy (HSCT-TMA): Subgroup analyses.'' Abstracts from the
47th Annual Meeting of the European Society for Blood and Marrow
Transplantation (EBMT). Bone Marrow Transplant. 2021;56:147-149.
https://doi.org/10.1038/s41409-021-01342-6.
\402\ Khaled SK, Boelens JJ, Cairo MS, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplant-associated thrombotic
microangiopathy (HSCT-TMA).'' Transplantation and Cellular Therapy.
2021;27(3):S24-S26.
\403\ Perales M, Cairo M, Duarte R, et al. ``Narsoplimab
(OMS721) treatment contributes to improvements in organ function in
adult patients with high-risk transplant-associated thrombotic
microangiopathy.'' Presented at: 26th European Hematology
Association Congress; June 9-17, 2021. Oral presentation S241.
https://library.ehaweb.org/eha/2021/eha2021-virtual-congress/324649/.
\404\ Rambaldi A, Claes K, Goh YT, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplant-associated thrombotic
microangiopathy (HSCT-TMA): Subgroup analyses.'' Abstracts from the
47th Annual Meeting of the European Society for Blood and Marrow
Transplantation (EBMT). Bone Marrow Transplant. 2021;56:147-149.
https://doi.org/10.1038/s41409-021-01342-6.
\405\ Khaled SK, Boelens JJ, Cairo MS, et al. ``Narsoplimab
(OMS721), a MASP-2 inhibitor, for the treatment of adult
hematopoietic stem cell transplant-associated thrombotic
microangiopathy (HSCT-TMA).'' Transplantation and Cellular Therapy.
2021;27(3):S24-S26.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
[[Page 28279]]
concerns with regard to the substantial clinical improvement criterion.
As we noted in the FY 2022 IPPS/LTCH PPS proposed rule, first, the
sample from which the applicant draws conclusions is small (sample size
of pivotal trial 28, plus five case studies previously discussed in the
FY 2022 proposed rule (86 FR 25285 through 25286)). We question whether
the sample and these results are generalizable to the greater Medicare
population.
As we discussed in the FY 2022 IPPS/LTCH PPS proposed rule, with
regard to methodological concerns, the authors pool data from an
historical cohort of patients drawn from published literature to
calculate survival rates in patients with HSCT-TMA and then
retrospectively compare these rates to the survival in their treated
cohort. We note the applicant has in their current application provided
some insight into how the historical control was evaluated in
comparison to narsoplimab outcomes, as previously discussed. We
appreciate the greater detail provided by the applicant but without
information regarding how the systematic review was designed and
performed, we question the appropriateness of the sample used to
identify a historical comparator. We question whether this systematic
review and analysis sufficiently establish differences between various
studies and whether they are sufficient to show that the difference
between outcomes is due to differences in treatments as opposed to
study design, samples, and so forth.
As we also noted in the FY 2022 IPPS/LTCH PPS proposed rule, the
study described in the pivotal trial, upon which the applicant bases
its claims for substantial clinical improvement, was not appropriately
designed to test for comparisons with another treatment such as an
historical control; a historical control was only assessed in post hoc
analyses and was not incorporated in the initial study design.
Furthermore, the methods utilized in the pivotal trial do not lend
themselves to making statistical inferences based on the provided
protocol (for example, no power assessment performed, no assessment for
multiple comparisons, no pre-identified alpha). We note that the
applicant stated that the trial's composite endpoint of laboratory and
clinical measures is novel and rigorous, and has not been previously
used in the literature. We would appreciate additional information on
the clinical significance of this endpoint as compared to others in the
literature referenced by the applicant, and whether the composite
endpoint has been clinically validated and is demonstrative of durable
clinical benefit. Specifically, we note that in some cases, measures
used as indicators for patient improvement such as haptoglobin
initially showed increases at early time points (for example, 1-10
weeks) but began to decrease at later time points (for example, 13-15
weeks).
We are inviting public comments on whether narsoplimab meets the
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
narsoplimab.
h. Spesolimab
Boehringer Ingelheim Pharmaceuticals, Inc. (BIPI), submitted an
application for new technology add-on payments for spesolimab for FY
2023. According to the applicant, spesolimab is a humanized
antagonistic monoclonal immunoglobulin G1 antibody blocking human IL36R
signaling currently under investigation for the treatment of flares in
adult patients with generalized pustular psoriasis (GPP). The applicant
stated that binding of spesolimab to IL36R prevents the subsequent
activation of IL36R by cognate ligands (IL36 [alpha], [beta] and
[gamma]) and downstream activation of pro-inflammatory and pro-fibrotic
pathways. Per the applicant, genetic human studies have established a
strong link between IL36R signaling and skin inflammation.
According to the applicant, GPP is a rare, heterogeneous, and
potentially life-threatening neutrophilic skin disease, with an
estimated prevalence of 1/10,000 in the United States.\406\ The
applicant noted that a flare entails widespread formation of pustules
that may occur with or without systemic inflammation. Per the
applicant, GPP causes significant morbidity and, in some cases,
mortality; infectious, metabolic, cardiac, liver, respiratory, and
neurological comorbidities have been reported.\407\ The applicant also
stated that various factors have been reported to trigger a GPP flare,
including pregnancy, severe injury, or viral and bacterial infections.
Per the applicant, the use and subsequent withdrawal of systemic
corticosteroids is a key contributing factor.408 409 410
---------------------------------------------------------------------------
\406\ Strober B., Kotowsky N, Medeiros R., et al., Unmet Medical
Needs in the Treatment and Management of Generalized Pustular
Psoriasis Flares: Evidence from a Survey of Corrona Registry.
Dermatologists Dermatol Ther (Heidelb) (2021) 11:529-541.
\407\ Ibid.
\408\ Zelickson BD, et al. Generalized Pustular Psoriasis. Arch
Dermatol 1991;127:1339-1345.
\409\ Choon SE, et al. Clinical profile, morbidity, and outcome
of adult-onset generalized pustular psoriasis: Analysis of 102 cases
seen in a tertiary hospital in Johor, Malaysia. Int J Dermatol
2014;53:676-684.
\410\ The applicant referred to a third citation here, as
``Goiriz 2007,'' but we are unable to identify the citation based
upon the information provided by the applicant.
---------------------------------------------------------------------------
According to the applicant, GPP can be distinguished from plaque
psoriasis based on clinical, pathologic, and genetic features in GPP.
The applicant asserted that although there are shared pathways between
GPP and plaque psoriasis, the IL-36 pathway is predominantly involved
in the pathogenesis of GPP, while the IL-23 axis drives plaque
psoriasis. Per the applicant, binding of spesolimab to IL36R prevents
the subsequent activation of IL36R by cognate ligands (IL36 [alpha],
[beta] and [gamma]) and downstream activation of pro-inflammatory and
pro-fibrotic pathways. The applicant also stated that IL-36R signaling
is differentiated from TNF-[alpha], integrin and IL-23 inhibitory
pathways by directly and simultaneously blocking both inflammatory and
pro-fibrotic pathways.
The applicant stated that in the absence of an FDA-approved therapy
specifically indicated for GPP, immunomodulatory therapies, including
biologics, are used in the treatment of GPP based on clinical
experience in patients with plaque psoriasis. The applicant further
noted that there is limited evidence on the efficacy and safety of
these therapies in the treatment of GPP. Per the applicant, due to the
rarity of the disease, there are no high-quality clinical trials
providing evidence for treatment options in GPP.411 412 The
applicant also stated that the National Psoriasis Foundation treatment
recommendations include cyclosporine, retinoids, infliximab and
methotrexate as first-line therapies \413\ but that current treatments
are associated with slow resolution of GPP flares, and complete
clearance of
[[Page 28280]]
pustules and skin is not always achieved.\414\
---------------------------------------------------------------------------
\411\ Robinson A, et al. Treatment of pustular psoriasis: From
the Medical Board of the National Psoriasis Foundation. J Am Acad
Dermatol 2012; 67:279-288.
\412\ Choon et al. Study protocol of the global Effisayil 1
Phase II, multicentre, randomised, double-blind, placebo-controlled
trial of spesolimab in patients with generalized pustular psoriasis
presenting with an acute flare. BMJ Open 2021; 11:e043666.
\413\ Robinson A, et al. Treatment of pustular psoriasis: From
the Medical Board of the National Psoriasis Foundation. J Am Acad
Dermatol 2012; 67:279-288.
\414\ Strober B, et al. Unmet medical needs in the treatment and
management of generalized pustular psoriasis flares: Evidence from a
survey of corrona registry dermatologists. Dermatol Ther (Heidelb)
2021.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant is pursuing
FDA approval of a Biologics License Application (BLA). We note that a
December 15, 2021, press release indicates that FDA has accepted a BLA
and granted Priority Review for spesolimab for the treatment of flares
in patients with GPP.\415\ The applicant indicated that it expects to
receive FDA approval prior to the July 1 deadline. According to the
applicant, the product will be available on the market 1 week post FDA
approval. According to the applicant, spesolimab is administered as a
single 900 mg (2 x 450 mg/7.5 mL vials) intravenous infusion over 90
minutes, and an additional intravenous 900 mg dose may be administered
1 week after the initial dose if flare symptoms persist. According to
the applicant, there are currently no ICD-10-PCS procedure codes to
distinctly identify spesolimab. The applicant submitted a request for
approval of a unique ICD-10-PCS code to identify cases involving the
administration of spesolimab beginning in FY 2023.
---------------------------------------------------------------------------
\415\ Boehringer Ingelheim, https://www.boehringer-ingelheim.us/press-release/us-fda-grants-priority-review-spesolimab-treatment-flares-patients-generalized. Accessed 1/18/2022.
---------------------------------------------------------------------------
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 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 stated that spesolimab does not use the same or similar
mechanism of action when compared to an existing technology. The
applicant stated that spesolimab inhibits IL-36R signaling which is
differentiated from TNF-[alpha], integrin and IL-23 inhibitory pathways
by directly and simultaneously blocking both inflammatory and pro-
fibrotic pathways. The applicant described first line therapies that
include acitretin, cyclosporine, methotrexate, infliximab, oral
prednisone, topical corticosteroids, topical calcipotriene, and
etanercept. As second line, the applicant cited adalimumab, etanercept,
psoralen and long-wave ultraviolet light A (PUVA), ultraviolet light B
(UVB) phototherapy, topical corticosteroids, topical calcipotriene,
topical tacrolimus, and infliximab. The applicant stated there is
limited evidence on the efficacy and safety of these therapies in the
treatment of GPP. The applicant reported that due to the rarity of the
disease, there are no high-quality clinical trials providing evidence
for treatment options in GPP.416 417
---------------------------------------------------------------------------
\416\ Robinson A, et al. Treatment of pustular psoriasis: From
the Medical Board of the National Psoriasis Foundation. J Am Acad
Dermatol 2012; 67:279-288.
\417\ Choon et al. Study protocol of the global Effisayil 1
Phase II, multicentre, randomised, double-blind, placebo-controlled
trial of spesolimab in patients with generalized pustular psoriasis
presenting with an acute flare. BMJ Open 2021; 11:e043666.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that there is
no MS-DRG for spesolimab. We note that the applicant also stated that
spesolimab currently maps to the following MS-DRGs: 603 (Cellulitis
without MCC), 607 (Minor Skin Disorders without MCC), 871 (Septicemia
or Severe Sepsis without MV >96 Hours with MCC), and 872 (Septicemia or
Severe Sepsis without MV >96 Hours without MCC) under the MS-DRG
grouper for FY 2022.
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 the clinical, pathological,
and genetic features associated with GPP establish it as a distinct
disease entity from plaque psoriasis, which is managed with existing
therapies.
In summary, the applicant asserted that spesolimab is not
substantially similar to other currently available therapies and/or
technologies because it does not use the same or similar mechanism of
action, there is no MS-DRG, and the features of GPP establish it as a
distinct disease entity from plaque psoriasis and that therefore, the
technology meets the ``newness'' criterion. However, we have the
following concerns with regard to the newness criterion. First, we note
that the applicant stated that there are no FDA-approved therapies
specifically indicated for GPP. However, we question whether there are
any treatments that may be indicated for psoriasis generally that may
therefore be considered an on-label use for subtypes of psoriasis such
as GPP, and request additional information on any such treatments. We
also note that while the applicant stated that spesolimab has no DRG to
which it maps, the applicant also provided a list of four MS-DRGs that
cases eligible for the use of the technology would map to, and we
believe these are the same MS-DRGs to which other treatments for GPP
would map.
We are inviting public comments on whether spesolimab is
substantially similar to existing technologies and whether spesolimab
meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analysis. The applicant first searched the FY 2019 MedPAR for
cases representing patients who may be eligible for spesolimab. The
applicant selected claims with a diagnosis code of L40.1 (Generalized
pustular psoriasis) and limited the data to PPS hospitals. The
applicant removed HMO cases, cases with total charges or covered
charges less than zero, and cases with a length of stay of zero. After
imputing a value of 11 cases for MS-DRGs with a case volume less than
11, the applicant identified 101 claims mapping to 4 MS-DRGs under the
MS-DRG grouper for FY 2022: MS-DRG 603 (Cellulitis without MCC), MS-DRG
607 (Minor Skin Disorders without MCC), MS-DRG 871 (Septicemia or
Severe Sepsis without MV >96 Hours with MCC), and MS-DRG 872
(Septicemia or Severe Sepsis without MV >96 Hours without MCC).
The applicant did not remove charges for prior technology as the
applicant stated it did not believe that it was applicable for this
product. The applicant standardized the charges and applied a 4-year
inflation factor of 1.281834 based on the inflation factor used in the
FY 2022 IPPS/LTCH PPS final rule and correction notice to calculate
outlier threshold charges. The applicant then added charges for the new
technology by dividing the cost of spesolimab by the national average
CCR for drugs which is 0.187 from the FY 2022 IPPS/LTCH PPS final rule
(86 FR 44966). The applicant stated that the final inflated average
case-weighted standardized charge per case of $359,404 exceeded the
average case-weighted threshold amount of $41,595. Because the final
inflated average case-weighted standardized charge per case exceeded
the average case-weighted threshold amount, the applicant asserted that
spesolimab meets the cost criterion.
We note the applicant's statement that removing charges for prior
technology was not applicable to spesolimab; however, the applicant did
not provide
[[Page 28281]]
an explanation as to why. We would be interested in additional detail
regarding the applicant's decision not to remove charges for prior
technology. We invite public comment on whether spesolimab meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that spesolimab represents a substantial clinical
improvement over existing technologies because it offers a treatment
option for a patient population unresponsive to, or ineligible for,
currently available treatments and significantly improves clinical
outcomes relative to services or technologies previously available.
With respect to the claim that spesolimab offers a treatment option
for a patient population unresponsive to, or ineligible for, currently
available treatments, the applicant stated that there are no FDA-
approved therapies specifically indicated for GPP. The applicant
further stated that current treatments are associated with slow
resolution of GPP flares, and complete clearance of pustules and skin
is not always achieved.\418\ In support of this claim, the applicant
submitted a study describing a structured survey which was purposed to
gauge unmet needs for GPP. The study results of the survey of 29
dermatologists were published regarding the range and adequacy of GPP
treatment options.\419\ Dermatologists were identified by the Corrona
Psoriasis Registry as likely to be currently treating patients with
GPP, with a history of having treated at least one patient in the
Corrona Registry. The survey was made up of 28 multiple choice
questions regarding GPP flares, diagnosis, and treatment options. The
authors found that all surveyed dermatologists believed that pustules
were necessary to diagnose a GPP flare. Most surveyed dermatologists
responded that treatment options for all flare frequencies were
adequate ``most'' (79%) or ``all'' (14%) of the time, and 83% reported
that treatments for residual disease for all flare frequencies are
adequate ``most of the time.'' According to the applicant, this survey
established the need for new therapies. The applicant stated that while
the study results suggest that moderately effective therapies may
exist, the need for GPP-specific treatments remains.
---------------------------------------------------------------------------
\418\ Strober B, et al. Unmet medical needs in the treatment and
management of generalized pustular psoriasis flares: Evidence from a
survey of corrona registry dermatologists. Dermatol Ther (Heidelb)
2021.
\419\ Ibid.
---------------------------------------------------------------------------
With respect to the claim that spesolimab improves outcomes, the
applicant restated that there are no FDA-approved therapies
specifically indicated for GPP, current treatments are associated with
slow resolution of GPP flares, and complete clearance of pustules and
skin is not always achieved.\420\ The applicant also stated that
spesolimab, as compared to placebo, leads to rapid pustular clearance
and rapid skin clearance; clinically significant improvements in
patient-reported pain, psoriasis symptoms, and fatigue; and significant
decreases in markers of systemic inflammation. The applicant provided
three data submissions in support of their claims of improved outcomes.
---------------------------------------------------------------------------
\420\ Ibid.
---------------------------------------------------------------------------
The applicant submitted a published letter to the editor describing
a phase I, proof-of-concept trial in 7 patients who were given a single
intravenous dose of spesolimab 10mg/kg and followed for 20 weeks, to
establish the results of spesolimab in a study. The authors noted that
most adverse events were mild or moderate in nature and that a
Generalized Pustular Psoriasis Physician Global Assessment (GPPGA)
score of 0 or 1 (clear or almost clear skin) was achieved in five
patients by week 1 and in all patients by week 4. Complete pustular
clearance was achieved in three patients within 48 hours after
treatment (n=3; 42.9%), in five patients by week 1 (n=5; 71.4%) and in
six patients by week 2 (n=6; 85.7%).\421\ According to the applicant,
this proof-of-concept study demonstrated that spesolimab could achieve
clear or almost clear skin with no serious adverse effects.
---------------------------------------------------------------------------
\421\ Bachelez H, et al. Inhibition of the Interleukin-36
Pathway for the Treatment of Generalized Pustular Psoriasis. N Engl
J Med 2019; 380:981-983.
---------------------------------------------------------------------------
The applicant also submitted a published study protocol describing
Effisayil-1, a phase 2 multicenter, randomized, placebo-controlled
trial designed to support the use of spesolimab for GPP in a double-
blind study. The protocol aimed to randomize at least 51 patients with
an acute GPP flare in 2:1 fashion for a single 900 mg intravenous dose
of spesolimab or placebo. Inclusion criteria included patients with a
GPPGA score 0 or 1 and documented history of GPP; or acute GPP with
moderate to severe intensity flare; or first episode acute GPP with
moderate to severe intensity with diagnosis to be confirmed
retrospectively. According to the protocol, patients would be followed
for up to 28 weeks and the primary endpoint would be achievement of
GPPGA pustulation subscore of 0 (pustule clearance) at Week 1. A
secondary endpoint of GPPGA score of 0 or 1 (clear or almost clear) at
Week 1 would also be assessed. Patients not qualifying to enter the
open label extension study would be followed for an additional 16
weeks. In addition to photographs, exam, vitals, safety laboratory
testing, the IL36RN mutation status would be determined for all
patients. Finally, safety would be assessed along with data collection
of blood and skin biopsies.\422\
---------------------------------------------------------------------------
\422\ Choon et al. Study protocol of the global Effisayil 1
Phase II, multicentre, randomised, double-blind, placebo-controlled
trial of spesolimab in patients with generalized pustular psoriasis
presenting with an acute flare. BMJ Open 2021; 11:e043666.
---------------------------------------------------------------------------
Finally, the applicant summarized unpublished data from Effisayil-
1, described previously to demonstrate that spesolimab improves
outcomes as compared to placebo.\423\ According to the applicant, 54.3%
of the treatment arm (19/35) achieved pustule clearance, as assessed by
GPPGA pustulation subscore one week after treatment, compared to
approximately 5.6% (1/18) of patients in the placebo arm (p<0.001),
demonstrating rapid pustular clearance. The applicant also noted a
secondary endpoint of clear or almost clear skin one week after
treatment. The applicant stated that spesolimab also demonstrated rapid
skin clearance, with 42.9% (15/35) of the treatment arm, compared to
11.1% (12/18) of patients treated with placebo (p=0.012) achieving
clear or almost clear skin as indicated by a total GPPGA score of 0 or
1 at week 1.
---------------------------------------------------------------------------
\423\ Bachelez et al., in print.
---------------------------------------------------------------------------
With respect to the claim that spesolimab improved patient-reported
outcomes, the applicant stated that patients in the Effisayil-1 trial
discussed previously used a visual analog scale to measure their pain.
According to the applicant, a significantly greater reduction in pain
was measured in patients receiving spesolimab at Week 4 as compared to
those receiving placebo (p=0.001). In addition, the applicant stated
that patients receiving spesolimab reported significantly greater
reductions in psoriasis symptoms (including pain, redness, itching, and
burning) as indicated by the psoriasis symptom scale (PSS) by Week 4
(p=0.004). The applicant also noted significantly greater reductions in
fatigue by the Functional Assessment of Chronic Illness Therapy (FACIT)
scores in the spesolimab group as compared to placebo (p=0.001) at Week
4.
Lastly, the applicant stated that the Effisayil-1 study also
demonstrated significant decreases in markers of systemic inflammation.
According to the applicant, serum biomarker data
[[Page 28282]]
showed that treatment with spesolimab led to normalization of C-
reactive protein (CRP) and neutrophil values that had been above the
upper limit of normal at baseline within 2 weeks for CRP and within 1
week for neutrophils. The applicant further stated that this effect was
sustained through to Week 12.
After review of the information provided by the applicant, we have
the following concerns regarding whether spesolimab meets the
substantial clinical improvement criterion. We note that the results of
the Effisayil-1 trial are not included in the application. As the
applicant references the Effisayil-1 trial in support of its assertions
regarding improved outcomes we are concerned that our analysis of the
clinical benefit of spesolimab relies entirely on the applicant's
summary of the unpublished trial. To the extent that Bachelez et al.,
matched to the previously published protocol, it does not appear that
the unpublished study met the goal of recruiting 51 patients and
therefore we question if the study was adequately powered. In addition,
the patient demographics, excluded cases, and details of adverse events
are unable to be determined. We therefore question the generalizability
of the Effisayil-1 trial outcomes to the Medicare population.
With regard to the Effisayil-1 protocol and the unpublished
data,424 425 we note that the protocol is not designed to
compare spesolimab to current treatment options. While the applicant
states that spesolimab will be the first GPP treatment targeting the
IL-36 pathway, we note that the applicant previously described other
treatments that are available, which include TNF-[alpha] inhibitors,
etanercept, and others. We also question whether there are any
treatments that may be indicated for psoriasis generally that may
therefore be considered an on-label use for subtypes of psoriasis such
as GPP, as discussed previously. In addition, we note that the
dermatology survey results supplied by the applicant seem to indicate
that there is perceived efficacy in current treatments.\426\ Most of
the surveyed dermatologists indicated that treatment options for all
flare frequencies were adequate ``most'' (79%) or ``all'' (14%) of the
time, and 83% reported that treatments for residual disease for all
flare frequencies are adequate ``most of the time.'' Given this, we
question whether placebo is the most appropriate comparator for
spesolimab.
---------------------------------------------------------------------------
\424\ Choon SE, et al. Clinical profile, morbidity, and outcome
of adult-onset generalized pustular psoriasis: Analysis of 102 cases
seen in a tertiary hospital in Johor, Malaysia. Int J Dermatol
2014;53:676-684.
\425\ Bachelez et al., in print.
\426\ Strober B, et al. Unmet medical needs in the treatment and
management of generalized pustular psoriasis flares: Evidence from a
survey of corrona registry dermatologists. Dermatol Ther (Heidelb)
2021.
---------------------------------------------------------------------------
We also note that there does not appear to be a standard way to
assess GPP severity and response to treatment. Though the studies
described in the application used GPPGA to assess these outcomes,
because there are multiple assessment tools such as the Psoriasis Area
and Severity Index (PASI), the GPPGA adapted from the Psoriasis
Physician Global Assessment (PGA), the Clinical Global Impression (CGI)
scale, the Japanese Dermatological Association Severity Index (JDA-SI),
patient reported outcomes, and others, we question the extent of
response and comparability to other therapies. We also question if skin
manifestations correlate with systemic symptoms and laboratory values
as those outcomes would also be of interest.
We are inviting public comments on whether spesolimab meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for spesolimab.
Comment: The applicant provided supplemental written responses to
questions by CMS during the FY 2022 Town Hall meeting regarding the
Effisayil-1 study. First, in response to a question regarding how the
results of the Effisayil-1 trial align to labs and other findings, the
applicant clarified that among patients with elevated baseline
neutrophils in the Effisayil-1 trial, counts were normalized within one
week of receiving spesolimab while median C-reactive protein (CRP)
normalized within two weeks in patients with elevated baseline CRP (>=
10mg/L).
Second, in response to a question regarding whether safety data is
available based on impact to the immune system, the applicant also
stated that a comparison of safety data among patients with or without
measurable changes to immune response cannot be answered since
treatment with spesolimab consistently resulted in normalization of
inflammatory markers among patients with elevated baseline values. Per
the applicant, during the 1-week placebo-controlled period in
Effisayil-1, infections were reported in 17.1% of patients treated with
spesolimab compared with 5.6% of patients treated with placebo. Serious
infection (urinary tract infection) was reported in one patient (2.9%)
in the spesolimab group and no patients in the placebo group. The
applicant also stated that infections observed were mild to moderate
with no distinct pattern regarding pathogen or type of infection.
Third, in response to a question regarding whether older adults
were studied in the trial, the applicant stated that among patients
enrolled in the Effisayil-1 study, the mean age was 43 years and the
median age was 41 years, thirteen patients (24.5%) were 50 to <65 years
of age and two patients (3.8%) were >=65 years of age. Per the
applicant, the age distribution observed in the Effisayil-1 study is
similar to what is known for the US population with GPP \427\ but
market research has suggested a larger impact on the Medicare
population. In utilizing IQVIA claims data, the applicant estimated
that approximately 40% of GPP claims are adjudicated as Medicare.\428\
---------------------------------------------------------------------------
\427\ Noe MH et al. JAMA Dermatol. doi:10.1001/
jamadermatol.2021.4640.
\428\ IQVIA Longitudinal Access and Adjudicated Data 2016-2019.
---------------------------------------------------------------------------
Fourth, in response to a request for the inclusion and exclusion
criteria, the applicant clarified that patients aged 18-75 years were
eligible for enrollment if they had a history of GPP consistent with
criteria for diagnosis according to European Rare and Severe Psoriasis
Expert Network (ERASPEN) criteria. The applicant further stated that
patients had to have a GPP flare of moderate-to-severe intensity
(defined as total GPPGA score >=3, new or worsening pustules, a GPPGA
pustulation subscore >=2, and >=5% body surface area with erythema and
the presence of pustules). Per the applicant, key exclusion criteria
included patients with plaque psoriasis without pustules or with
pustules restricted to psoriatic plaques, drug-triggered acute
generalized exanthematous pustulosis, immediate life-threatening flare
of GPP requiring intensive care treatment, and requirement for current
treatment with methotrexate, cyclosporine, or retinoids, or any
restricted medication.
Fifth, in response to a question regarding whether the primary
endpoint reached statistical significance, the applicant asserted that
the Effisayil-1 study met its primary endpoint and achieved statistical
significance with the following results: At week one, 19 patients
(54.3%) receiving spesolimab versus one patient (5.6%) receiving
placebo, achieved a GPPGA pustulation subscore of 0; (risk difference:
48.7%
[[Page 28283]]
with a 95% confidence interval [CI] 21.5-67.2; one-sided p<0.001).
Sixth, in response to a question regarding how IL-36R signaling
could be utilized for other indications, the applicant stated that
spesolimab is also under investigation for the prevention of GPP flares
and for the treatment of other neutrophilic skin diseases, such as
palmoplantar pustulosis (PPP) and hidradenitis suppurativa (HS).
Seventh, in response to a question regarding when the published
results of Effisayil-1 and Effisayil-2 are expected, the applicant
stated that the primary results of Effisayil-1 were previously
presented at the World Psoriasis and Psoriatic Arthritis Conference in
June 2021, and the full manuscript has been accepted in a peer-reviewed
journal for publication by the end of December 2021. The applicant
further noted that the Effisayil-2 study is currently ongoing and
publication of the results is to be determined.
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for spesolimab. We note that as of the
time of the development of this proposed rule, we have not received the
published Effisayil-1 trial results.
i. Teclistamab
Johnson & Johnson submitted an application for new technology add-
on payments for teclistamab for FY 2023. Teclistamab is a bispecific
antibody (bsAb) that is intended to bind CD3 on T cells and B cell
maturation antigen (BCMA) on myeloma cells in the treatment of relapsed
or refractory multiple myeloma. The applicant stated that this dual
binding brings T cells into proximity with target myeloma cells and
triggers T cell activation, leading to a cascade of ``effector''
events, such as cytotoxicity, cytokine production and immune
activation, and an overall anti-tumor response.
Multiple myeloma is an incurable blood cancer that affects a type
of white blood cell called plasma cells.\429\ Normal plasma cells are
found in the bone marrow as part of the immune system and make
antibodies that help the body fight infections. According to the
applicant, when they become malignant, these plasma cells rapidly
spread and replace normal cells in the bone marrow.\430\ As indicated
by its name, multiple myeloma is characterized by dissemination of
multiple tumor cells throughout the bone marrow.\431\ The applicant
asserted that the median age of onset is 66 years old, and only 2% of
patients are less than 40 at the age of diagnosis.\432\ In 2020, it is
estimated that more than 32,000 people will be diagnosed and nearly
13,000 will die from multiple myeloma in the US.\433\ It is associated
with substantial morbidity and mortality, and approximately 25% of
patients have a median survival of two years or less.434 435
---------------------------------------------------------------------------
\429\ Raab MS, Podar K, Breitkreutz I, Richardson PG, Anderson
KC. Multiple myeloma. Lancet. 2009 Jul 25;374(9686):324-39. doi:
10.1016/S0140-6736(09)60221-X. Epub 2009 Jun 21. PMID: 19541364.
\430\ Utley A, Lipchick B, Lee KP, Nikiforov MA. Targeting
Multiple Myeloma through the Biology of Long-Lived Plasma Cells.
Cancers (Basel). 2020 Jul 30;12(8):2117. doi: 10.3390/
cancers12082117. PMID: 32751699; PMCID: PMC7466116.
\431\ Fairfield H, Falank C, Avery L, Reagan MR. Multiple
myeloma in the marrow: Pathogenesis and treatments. Ann N Y Acad
Sci. 2016 Jan;1364(1):32-51. doi: 10.1111/nyas.13038. PMID:
27002787; PMCID: PMC4806534.
\432\ Kyle RA, Gertz MA, Witzig TE, Lust JA, Lacy MQ,
Dispenzieri A, Fonseca R, Rajkumar SV, Offord JR, Larson DR, Plevak
ME, Therneau TM, Greipp PR. Review of 1027 patients with newly
diagnosed multiple myeloma. Mayo Clin Proc. 2003 Jan;78(1):21-33.
doi: 10.4065/78.1.21. PMID: 12528874.
\433\ SEER Cancer Stat Facts: Myeloma. National Cancer
Institute. Bethesda, MD, https://seer.cancer.gov/statfacts/html/mulmy.html.
\434\ Cowan AJ, Allen C, Barac A, Basaleem H, Bensenor I, Curado
MP, Foreman K, Gupta R, Harvey J, Hosgood HD, Jakovljevic M, Khader
Y, Linn S, Lad D, Mantovani L, Nong VM, Mokdad A, Naghavi M, Postma
M, Roshandel G, Shackelford K, Sisay M, Nguyen CT, Tran TT, Xuan BT,
Ukwaja KN, Vollset SE, Weiderpass E, Libby EN, Fitzmaurice C. Global
Burden of Multiple Myeloma: A Systematic Analysis for the Global
Burden of Disease Study 2016. JAMA Oncol. 2018 Sep 1;4(9):1221-1227.
doi: 10.1001/jamaoncol.2018.2128. PMID: 29800065; PMCID: PMC6143021.
\435\ Biran N, Jagannath S, Chari A. Risk stratification in
multiple myeloma, part 1: Characterization of high-risk disease.
Clin Adv Hematol Oncol. 2013 Aug;11(8):489-503. PMID: 24518420.
---------------------------------------------------------------------------
According to the applicant, multiple myeloma is incurable, with
most patients relapsing despite current treatments.\436\ The applicant
stated that immunotherapies, including CAR T-cell therapy and antibody-
based therapies, engage the patient's immune system to fight cancer.
According to the applicant, new treatment options available in the last
two decades have extended the median survival of multiple myeloma
patients. The introduction of proteasome inhibitors (PI), histone
deacetylase inhibitors, immunomodulatory agents (IMiD), monoclonal
antibodies, antibody-drug conjugates, corticosteroids, conventional
chemotherapy and cellular therapies like autologous stem cell
transplantation (ASCT) have allowed numerous therapeutic options for
patients with multiple myeloma. The applicant stated that other
currently available treatment options include selective inhibitor of
nuclear export (SINES) and melphalan flufenamide. However, the
applicant stated that barriers to access and a complex, time-consuming
manufacturing process limit access on some therapies. The applicant
stated that bsAbs facilitate T cell redirection without the need for
patient cell collection and external manipulation as is seen in CAR T-
cell therapy.
---------------------------------------------------------------------------
\436\ Rajkumar SV. Multiple myeloma: Every year a new standard?
Hematol Oncol. 2019 Jun;37 Suppl 1(Suppl 1):62-65. doi: 10.1002/
hon.2586. PMID: 31187526; PMCID: PMC6570407.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant stated that
teclistamab has not yet received FDA marketing authorization but was
granted Breakthrough Therapy designation on May 26, 2021. The applicant
stated that it is seeking accelerated approval for a Biologics License
Application (BLA) for the proposed indication for adult patients with
relapsed or refractory multiple myeloma, who have received at least 3
prior therapies including a proteasome inhibitor, an immunomodulatory
agent and an anti-CD38 monoclonal antibody, and that it expects FDA
approval by June 2022. According to the applicant, teclistamab is
designed to be given subcutaneously in two priming doses of 60 ug/kg
and 300 ug/kg, then a maintenance dose of 1500 ug/kg. According to the
applicant, ICD-10-PCS code 3E01305 (Introduction of other
antineoplastic into subcutaneous tissue, percutaneous approach) can be
used to identify the technology, but it does not distinctly identify
procedures involving the administration of teclistamab. The applicant
has submitted a request for approval for a unique ICD-10-PCS code to
identify procedures involving the administration of teclistamab. The
applicant also stated that the following ICD-10 CM diagnosis codes can
be used to identify the proposed indication for teclistamab: C90.00
(Multiple myeloma not having achieved remission), C90.01 (Multiple
myeloma in remission), and C90.02 (Multiple myeloma in relapse).
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 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 28284]]
asserts that teclistamab uses a different mechanism of action when
compared to existing technologies used to treat myeloma. The applicant
stated that teclistamab has a unique mechanism of action with a full-
sized antibody containing two distinct binding domains that
simultaneously bind the BCMA target on tumor cells and the CD3 T-cell
receptor. The applicant stated that teclistamab's mechanism of action
is different from CAR T-cell therapies used to treat multiple myeloma
such as idecabtagene vicleucel because it does not require cell
extraction and engineering. The applicant submitted the following table
that compares the mechanism of action for teclistamab to the mechanism
of action for existing technologies used to treat multiple myeloma.
[GRAPHIC] [TIFF OMITTED] TP10MY22.107
According to the applicant, there is currently no commercially
available bispecific antibody for multiple myeloma: Blinatumomab is a
bispecific T cell engager (BiTE) targeting CD3 and CD19 made up of two
fragment antigen-binding (Fab) portions held together by a chemical
linker that is only approved for pre-B-cell acute lymphoblastic
lymphoma, and amivantamab targets two antigens specific to lung cancer
cells and does not contain a CD3-binding domain. The applicant stated
that teclistamab is not substantially similar to other existing
bispecific antibodies like blinatumomab due to teclistamab's duobody
structure of BCMA versus CD19, or amivantamab due to targeting of CD3
and BCMA versus the lung cancer antigens, cMET and EGFR. Therefore, the
applicant asserted that teclistamab has a novel structure and unique
mechanism of action, and is unlike any existing technology utilized to
treat multiple myeloma.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that the DRG
assignment for treating multiple myeloma is not expected to change with
this technology.
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 its proposed indication
is for treatment of adult patients with relapsed or refractory multiple
myeloma, who have received at least three prior therapies including a
proteasome inhibitor, an immunomodulatory agent and an anti-CD38
monoclonal antibody. According to the applicant, this indication is
similar to belantamab and idecabtagene vicleucel, which are approved
for multiple myeloma patients who have failed four prior therapies or
lines of therapy, respectively. The applicant asserts that it is likely
that teclistamab will be approved for an indication identical or
similar to these two other therapies.
In summary, the applicant believes that teclistamab 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.
We are inviting public comments on whether teclistamab is
substantially similar to existing technologies and whether teclistamab
meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analysis. The applicant searched the FY 2019 MedPAR for cases
representing patients who may be eligible for teclistamab based on the
presence of the ICD-10-CM diagnosis codes listed.
[[Page 28285]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.108
The applicant limited its case selection to cases mapping to MS-
DRGs 846 (Chemotherapy without Acute Leukemia as Secondary Diagnosis
with MCC) and 847 (Chemotherapy without Acute Leukemia as Secondary
Diagnosis with CC). The applicant identified 766 claims that mapped to
these two MS-DRGs.
Next, the applicant removed all charges in the drug cost center
because it stated that it was not possible to differentiate between
different drugs on inpatient claims. The applicant noted that the three
doses of the drug administered during inpatient hospitalization would
replace other therapies, but that removing all charges is likely an
overestimation of the charges that would be replaced by use of
teclistamab.
The applicant then standardized the charges using the FY 2022 IPPS/
LTCH PPS final rule impact file and applied a 4-year inflation factor
(1.281834) based on the inflation factor used in the FY 2022 IPPS/LTCH
PPS final rule and correction notice (86 FR 45542) to calculate outlier
threshold charges. Since the technology is not FDA approved, the cost
of teclistamab has not yet been determined. However, the applicant
added charges for the new technology by dividing an estimated cost of
teclistamab by the national average CCR for drugs (0.187) published in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 44966).
The applicant calculated a final inflated average case-weighted
standardized charge per case of $101,270, which exceeded the average
case-weighted threshold amount of $58,800. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that teclistamab
meets the cost criterion. We are inviting public comment on whether
teclistamab meets the cost criterion.
With respect to the substantial clinical improvement criterion, the
applicant asserted that teclistamab offers a treatment option for
patients who are refractory to the three major classes of drugs
currently approved for multiple myeloma (IMiDs, PIs, and monoclonal
antibodies). The applicant also asserts that teclistamab significantly
improves clinical outcomes such as treatment response rates, and
minimal residual disease (MRD) rates when compared to currently
available treatments.
With respect to the claim that teclistamab provides a treatment
option for patients who are refractory to the three major classes of
drugs currently approved for multiple myeloma, the applicant asserted
that patients treated with teclistamab demonstrate an overall response
rate (ORR) of 65%, with 61% of patients who are triple-class refractory
exhibiting a response. The applicant stated that while response rates
are similar for idecabtagene vicleucel, another BCMA targeting therapy,
access may be limited due to inability to secure a CAR T-cell treatment
spot due to manufacturing constraints, inability and/or unwillingness
to travel to an idecabtagene vicleucel qualified center, or the need to
initiate immediate treatment and inability to wait weeks for CAR T-cell
manufacturing and/or respond to bridging therapy. Additionally, the
applicant stated some patients are not eligible for idecabtagene
vicleucel due to fitness/frailty and CAR T-cell manufacturing may be
unsuccessful. The applicant described the ``off-the-shelf'' nature of
teclistamab providing a more accessible and immediate option for
patients, not limited to certified centers, and available to more
practitioners. Finally, the applicant asserted that frequency and
severity of CRS and neurotoxicity are less with teclistamab than with
some other therapies, including CAR T-cell therapies. The applicant
asserted that no neurotoxicity was observed at the recommended phase 2
dose (RP2D).\437\
---------------------------------------------------------------------------
\437\ Usmani et al. Teclistamab, a B-cell maturation antigen x
CD3 bispecific antibody, in patients with relapsed or refractory
multiple myeloma (MajesTEC-1): A multicentre, open-label, single-
arm, phase I study, Lancet. 2021 Aug 21;398(10301):665-674. doi:
10.1016/S0140-6736(21)01338-6. Epub 2021 Aug 10. PMID: 34388396.
---------------------------------------------------------------------------
With respect to the claim that teclistamab improves clinical
outcomes as compared to existing technologies, the applicant stated
that teclistamab demonstrates a high ORR in general as well as in
triple-class refractory patients; early and deep clinical responses;
MRD at time of complete response and sustained results; good
progression-free survival (PFS); predictable, limited, and manageable
CRS, and minimal toxicity. To support these claims, the applicant
referenced data from the MajesTEC-1 trial, which is an ongoing, open-
label, single-arm, phase 1 study of intravenous (IV) or subcutaneous
(SQ) teclistamab in 157 patients with multiple myeloma who were
relapsed, refractory, or intolerant to established
therapies.438 439 The primary objectives were to identify
the RP2D and its safety and tolerability. The study used a data cutoff
date of March 29, 2021. Between June 8, 2017 and March 29, 2021,
enrolled patients were administered the study drug at 0.3-19.2 ug/kg
once every 2 weeks or 19.2-720 ug/kg once a week in the IV cohort, and
80-3000 ug/kg once a week in the SQ cohort. Teclistamab was given to
the 157 subjects by IV (n=84) or SC (n=73) administration. Step-up
dosing was employed during the first week to minimize side effects, and
the full dose was given weekly beginning on day 1 of week 2. Patients
continued treatment until disease progression, unacceptable toxicity,
withdrawal of consent, death, or at study completion. Patients who had
at least one post-baseline response evaluation after teclistamab
administration (n=40) were evaluated for secondary endpoints of ORR,
duration of response (DOR), time to response, pharmacokinetic
parameters, pharmacodynamics markers, and anti-teclistamab antibodies.
The authors did not report PFS and overall survival (OS) because they
stated that the data were not mature.
---------------------------------------------------------------------------
\438\ Usmani et al., Teclistamab, a B-cell maturation antigen x
CD3 bispecific antibody, in patients with relapsed or refractory
multiple myeloma (MajesTEC-1): A multicentre, open-label, single-
arm, phase 1 study, Lancet. 2021 Aug 21;398(10301):665-674. doi:
10.1016/S0140-6736(21)01338-6. Epub 2021 Aug 10. PMID: 34388396.
\439\ ClinicalTrials.gov, NCT03145181.
---------------------------------------------------------------------------
At the cutoff date, median age of enrolled patients was 63, with
more elderly patients (>=70 years) in the IV cohort than the SQ cohort.
The median lines of therapy received prior to the study were six. All
patients enrolled in the study experienced treatment-emergent adverse
events (TEAEs), with 85% experiencing grade 3 or 4. At R2PD, the
percentage of grade 3 or 4
[[Page 28286]]
TEAEs dropped to 80%, and 50% of those were believed to be treatment
related. The most common hematologic TEAEs were neutropenia, anemia,
and thrombocytopenia, whereas the most common non-hematologic TEAE was
CRS at grade 1 or 2. TEAEs occurred in 57% of all treated patients, and
70% of those at the R2PD. Median time and duration of CRS was 1 day in
IV cohort and 2 days in the SQ cohort. The most common non-hematologic
adverse event (AE) was CRS, all grade 1 or 2, which occurred in 60% of
all subjects treated with subcutaneous drug and 70% of subjects at the
RP2D. Infections were noted in 45% of subjects at the RP2D, including
23% with grade 3/4 infections. Neurotoxicity occurred in 1% of subjects
treated with SC drug, including 3% at the RP2D. AEs led to cycle delays
or dose reductions in the overall population. No subject discontinued
treatment due to CRS. Based on data from this trial, the authors noted
a more gradual increase in serum teclistamab in SQ administration
compared to IV administration and established a RP2D of 1500 ug/kg SQ.
The ORR at the RP2D was 65%, with complete response (CR) and very good
partial response (VGPR) rates of 40% and 58%, respectively. After a
median follow-up of 7.1 months, 22/26 (85%) responders continued on
therapy. In a small subgroup of 33 triple-class refractory patients,
the ORR was 61%. Authors noted that, in contrast, studies of selinexor
and belantamab mafodotin at approved doses had response rates of 26%
and 31%, respectively.
The applicant also provided updated results that were presented at
the American Society for Hematology in December 2021.\440\ This data,
up to clinical cut-off date September 7, 2021, included longer follow-
up of the phase 1 trial (median 5.9 months, 0.2-18 month range in the
safety analysis) as well as initial data from the phase 2 trial at
median follow-up of 7.8 months (range 0.5+-18 months). The pivotal
cohort now included 165 patients, with 40 in the phase 1 cohort and 125
in the phase 2 cohort. According to the applicant, the phase 1 patients
were relapsed, refractory, or intolerant to established therapies. The
phase 2 patients received >3 prior lines of therapy and both cohorts
received R2PD. There were discontinuations in both groups due to
progressive disease, physician decision, patient withdrawal, AE, and
death. At the time of the ASH presentation, authors noted an ORR of 62%
(95% CI: 53.7-69.8) with median time to first response of 1.2 months
(range 0.2-5.5 months). ORR was slightly higher in patients <75 years
old (n=127) compared to patients >75 years (n=23) and in those with
baseline renal function >60 ml/min/1.73 m2. Of the 165 patients,
serious AEs occurred in 88 patients and there were 9 deaths. CRS events
were mostly grade 1/2 with one transient-grade 3 CRS. There was
neurotoxicity in 21 patients, with headache being the most common. At a
data cut-off of November 7, 2021, the applicant stated that 88.2% of
responders were alive without subsequent treatment or progressive
disease. Median DOR has not been reached, with a 9-month PFS rate of
59%. The applicant also stated that enrollment in phase 2 expansion
cohorts is ongoing, and phase 3 study enrollment has been initiated.
---------------------------------------------------------------------------
\440\ Moreau P, Usmani S, Garfall A, et al., Updated Results
From MajesTEC-1: Phase 1/2 Study of Teclistamab, a B-Cell Maturation
Antigen x CD3 Bispecific Antibody, in Relapsed/Refractory Multiple
Myeloma. 63rd American Society of Hematology (ASH) Annual Meeting &
Exposition, Atlanta, GA/Virtual, December 11-14, 2021.
---------------------------------------------------------------------------
In support of the claim that teclistamab demonstrates a high ORR
and early and deep clinical responses, the applicant cited MajesTEC-1
data for 40 patients who received R2PD and were eligible for evaluation
of response. The applicant noted that at a median follow-up of 6.1
months, teclistamab was associated with a 65% overall response rate
(95% CI 48-79), in patients receiving the RP2D of maintenance dose of
1.5 mg/kg SQ weekly (n=40). Approximately 58% achieved VGPR or better,
and 40% achieved complete response or better. For the subgroup of
triple-class refractory patients (n=33), the applicant cited a 61% ORR
at R2PD. Regarding early and deep clinical responses, the applicant
noted that of the 40 patients receiving R2PD, the median time to first
confirmed response was 1 month (IQR 1.0-1.6), very good partial
response or better was 1 month (1.0-3.1), first confirmed complete
response or better was 3.0 months (1.7-3.7).
In support of the assertions that teclistamab is associated with
high levels of response, the applicant stated that most patients at
RP2D attained a status of MRD-negativity by the time they were
evaluable for a CR. The applicant also stated that teclistamab
demonstrated responses wherein myeloma cells were not detected in a
background of 105 or 106 cells. The applicant also cited a 6-month PFS
of 67% (95% CI 49-80) for those treated at R2PD.
Lastly, in support of the claim that teclistamab results in
predictable, limited, and manageable CRS and minimal toxicity, the
applicant cited hematological and nonhematological TEAEs described
earlier in the MajesTEC-1 trial summary. The applicant also stated that
CRS was of limited severity, with consistent, predictable time to onset
(median 2 days) and duration of CRS (median 2 days). Teclistamab-
related toxicity was manageable, including CRS, and did not result in
discontinuation of therapy. In review of the applicant's data,
neurotoxicity occurred in 4% of patients (n=7), with higher grade
neurotoxicity (3 or 4) occurring in the IV cohort.
The applicant also provided preclinical data regarding the
development of JNJ-7957 (teclistamab), a novel BCMAxCD3 bispecific
antibody.\441\ In the first paper, authors evaluated activity of this
antibody in cell lines and bone marrow samples from patients with
multiple myeloma and refractory disease. It was noted that JNJ-7957 was
associated with anti-tumor activity in 48 of 49 bone marrow samples
from multiple myeloma patients and in 5 of 6 bone marrow samples from
primary plasma cell leukemia patients. In daratumumab-exposed effector
cells, there appeared to be enhanced JNJ-7957 activity. The authors
used this data to support further studies on JNJ-7957 in patients with
multiple myeloma (MM). In a second preclinical paper, authors described
the development of a BCMAxCD3 bispecific antibody (teclistamab [JNJ-
64007957]) to recruit and activate T cells to kill BCMA-expressing
multiple myeloma cells.\442\ This study noted that teclistamab was
associated with cytotoxicity of BCMA+ MM cell lines in vitro (H929
cells, 50% effective concentration [EC50] = 0.15 nM; MM.1R cells, EC50
= 0.06 nM; RPMI 8226 cells, EC50 = 0.45 nM) with concomitant T-cell
activation (H929 cells, EC50 = 0.21 nM; MM.1R cells, EC50 = 0.1 nM;
RPMI 8226 cells, EC50 = 0.28 nM) and cytokine release. According to the
applicant, teclistamab also depleted BCMA+ cells in bone marrow samples
from MM patients in an ex vivo assay with an average EC50 value of 1.7
nM. Under more physiological conditions using healthy human whole
blood, teclistamab mediated dose-dependent lysis of H929 cells and
activation of T
[[Page 28287]]
cells. Antitumor activity of teclistamab was also observed in 2 BCMA+
MM murine xenograft models inoculated with human T cells (tumor
inhibition with H929 model and tumor regression with the RPMI 8226
model) compared with vehicle and antibody controls. According to the
applicant, the findings of this study indicate that teclistamab is
active against BCMA-expressing cells from MM cell lines, patient
samples, and MM xenograft models.
---------------------------------------------------------------------------
\441\ Frerichs et al., Preclinical Activity of JNJ-7957, a Novel
BCMAxCD3 Bispecific Antibody for the Treatment of Multiple Myeloma,
Is Potentiated by Daratumumab, Clin Cancer Res. 2020 May
1;26(9):2203-2215. doi: 10.1158/1078-0432.CCR-19-2299. Epub 2020 Jan
22. PMID: 31969333.
\442\ Pillarisetti et al, Teclistamab is an active T cell-
redirecting bispecific antibody against B-cell maturation antigen
for multiple myeloma, Blood Adv. 2020 Sep 22;4(18):4538-4549.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether teclistamab meets the
substantial clinical improvement criterion. We note that all
substantial clinical improvement claims were based on one small-sized
open-label phase 1 study (MajesTEC-1) without control or comparator and
that subsequently submitted phase 2 data is still in early phases. The
application and MajesTEC-1 manuscript reported outcomes on 26 of the 40
patients at RP2D, but further information on that smaller population
and MRD-evaluability would be helpful. There is also no long-term
follow-up in the published data. Additionally, of the 40 patients
enrolled in the R2PD cohort, 70% had CRS and 18 had discontinued
treatment at the time of publication. Updated results presented at ASH
demonstrated that 50 patients had discontinued treatment out of the 125
enrolled in the phase 2 cohort. The authors studied both IV and SQ
dosing in the MajesTEC-1 trial, but it is unclear if the overall
results that include IV doses can be generalizable. We further note
that the median age in MajesTEC-1 was 63 years and the majority of
elderly patients (>=70 years old) were not in the R2PD cohort. The new
data presented at ASH included 24 patients >=75 years in the safety
analysis. The ORR was slightly lower than what was seen in younger
patients. It is unclear if this is mainly due to small sample size; the
confidence interval is wider in this subgroup.
While the applicant provided data to demonstrate that teclistamab
is associated with a 62% ORR, this was done in a single-arm trial which
the applicant compared to historically published data of other
therapies such as selinexor, belantamab, and idecabtagene vicleucel. We
note that this comparison may be subject to sample-selection bias, as
without matching of patients or study characteristics, it is unclear
whether these differences in ORR are due to the therapy or can be
attributed to other factors.
We also note that while the applicant asserted that teclistamab
offers a treatment option for patients with limited access to or who
are ineligible for CAR T-cell therapy due to wait time, fitness/
frailty, and other issues, we question whether there are other
available therapies, such as belantamab and selinexor, that may be used
to treat patients with multiple relapses or who are refractory to other
therapies that also would not have those limitations. We are inviting
public comments on whether teclistamab meets the substantial clinical
improvement criterion.
We received a written public comment from the applicant in response
to the New Technology Town Hall meeting regarding the teclistamab FY
2023 application for new technology add-on payments.
Comment: The applicant responded to questions received at the New
Technology Town Hall Meeting. During the Q&A portion of their
presentation, the applicant presenter was asked about the status of
planned phase 2 studies as the data shown were from the phase I portion
of MajesTEC-1, first presented at the American Society of Clinical
Oncology Annual Meeting in June 2021. According to the applicant, the
data shown were the most recent available at the time of submission of
the FY 2023 application and slide for new technology add-on payments.
The applicant provided updated data from the phase I and phase 2
cohorts of MajesTEC-1 which, according to the applicant, were presented
just the evening before at the American Society for Hematology 2021
Annual Meeting. This update included safety and efficacy data from both
cohorts, including longer-term follow for 150 patients at the RP2D. The
applicant provided a summary of this update as well as the presentation
deck from the ASH oral session. (We note that we have summarized this
updated data in the preceding discussion of the substantial clinical
improvement criterion for teclistamab.)
Response: We appreciate the applicant's comments and updated data,
as previously summarized. We will take these comments into
consideration when deciding whether to approve new technology add-on
payments for teclistamab.
j. TERLIVAZ[supreg] for Injection (Terlipressin)
Mallinckrodt Pharmaceuticals submitted an application for new
technology add-on payments for TERLIVAZ[supreg] (terlipressin) for FY
2023. Per the applicant, TERLIVAZ[supreg] is for intravenous use in the
treatment of adults with hepatorenal syndrome type 1 (HRS-1).
TERLIVAZ[supreg] is a sterile, preservative-free, lyophilized powder
for intravenous (IV) administration. We note that Mallinckrodt
Pharmaceuticals previously submitted an application for new technology
add-on payments for TERLIVAZTM for FY 2022, as summarized in
the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25339 through 25344),
that it withdrew prior to the issuance of the FY 2022 IPPS/LTCH PPS
final rule (86 FR 44979).
The applicant stated that TERLIVAZ[supreg] (Na-tryglycl-8-
lysinevasopressin) is a pro-drug for the endogenous/natural porcine
hormone [Lys8]-vasopressin and a synthetic vasopressin analog derived
from the natural/endogenous human hormone [Arg8]-vasopressin.\443\
According to the applicant, TERLIVAZ[supreg] has greater selectivity
for the vasopressin receptors (V1) versus vasopressin receptors (V2)
and inhibits portal hypertension with simultaneous reduction of blood
circulation in portal vessels.\444\ The applicant stated that the V1
receptor mediated vasoconstrictor activity of TERLIVAZ[supreg],
particularly in the splanchnic area, results in an increase in
effective arterial volume, an increase in mean arterial pressure (MAP),
and normalization of endogenous vasoconstrictor systems (renin-
angiotensin-aldosterone and sympathetic nervous system) resulting in
increased renal blood flow.\445\
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\443\ Jamil K, Pappas SC, Devarakonda KR. In vitro binding and
receptor-mediated activity of terlipressin at vasopressin receptors
V1 and V2. J Exp Pharmacol. 2017;10:1-7.
\444\ Wong F. Recent advances in our understanding of
hepatorenal syndrome. Nat Rev Gastroenterol Hepatol. 2012;9(7):382-
391.
\445\ Ibid.
---------------------------------------------------------------------------
The applicant described HRS-1 as a serious, life-threatening
condition characterized by development of acute or sub-acute renal
failure in patients with advanced chronic liver disease (CLD). The
applicant stated that HRS-1 is the leading cause of hospitalizations
among all patients with advanced CLD.\446\ The applicant explained that
HRS-1 most often develops in patients with CLD, including cirrhosis.
HRS-1 does not exist in isolation, but as a co-morbidity in very ill
patients with CLD. According to the applicant, 43.4% of estimated
annual HRS cases in FY 2023 will be Medicare patients. The applicant
asserted that the high mortality and significant rates of HRS-1-related
readmissions support the need for better disease awareness and more
effective
[[Page 28288]]
treatment options.447 448 The applicant stated that there
are currently no FDA-approved medications available in the US indicated
specifically for the treatment of HRS-1,\449\ but several agents are
used off-label. The applicant stated that in the U.S., the standard of
care and initial treatment for HRS-1 is a combination of midodrine and
octreotide, which are used off-label.450 451 According to
the applicant, this combination is concomitantly administered with
albumin. The applicant also stated that in patients who are admitted to
the intensive care unit (ICU), initial treatment with norepinephrine,
also used off-label, in combination with albumin is recommended.\452\
The applicant stated that the ideal therapy for HRS-1 is improvement of
liver function from either recovery of alcoholic hepatitis, treatment
of decompensated hepatitis B with effective antiviral therapy, recovery
from acute hepatic failure, or liver transplantation.\453\ According to
the applicant, TERLIVAZ[supreg] is approved as the first-line treatment
for HRS-1 in European and Asian countries under appropriate marketing
authorizations in those countries.\454\
---------------------------------------------------------------------------
\446\ Allegretti AS, Ortiz G, Wenger J, et al. Prognosis of
Acute Kidney Injury and Hepatorenal Syndrome in Patients with
Cirrhosis: A Prospective Cohort Study. Int J Nephrol. 2015;
2015:108139.
\447\ Low G, Alexander GJ, Lomas DJ. Hepatorenal syndrome:
Aetiology, diagnosis, and treatment. Gastroenterol Res Pract. 2015;
2015:207012.
\448\ Angeli P, Bernardi M, Villanueva C, et al. EASL Clinical
Practice Guidelines for the management of patients with
decompensated cirrhosis. J Hepatol. 2018;69(2):406-460.
\449\ Jamil K, Huang X, Lovelace B, Pham AT, Lodaya K, Wan G.
The burden of illness of hepatorenal syndrome (HRS) in the United
States: A retrospective analysis of electronic health records. J Med
Econ. 2019;22(5):421-429.
\450\ Mindikoglu AL, Pappas SC. New Developments in Hepatorenal
Syndrome [published correction appears in Clin Gastroenterol
Hepatol. 2018 Jun;16(6):988]. Clin Gastroenterol Hepatol.
2018;16(2):162-177.e1.
\451\ Runyon BA. Hepatorenal syndrome. UpToDate.com. https://www.uptodate.com/contents/hepatorenal-syndrome. Updated April 13,
2020. Accessed January 26, 2020.
\452\ Ibid.
\453\ Ibid.
\454\ Sarin S, Sharma P. Terlipressin: An Asset for
Hepatologists! Hepatology. 2011;54(2):724-728.
---------------------------------------------------------------------------
The applicant explained that the goal of HRS-1 treatment is to
reverse the underlying hemodynamic instability. According to the
applicant, treatment with TERLIVAZ[supreg] accomplishes this by
decreasing splanchnic vasodilation and improving renal hemodynamics,
thereby ameliorating afferent renal vasoconstriction, and improving
glomerular filtration rate (GFR). The applicant noted that recent
research suggests that increased circulating levels of pro-inflammatory
cytokines (which the applicant asserted TERLIVAZ[supreg] administration
helps to reduce) also play an important role in the development of HRS.
The applicant asserted that, overall, treatment with TERLIVAZ[supreg]
effectively addresses multiple aspects of the fundamental
pathophysiology responsible for HRS-1, though it does not treat the
underlying liver disease or decompensated cirrhosis. Furthermore, the
applicant asserted that effective timely reversal of HRS-1 helps to
improve post-liver transplant outcomes, as well as mitigates demand for
renal replacement therapy (RRT) and kidney transplant.
With respect to the newness criterion, the applicant explained that
TERLIVAZ[supreg] has not yet been granted approval from FDA for the
proposed indication of treatment of adults with HRS-1. The applicant
stated that in 2005, a New Drug Application (NDA) filing for
TERLIVAZ[supreg] was granted Fast Track designation by FDA and was
considered under Priority Review in May 2008, but a Complete Response
Letter (CRL) was issued by FDA in November 2009. The applicant also
stated that in 2016, Mallinckrodt Pharmaceuticals and FDA reached
agreement on their trial protocol design and data analysis under the
Agency's special protocol assessment (SPA) process. In April 2020, the
applicant submitted the current NDA application with FDA as a Class 2
resubmission of the original NDA. On July 15, 2020, the Cardiovascular
and Renal Drugs Advisory Committee of FDA voted to recommend approval
of the investigational agent TERLIVAZ[supreg] to treat adults with HRS-
1; however, on September 11, 2020, Mallinckrodt received a CRL from FDA
denying this NDA. The applicant stated that it will work with FDA and
anticipates approval prior to July 1, 2022.
According to the applicant, TERLIVAZ[supreg] is administered as an
IV bolus injection. For the first 3 days, the recommended dosage is 1
mg TERLIVAZ every 6 hours by slow IV bolus injection (over 2 minutes).
On day 4, the serum creatinine level is assessed against the baseline
level obtained prior to initiating treatment. If the serum creatinine
has decreased by 30% or more from the baseline, then 1 mg
TERLIVAZ[supreg] can continue to be administered every 6 hours. If the
serum creatinine has decreased by less than 30% from the baseline, then
TERLIVAZ[supreg] may be increased to 2 mg every 6 hours. According to
the applicant, TERLIVAZ[supreg] can continue to be administered until
24 hours after the patient achieves a second consecutive serum
creatinine value of <=1.5mg/dL at least 2 hours apart or for a maximum
of 14 days. If, by day 4, serum creatine is at or above the baseline
serum creatinine level, then TERLIVAZ[supreg] should be discontinued.
If a patient develops a recurrence of HRS-1 after discontinuation of
initial treatment, TERLIVAZ may be re-administered.
The applicant stated that, effective October 1, 2022, the following
ICD-10-PCS codes may be used to uniquely describe procedures involving
the administration of TERLIVAZ[supreg]: XW03367 (Introduction of
terlipressin into peripheral vein, percutaneous approach, new
technology group 7) and XW04367 (Introduction of terlipressin 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 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 stated that TERLIVAZ[supreg] uses a different mechanism
of action than existing, off-label treatments for HRS-1, for example,
midodrine, octreotide, and norepinephrine. The applicant explained that
TERLIVAZ[supreg] has a selective affinity for V1 vasopressin receptors
predominantly located in the arterial vasculature in the splanchnic
region. The applicant submitted the following table that compares the
mechanism of action for TERLIVAZ[supreg] to the mechanism of action for
existing technologies used off-label to treat HRS-1 including
midodrine, octreotide, and norepinephrine.
BILLING CODE 4120-01-P
[[Page 28289]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.109
BILLING CODE 4120-01-C
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that
TERLIVAZ[supreg] may be assigned to the same MS-DRG as existing
technologies currently used to treat HRS-1. In particular, the
applicant stated that cases involving the use of TERLIVAZ[supreg] may
map to the following three MS-DRGs: (1) MS-DRG 441 (Disorders of Liver
Except Malignancy, Cirrhosis or Alcoholic Hepatitis with Major
Complication or Comorbidity); (2) MS-DRG 442 (Disorders of Liver Except
Malignancy, Cirrhosis or Alcoholic Hepatitis with Complication or
Comorbidity); and (3) MS-DRG 443 (Disorders of Liver Except Malignancy,
Cirrhosis or Alcoholic Hepatitis without Complication or Comorbidity/
Major Complication or Comorbidity). The applicant stated that although
TERLIVAZ[supreg] may be assigned to the same MS-DRG when compared with
an existing technology, this does not mean that TERLIVAZ[supreg] is not
``new'' for the purposes of new technology add-on payments because,
according to the applicant, the existing technologies are not
specifically indicated for the treatment of HRS-1. The applicant stated
that none of the current standard-of-care drugs used to treat HRS-1,
namely midodrine, octreotide, and norepinephrine, are FDA-approved for
the treatment of this disease. The applicant referenced the discussion
in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49445) of
BLINCYTO[supreg], as an example of another technology that was the only
FDA-approved product available on the U.S. market to treat the relevant
indication, and stated that CMS agreed that eligible cases involving
the BLINCYTO technology would map to a different MS-DRG than cases
treated with similar technologies. The applicant also stated that the
MS-DRG system does not differentiate between patients with HRS and non-
HRS conditions that are assigned to the three MS-DRGs included in Major
Diagnostic Category (MDC) 7 (Diseases & Disorders of the Hepatobiliary
System & Pancreas), and further that the current MS-DRGs do not
differentiate between HRS type 1 and type 2. The applicant states that
because of this, both TERLIVAZ[supreg] and an existing technology used
to treat non-HRS conditions may be assigned to MS-DRGs 441, 442, and
443.
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 it is seeking FDA
approval for the proposed indication of treatment of adults with HRS-1.
Therefore, the applicant explained, TERLIVAZ[supreg] will treat the
same type of disease when compared to existing technologies. However,
the applicant noted that the use of the existing drugs for treatment of
HRS-1 is off-label, while Mallinckrodt Pharmaceuticals is
[[Page 28290]]
seeking FDA approval of TERLIVAZ[supreg] specifically for the proposed
indication of treatment of adults with HRS-1. The applicant also
asserted that TERLIVAZ[supreg] (upon FDA approval) will not treat the
same or a similar population when compared to existing technologies
currently used to treat HRS-1 in the U.S. The applicant asserted that
results from the CONFIRM trial (ClinicalTrials.gov number, NCT02770716)
indicate there is a subset of patients for whom TERLIVAZ[supreg] will
have efficacy and for whom current therapies, which are used off-label,
are not effective. The applicant asserted that the patient population
for which TERLIVAZ[supreg] offers a new treatment option (that is,
those unresponsive to current standard of care treatments) is a subset
of the larger patient population for which TERLIVAZ[supreg] will
receive an FDA label. Nevertheless, the applicant stated that while the
FDA label for TERLIVAZ[supreg] is not expected to be reserved for a
subset of the patient population that has been diagnosed with HRS-1 and
has failed to respond to standard-of-care treatment options, it does
not logically follow that because of this label, TERLIVAZ[supreg] will
not offer a treatment option to a new patient population.
In summary, the applicant stated that TERLIVAZ[supreg] is not
substantially similar to existing technologies currently available to
Medicare beneficiaries to treat HRS-1 because it uses a different
mechanism of action and treats a new patient population, and therefore,
the technology meets the ``newness'' criterion. However, similar to our
discussion in the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25340), we
note that while TERLIVAZ[supreg] may address an unmet need because it
will be the first treatment indicated specifically for the treatment of
HRS-1, the applicant's assertion that TERLIVAZ[supreg] involves the
treatment of a different patient population on the basis that there is
a subset of patients for whom TERLIVAZ[supreg] will have efficacy and
for whom current treatments are ineffective does not necessarily speak
to the treatment of a new patient population for HRS-1.
We are inviting public comments on whether TERLIVAZ[supreg] is
substantially similar to existing technologies and whether
TERLIVAZ[supreg] meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analysis. The applicant searched the FY 2019 MedPAR database
for cases representing patients who may be eligible for
TERLIVAZ[supreg] using patient claims bearing the ICD-10-CM code K76.7
(Hepatorenal syndrome) to identify HRS-1 in the inpatient setting. The
applicant stated that it filtered for HRS-1 cases by excluding cases
with an inpatient length of stay of under two days. The applicant
explained that HRS-1 is diagnosed by the exclusion of other causes of
acute kidney injury in cirrhotic patients, and that no response after
two consecutive days of diuretic withdrawal and plasma volume expansion
with albumin is one of the diagnostic criteria of HRS-1 in patients
with cirrhosis. The applicant stated that, accordingly, patients who do
not fulfill this criterion cannot be considered HRS-1 cases. The
applicant also stated that it differentiated between cases where HRS-1
is the primary and/or admitting diagnosis code and cases where HRS-1
can be the primary, admitting, or any secondary diagnosis. The
applicant further defined cohorts using an ICU indicator, explaining
that it considered the different clinical presentations of HRS-1, which
may at times be treated in the ICU.
The applicant then presented two analyses using six defined
cohorts. The applicant considered the following factors in defining the
cohorts. For Cohorts 1 and 2, the applicant included cases with an ICU
indicator, representing serious cases where the patient needed
stabilization procedures and/or conditions needing immediate attention.
The applicant stated that these could be conditions related to, caused
by, or leading to the HRS-1 diagnosis or having no relationship to HRS-
1 other than a concurrent presence. For Cohorts 3 and 4, the applicant
also included cases without an ICU indicator. For Cohorts 5 and 6, the
applicant included all cases without differentiation in ICU
utilization. Cohorts 1, 3, and 5 include cases where HRS is the primary
and/or admitting diagnosis code. Cohorts 2, 4, and 6 include cases
where HRS can be the primary, the admitting, or any secondary
diagnosis. The applicant described the six cohorts as shown in the
table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.110
The applicant imputed a value of 11 cases for MS-DRGs with a case
volume under 11 for use in the weighted average calculations. Using
this approach, the applicant identified 318,557 cases mapping to 249
MS-DRGs across the six cohorts. The applicant noted, however, that only
14 MS-DRGs had a case volume >= 1% across all cohorts, as shown in the
table, and that these MS-DRGs cumulatively represented 77.8% of all
cases. The applicant stated that MS-DRG 441 (Disorders of Liver Except
Malignancy, Cirrhosis or Alcoholic Hepatitis with MCC) had the highest
case volume in each of the six cohorts in the analysis, and that only
the first four MS-DRGs listed in the table had a case volume >=7%.
[[Page 28291]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.111
After identifying cases in each of the cohorts, the applicant
removed charges for prior technology as follows:
The applicant subtracted the estimated cost of generic
norepinephrine based on HRS-1 dosing regimens, $1,699 (AnalySource 2018
U.S. Pricing), for ICU-only cases (Cohorts 1 and 2).
The applicant subtracted the estimated cost of midodrine
plus octreotide based on HRS-1 dosing regimens, $3,391 (AnalySource
2018 U.S. Pricing), for non-ICU cases (Cohorts 3 and 4).
The applicant noted that Cohorts 5 and 6 have a mix of
both ICU and non-ICU cases. For the ICU cases, the applicant subtracted
the estimated cost of generic norepinephrine, $1,699. For non-ICU
cases, the applicant subtracted the estimated cost of midodrine plus
octreotide, $3,391.
The applicant then standardized the charges across the six cohorts
using the FY 2019 impact file in the FY 2022 IPPS/LTCH PPS final rule
and correction notice. The applicant presented two scenarios that
varied the inflation factor used to update charges from FY 2019. Under
the first scenario, the applicant applied the 3-year inflation factor
of 20.5% (rounded from 1.204686), which was derived from the inflation
factor used to calculate outlier threshold charges in the FY 2022 IPPS/
LTCH PPS final rule and correction notice (86 FR 45542), to update the
charges from FY 2019 to FY 2022. The applicant asserted that it did not
add charges for the new technology, as a price for TERLIVAZ[supreg] has
not yet been established. Even without the additional charges, the
applicant asserted that TERLIVAZ[supreg] would meet the cost criterion
as the final inflated average case-weighted standardized charge per
case exceeded the average case-weighted threshold amount across all six
cohorts, as summarized in the table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.112
Under the second scenario, the applicant applied a 4-year inflation
factor of 28.2% (rounded from 1.281834), which was derived from the
inflation factor used to calculate outlier threshold charges in the FY
2022 IPPS/LTCH PPS final rule and correction notice (86 FR 45542), to
update the standardized charges from FY 2019 to FY 2023. Similar to the
first analysis, the applicant did not add charges for the new
technology as the applicant asserted that a price for TERLIVAZ[supreg]
has not yet been established. Again, the applicant asserted that even
without the additional charges, TERLIVAZ[supreg] would meet the cost
criterion as the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount
across all six cohorts. We did not receive a weighted average for the
final inflated average case-weighted standardized charge per case
across the six cohorts for the 4-year inflation factor calculations.
For Cohort 1, the applicant calculated a final inflated
average case-weighted standardized charge per case of $153,342, which
exceeded the average case-weighted threshold amount of $71,069.
For Cohort 2, the applicant calculated a final inflated
average case-weighted standardized charge per case of $206,064, which
exceeded the average case-weighted threshold amount of $88,995.
For Cohort 3, the applicant calculated a final inflated
average case-
[[Page 28292]]
weighted standardized charge per case of $67,120, which exceeded the
average case-weighted threshold amount of $57,341.
For Cohort 4, the applicant calculated a final inflated
average case-weighted standardized charge per case of $76,156, which
exceeded the average case-weighted threshold amount of $64,420.
For Cohort 5, the applicant calculated a final inflated
average case-weighted standardized charge per case of $109,752, which
exceeded the average case-weighted threshold amount of $64,125.
For Cohort 6, the applicant calculated a final inflated
average case-weighted standardized charge per case of $150,184, which
exceeded the average case-weighted threshold amount of $78,597.
Because the final inflated average case-weighted standardized
charge per case for each of the six cohorts under both scenarios
exceeded the average case-weighted threshold amount, the applicant
asserted that TERLIVAZ[supreg] meets the cost criterion.
We invite public comments on whether TERLIVAZ[supreg] meets the
cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant asserted that TERLIVAZ[supreg] represents a substantial
clinical improvement over existing technologies because (1) it offers a
treatment option for HRS-1 patients unresponsive to currently available
treatments (for example, midodrine, octreotide, and norepinephrine);
and (2) it significantly improves clinical outcomes among HRS-1
patients as compared to placebo as well as currently available
treatments.
In support of the claim that the use of TERLIVAZ[supreg] offers a
treatment option for HRS-1 patients unresponsive to currently available
treatments, the applicant cited the results of the CONFIRM trial
(ClinicalTrials.gov number, NCT02770716).\455\ The CONFIRM study was a
randomized (2:1), double-blinded study comparing TERLIVAZ[supreg] to
placebo in 300 adult patients, 18 years of age or older with HRS-1
(defined as rapidly progressive worsening in renal function to a serum
creatinine (SCr) >=2.25 mg/dL and meeting a trajectory for SCr to
double over 2 weeks). TERLIVAZ[supreg] or placebo were administered as
a 1 mg IV bolus injection every 6 hours for a maximum of 14 days. The
primary objective of the study was to confirm the efficacy and safety
of TERLIVAZ[supreg] versus placebo in the treatment of adult subjects
with HRS-1 receiving standard of care albumin therapy. The primary
endpoint was the incidence of verified HRS reversal, defined as 2
consecutive serum creatinine values <=1.5 mg/dL at least 2 hours apart,
while on treatment by Day 14 or discharge, whichever came first (on
treatment defined as up to 24 hours after the final dose of study
drug). To be counted in the primary endpoint, patients needed to be
alive without RRT for at least 10 days after achieving verified HRS
reversal. The secondary endpoints were as follows: HRS reversal,
defined as a serum creatinine level of 1.5 mg per deciliter or less;
durability of HRS reversal, defined as HRS reversal without renal-
replacement therapy to day 30; HRS reversal among patients with
systemic inflammatory response syndrome (SIRS); and verified reversal
of HRS without recurrence of HRS by day 30. The applicant explained
that patient enrollment criteria for the CONFIRM trial included
cirrhosis, ascites, and rapidly progressive kidney failure, with a
doubling of the serum creatinine level to at least 2.25 mg per
deciliter (199 [micro]mol per liter) within 14 days before
randomization.
---------------------------------------------------------------------------
\455\ Wong F, Pappas, S.C, Curry M.P, et al. Terlipressin plus
Albumin for the Treatment of Type 1 Hepatorenal Syndrome. New
England Journal of Medicine. 2021;384(9):818-828. doi: 10.1056/
NEJMoa2008290.
---------------------------------------------------------------------------
The applicant stated that patients were excluded if they had a
sustained reduction in the serum creatinine level of more than 20% or a
decrease to below 2.25 mg per deciliter at least 48 hours after
diuretic withdrawal and albumin infusions. The applicant explained that
approximately three fourths of the study patients in the CONFIRM trial
had received vasopressors prior to randomization and did not respond;
these included midodrine, octreotide, and/or norepinephrine. The
applicant stated that out of a total of 121 patients, 60 patients (61%)
in the TERLIVAZ[supreg] group and 61 patients (60%) in the placebo
group, had previously received midodrine and octreotide and had failed
on that combination before entering the study. Therefore, the applicant
explained that well over half of the patients treated in the CONFIRM
trial were unresponsive to currently available (off-label) treatment
options--the option often used in the ICU setting (norepinephrine) and
the options typically used to treat patients on the general medical
ward (midodrine and/or octreotide).
In support of the claim that the use of TERLIVAZ[supreg]
significantly improves clinical outcomes among HRS-1 patients as
compared to the currently available treatments, the applicant stated
that TERLIVAZ[supreg] is associated with a more rapid resolution of the
disease process and a reduced rate of mortality compared to placebo,
midodrine and octreotide, and norepinephrine. The applicant also stated
that the use of TERLIVAZ[supreg] is associated with a decreased rate of
several subsequent diagnostic or therapeutic interventions, compared
with placebo, and that the overall benefit-risk profile of
TERLIVAZ[supreg] as a treatment for HRS-1 is favorable.
In support of the claim that the use of TERLIVAZ[supreg] is
associated with a more rapid resolution of the disease process and a
reduced rate of mortality compared to placebo, the applicant cited
results from the CONFIRM study, previously described, as a well as an
abstract of a post-hoc analysis done by Mujtaba et al. on outcomes with
TERLIVAZ[supreg] in older patients aged >=65 years.456 457
The applicant stated that the incidence of verified HRS reversal was
32% in the TERLIVAZ[supreg] (treatment) group and 17% in the placebo
(control) group (p=0.006). According to the applicant, the incidence of
subjects with the pre-specified secondary endpoint of HRS reversal was
36.2% in the treatment group and 16.8% in the control group (p<0.001).
According to the applicant, the incidence of verified HRS reversal
without HRS recurrence by Day 30 was 24.1% in the treatment group and
15.8% in the control group (p=0.092). The applicant stated that in the
intent-to-treat (ITT) population for patients at least 65 years old,
34.3% of the patients in the TERLIVAZ[supreg] group demonstrated the
pre-specified secondary endpoint of HRS reversal compared to 16.7%
patients in the placebo group.
---------------------------------------------------------------------------
\456\ Ibid.
\457\ Mujtaba M, Gamilla-Cruda AK, Jamil K, et al. Terlipressin,
in Combination with Albumin, Is an Effective Therapy for Hepatorenal
Syndrome Type 1 in Patients Aged >=65 Years. Abstract to be
submitted to NKF by November 30, 2021 for presentation at the NKF
Spring Clinical Meeting (April 6-10, 2022).
---------------------------------------------------------------------------
The applicant noted that the durability of HRS reversal was 31.7%
in the treatment group and 15.8% in the control group (p=0.003). In
addition, the applicant stated that TERLIVAZ[supreg] provided greater
durability of HRS reversal in HRS-1 patients who were at least 65 years
of age, and that in the ITT population, 31.4% of patients in the
TERLIVAZ[supreg] arm achieved durable HRS reversal compared to 16.7% in
the placebo arm.
The applicant stated that TERLIVAZ[supreg] provided greater benefit
in HRS-1 patients with SIRS and that the incidence of HRS reversal in
the SIRS subgroup was 33.3% (n=28) in the treatment group and 6.3%
(n=3) in the control group (p <0.001). In addition,
[[Page 28293]]
the applicant stated that TERLIVAZ[supreg] provided greater benefit in
HRS-1 patients with SIRS who were at least 65 years of age, and that in
the ITT population, 23.1% of patients with SIRS in the TERLIVAZ[supreg]
arm achieved HRS reversal compared to 0.0% in the placebo arm.\458\
---------------------------------------------------------------------------
\458\ Ibid.
---------------------------------------------------------------------------
The applicant also reported that overall survival up to Day 90 was
higher in subjects who achieved verified HRS reversal or HRS reversal
while receiving treatment than in those who did not (p<0.001). The
applicant stated that by Day 90, death occurred in 101 patients (51%)
in the TERLIVAZ[supreg] group and in 45 patients (45%) in the placebo
group (6% difference, 95% CI, -6 to 18). The applicant stated that
overall survival was not a primary or secondary endpoint in the CONFIRM
trial as the prognosis of patients with HRS-1 is poor, with a reported
median survival of <= 3 months. The applicant stated that aggregate,
published studies and meta-analyses suggest that TERLIVAZ[supreg]
treatment is likely associated with improved survival for HRS-1 as a
cause of death, but not for other causes of death.459 460
The applicant also stated that given the high overall mortality in the
study population, a total of 146 patients (48.8%) died during the
CONFIRM trial.\461\ The applicant explained that while TERLIVAZ[supreg]
improves renal function, patients with end stage liver disease
nonetheless may continue to experience and die from other complications
of end stage liver disease, unrelated to HRS-1. The applicant further
explained that the CONFIRM trial was not powered to show a statistical
difference in survival. However, the applicant stated that the
TERLIVAZ[supreg] plus albumin arm in CONFIRM had a significantly better
verified response rate than the albumin arm, and that better response
confers better prognosis in these patients.\462\ The applicant also
mentioned that similar results were seen in previous North American and
European trials with TERLIVAZ[supreg].463 464 465
---------------------------------------------------------------------------
\459\ Hiremath SB, Srinivas LD. Survival benefits of
terlipressin and non-responder state in hepatorenal syndrome: A
meta-analysis. Indian J Pharmacol. 2013;45(1):54-60.
\460\ Facciorusso A, Chandar AK, Murad MH, et al. Comparative
efficacy of pharmacological strategies for management of type 1
hepatorenal syndrome: A systematic review and network meta-analysis.
Lancet Gastroenterol Hepatol. 2017; 2: 94-102.
\461\ Wong F, Pappas, S.C, Curry M.P, et al. Terlipressin plus
Albumin for the Treatment of Type 1 Hepatorenal Syndrome. New
England Journal of Medicine. 2021;384(9):818-828. doi: 10.1056/
NEJMoa2008290.
\462\ Wong F, Pappas, S.C, Curry M.P, et al. Terlipressin plus
Albumin for the Treatment of Type 1 Hepatorenal Syndrome. New
England Journal of Medicine. 2021;384(9):818-828. doi: 10.1056/
NEJMoa2008290.
\463\ Sanyal A, Boyer T, Garcia-Taso G, et al. A Randomized,
Prospective, Double-Blind, Placebo-Controlled Trial of Terlipressin
for Type 1 Hepatorenal Syndrome. Gastroenterology. 2008;134(5):1360-
1368.
\464\ Martin-Llahi M, Pepin MN, Guevara M, et al. Terlipressin
and albumin vs. albumin in patients with cirrhosis and hepatorenal
syndrome: A randomized study. Gastroenterology. 2008;134:1352-1359.
\465\ Boyer T, Sanyal A, Wong F, et al. Terlipressin Plus
Albumin is More Effective Than Albumin Alone in Improving Renal
Function in Patients with Cirrhosis and Hepatorenal Syndrome Type 1.
Gastroenterology. 2016;150:1579-1589.
---------------------------------------------------------------------------
To support its claim that the use of TERLIVAZ[supreg] is associated
with a more rapid resolution of the HRS-1 disease process and a reduced
rate of mortality compared to norepinephrine, the applicant cited a
study conducted by Arora et al.\466\ This study was an open-label,
randomized controlled trial conducted as a single-center study in
India. The study compared a continuous infusion of TERLIVAZ[supreg] and
albumin to a continuous infusion of norepinephrine and albumin in the
management of HRS-AKI in patients with a diagnosis of acute chronic
liver failure (ACLF). Patients were randomized to receive either
TERLIVAZ[supreg] or norepinephrine in a 1:1 ratio.\467\ ACLF is a
distinct diagnosis where, because of severe acute hepatic injury, a
rapid loss of liver function develops in a patient with previous
chronic liver disease. In this study, ACLF was defined as an acute
hepatic insult manifesting as jaundice (serum bilirubin >=5 mg/dL) and
coagulopathy (international normalized ratio [INR] >=1.5) complicated
within 4 weeks by ascites and/or encephalopathy in a patient with
previously diagnosed or undiagnosed CLD or cirrhosis. HRS-AKI was
defined as ICA-AKI stage >=II when other causes of AKI were excluded
and the patient was nonresponsive to volume expansion with intravenous
albumin.
---------------------------------------------------------------------------
\466\ Arora V, Maiwall R, Rajan V, et al. Terlipressin Is
Superior to Noradrenaline in the Management of Acute Kidney Injury
in Acute on Chronic Liver Failure. Hepatology. 2020;71(2):600-610.
\467\ Ibid.
---------------------------------------------------------------------------
A total of 120 patients were randomized; 60 patients were allocated
to the intention to treat group for both the TERLIVAZ[supreg] and
norepinephrine arms. Adverse events requiring discontinuation of the
drug were reported in 9 of 60 (15%) patients in the TERLIVAZ[supreg]
arm compared to 5 of 60 (8.3%) in the norepinephrine arm (P=0.39).
These events included diarrhea, abdominal pain, atrial fibrillation,
cyanosis, and chest pain in the TERLIVAZ[supreg] arm. In the
norepinephrine arm, patients experienced the previously mentioned
adverse events as well as ventricular premature complex (VPCs) and
hypertension. The per protocol analysis included 51 patients in the
TERLIVAZ[supreg] arm and 55 patients in the norepinephrine arm. A
response rate of 56% for TERLIVAZ[supreg], a response rate of 43% for
norepinephrine, and a 10% noninferiority margin was assumed. For an
alpha level of 5% and power of 80%, it was determined that 57 patients
were needed in each arm.
According to the applicant, the results showed that a higher
percentage of patients achieved HRS reversal at day 14 (primary
endpoint) in the TERLIVAZ[supreg] group compared to the norepinephrine
group in both the ITT analysis and per protocol analysis (PPA) (ITT 40%
(n=24) vs. 16.7% (n=10), p=0.004; PPA 43.1% (n=22) vs. 16.3% (n=9),
p=0.002). Complete response was defined as return of serum creatinine
to a value within 0.3 mg/dL of baseline. The applicant also stated that
patients in the TERLIVAZ[supreg] group had higher 28-day survival
compared to the norepinephrine group (48% versus 20%, respectively;
p=0.001).
In support of its claims that TERLIVAZ[supreg] is associated with a
more rapid resolution of the HRS-1 disease process and a reduced rate
of mortality compared to midodrine and octreotide, the applicant
summarized the results of the Cavallin et al. study,\468\ which
compared TERLIVAZ[supreg] plus albumin versus midodrine and octreotide
(MID/OCT) plus albumin in a multi-center randomized controlled trial.
The applicant stated that 27 patients were randomized to receive
TERLIVAZ[supreg] with albumin and 22 to receive MID/OCT plus albumin.
Patients in the study were from eight hospitals in Italy. The
researchers hypothesized a response rate of 60% for TERLIVAZ[supreg]
and of 30% for MID/OCT, with an alpha error of 5% and power of 80%. An
interim analysis after enrolling half the sample set a stopping rule
for the randomized clinical trial if the difference in renal function
recovery was significant at p<0.01. The study was terminated after 49
patients were enrolled according to the a priori determined stopping
rule.
---------------------------------------------------------------------------
\468\ Cavallin M, Kamath PS, Merli M, et al. Terlipressin plus
albumin versus midodrine and octreotide plus albumin in the
treatment of hepatorenal syndrome: A randomized trial. Hepatology.
2015;62:567-574.
---------------------------------------------------------------------------
The applicant stated that the results showed improvement of renal
function was significantly more frequent in patients randomized to the
TERLIVAZ[supreg] group compared to patients randomized to the MID/OCT
group; 70.4% of
[[Page 28294]]
patients in the TERLIVAZ[supreg] group had a complete or partial
response compared with 28.6% in the MID/OCT group (p=0.01); 55.5% of
patients in the TERLIVAZ[supreg] group had a complete response compared
with 4.8% of the MID/OCT group (p<0.001). Complete response was defined
as a decrease in serum creatinine to <=133 mmol/L (<=1.5 mg/dL).
Partial response was defined as a >=50% serum creatinine decrease from
baseline to a final value >133 mmol/L (>1.5 mg/dL). No response was
defined as a serum creatinine decrease of <50% from baseline. The
applicant stated that mean arterial pressure (MAP) was significantly
higher in the TERLIVAZ[supreg] group compared to the MID/OCT group
after 3 days of treatment as well as at the midpoint of the treatment
period.
The applicant also stated that response to treatment (complete or
partial) was found to be a predictor of 3-month survival in the
univariate analysis. The difference in cumulative survival between all
responders (partial and full responders) and nonresponders was
statistically significant in the TERLIVAZ[supreg] group (P<0.001) but
not in the MID/OCT group. Some nonresponders to the assigned treatment
received a rescue treatment according to the treating physician's
decision. Seven of 12 (58.3%) nonresponders in the MID/OCT group
received a rescue treatment: Six received TERLIVAZ[supreg] plus
albumin, and one received dialysis. An improvement of renal function
was observed in five of six patients (83.3%) who received
TERLIVAZ[supreg] plus albumin. Four patients had a complete response
and one patient had a partial response. The applicant stated that in
patients who did not receive any rescue treatment, the TERLIVAZ[supreg]
group had a higher 3-month survival rate than the MID/OCT group (55.5%
vs. 28.6%, P=0.06).
In support of its claim that TERLIVAZ[supreg] is associated with a
decreased rate of subsequent diagnostic or therapeutic interventions,
compared with placebo, the applicant cited the results of the CONFIRM
trial. The applicant noted that there was a lower incidence of RRT
through the treatment period (14 days) in patients receiving
TERLIVAZ[supreg] (23.1% (n=46)) versus the placebo (34.7% (n=35))
(p=0.03).\469\
---------------------------------------------------------------------------
\469\ Jamil, K. Terlipressin, a New Investigational Drug for the
Treatment of Hepatorenal Syndrome Type 1. Presented at: New
Technology Town Hall Meeting; December 16, 2019; Centers for
Medicare & Medicaid Services; Baltimore, MD.
---------------------------------------------------------------------------
In addition, according to the applicant, based on the ITT
population for the integrated studies for patients at least 65 years
old (TERLIVAZ[supreg] n=54; placebo n=36), there was a favorable trend
of lower incidence of RRT in the subsequent follow-up periods: (1) The
use of RRT/dialysis by Day 30 visit was 25.9% (n=14) in
TERLIVAZ[supreg]-treated patients vs. 44.4% in placebo-treated
patients; (2) the use of RRT/dialysis by Day 60 visit was 27.8% in
TERLIVAZ[supreg]-treated patients vs. 44.4% in placebo-treated
patients; and (3) the use of RRT/dialysis by Day 90 visit was 29.6% in
TERLIVAZ[supreg]-treated patients vs. 47.2% in placebo-treated
patients.\470\
---------------------------------------------------------------------------
\470\ Mujtaba M, Gamilla-Cruda AK, Jamil K, et al. Terlipressin,
in Combination with Albumin, Is an Effective Therapy for Hepatorenal
Syndrome Type 1 in Patients Aged >=65 Years. Abstract to be
submitted to NKF by November 30, 2021 for presentation at the NKF
Spring Clinical Meeting (April 6-10, 2022).
---------------------------------------------------------------------------
The applicant also stated that there was a decreased incidence of
RRT after liver transplant in patients treated with TERLIVAZ[supreg]
(19.6% (n=46)) versus 44.8% (n=29) in the placebo group (p=0.04).\471\
The applicant stated that the need for RRT post-transplant is
predictive of poor graft function and survival.\472\ The applicant
stated that in the ITT population, 0 of 8 TERLIVAZ[supreg]-treated
patients 65 years and older who received liver transplant required RRT
and 5 of 6 placebo-treated patients 65 years and older who received
liver transplant required RRT.\473\
---------------------------------------------------------------------------
\471\ Jamil, K. Terlipressin, a New Investigational Drug for the
Treatment of Hepatorenal Syndrome Type 1. Presented at: New
Technology Town Hall Meeting; December 16, 2019; Centers for
Medicare & Medicaid Services; Baltimore, MD.
\472\ Watt KDS, Pedersen RA, Kremers WK, et al. Evolution of
Causes and Risk Factors for Mortality Post-Liver Transplant: Results
of the NIDDK Long-Term Follow-Up Study. Am. J. Transplant.
2010;10(6)1420-1427.
\473\ Mujtaba M, Gamilla-Cruda AK, Jamil K, et al. Terlipressin,
in Combination with Albumin, Is an Effective Therapy for Hepatorenal
Syndrome Type 1 in Patients Aged >=65 Years. Abstract to be
submitted to NKF by November 30, 2021 for presentation at the NKF
Spring Clinical Meeting (April 6-10, 2022).
---------------------------------------------------------------------------
The applicant also claimed that patients receiving TERLIVAZ[supreg]
in the CONFIRM trial had shorter lengths of hospitalizations and ICU
stays compared to those in the placebo group. The applicant stated that
in the ITT population for patients at least 65 years old, the median
number of days for hospital length of stay was 18 for TERLIVAZ[supreg]-
treated patients and 25.5 for placebo-treated patients.\474\ In
addition, the applicant stated that patients in the TERLIVAZ[supreg]
group stayed an average of 6.4 days in the ICU versus 13.2 days in the
placebo group.\475\ The applicant explained that, while in CONFIRM, the
overall incidence of admission to ICU was similar in both cohorts given
the severe multiple pre-existing comorbidities in patients with
decompensated cirrhosis, and that by addressing one severe complication
(HRS-1), TERLIVAZ[supreg] facilitates management of these patients and
reduces the burden of critical care management.
---------------------------------------------------------------------------
\474\ Ibid.
\475\ Jamil, K. Terlipressin, a New Investigational Drug for the
Treatment of Hepatorenal Syndrome Type 1. Presented at: New
Technology Town Hall Meeting; December 16, 2019; Centers for
Medicare & Medicaid Services; Baltimore, MD.
---------------------------------------------------------------------------
The applicant also asserted that the overall benefit-risk profile
of TERLIVAZ[supreg] as a treatment for HRS-1 is favorable. In support
of this assertion, the applicant cited the results of the CONFIRM
trial. The applicant noted that the overall incidence of adverse events
(AEs) and serious adverse events (SAEs) were similar between patients
receiving TERLIVAZ[supreg] (n=200) and those receiving placebo
(n=99).\476\ The applicant stated that 88.0% (n=176) of patients
receiving TERLIVAZ[supreg] reported AEs versus 88.9% (n=88) in the
placebo group, and that 65.0% (n=130) of patients receiving
TERLIVAZ[supreg] reported SAEs versus 60.6% (n=60) in the placebo
group. The applicant also stated that: (1) The overall incidence of AEs
was similar between groups: 91.1% in the TERLIVAZ[supreg] group and
90.4% in the placebo group; (2) the incidence of SAEs was similar
between groups: 65.0% in the TERLIVAZ[supreg] group and 59.8% in the
placebo group; and (3) mortality up to 30 days after first treatment
was 41.5% in the TERLIVAZ[supreg] group and 40.6% in the placebo
group.\477\
---------------------------------------------------------------------------
\476\ Ibid.
\477\ Mallinckrodt Hospital Products Inc. Terlipressin Briefing
Document. NDA # 022231. Cardiovascular and Renal Drugs Advisory
Committee, July 15, 2020. U.S. Food and Drug Administration. https://www.fda.gov/media/139965/download. Accessed September 10, 2020.
---------------------------------------------------------------------------
The applicant stated that, with appropriate labeling to help
prevent administration to patients who are known to be at higher risk
for SAEs, TERLIVAZ[supreg] has an acceptable safety profile for
patients at least 65 years old, a high-morbidity patient population.
The applicant explained that the safety profile of TERLIVAZ[supreg] is
well-characterized, with the majority of AEs being predictable,
recognizable, and generally manageable in the hospital setting where
HRS-1 patients are treated. The applicant further stated that most of
the events observed in the company-sponsored clinical studies were
expected based on TERLIVAZ[supreg]'s V1-receptor activity and
consistent with the known experience with TERLIVAZ[supreg] outside the
US. Regarding the increased risk of serious or fatal respiratory
failure, the applicant stated that TERLIVAZ[supreg] should not be
administered in patients with pulmonary edema,
[[Page 28295]]
pneumonia, dyspnea, or tachypnea until events resolve. The applicant
explained that patients with ACLF grade 3 are at significant risk of
respiratory failure and fluid overload must be actively managed.
Regarding increased mortality in patients with SCr >=5 mg/dL, the
applicant explained that the use of TERLIVAZ[supreg] with these
patients should be considered only when the anticipated benefit to the
patient outweighs the potential risk.
In support of the claim that TERLIVAZ[supreg] represents a
substantial clinical improvement over existing technologies, based on
real-world usage, the applicant noted that TERLIVAZ is the
vasoconstrictor of choice for HRS-1 in much of the rest of the world,
where it is approved and available due to its direct effect in
reversing the fundamental hemodynamic pathophysiology of HRS-1. The
applicant stated that both the EASL \478\ and the American Association
for the Study of Liver Diseases (AASLD) \479\ recommend
TERLIVAZ[supreg] plus albumin as the first-line treatment for the
reversal of HRS-1, while other treatment options should only be used if
TERLIVAZ[supreg] is not available.
---------------------------------------------------------------------------
\478\ Angeli P, Bernardi M, Villanueva C, et al. EASL Clinical
Practice Guidelines for the management of patients with
decompensated cirrhosis. J Hepatol. 2018;69(2):406-460.
\479\ Biggins S, Angeli P, Garcia-Tsao G, et al. Diagnosis,
Evaluation, and Management of Ascites, Spontaneous Bacterial
Peritonitis and Hepatorenal Syndrome: 2021 Practice Guidance by the
American Association for the Study of Liver Diseases. Hepatology.
2021;74(2):1014-1048. doi:10.1002/hep.31884.
---------------------------------------------------------------------------
The applicant also described a meta-analysis study identifying a
total of 377 patients from eight eligible studies, from which the
authors found that: (1) TERLIVAZ[supreg] reduced the all-cause
mortality rate by 15% (Risk Difference: -0.15%, 95% CI: -0.26 to -
0.03); and (2) the reduction in the mortality rate due to HRS at three
months was 9% (Risk Difference: -0.09%, 95% CI: -0.18 to 0.00).\480\
According to the applicant, the authors concluded that TERLIVAZ[supreg]
has long-term survival benefits of at least up to three months, but
only with HRS as a cause of death, not for other causes of death.\481\
---------------------------------------------------------------------------
\480\ Hiremath SB, Srinivas LD. Survival benefits of
terlipressin and non-responder state in hepatorenal syndrome: A
meta-analysis. Indian J Pharmacol. 2013;45(1):54-60.
\481\ Ibid.
---------------------------------------------------------------------------
In addition, the applicant cited a study by Moore et al. of real-
world treatment patterns and outcomes using TERLIVAZ[supreg] in 203
patients with HRS-1/HRS-acute kidney injury (AKI) in the United
Kingdom.\482\ The applicant stated that the authors found that the vast
majority of patients with a clinical diagnosis of HRS-AKI were treated
with TERLIVAZ[supreg] in the United Kingdom, consistent with EASL
guidelines. The applicant stated that approximately 50% of patients
treated with TERLIVAZ[supreg] in the study achieved a complete
response, with an additional 23% experiencing partial response, and
that initiation of TERLIVAZ[supreg] at lower serum creatinine levels
was associated with higher rates of treatment response. The applicant
stated that complete or partial response to TERLIVAZ[supreg] was
associated with a higher rate of 90-day survival.
---------------------------------------------------------------------------
\482\ Moore K, Jamil K, Verleger K, et al. Real-world treatment
patterns and outcomes using terlipressin in 203 patients with the
hepatorenal syndrome. Aliment Pharmacol. Ther. 2020;00:1-8. doi:
10.1111/apt.15836.
---------------------------------------------------------------------------
Finally, the applicant asserted that TERLIVAZ[supreg] represents a
substantial clinical improvement because the totality of the
circumstances demonstrates that TERLIVAZ[supreg] substantially
improves, relative to technologies previously available, the treatment
of Medicare beneficiaries. The applicant stated that HRS-1 is a
serious, life-threatening condition characterized by development of
acute or sub-acute renal failure in patients with advanced CLD. The
applicant further emphasized that HRS-1 is the leading cause of
hospitalizations among all patients with advanced CLD; therefore,
inpatient care management of patients with HRS-1 is time and resource
intensive, representing a significant cost to hospitals.\483\ Finally,
the applicant reiterated that upon FDA approval, TERLIVAZ[supreg] will
be the only FDA-approved drug for the HRS-1 indication that aligns with
the EASL treatment guidelines for HRS-1 and that TERLIVAZ[supreg] has
now been recommended in guidance from AASLD as first-line treatment for
HRS reversal.\484\
---------------------------------------------------------------------------
\483\ Jamil K, Huang X, Lovelace B, et al. The Burden of Illness
of Hepatorenal Syndrome (HRS) in the United States: A Retrospective
Analysis of Electronic Health Records. Journal of Medical Economics.
2019;22(5):421-430.
\484\ Angeli P, Bernardi M, Villanueva C, et al. EASL Clinical
Practice Guidelines for the management of patients with
decompensated cirrhosis. Journal of Hepatology. 2018;69(2):406-460.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether TERLIVAZ[supreg] meets the
substantial clinical improvement criterion. As we noted in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25344), in the CONFIRM trial the
proportion of patients with verified HRS reversal without HRS-1
recurrence by Day 30 was numerically greater in the TERLIVAZ[supreg]
arm than placebo; however, the difference between groups was not
statistically significant (26% vs 17%, p=0.08) \485\ and we note that
the potential for HRS-1 recurrence among patients treated with
TERLIVAZ[supreg] after 30 days is unclear. We also noted in the FY 2022
IPPS/LTCH PPS proposed rule (86 FR 25344) that, although the applicant
claimed a reduction in mortality with the use of TERLIVAZ[supreg], the
mortality rate at Day 90 was higher in the TERLIVAZ[supreg] group vs.
the placebo group (51% vs. 45%).\486\ We further noted in the FY 2022
IPPS/LTCH PPS proposed rule that the applicant states that survival was
not defined as a primary or secondary analysis in the CONFIRM trial and
that no overall survival benefit was observed in the CONFIRM trial
because survival is confounded by multiple comorbidities in patients
with HRS-1.\487\
---------------------------------------------------------------------------
\485\ Wong F, Pappas, S.C, Curry M.P, et al. Terlipressin plus
Albumin for the Treatment of Type 1 Hepatorenal Syndrome. New
England Journal of Medicine. 2021;384(9):818-828. doi: 10.1056/
NEJMoa2008290.
\486\ Ibid.
\487\ Ibid.
---------------------------------------------------------------------------
In addition, we noted in the FY 2022 IPPS/LTCH PPS proposed rule
that the primary endpoint of the CONFIRM trial used a surrogate
endpoint of serum creatinine as an indicator of HRS reversal, and we
questioned whether this correlates to improvements in clinical outcomes
such as mortality and time to transplant (86 FR 25344). We also
question whether mortality would be a more appropriate endpoint than
HRS reversal to demonstrate substantial clinical improvement in
clinical outcomes. We note that we were unable to verify the following
claims made by the applicant about the ITT population for the
integrated studies involving patients at least 65 years old, based on
the submitted abstract for Mujtaba et al: (1) That there was a greater
benefit in these HRS-1 patients with SIRS, (2) that there was a
favorable trend of lower incidence of RRT in these patients, and (3)
that there was a shorter median number of days for hospital length of
stay in these patients.\488\
---------------------------------------------------------------------------
\488\ Mujtaba M, Gamilla-Cruda AK, Jamil K, et al. Terlipressin,
in Combination with Albumin, Is an Effective Therapy for Hepatorenal
Syndrome Type 1 in Patients Aged >=65 Years. Abstract to be
submitted to NKF by November 30, 2021 for presentation at the NKF
Spring Clinical Meeting (April 6-10, 2022).
---------------------------------------------------------------------------
With regard to the applicant's claims regarding a similar incidence
of AEs and SAEs between groups in the CONFIRM trial, we noted in the FY
2022 IPPS/LTCH PPS proposed rule that the results show that the
TERLIVAZ[supreg] arm had a higher incidence of SAEs up to 30 days
[[Page 28296]]
post-treatment (65% of patients receiving TERLIVAZ[supreg] reported
SAEs vs. 60.6% in the placebo group) related to respiratory failure,
serious infections such as sepsis and septic shock, GI bleeding, and
abdominal pain \489\ (86 FR 25344).
---------------------------------------------------------------------------
\489\ Ibid.
---------------------------------------------------------------------------
Additionally, we note that death within 90 days due to respiratory
disorders occurred in 11% of patients in the TERLIVAZ[supreg] group and
2% of patients in the placebo group.\490\ Regarding the study conducted
by Arora et al., we noted in the FY 2022 IPPS/LTCH PPS proposed rule
that this study had an open-label design and included patients with a
diagnosis of ACLF as well as HRS-AKI, which may have contributed to the
differences observed between the TERLIVAZ[supreg] arm and the
norepinephrine arm in this study \491\ (86 FR 25344). Finally, in the
FY 2022 IPPS/LTCH PPS proposed rule, we noted that the results of the
Cavallin et al. study submitted by the applicant in support of a
substantial clinical improvement over midodrine and octreotide show
that there was no survival benefit for the TERLIVAZ[supreg] group at
months one and three \492\ (86 FR 25344).
---------------------------------------------------------------------------
\490\ Ibid.
\491\ Arora V, Maiwall R, Rajan V, et al. Terlipressin Is
Superior to Noradrenaline in the Management of Acute Kidney Injury
in Acute on Chronic Liver Failure. Hepatology. 2020;71(2):600-610.
\492\ Cavallin M, Kamath PS, Merli M, et al. Terlipressin plus
albumin versus midodrine and octreotide plus albumin in the
treatment of hepatorenal syndrome: A randomized trial. Hepatology.
2015;62:567-574.
---------------------------------------------------------------------------
We are inviting public comments on whether TERLIVAZ[supreg] meets
the substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
TERLIVAZ[supreg].
k. Treosulfan
Medexus Pharma, Inc. submitted an application for new technology
add-on payments for treosulfan for FY 2023. According to the applicant,
treosulfan is a prodrug of a bifunctional alkylating agent that is
being studied in combination with fludarabine as a preparative regimen
for allogenic hematopoietic stem cell transplantation (alloHSCT) in
patients with acute myeloid leukemia (AML) or myelodysplastic syndrome
(MDS).
The applicant stated that the goal of alloHSCT is to cure patients
of their disease by replacing their hematopoietic stem cells (that is,
bone marrow stem cells) with stem cells from a healthy related or
unrelated donor. The applicant noted that preparative or conditioning
treatments are often used to (1) eradicate existing bone marrow tissue
to provide space for engraftment of transplanted donor stem cells, (2)
prevent rejection of the incoming donor stem cells by host immune
cells, and (3) help eradicate existing disease, and that this type of
preparation is needed for the alloHSCT process. The applicant explained
that there are two types of conditioning regimens, myeloablative
conditioning (MAC) and reduced intensity conditioning (RIC). According
to the applicant, while standard MAC regimens generally lead to low
relapse rates, they are associated with high treatment-related toxicity
and transplantation-related mortality (TRM). Thus, patients who are not
eligible for MAC regimens due to these risks (for example, the elderly
and patients with comorbidities) usually receive a RIC regimen. The
applicant described a recent study of patients with acute myeloid
leukemia,\493\ where RIC resulted in lower treatment related mortality
but higher relapse rates compared with MAC, with a statistically
significant advantage in relapse-free survival with MAC. However, the
applicant stated that certain patients are unable to tolerate MAC,
therefore according to the applicant, treosulfan was developed in an
effort to address the significant unmet medical need for improved
alloHSCT conditioning regimens that can reduce treatment-related
toxicity and the risk of TRM without increasing the incidence of
relapse. Per the applicant, treosulfan's immunosuppressive effects are
due to its toxicity against primitive and committed progenitor cells, T
and NK cells, reduction of cellularity of primary and secondary
lymphatic organs and a preclusive effect on the `cytokine storm' that
precedes the development of graft-versus-host disease (GVHD). The
applicant stated that these events are involved in the pathogenesis of
hepatic sinusoidal obstruction syndrome (HSOS).
---------------------------------------------------------------------------
\493\ Scott, BL et al. 2017. Myeloablative Versus Reduced-
Intensity Hematopoietic Cell Transplantation for Acute Myeloid
Leukemia and Myelodysplastic Syndromes. J. Clin Oncology 11: 1154.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant stated that
FDA is still reviewing treosulfan's NDA which has a proposed indication
for: (1) Use in combination with fludarabine as a preparative regimen
for alloHSCT in adult and pediatric patients older than one year with
AML; and (2) use in combination with fludarabine as a preparative
regimen for alloHSCT in adult and pediatric patients older than one
year with MDS. According to the applicant, FDA approval is anticipated
by June 30, 2022. The applicant stated that the drug is designed to be
administered intravenously and must be reconstituted prior to infusion.
While not yet FDA approved, the applicant noted that the recommended
dosage of treosulfan for adult patients is anticipated to be 10 grams
per square meter (10g/m\2\) of body surface area (BSA) per day of
treatment, given as a two-hour intravenous infusion, and with treatment
provided on three consecutive days (day -4, -3, -2) in conjunction with
fludarabine before hematopoietic stem cell infusion (which occurs on
day 0).
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify procedures involving the
administration of treosulfan. The applicant submitted a request for
approval for a unique ICD-10-PCS code for procedures involving the
administration of treosulfan beginning in FY 2023. The applicant also
stated that the following ICD-10 CM diagnosis codes are potentially
applicable for the proposed AML and MDS indications that FDA is
currently reviewing:
BILLING CODE 4120-01-P
[[Page 28297]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.113
BILLING CODE 4120-01-C
As previously discussed, if a technology meets all three of the
substantial similarity criteria under the newness criterion, it would
be
[[Page 28298]]
considered substantially similar to an existing technology and would
not be considered new for the 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 stated that treosulfan does not use the same or similar
mechanism of action to achieve a therapeutic outcome as compared to
existing busulfan- and melphalan-based MAC and RIC regimens. The
applicant stated that treosulfan differs from both busulfan and
melphalan in that it is a separate chemical entity that is pending FDA
review for a fully separate and distinct New Drug Application. The
applicant further stated that treosulfan differs from other alkylating
agents in that it is a prodrug activated under specific pH conditions
and that it has its own distinct cytotoxic activity toward
hematopoietic precursor cells. The applicant described the pH-dependent
conversion into a mono-epoxide intermediate and L-diepoxybutan. The
applicant stated that the epoxides form alkylate and cross-link
nucleophilic centers of deoxyribonucleic acid (DNA) and other
biological molecules, which are involved in various physiological
functions, and the alkylation and cross-linking are considered
responsible for the stem cell depleting, immune-suppressive and
antineoplastic effects of the epoxides. The applicant stated that
treosulfan exerts broad antineoplastic and antileukemic activity. In
further support of its assertion that treosulfan has a different
mechanism of action, the applicant cited an in vitro to in vivo
extrapolation (IVIVE) study modeling its potential for drug
interactions.\494\
---------------------------------------------------------------------------
\494\ Schaller, S. et al. 2021. Evaluation of the Drug-Drug
Interaction Potential of Treosulfan using a Physiologically-Based
Pharmacokinetic Modelling Approach. Br. J Clin Pharmacology (first
published Sept. 13, 2021), available at https://bpspubs.onlinelibrary.wiley.com/doi/10.1111/bcp.15081.
---------------------------------------------------------------------------
The applicant further stated that treosulfan-based conditioning
regimens differ significantly from existing conditioning regimens that
commonly utilize busulfan and melphalan. The applicant stated that MAC
treatments typically include high-dose TBI and high-dose chemotherapy-
based regimens, while in RIC treatments, cytotoxic components of the
regimen are reduced or replaced with less toxic but immunosuppressive
agents. The applicant noted that busulfan and melphalan are typically
the mainstays of MAC chemotherapy-based regimens, while fludarabine
combined with busulfan or melphalan is commonly used in RIC regimens.
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG, the applicant stated that treosulfan
would be assigned to the same MS-DRG as other agents used for
conditioning/preparative treatments, MS-DRG 014 (Allogeneic Bone Marrow
Transplant) because, in a majority of cases, it is anticipated that a
patient would undergo the treosulfan-based conditioning regimen during
the same inpatient admission as alloHSCT itself.
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 treosulfan is designed
to address a broader patient population than existing MAC and RIC
treatment regimens by providing access to improved alloHSCT
conditioning outcomes for patients who may otherwise be ineligible for
MAC regimens (for example, the elderly and patients with comorbidities)
due to the increased toxicity of those regimens, without increasing
risk of relapse. The applicant stated that treosulfan may also be used
as a conditioning regimen appropriate for children with malignant and
non-malignant disorders that are indicated for alloHSCT.
In summary, the applicant believes that treosulfan is not
substantially similar to other currently available therapies and/or
technologies because it uses a new mechanism of action and treats a
broader patient population as compared to existing technologies and
therefore, the technology meets the ``newness'' criterion. However, we
have the following concerns regarding whether treosulfan meets the
newness criterion. We note that it is unclear how the drug interaction
modeling study, and the separate NDA being considered for treosulfan,
as cited by the applicant, support the assertion that its mechanism of
action is different from other alkylating agents. We note that
treosulfan is an alkylating agent like other drugs used in
myeloablative conditioning such as busulfan and melphalan.
Specifically, treosulfan appears to be structurally similar to
busulfan, and we therefore question whether they share a similar
mechanism of action. Additionally, we note that the applicant asserts
that treosulfan can be used in a broader patient population than that
eligible for MAC regimens, without increasing the risk of relapse
associated with RIC regimens, but the references presented by the
applicant only compare a treosulfan-containing conditioning regimen to
another RIC regimen 495 496 and thus do not demonstrate that
treosulfan can be used in different patient populations unable to
receive MAC. Specifically, the studies provided by the applicant
compare treosulfan to busulfan, both of which are RIC regimens, so this
appears to demonstrate that a RIC regimen using treosulfan could be an
option for patients who otherwise would have been treated with a
busulfan regimen. We are inviting public comments on whether treosulfan
is substanially similar to existing technologies and whether treosulfan
meets the newness criterion.
---------------------------------------------------------------------------
\495\ Beelen DW 2019 Treosulfan or busulfan plus fludarabine as
conditioning treatment before allogeneic aemopoietic stem cell
transplantation for older patients with acute myeloid leukaemia or
myelodysplastic syndrome (MC-FludT.14/L): A randomised, non-
inferiority, phase 3 trial. The Lancet Haematol https://doi.org/10.1016/S2352-3026(19)30157-7.
\496\ Beelen D 2019 Final Evaluation of a Clinical Phase III
Trial Comparing Treosulfan to Busulfan-Based Conditioning Therapy
Prior to Allogeneic Hematopoietic Stem Cell Transplantation of Adult
Acute Myeloid Leukemia and Myelodysplastic Syndrome Patients
Ineligible to Standard Myeloablative Regimens. Biol Blood Marrow
Transplant 25 (2019) S3.
---------------------------------------------------------------------------
With respect to the cost criterion, the applicant presented the
following analysis to demonstrate that treosulfan meets the cost
criterion. To identify cases representing patients who may be eligible
for treatment with treosulfan, the applicant searched the FY 2019
MedPAR dataset from the FY 2022 IPPS/LTCH PPS final rule for claims
reporting an ICD-10-PCS procedure code that could potentially be used
to identify procedures involving the administration of treosulfan, in
conjunction with an ICD-10-CM diagnosis code for AML or MDS. For
inclusion in the analysis, the applicant required at least one ICD-10-
PCS procedure code and at least one ICD-10-CM diagnosis code from the
following tables:
BILLING CODE 4120-01-P
[[Page 28299]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.114
[GRAPHIC] [TIFF OMITTED] TP10MY22.115
[[Page 28300]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.116
BILLING CODE 4120-01-C
Using these case selection criteria, the applicant's search
resulted in 549 cases mapping to three MS-DRGs: MS-DRG 014 (Allogeneic
Bone Marrow Transplant), MS-DRG 003 (ECMO or Tracheostomy with MV >96
Hours or Principal Diagnosis Except Face, Mouth and Neck with Major
O.R. Procedures), and MS-DRG 004 (Tracheostomy with MV >96 Hours or
Principal Diagnosis Except Face, Mouth and Neck Without Major O.R.
Procedures). The applicant noted that they imputed a value of 11 cases
for MS-DRGs with a case count lower than 11 for use in the weighted
average calculations. The applicant noted that approximately 96% of
identified cases were in MS-DRG 014, approximately 2% of identified
cases were in MS-DRG 003, and approximately 2% of identified cases were
in MS-DRG 004. The applicant stated that the cost threshold would still
be exceeded even if the cases from DRGs 003 and 004 were excluded.
The applicant then removed charges for the technology being
replaced. According to the applicant, 100% of charges associated with
drugs (revenue centers 025X, 026X, and 063X) were removed from the
identified claims. The applicant stated that, while some other drugs
would still be required for patients treated with treosulfan during
their inpatient hospital stay, the applicant removed 100% of total drug
charges to be as conservative as possible. Next, the applicant
standardized charges using the FY 2022 IPPS/LTCH PPS final rule impact
file and applied a 4-year inflation factor (1.281834) based on the
inflation factor used in the FY 2022 IPPS/LTCH PPS final rule to
calculate outlier threshold charges. As the price of treosulfan has yet
to be determined, the applicant did not add charges for the new
technology. The applicant indicated that, once the price is determined,
it will divide the wholesale acquisition cost (WAC) of treosulfan (per
gram) by the national CCR for drugs from the FY 2022 IPPS/LTCH PPS
final rule (0.187) to calculate estimated average hospital charges
associated with treosulfan. The applicant also noted that no other
charges related to the administration of treosulfan are expected to be
added.
The applicant calculated a final inflated average case-weighted
standardized charge per case of $363,789, which exceeded the average
case-weighted threshold amount of $260,833. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that
treosulfan meets the cost criterion.
We note that the applicant did not remove claims from PPS-excluded
cancer hospitals that can be identified by a ``V'' in the fifth
position of their provider number or an ``E'' or ``F'' in the sixth
position in their Medicare certification number. We further note that
many HSCTs are done by cancer centers not paid under IPPS and typically
have higher charges, which may inflate the cost calculation. Since
these hospitals are not paid under IPPS, their claims should not be
included in the calculation of the charges for cases. We believe
estimates from an analysis excluding PPS-exempt hospitals would be more
appropriate for this cost analysis. Finally, we also note that the
leukemia patients in treosulfan's clinical evidence \497\ were in
remission and posit that codes only specifying remission should be
included in the cost analysis. We invite public comments on whether
treosulfan meets the cost criterion.
---------------------------------------------------------------------------
\497\ Beelen DW 2019 Treosulfan or busulfan plus fludarabine as
conditioning treatment before allogeneic aemopoietic stem cell
transplantation for older patients with acute myeloid leukaemia or
myelodysplastic syndrome (MC-FludT.14/L): A randomised, non-
inferiority, phase 3 trial. The Lancet Haematol https://doi.org/10.1016/S2352-3026(19)30157-7.
---------------------------------------------------------------------------
With respect to the substantial clinical improvement criterion, the
applicant asserted that treosulfan represents a substantial clinical
improvement over existing technologies because it was designed to
provide access to improved alloHSCT conditioning outcomes for patients
that may otherwise be ineligible for MAC regimens due to its increased
toxicity (for example, the elderly and patients with comorbidities),
without the increased risk of relapse that is demonstrated to occur
with RIC regimens. The applicant also asserted that treosulfan
significantly improves clinical outcomes relative to services or
[[Page 28301]]
technologies previously available, including increased event free
survival and overall survival at 24 months post-alloHSCT, reduced
cumulative incidence of non-relapse mortality (NRM) at 24 months post-
alloHSCT, reduced cumulative incidence of treatment-related mortality
(TRM) at 24 months post-alloHSCT, increased rate of graft-versus-host
disease (GVHD)-free and relapse/progression-free survival at 24 months
post-alloHSCT. To support its claims, the applicant provided two
published articles, one published abstract, and two background
articles.
To support its claim that treosulfan represents a substantial
clinical improvement over existing technologies because it was designed
to provide access to improved alloHSCT conditioning outcomes for
patients that may otherwise be ineligible for MAC regimens without the
increased risk of relapse that is demonstrated to occur with RIC
regimens, the applicant asserted that treosulfan-based regimens retain
the beneficial properties from both MAC and RIC regimens with an
efficacy profile comparable with that of conventional MAC regimens as
they are associated with rapid engraftment, high levels of donor
chimerism, and relatively low post-transplantation relapse
rates.498 499 The applicant also cited background studies,
which indicated that MAC regimens are currently the preferred standard
of care for young patients given the reduced relapse rates for MAC
patients as compared to RIC patients showing that MAC regimens produced
less recurrence of disease.500 501
---------------------------------------------------------------------------
\498\ Dietrich Wilhelm Beelen, et al., Treosulfan or Busulfan
plus Fludarabine as Conditioning Treatment Before Allogeneic
Haemopoietic Stem Cell Transplantation for Older patients with Acute
Myeloid Leukemia or Myelodysplastic Syndrome (MC-Flud.T.14/L): A
Randomised, Non-Inferiority, Phase 3 Trial, THE LANCET HAEMATOLOGY,
Oct. 9, 2019.
\499\ Dietrich Wilhelm Beelen, et al., Final Evaluation of a
Clinical Phase III Trial Comparing Treosulfan to Busulfan-Based
Conditioning Therapy Prior to Allogeneic Hematopoietic Stem Cell
Transplantation of Adult Acute Myeloid Leukemia and Myelodysplastic
Syndrome Patients Ineligible to Standard Myeloablative Regimens,
BIOLOGY OF BLOOD AND MARROW TRANSPLANTATION, 2019; 25(3): S3.
\500\ Scott, BL et al. 2017. Myeloablative Versus Reduced-
Intensity Hematopoietic Cell Transplantation for Acute Myeloid
Leukemia and Myelodysplastic Syndromes. J. Clin Oncology 11: 1154.
\501\ Dhere V et al. 2018. Myeloablative busulfan/cytoxan
conditioning versus reduced-intensity fludarabine/melphalan
conditioning for allogeneic hematopoietic stem cell transplant in
patients with acute myelogenous leukemia Leuk Lymphoma. 2018 April;
59(4): 837-843. doi:10.1080/10428194.2017.1361027.
---------------------------------------------------------------------------
To support its claim that treosulfan significantly improves
clinical outcomes relative to services or technologies previously
available, the applicant provided a phase 3 open-label, non-
inferiority, randomized study of the use of treosulfan as part of a
conditioning regimen in 31 transplant centers in 5 European
countries.\502\ The authors compared a RIC regimen of treosulfan 10 gm/
m\2\ daily for 3 days (days 4 to 2 prior to the alloHSCT) plus
fludarabine 30 mg/m\2\ daily for 5 days (6 to 2 days prior to the
alloHSCT) to a RIC regimen containing busulfan (another alkylating
agent) 0.8 mg/kg at 6 hour intervals on days 4 and 3 prior to the
alloHSCT with the same dose of fludarabine. The initial protocol used a
treosulfan dose of 14 gm/m\2\, but the protocol was modified to 10 gm/
m\2\, but the protocol was modified to 10 gm/m\2\ daily because of the
prolonged neutropenia and subsequent infections with that dose.
Eligible patients were aged 18 to 70 years with either AML in a first
or complete remission or MDS with bone marrow blast counts >20% who
were identified as appropriate for treatment with alloHSCT but were
considered high risk for myeloablative conditioning because of age
greater than or equal to 50 or comorbidities. 476 patients were
enrolled (240 patients in the busulfan group received treatment and
transplantation and were included in the full analysis population; 221
patients in the treosulfan group received treatment, but only 220
patients received transplantation and were included in the full
analysis population). Study discontinuations were mainly due to disease
progression prior to conditioning.
---------------------------------------------------------------------------
\502\ Beelen DW 2019 Treosulfan or busulfan plus fludarabine as
conditioning treatment before allogeneic aemopoietic stem cell
transplantation for older patients with acute myeloid leukaemia or
myelodysplastic syndrome (MC-FludT.14/L): A randomised, non-
inferiority, phase 3 trial. The Lancet Haematol https://doi.org/10.1016/S2352-3026(19)30157-7.
[GRAPHIC] [TIFF OMITTED] TP10MY22.117
The applicant noted that other results from this study demonstrated
no significant differences in engraftment with neutrophils, leukocytes,
and platelets and graft versus host disease (overall, acute and
chronic). The applicant also noted that the treosulfan treated group
had higher incidences of complete chimerism at both 28- and 100-days
post alloHSCT.
The applicant also submitted an abstract \503\ containing a final
evaluation of the results from the phase 3 study reported in the
earlier publication.\504\ The authors of the abstract noted that the
previous study was a confirmatory interim analysis (based on 476
patients), and that results of the final analysis of all 570 randomized
patients including post surveillance data were provided in this
analysis. The full analysis in the abstract consisted of 551 patients:
352 with AML and 199 with MDS. Treosulfan was given to 268 patients and
busulfan was given to 283 patients. The median age of patients was 60
years
[[Page 28302]]
(range 21-70). The median follow-up time was 29 months. The findings
are shown in the following table.
---------------------------------------------------------------------------
\503\ Beelen D 2019 Final Evaluation of a Clinical Phase III
Trial Comparing Treosulfan to Busulfan-Based Conditioning Therapy
Prior to Allogeneic Hematopoietic Stem Cell Transplantation of Adult
Acute Myeloid Leukemia and Myelodysplastic Syndrome Patients
Ineligible to Standard Myeloablative Regimens. Biol Blood Marrow
Transplant 25 (2019) S3.
\504\ Beelen DW 2019 Treosulfan or busulfan plus fludarabine as
conditioning treatment before allogeneic aemopoietic stem cell
transplantation for older patients with acute myeloid leukaemia or
myelodysplastic syndrome (MC-FludT.14/L): A randomised, non-
inferiority, phase 3 trial. The Lancet Haematol https://doi.org/10.1016/S2352-3026(19)30157-7.
[GRAPHIC] [TIFF OMITTED] TP10MY22.118
The applicant stated that the results of the phase 3 trial
demonstrated that the treosulfan treatment group had increased event
free survival (EFS) and overall survival (OS), with statistically
significant improvements in EFS (p=0.0005787) and OS at 24 months post-
alloHSCT (p=0.0037) compared to the busulfan treatment group. The
applicant also stated that the results of the phase 3 trial
demonstrated that the treosulfan treatment group had reduced cumulative
incidence of NRM and TRM, noting a statistically significant reduced
cumulative incidence of NRM at 24 months post-alloHSCT (p=0.0343), as
well as a reduced cumulative incidence of TRM at 24 months post-
alloHSCT (adjusted p value of 0.0043) compared to the busulfan
treatment group. The applicant also cited a statistically significantly
lower cumulative incidence of TRM caused by infections (adjusted p
value of 0.0371) and lower cumulative incidence of TRM related to
causes of death other than infections (adjusted p value of 0.0423).
Furthermore, the applicant stated that the incidence of complete donor
type chimerism was statistically significantly higher in the treosulfan
treatment group compared with the busulfan treatment group (adjusted p
value of 0.0381). Finally, the applicant stated that the results of the
phase 3 trial demonstrated that the treosulfan treatment group had an
increased rate of GVHD-free and relapse/progression-free survival at 24
months post-alloHSCT compared to the busulfan treatment group (adjusted
p value of 0.00087), as well as a higher chronic GVHD-free and relapse/
progression-free survival at 24 months (adjusted p value of
0.003).505 506
---------------------------------------------------------------------------
\505\ Ibid.
\506\ Beelen D 2019 Final Evaluation of a Clinical Phase III
Trial Comparing Treosulfan to Busulfan-Based Conditioning Therapy
Prior to Allogeneic Hematopoietic Stem Cell Transplantation of Adult
Acute Myeloid Leukemia and Myelodysplastic Syndrome Patients
Ineligible to Standard Myeloablative Regimens. Biol Blood Marrow
Transplant 25 (2019) S3.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether treosulfan meets the
substantial clinical improvement criterion. We note that we were unable
to verify the applicant's claims that the treosulfan treatment group
had a statistically significant increased rate of acute and chronic
GVHD-free and relapse/progression-free survival at 24 months post-
alloHSCT compared to the busulfan treatment group. We note that the
Beelen et al. abstract cited by the applicant only provided an analysis
of GVHD rates up to the 28-day follow-up visit, and stated that the
incidences of acute and chronic GVHD were comparable between the two
regimens (treosulfan and busulfan). We also note that the cumulative
incidence of acute GVHD in the Beelen et al. interim analysis of 473
patients submitted by the applicant was only analyzed at 100 days, and
did not describe a statistically significant difference between the
treosulfan and busulfan groups (acute GVHD grade 2-4, p=0.13; grade 3-
4, p=0.21); similarly, the cumulative incidence of chronic GVHD at 24
months were not significantly different (chronic GVHD, p=0.52;
extensive chronic GVHD, p=0.11). Furthermore, we note that the
treosulfan and busulfan treatment groups did not have a statistically
significant difference in cumulative incidence of relapse or
progression incidence at 24 months (p=0.50).507 508
---------------------------------------------------------------------------
\507\ Beelen D 2019 Final Evaluation of a Clinical Phase III
Trial Comparing Treosulfan to Busulfan-Based Conditioning Therapy
Prior to Allogeneic Hematopoietic Stem Cell Transplantation of Adult
Acute Myeloid Leukemia and Myelodysplastic Syndrome Patients
Ineligible to Standard Myeloablative Regimens. Biol Blood Marrow
Transplant 25 (2019) S3.
\508\ Beelen DW 2019 Treosulfan or busulfan plus fludarabine as
conditioning treatment before allogeneic aemopoietic stem cell
transplantation for older patients with acute myeloid leukaemia or
myelodysplastic syndrome (MC-FludT.14/L): A randomised, non-
inferiority, phase 3 trial. The Lancet Haematol https://doi.org/10.1016/S2352-3026(19)30157-7.
---------------------------------------------------------------------------
Finally, we note that the phase 3 trial \509\ was a non-inferiority
trial, which is not designed to demonstrate superiority over other
regimens, and may be subject to observer bias due to the lack of
blinding. We also note that the studies provided were not powered to
show that the treosulfan 10mg/m\2\ improved outcomes for patients 65
and older, and therefore question whether the results may be
generalizable to the Medicare population. Furthermore, the comparison
of treosulfan with busulfan represents the testing of only one
potential RIC regimen, and we note that there are other possible
treatment regimens. For example, the applicant asserted that
combination treatments including treosulfan can provide patients who
are ineligible for MAC regimens access to a new treatment option.
However, the applicant did not provide evidence that this treosulfan
treatment combination improved outcomes relative to other current RIC
regimens, besides busulfan and fludarabine used in their cited studies.
We note that while the applicant stated that treosulfan demonstrates
improved outcomes (reduces treatment-related toxicity and risk of TRM
without increasing risk of relapse) as compared to MAC regimens and
that it therefore offers a treatment option for patients ineligible for
MAC, the proposed indications for treosulfan do not limit use to
patients ineligible for MAC. We would appreciate additional information
comparing outcomes with treosulfan-based regimens to MAC regimens. We
are inviting public comments on whether treosulfan meets the
substantial clinical improvement criterion.
---------------------------------------------------------------------------
\509\ Ibid.
---------------------------------------------------------------------------
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
treosulfan.
[[Page 28303]]
l. UPLIZNA[supreg] (inebilizumab-cdon)
HTI-DAC, the manufacturer under the distributor Horizon
Therapeutics USA, Inc., submitted an application for new technology
add-on payment for UPLIZNA[supreg] (inebilizumab-cdon) for FY 2023. Per
the applicant, UPLIZNA[supreg] is the first FDA-approved anti-cluster
of differentiation 19 (CD19) B-cell depleter for the treatment of
neuromyelitis optica spectrum disorder (NMOSD) in adults who are anti-
aquaporin-4 (AQP4) antibody positive, for which 80% of all patients
with NMOSD test positive.\510\ According to the applicant, the goal of
UPLIZNA[supreg] is to reduce the risk of relapse and disability
progression. The applicant explained UPLIZNA[supreg] is a CD19+ B cell-
directed humanized afucosylated immunoglobulin F1 (IgG1) monoclonal
antibody. The applicant further explained that CD19 is a cell surface
antigen expressed on a broad range of B lymphocytes. Per the applicant,
UPLIZNA[supreg] is a B-cell depleter that binds specifically to CD19,
allowing it to target an extended range of B-cells that play a role in
NMOSD. The applicant stated that following cell surface binding to
CD19+ B lymphocytes, UPLIZNA[supreg] causes antibody-dependent cellular
cytolysis (ADCC), resulting in significant and robust B-cell depletion.
---------------------------------------------------------------------------
\510\ Wingerchuck, D. (2009, November 15). Neuromyelitis optica:
Effect of gender. Journal of the Neurological Sciences. Retrieved
October 6, 2021, from https://pubmed.ncbi.nlm.nih.gov/19740485/.
---------------------------------------------------------------------------
NMOSD is a rare, severe autoimmune disease of the central nervous
system that causes damage to the optic nerve, spinal cord, and brain
stem. NMOSD affects approximately 10,000-15,000 people in the United
States, and the incidence rate may be up to 9 times higher for women
than for men, with prevalence approximately 2- to 3-fold higher among
Black and Asian populations.\511\ According to the applicant, NMOSD is
characterized by unpredictable, recurrent attacks of inflammation of
the optic nerve (optic neuritis) and/or of the spinal cord (transverse
myelitis), and may also affect regions of the brain. The applicant
stated that attacks can be severe and result in life-altering permanent
disability, such as blindness and paralysis, and that recurring attacks
can have cumulative effects resulting in significant morbidity.
According to the applicant, aquaporin-4 antibodies are highly specific
to NMOSD and AQP4 is expressed on astrocytes throughout the central
nervous system. Per the applicant, in NMOSD, AQP4 antibodies bind to
AQP4, resulting in astrocyte cell death and inflammation. The applicant
stated that a sub-population of B-lineage cells, CD19+ plasmablasts,
produce AQP4 antibodies and that certain CD19+ B-cells are increased in
the blood of AQP4-seropositive individuals with NMOSD, with the highest
levels observed during an attack. According to the applicant, by
depleting a wide range of B-cells that express CD19 (including
plasmablasts and some plasma cells), UPLIZNA[supreg] reduces the risk
of relapses or attacks that may lead to permanent disability in NMOSD
patients.
---------------------------------------------------------------------------
\511\ Flanagan, E.P. et al. (2016, April 4). Epidemiology of
aquaporin[hyphen]4 autoimmunity and Neuromyelitis Optica Spectrum.
Wiley Online Library. Retrieved October 6, 2021, from https://onlinelibrary.wiley.com/doi/10.1002/ana.24617.
---------------------------------------------------------------------------
With respect to the newness criterion, the applicant stated that
UPLIZNA[supreg] was designated as a Breakthrough Therapy and received
Orphan Drug designation on February 10, 2016 for the treatment of
NMOSD.\512\ Per the applicant, UPLIZNA[supreg] received FDA approval on
June 11, 2020, for the treatment of NMOSD in adult patients who are
AQP4 antibody positive (BLA #761142). The applicant stated that
UPLIZNA[supreg] became commercially available on July 9, 2020,
following FDA approval. According to the applicant, UPLIZNA[supreg] is
administered as an intravenous infusion, and titrated to completion,
over approximately 90 minutes under the close supervision of an
experienced healthcare professional. The applicant stated that the
recommended initial dose is a 300 mg intravenous infusion followed 2
weeks later by a second 300 mg intravenous infusion. The applicant also
stated that subsequent doses, starting 6 months from the first
infusion, consist of a single 300 mg intravenous infusion every 6
months.
---------------------------------------------------------------------------
\512\ U.S. Food and Drug Administration website: https://www.accessdata.fda.gov/scripts/opdlisting/oopd/listResult.cfm.
---------------------------------------------------------------------------
According to the applicant, there are currently no ICD-10-PCS
procedure codes that uniquely identify the use of UPLIZNA[supreg].
However, the applicant stated that the following procedure codes may be
used to identify administration of UPLIZNA[supreg] in the inpatient
setting, though they are not specific to UPLIZNA[supreg]: 3E033GC
(Introduction of other therapeutic substance into the peripheral vein,
percutaneous approach) or 3E043GC (Introduction of other therapeutic
substance into central vein, percutaneous approach). The applicant
submitted a request for approval of a unique ICD-10-PCS procedure code
to identify use of the technology beginning in FY 2023. 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 purposes of new technology add-on payments.
According to the applicant, the only approved treatments for NMOSD are
UPLIZNA[supreg], Soliris[supreg] (eculizumab), and
ENSPRYNGTM (satralizumab). We note that
ENSPRYNGTM and Soliris[supreg] previously submitted
applications for new technology add-on payments. Please see discussion
of ENSPRYNGTM in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45019 through 45028) and Soliris[supreg] in the FY 2021 IPPS/LTCH PPS
final rule (85 FR 58684 through 58689).
With respect to the first criterion, whether a product uses the
same or similar mechanism of action to achieve a therapeutic outcome,
the applicant stated that UPLIZNA[supreg] is the only treatment for
NMOSD that targets B-cells and causes B-cell depletion. The applicant
contrasted the mechanism of action of UPLIZNA[supreg] with those of
Soliris[supreg] and ENSPRYNGTM. Per the applicant, the
mechanism of action of Soliris[supreg] is the inhibition of aquaporin-
4-antibody induced terminal complement C5b-9 deposition.\513\ The
applicant explained that Soliris[supreg] specifically binds to
complement protein C5, inhibiting its cleavage to C5a and C5b and
preventing the generation of C5b-9. The applicant also stated that
ENSPRYNGTM is a recombinant humanized anti-human
interleukin-6 (IL-6) receptor monoclonal antibody. Per the applicant,
the mechanism of action of ENSPRYNGTM involves the
inhibition of IL-6-mediated signaling through binding to soluble and
membrane-bound IL-6 receptors.\514\ Thus, the applicant asserted that
each of the three FDA approved treatments for NMOSD--UPLIZNA[supreg],
Soliris[supreg], and ENSPRYNGTM--bind to a different
molecular target and have different mechanisms of action.
---------------------------------------------------------------------------
\513\ U.S. Food and Drug Administration. (2019, June). Soliris
Prescribing Information. Retrieved October 6, 2021, from https://www.accessdata.fda.gov/drugsatfda_docs/label/2019/125166s431lbl.pdf.
\514\ Genentech. (2020, August). ENSPRYNG Factsheet. Retrieved
October 6, 2021, from https://www.gene.com/download/pdf/genentech_enspryng_factsheet.pdf.
---------------------------------------------------------------------------
With respect to the second criterion, whether a product is assigned
to the same or a different MS-DRG when compared to an existing
technology, the applicant stated that cases representing patients who
may be eligible for treatment with UPLIZNA[supreg] map to MS-DRGs 058,
059, or 060 (Multiple Sclerosis and Cerebellar Ataxia with
[[Page 28304]]
MCC, with CC, or without CC/MCC, respectively), which are the same MS-
DRGs to which existing technologies may also be assigned.
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 asserted that, while UPLIZNA[supreg]
treats a patient population with the same type of disease (NMOSD) as
Soliris[supreg] or ENSPRYNGTM, it offers a treatment option
for a subset of this patient population, which differentiates it from
existing technologies. Per the applicant, UPLIZNA[supreg] has not been
shown to carry an increased risk of meningitis and may be used in
patient populations who are unvaccinated with the meningococcal vaccine
and/or are not able to use prophylactic antibiotics. The applicant
noted that while patients with NMOSD who are unvaccinated with the
meningococcal vaccine can still receive other approved treatments for
NMOSD, such as Soliris[supreg] or ENSPRYNGTM, they need to
have a risk reduction protocol instituted at the time of treatment and,
in some cases, may require two weeks of prophylactic antibacterial
treatment first.515 516
---------------------------------------------------------------------------
\515\ Soliris[supreg] prescribing details: https://solirispro.com/pdf/Soliris_USPI.pdf.
\516\ ENSPRYNGTM prescribing information: https://www.gene.com/download/pdf/enspryng_prescribing.pdf.
---------------------------------------------------------------------------
In summary, the applicant maintained that UPLIZNA[supreg] is not
substantially similar to other currently available therapies and/or
technologies because it uses a new mechanism of action and treats a
different subset of the patient population with NMOSD compared to an
existing technology.
We note that the applicant asserts that UPLIZNA[supreg] treats a
different subset of the patient population with NMOSD compared to
existing technologies, specifically patients who are unvaccinated with
the meningococcal vaccine. However, we question whether this subset is
considered a new patient population since, as previously discussed in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45021),
ENSPRYNGTM is also not contraindicated in patients with
unresolved serious Neisseria meningitidis infections, and therefore,
may be a treatment option for patients with meningococcal disease as
well as UPLIZNA[supreg]. Furthermore, as we previously stated in the FY
2022 IPPS/LTCH PPS final rule, individuals that are not vaccinated
against Neisseria mengitidis are not considered a separate patient
population because eligibility can be easily attained via a widely
available vaccine (86 FR 45027). Additionally, we question whether the
additional requirements for patients taking Soliris[supreg]--namely
participation in a risk reduction protocol related to the associated
risk of meningococcal infections, and prophylactic antibiotic treatment
that may result in a 2-week delay for treatment--constitute a new
patient population for technologies without those requirements.
We are inviting public comments on whether UPLIZNA[supreg] is
substantially similar to existing technologies and whether
UPLIZNA[supreg] meets the newness criterion.
With respect to the cost criterion, the applicant presented the
following analysis. The applicant searched the FY 2019 Medicare
Provider Analysis and Review (MedPAR) Hospital Limited Data Set (LDS)
for cases with ICD-10-CM diagnosis code G36.0 for Neuromyelitis optica
[Devic] (NMOSD) coded in the first diagnosis position. The applicant
determined that cases representing patients who may be eligible for
treatment with UPLIZNA[supreg] would map to MS-DRGs 058, 059, or 060
(Multiple Sclerosis and Cerebellar Ataxia with MCC, with CC, or without
CC/MCC, respectively).
The applicant determined a case count of 257 after imputing a value
of 11 for MS-DRGs with a case volume under 11. The applicant then
removed 100% of the drug charges to estimate the potential decrease in
costs due to the use of UPLIZNA[supreg]. The applicant noted that,
although use of UPLIZNA[supreg] would replace current drug charges for
therapies such as azathioprine, methotrexate, and rituximab, it is not
possible to differentiate between drug costs on MedPAR claims, and so
it removed all drug charges to be conservative. The applicant then
standardized the charges and applied a 4-year inflation factor of
1.281834, or 28.1834%, based on the inflation factor used to update the
outlier threshold in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45542). The applicant added charges for the new technology by dividing
the estimated cost of UPLIZNA[supreg] by the national average CCR for
drugs which is 0.187, from the FY 2022 IPPS/LTCH PPS final rule (86 FR
44966).
The applicant calculated a final inflated average case-weighted
standardized charge per case of $764,547, which exceeded the average
case-weighted threshold amount of $48,165. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant asserted that
UPLIZNA[supreg] meets the cost criterion.
We are inviting public comments on whether UPLIZNA[supreg] meets
the cost criterion.
With regard to the substantial clinical improvement criterion, the
applicant made two assertions. First, the applicant asserted that
UPLIZNA[supreg] offers a treatment option for a patient population that
is ineligible for currently available treatments. Specifically, the
applicant asserted that UPLIZNA[supreg] is a new treatment option for
patients who carry an increased risk of meningitis, patients following
treatments with more frequent and burdensome dosing schedules, and
patient populations more likely to be impacted by health disparities.
Finally, the applicant asserted that UPLIZNA[supreg] significantly
improves clinical outcomes relative to currently available technologies
because it reduced the risk of NMOSD attacks and disability progression
among patients with NMOSD when compared to placebo in the N-MOmentum
trial, which the applicant asserted is the largest NMOSD study
conducted.\517\
---------------------------------------------------------------------------
\517\ Marignier, R. et al., (2021, March 26). Disability
Outcomes in the N-MOmentum Trial of Inebilizumab in Neuromyelitis
Optica Spectrum Disorder. Neurology[supreg] neuroimmunology &
neuroinflammation. Retrieved October 6, 2021, from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8054974/.
---------------------------------------------------------------------------
With respect to the applicant's assertion that UPLIZNA[supreg] is a
substantial clinical improvement over existing technologies because it
represents a new treatment option for a patient population ineligible
for currently available treatments, the applicant stated that
UPLIZNA[supreg] may be used in patient populations who are unvaccinated
with the meningococcal vaccine and/or are not able to use prophylactic
antibiotics because UPLIZNA[supreg] has not been shown to carry an
increased risk of meningitis, as compared with Soliris[supreg].
To support this claim, the applicant cited an article from the CDC
explaining that patients taking complement inhibitors, such as
Soliris[supreg], are at an increased risk for meningococcal disease
\518\ and referenced the CDC's recommendation that patients receive the
meningococcal vaccination prior to initiating treatment with a
complement inhibitor. The applicant also cited a
[[Page 28305]]
study by McNamara et al.\519\ that identified 16 cases in the U.S.
between 2008 and 2016 of patients who were taking Soliris[supreg] who
had meningococcal disease despite having received at least 1 dose of
meningococcal vaccine before disease onset. Referring to the same
article by McNamara et al., the applicant stated that some healthcare
providers recommend prophylactic antibiotics even for vaccinated
patients during treatment with Soliris[supreg], exposing them to long-
term antibiotic use, which carries the risk of developing antimicrobial
resistance.
---------------------------------------------------------------------------
\518\ Centers for Disease Control and Prevention. (2019, May
31). Taking complement inhibitors increases risk for meningococcal
disease/CDC. Centers for Disease Control and Prevention. Retrieved
October 1, 2021, from https://www.cdc.gov/meningococcal/about/soliris-patients.html.
\519\ McNamara, L. et al. (2017, July 7). High Risk for Invasive
Meningococcal Disease Among Patients Receiving Eculizumab (Soliris)
Despite Receipt of Meningococcal Vaccine Retrieved October 6, 2021,
from https://www.cdc.gov/mmwr/volumes/66/wr/pdfs/mm6627e1.pdf.
---------------------------------------------------------------------------
Furthermore, the applicant claimed that UPLIZNA[supreg] represents
a new treatment option for patients following treatments with more
frequent and burdensome dosing schedules than UPLIZNA[supreg]. Per the
applicant, the dosing schedule for UPLIZNA[supreg] consists of 2
initial doses delivered 2 weeks apart, followed by 1 dose every 6
months after that.\520\ In comparison, based on the FDA prescribing
information for Soliris[supreg], the applicant asserted that
UPLIZNA[supreg]'s 6-month dosing regimen is less frequent than that of
Soliris[supreg], and, therefore, is less burdensome to follow.\521\ The
applicant asserted the dosing schedule for UPLIZNA[supreg] is more
amenable to NMOSD patients for whom more frequent intravenous infusions
may be burdensome and stated that its characteristics as a treatment
regimen, compared to SolirisTM, may help to improve
medication adherence and decrease likelihood of relapse and
hospitalization relative to placebo. To further demonstrate that
UPLIZNA[supreg] may help to improve long-term patient adherence,
compared to SolirisTM, the applicant provided a review by
Vlasnik et al.\522\ noting that medication regimen complexity is one
factor that can negatively affect adherence. The applicant emphasized
that, for NMOSD, medication adherence to maintain immune suppression is
essential for reducing the risk of attacks, which can lead to
hospitalization, vision loss and paralysis. Finally, the applicant
stated that UPLIZNA[supreg] poses less of a barrier for patient access,
as it does not require patients or providers to participate in FDA's
Risk Evaluation and Mitigation Strategy (REMS) program, or receive
additional counselling regarding the program, as required by
Soliris[supreg].\523\
---------------------------------------------------------------------------
\520\ U.S. Food and Drug Administration. (2007, March).
Highlights of prescribing information administration. Retrieved
October 6, 2021, from https://www.accessdata.fda.gov/drugsatfda_docs/label/2007/125166lbl.pdf.
\521\ U.S. Food and Drug Administration. Alexion briefing
information for the November 18, 2014, meeting of the Drug Safety
and Risk Management Advisory Committee. https://www.fda.gov/advisory-committees/human-drug-advisory-committees/drug-safety-and-risk-management-advisory-committee.
\522\ Vlasnik, J.J., Aliotta, S.L., & DeLor, B. (2005, April 7).
Medication adherence: Factors influencing compliance with prescribed
medication plans. The Case Manager. Retrieved October 6, 2021, from
https://www.sciencedirect.com/science/article/abs/pii/S1061925905000263?via%3Dihub.
\523\ Alexion Pharmaceutical, Inc. (2020). Soliris REMS.
Retrieved October 6, 2021, from https://solirisrems.com/.
---------------------------------------------------------------------------
To support its claim that UPLIZNA[supreg] is a new treatment option
for populations that are more likely to be impacted by health
disparities, the applicant noted UPLIZNA[supreg]'s durable efficacy and
favorable safety profile among African Americans with NMOSD. To support
this claim, the applicant cited the safety results published by Cree et
al.\524\ from both a randomized control period (RCP) and an open label
period (OLP) of the N-MOmentum trial. The RCP phase of N-Momentum was a
multicenter, double-blind, \2/3\ study conducted at 99 outpatient
specialty clinics or hospitals in 25 countries that lasted up to 197
days. The primary endpoint was time to onset of an NMOSD attack, as
determined by the investigator and adjudication committee. Eligible
participants were randomized in a 3:1 ratio to receive either 300 mg
intravenous UPLIZNA[supreg] (n=174) or a saline placebo (n=56) on days
1 and 15. Participants continued through the RCP for up to 28 weeks
unless they had a confirmed NMOSD attack, at which point they could
choose to continue in the OLP phase of the trial. The OLP included
eligible adult participants (n=230) who had had at least 1 NMOSD attack
in the year before screening or at least 2 attacks requiring rescue
therapy in the 2 years before screening. During the OLP, all patients
received UPLIZNA[supreg] for at least 2 years. As recommended by an
independent committee, enrollment in the RCP phase stopped prior to
study completion due to the early findings where 21 of 174 participants
(12%) receiving UPLIZNA[supreg] had an attack as compared with 22 of
the 56 placebo recipients (39%). Marignier et al. (2021) assessed
treatment effects in N-MOmentum by measuring score worsening of the
Expanded Disability Status Scale (EDSS) and modified Rankin Scale (mRS)
scores.\525\ EDSS scores were measured at baseline, then at RCP study
weeks 12 and 28, and every 3 months during the OLP, and within 5 days
of a potential attack. mRS scores were measured at baseline, and at
weeks 4, 8, 12, 16, 22, and 28 of the RCP. The Marignier results from
the N-MOmentum study found the annualized attack rate for African
Americans was lower at 0.06 compared to an annualized attack rate of
0.09 in the overall group exposed to UPLIZNA[supreg]. The applicant
stated that among the 19 African American participants who received
UPLIZNA[supreg] or placebo during the RCP and/or OLP of the N-MOmentum
trial, three had attacks 18, 29, and 104 days after their first
UPLIZNA[supreg] dose. The summary of baseline demographics and
characteristics of the intent-to-treat population notes that there were
14 African American participants who received UPLIZNA[supreg] and 5 who
received the placebo.\526\
---------------------------------------------------------------------------
\524\ Cree BAC, Bennett J.L., Kim H.J., Weinshenker B.G.,
Pittock S.J., Wingerchuk D.M., Fujihara K., Paul F., Cutter G.R.,
Marignier R., Green A.J., Aktas O., Hartung H.P., Lublin F.D.,
Drappa J., Barron G., Madani S., Ratchford J.N., She D., Cimbora D.,
Katz E.; N-MOmentum study investigators. Inebilizumab for the
treatment of neuromyelitis optica spectrum disorder (N-MOmentum): a
double-blind, randomised placebo-controlled phase \2/3\ trial.
Lancet. 2019 Oct 12;394(10206):1352-1363. doi: 10.1016/S0140-
6736(19)31817-3. Epub 2019 Sep 5. PMID: 31495497.
\525\ Marignier R., Bennett J.L., Kim H.J., Weinshenker B.G.,
Pittock S.J., Wingerchuk D., Fujihara K., Paul F., Cutter G.R.,
Green A.J., Aktas O., Hartung H.P., Lublin F.D., Williams I.M.,
Drappa J., She D., Cimbora D., Rees W., Smith M., Ratchford J.N.,
Katz E., Cree BAC; N-MOmentum Study Investigators. Disability
Outcomes in the N-MOmentum Trial of Inebilizumab in Neuromyelitis
Optica Spectrum Disorder. Neurol Neuroimmunol Neuroinflamm. 2021 Mar
26;8(3):e978. doi: 10.1212/NXI.0000000000000978. PMID: 33771837;
PMCID: PMC8054974.
\526\ Ibid.
---------------------------------------------------------------------------
With respect to its claim that UPLIZNA[supreg] significantly
improves clinical outcomes relative to previously available treatment
options, the applicant stated that patients taking UPLIZNA[supreg] had
a reduced risk of NMOSD attacks and disability progression when
compared to placebo in the N-MOmentum trial. The applicant again
referenced the results of the N-MOmentum trial reported by Cree et al.,
where 21 (12%) of the 174 participants receiving UPLIZNA[supreg] had an
attack by the time enrollment ended versus 22 (39%) of the 56
participants receiving placebo (hazard ratio (HR) 0[middot]272 [95% CI
0[middot]150-0[middot]496]; p<0[middot]0001). The applicant also
referred to the N-MOmentum results from the OLP and asserted that they
show long-term treatment with UPLIZNA[supreg] provided a sustained
reduction in NMOSD attack risk, MRI lesions, and NMOSD-related
hospitalizations regardless of treatment provided during the RCP. The
applicant
[[Page 28306]]
referenced the disability data published by Marignier et al.\527\ from
the results of the N-MOmentum trial on the use of UPLIZNA[supreg] and
asserted that they showed favorable results among patients with NMOSD
when compared to placebo. Specifically, Marignier et al. assessed the
treatment effects of UPLIZNA[supreg] in comparison with placebo by
using a worsening score of the Expanded Disability Status Scale (EDSS)
to measure confirmed disability progression (CDP). The applicant
asserted that the results show UPLIZNA[supreg] reduced the risk of 3-
month CDP compared with placebo (HR: 0.375; 95% CI: 0.148-0.952; p =
0.0390). The applicant also stated that UPLIZNA[supreg] showed a
significantly lower risk of relapse among patients with NMOSD when
compared to placebo. The applicant cited results from Pittock et
al.,\528\ a randomized, double-blind, time-to-event trial in which 143
adult subjects were randomly assigned to receive either UPLIZNA[supreg]
or placebo weekly and continued use of an immunosuppressive therapy, as
needed. The primary endpoint was the first adjudicated relapse, while
secondary endpoints included the adjudicated annualized relapse rate.
Pittock et al. reported that adjudicated relapses occurred in 3 of 96
patients (3%) in the UPLIZNA[supreg] group and 20 of 47 (43%) in the
placebo group (hazard ratio 0.06; 95% confidence interval [CI], 0.02 to
0.20; P<0.001). The adjudicated annualized relapse rate was 0.02 in the
eculizumab group and 0.35 in the placebo group (rate ratio, 0.04; 95%
CI, 0.01 to 0.15; P<0.001). Referring to the results from the Pittock
et al. study, the applicant asserted that UPLIZNA[supreg] showed a
consistent effect in reducing the risk of attack compared to placebo,
regardless of baseline disability status, attack history, or disease
duration.\529\
---------------------------------------------------------------------------
\527\ Marignier R., Bennett J.L., Kim H.J., Weinshenker B.G.,
Pittock S.J., Wingerchuk D., Fujihara K., Paul F., Cutter G.R.,
Green A.J., Aktas O., Hartung H.P., Lublin F.D., Williams I.M.,
Drappa J., She D., Cimbora D., Rees W., Smith M., Ratchford J.N.,
Katz E., Cree BAC; N-MOmentum Study Investigators. Disability
Outcomes in the N-MOmentum Trial of Inebilizumab in Neuromyelitis
Optica Spectrum Disorder. Neurol Neuroimmunol Neuroinflamm. 2021 Mar
26;8(3): e978. doi: 10.1212/NXI.0000000000000978. PMID: 33771837;
PMCID: PMC8054974.
\528\ Pittock S.J., Berthele A., Fujihara K., Kim H.J., Levy M.,
Palace J., Nakashima I., Terzi M., Totolyan N., Viswanathan S., Wang
K.C., Pace A., Fujita K.P., Armstrong R., Wingerchuk D.M. Eculizumab
in Aquaporin-4-Positive Neuromyelitis Optica Spectrum Disorder. N
Engl J Med. 2019 Aug 15;381(7):614-625. doi: 10.1056/NEJMoa1900866.
Epub 2019 May 3. PMID: 31050279.
\529\ Ibid.
---------------------------------------------------------------------------
After review of the information provided by the applicant, we have
the following concerns regarding whether UPLIZNA[supreg] meets the
substantial clinical improvement criterion. First, we note that while
the applicant provided data comparing UPLIZNA[supreg] to placebo, we
did not receive any data to demonstrate improved outcomes over existing
FDA approved treatments. Additional information comparing outcomes such
as relapse rate, risk of relapse, and disability progression for
patients receiving UPLIZNA[supreg] versus other currently available
treatments would help inform our assessment of whether UPLIZNA[supreg]
demonstrates a substantial clinical improvement over existing
technologies. Second, while the applicant asserted that UPLIZNA[supreg]
represents a new treatment option for patients who are unvaccinated
with the meningococcal vaccine, similar to the discussion in the FY
2022 IPPS/LTCH PPS final rule (86 FR 45021) in response to a similar
assertion with respect to ENSPRYNGTM, we note that
ENSPRYNG[supreg] is also not contraindicated in patients with
unresolved serious Neisseria meningitidis infection and therefore may
also be a treatment option for patients with meningococcal disease. We
further note that the use of ENSPRYNGTM to treat patients
with NMOSD also does not require a meningococcal vaccination. We note
that the applicant sought to support its claim that UPLIZNA[supreg]
represents a new treatment option for patients who are unvaccinated
against Neisseria meningitidis through the inference that
Soliris[supreg] has a high risk of causing meningitis; however, we have
concerns about the applicant's claim because Neisseria meningitidis may
easily be mitigated through the use of a common vaccine or
antimicrobials. As discussed in the FY 2022 IPPS/LTCH PPS final rule in
response to similar claims with respect to ENSPRYNG[supreg], and as
noted previously, individuals that are not vaccinated against Neisseria
mengitidis 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 (86 FR 45027).
With regard to the applicant's claim that UPLIZNA[supreg] is a new
treatment option for patients following treatments with more frequent
dosing schedules, we are unsure whether these patients may be
considered as a separate patient population ineligible for currently
available treatments. For example, although the applicant compared the
UPLIZNA[supreg] dosing regimen against Soliris[supreg], it did not
provide a similar comparison against ENSPRYNGTM, which--
similar to UPLIZNA[supreg]--does not require frequent intravenous
infusions or participation in the FDA REMS program (see 86 FR 45020).
Therefore, it is unclear whether UPLIZNA[supreg] provides a treatment
option for a separate patient population that is ineligible for
currently available treatments, when there are other available
treatments, like ENSPRYNGTM, without the limitations that
the applicant described with respect to Soliris[supreg]. In addition,
while the applicant stated that UPLIZNA[supreg]'s dosing regimen may
help to improve long-term patient medication adherence and decrease the
likelihood of relapse and hospitalization, we question the strength of
the correlation between UPLIZNA's[supreg] dosing regimen and these
outcomes. We are also interested in additional information on the
efficacy results of UPLIZNA[supreg] among African Americans with NMOSD,
as cited by the applicant, as we understand that NMOSD
disproportionately affects African American and Asian populations at
rates approximately 2- to 3-fold higher than their Caucasian
counterparts.\530\ Specifically, we question whether the retrospective
analysis of the results from the N-MOmentum trial on the annualized
attack rate for African Americans (0.06 compared with 0.09 in the
overall group) is generalizable to larger populations because the study
included low numbers of participants. Of the 20 African American
participants randomized in N-Momentum, 19 were AQP4 antibody positive
and 1 was AQP4 antibody negative. As a result, of the 19 participants,
14 received UPLIZNA[supreg], and only 5 received
placebo.531 532 We further note that the applicant did not
provide comparative data on the efficacy of UPLIZNA[supreg],
Soliris[supreg], and ENSPRYNGTM in these populations.
---------------------------------------------------------------------------
\530\ Flanagan, E.P. et al. (2016, April 4). Epidemiology of
aquaporin[hyphen]4 autoimmunity and Neuromyelitis Optica Spectrum.
Wiley Online Library. Retrieved October 6, 2021, from https://onlinelibrary.wiley.com/doi/10.1002/ana.24617.
\531\ Bernitsas, E., Cimbora, D., Dinh, Q., She, D., Katz, E.
Safety and Efficacy of Inebilizumab in African Americans with
Neuromyelitis Optica Spectrum Disorder. Poster presentation at the
15th World Congress on Controversies in Neurology (CONy Virtual).
September 23-26, 2021.
\532\ Cree BAC, Bennett JL, Kim HJ, Weinshenker BG, Pittock SJ,
Wingerchuk DM, Fujihara K, Paul F, Cutter GR, Marignier R, Green AJ,
Aktas O, Hartung HP, Lublin FD, Drappa J, Barron G, Madani S,
Ratchford JN, She D, Cimbora D, Katz E; N-MOmentum study
investigators. Inebilizumab for the treatment of neuromyelitis
optica spectrum disorder (N-MOmentum): A double-blind, randomised
placebo-controlled phase \2/3\ trial. Lancet. 2019 Oct
12;394(10206):1352-1363. doi: 10.1016/S0140-6736(19)31817-3. Epub
2019 Sep 5. PMID: 31495497.
---------------------------------------------------------------------------
We are inviting public comments on whether UPLIZNA[supreg] meets
the
[[Page 28307]]
substantial clinical improvement criterion.
We did not receive any written comments in response to the New
Technology Town Hall meeting notice published in the Federal Register
regarding the substantial clinical improvement criterion for
UPLIZNA[supreg].
m. XENOVIEW (hyperpolarized Xenon-129 [HP \129\Xe] gas for inhalation)
Polarean, Inc. and The Institute for Quality Resource Management
(collectively referred to as ``applicant'') submitted an application
for new technology add-on payments for XENOVIEW for FY 2023. Per the
applicant, XENOVIEW is a gas blend used in chest magnetic resonance
imaging (MRI) that is processed to consist of 89% Helium, 10% Nitrogen,
and 1% Xenon. The applicant stated that the 1% Xenon in the gas blend
is hyperpolarized (HP) to create Xenon-129 (\129\Xe) (that is, 80%
purity of \129\Xe isotope), which allows for high resolution 3-
dimensional (3-D) images of the lungs and assessment of the lungs'
functional status when inhaled by a patient during a pulmonary MRI
scan. The applicant stated that XENOVIEW rapidly and directly
quantifies regional lung function without ionizing radiation or
compromising patient comfort and aids clinical decision-making by
directly quantifying gas exchange across three compartments (airspace
and ventilation, interstitial barrier tissues, and transfer to red
blood cells (RBCs)) to provide a complete picture of lung function. The
applicant stated that this makes it well-suited for longitudinal
therapeutic evaluation and assessment of disease progression.\533\
---------------------------------------------------------------------------
\533\ Wang Z, Rankine L, Bier EA, Mummy D, Lu J, et al. Using
hyperpolarized \129\Xe gas exchange MRI to model the regional
airspace, membrane and capillary contributions to diffusing
capacity. J Appl Physiology 130: 1398-1409, 2021.
---------------------------------------------------------------------------
The applicant stated that hyperpolarization of \129\Xe gas is
generated by using the combination hyperpolarization system consisting
of the \129\Xe gas cylinder, Hyperpolarizer, Measurement Station, and
Dose Delivery Bag. The applicant noted that hospital trained clinical
personnel use this drug system to activate the XENOVIEW from the
initial gas blend cylinder, and to make HP \129\Xenon immediately prior
to patient administration. The applicant explained that collectively,
these components hyperpolarize (using the Xenon Hyperpolarizer) and
measure the hyperpolarization of \129\Xe gas (using the Polarization
Measurement Station), and then the clinician administers the XENOVIEW
Dose Equivalent (DE) to the patient using the Polarean DE Dose Delivery
Bag during a pulmonary MRI scan.
According to the applicant, XENOVIEW MRIs can be used to spatially
characterize disease burden across a range of pulmonary disorders and
lung abnormalities, including asthma, cystic fibrosis (CF),
bronchiolitis obliterans, interstitial lung disease, patients
recommended for surgical lung resection, post-lung transplant patients,
and people diagnosed with chronic obstructive pulmonary disease (COPD).
The applicant noted specifically that defects in all three compartments
of lung function are commonly seen in COPD, and that XENOVIEW has been
used to assess regional lung function in patients recommended for
surgical lung resection as well as in post-lung transplant patients to
sooner diagnose a failing transplant (where corrective action is needed
to save the lung). Per the applicant, the estimated patient prevalence
of these conditions is over 40 million diagnoses in the United States.
With respect to the newness criterion, the applicant stated it is
pursuing an NDA from FDA for XENOVIEW as a drug combination for the
evaluation of pulmonary function and imaging of the lungs using MRI.
The applicant reported that on October 5, 2021, it received a complete
response letter from FDA. The applicant stated that it intends to
address FDA's concerns and resubmit the NDA, with FDA approval
anticipated by July 1, 2022. The applicant anticipates commercial
availability for XENOVIEW after FDA approval. Per the applicant, the
recommended dosage for XENOVIEW is 75 mL Dose Equivalent (DE, where DE
= total volume Xe gas x \129\Xe isotopic enrichment x polarized%) of HP
\129\Xe (250-750 mL total Xe) mixed with nitrogen NF (99.999% purity)
as an inert buffer to ensure that the total volume of gas contained in
the XENOVIEW Dose Delivery Bag is 1L.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify cases involving the use of
XENOVIEW. The applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for XENOVIEW beginning in FY 2023.
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 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 explained that HP \129\Xe identifies regional function in
the entire lung, facilitating more informed treatment decisions while
reducing the patient's risk of receiving more invasive procedures, such
as a right heart catherization. The applicant stated that the
hyperpolarization and isotopic properties used by XENOVIEW are
different from traditional MRI imaging, which is based on imaging of
the hydrogen nucleus. Further, the applicant stated that XENOVIEW
provides a completely new image requiring novel hardware, pulse
sequence programming, post-processing interpretation software, and
physician training for evaluation of lung function. Per the applicant,
alternatives to XENOVIEW include nuclear scintigraphy methods using
\133\Xe ventilation and/or Technetium (99mTc) perfusion (ventilation/
perfusion [V/Q] scan) or spirometry measurements, which, according to
the applicant, do not provide regional information and pose added
ionizing radiation to the patient. The applicant stated that
experimental computed tomography (CT) imaging using parametric modeling
has also been used to infer function from structural imaging; however,
unlike XENOVIEW, it does not directly measure function.
With respect to the second criterion, whether a product is assigned
to the same or different MS-DRG when compared to an existing
technology, the applicant stated that XENOVIEW has not been assigned to
an MS-DRG and cannot be compared to an existing technology, nor is
there data reflecting the cost of XENOVIEW in the MS-DRGs as it has not
yet been billed to Medicare. However, the applicant noted that XENOVIEW
is intended to aid diagnoses for patients with pulmonary disease
frequently assigned to MS-DRGs 190-192 and 202-203, provided in the
table.
[[Page 28308]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.119
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 asserted that XENOVIEW is available
to a new population of patients whose underlying morbidities cannot
safely tolerate standard lung imaging. The applicant noted that only
13% of patients within MS-DRGs 190-192 and 202-203 are without a
complication or major complication, and that subjecting these patients
to additional radiation exposure--such as that through single-photon
emission computed tomography (SPECT)/CT, high-resolution CT, or
nephrotoxicity from MRI--is not appropriate. The applicant further
stated that an analysis of imaging ICD-10-PCS codes within these MS-
DRGs indicates that less than 8% of these patients receive inpatient
imaging. The applicant stated that XENOVIEW enables patients with
comorbidities to have safe and effective MRIs to monitor their disease
response to treatment or to identify loss of lung function. The
applicant stated that XENOVIEW addresses an unmet medical need for a
diagnostic agent that evaluates pulmonary function using more modern
and precise imaging techniques (for example, MRI) without requiring
patients to be exposed to radiation or nephrotoxicity.
In summary, the applicant stated that XENOVIEW is not substantially
similar to other currently available therapies and/or technologies
because it has a unique mechanism of action compared to existing lung
imaging modalities, has not been assigned to an MS-DRG, and treats a
new patient population. Therefore, the applicant asserted that XENOVIEW
meets the ``newness'' criterion.
We note that although the applicant states that XENOVIEW has not
been assigned to an MS-DRG and cannot be compared to an existing
technology, we believe that based on its proposed FDA indication, cases
involving the use of XENOVIEW would be assigned to the same MS-DRGs as
cases involving the use of other MRIs and imaging modalities for
pulmonary function and imaging of the lungs. We also believe that
XENOVIEW may use the same or similar mechanism of action as other
inhaled gases (\133\Xe) and oxygen-enhanced pulmonary imaging, and we
invite public comments on whether XENOVIEW's mechanism of action for
the diagnosis and assessment of certain lung abnormalities is different
than existing technologies. Further, we also invite public comments on
whether XENOVIEW's safety profile allows patients with certain
underlying morbidities access to previously contraindicated pulmonary
testing and whether those patients with previous contraindication to
current pulmonary imaging techniques should be considered a new patient
population. We note that the proposed FDA indication for this
technology is the evaluation of pulmonary function and imaging of the
lungs using MRI, which is not unique to XENOVIEW, and does not mention
the subset of patients with comorbidities that the applicant asserts is
a new patient population.
We are inviting public comments on whether XENOVIEW is
substantially similar to existing technologies and whether XENOVIEW
meets the newness criterion.
With respect to the cost criterion, the applicant presented three
analyses which varied the charges added for the new technology. For all
three analyses, the applicant determined that cases representing
patients potentially eligible for treatment with XENOVIEW (that is,
patients with lung disease, exacerbations of lung disease, or those who
require an inpatient admission to better monitor their response to or
the side effects of pharmacologic therapy) mapped to five MS-DRGs,
listed in the table.
[GRAPHIC] [TIFF OMITTED] TP10MY22.120
The applicant explained that it initially identified 255,651 cases
as reported for the MS-DRGs in the preceding table in the FY 2019
MedPAR data. However, the applicant stated that because the cases it
identified were 96% of total FY 2019 MS-DRG discharges reported in the
FY 2023 threshold table, it decided to use the case counts from the FY
2023 Threshold Table, which resulted in a total of 267,158 cases. The
applicant stated that it did not remove charges for prior drugs. The
applicant then standardized the charges and applied a 4-year inflation
factor of 1.281834 or 28.1834% based on the inflation factor used in
the FY 2022 IPPS/LTCH PPS final rule and correction notice to calculate
outlier threshold charges (86 FR 45542).
The applicant then added charges for the new technology by dividing
the cost of XENOVIEW by the national average CCR for: (1) Drugs and
radiology; (2) drugs alone; and (3) radiology alone. The applicant used
the national average CCRs published in the FY 2022 IPPS/LTCH PPS final
rule (86 FR 44966).
In the first analysis, the applicant applied the national average
CCR for
[[Page 28309]]
drugs, which is 0.187, to costs associated with the gas blend
preparation, and the national average CCR for radiology, which is
0.136, for preparation of the hyperpolarized dose equivalent. Under
this analysis, the applicant calculated a final inflated average case-
weighted standardized charge per case of $51,418 which exceeded the
average case-weighted threshold amount of $42,424.
In the second analysis, the applicant added charges for the new
technology by dividing the cost of XENOVIEW by the national average CCR
for drugs, which is 0.187, for costs associated with the gas blend
preparation as well as costs associated with preparation of the
hyperpolarized dose equivalent. Under this analysis, the applicant
calculated a final inflated average case-weighted standardized charge
per case of $49,012 which exceeded the average case-weighted threshold
amount of $42,424.
In the third analysis, the applicant added charges for the new
technology by dividing the total cost of XENOVIEW by the national
average CCR for radiology, which is 0.136. Under this analysis, the
applicant calculated a final inflated average case-weighted
standardized charge per case of $52,622 which exceeded the average
case-weighted threshold amount of $42,424.
[GRAPHIC] [TIFF OMITTED] TP10MY22.121
Because the final inflated average case-weighted standardized
charge per case exceeded the average case-weighted threshold amount in
each analysis, the applicant asserted that XENOVIEW meets the cost
criterion.
We are inviting public comments on whether XENOVIEW meets the cost
criterion, including whether it is appropriate to assume that no
charges should be removed for the prior technology or the technologies
being replaced for the cases assigned to the identified MS-DRGs,
particularly as the applicant noted 13% of patients within MS-DRGs 190-
192 and 202-203 are without a complication or major complication, and
therefore might be able to handle additional radiation exposure such as
that through SPECT/CT or high-resolution CT, or nephrotoxicity from
MRI. For this reason, we invite comment on whether any charges should
be removed within the specified MS-DRGs to account for prior technology
XENOVIEW would be replacing.
With regard to the substantial clinical improvement criterion, the
applicant asserted that XENOVIEW offers: (1) A new service or treatment
option for patients with early symptoms of breathing difficulty,
including those with an uncertain diagnosis that are unresponsive to,
or ineligible for, currently available treatments; (2) the ability to
diagnose a medical condition in a patient population where the medical
condition is currently undetectable; (3) the ability to diagnose a
medical condition earlier than currently available methods; (4)
improved outcomes such as novel actionable information to inform
treatment decisions; and (5) the ability to safely monitor unexplained
dyspnea.
In support of its first assertion that XENOVIEW can help patients
with early symptoms of breathing difficulty, the applicant noted that
these patients--which include those with suspected COPD, asthma, or
those living with idiopathic pulmonary fibrosis or inflammatory
pulmonary disease--can benefit from XENOVIEW's safety profile as it
allows them to receive medically necessary diagnostic treatment to aid
their treatment decisions. The applicant stated that these patients are
particularly vulnerable to gadolinium contrast enhanced MRI, lung
SPECT, or thoracic CT imaging. According to the applicant, XENOVIEW can
aid in treatment management and would be able to be used for clinical
decision making to reduce a COPD exacerbation, preempt asthma
exacerbation, and support therapies for interstitial lung disease.
The applicant also asserted that XENOVIEW can help identify the
ventilation defect percentage (VDP) in patients with early symptoms,
including patients in early phase COPD or asthma, and can provide
diagnostic information with lesser risk than other pulmonary function
tests (PFTs) and lung imaging methods. The applicant cited an opinion
paper by Usmani et al.,\534\ which discusses small airways disease in
the context of asthma and COPD, as background to highlight gaps in
current knowledge that impede earlier identification of obstructive
lung disease and the development and standardization of novel small
airways-specific end points for use in clinical trials. The applicant
stated that because XENOVIEW is intended to help assess small airways,
it could help address the gaps in current knowledge discussed in the
opinion paper.
---------------------------------------------------------------------------
\534\ Usmani OS, Han MK, Kaminsky DA, Hogg J, Hjobert J, et al.
Seven pillars of small airway disease in Asthma and COPD. CHEST
2021; 160(1):114-134.
---------------------------------------------------------------------------
The applicant asserted that detailed imaging through the 23
branches of the lung that can be provided by XENOVIEW is an ideal way
to preemptively manage the patients with lung disease. In support of
this claim, the applicant cited a narrative review by Crisafulli et
al.\535\ as background on AECOPD and the current treatment options. In
this narrative, the authors conducted a review of 160 citations, based
on a search of Medline completed in the month of May 2018, to update
the scientific evidence about the in-hospital pharmacological (inhaled
bronchodilators, steroids, antibiotics) and non-pharmacological
treatments (oxygen, high flow nasal cannulae (HFNC) oxygen, non-
invasive mechanical ventilation (NIMV), pulmonary rehabilitation (PR))
used in the management of a severe COPD exacerbation as well as studies
about non-conventional drugs for severe AECOPD. The applicant asserted
that HP \129\Xe MRI has been shown to identify signs of COPD earlier
than conventional techniques and can therefore enable earlier
rehabilitation for the patient, which was identified in the
[[Page 28310]]
study as one factor that could improve treatment of AECOPD.
---------------------------------------------------------------------------
\535\ Crisafulli, E., Barbeta, E., Ielpo, A., Torres, A. (2018)
Management of severe acute exacerbations of COPD: An updated
narrative review. Multidiscip Respir Med 13: 36.
---------------------------------------------------------------------------
In support of its claim that XENOVIEW offers the ability to
diagnose a medical condition earlier in a patient population than
allowed by currently available methods, the applicant cited additional
references. The applicant asserted that use of HP \129\Xe MRI
correlates with asthma severity, health care utilization and oral
corticosteroid use. The applicant referenced an article by Lin et
al.\536\ in which children with asthma have a higher VDP (p = 0.002)
and a higher number of defects per image slice than children without
asthma (p = 0.0001). The article noted that children with asthma who
had higher defects per image slice had a higher rate of health care
utilization correlation (r) (r = 0.48; p = 0.03) and oral
corticosteroid use (r = 0.43, p = 0.05). Asthma severity can be
difficult to assess in children and the authors postulate that HP
\129\Xe MRI can be used to identify children at a higher risk for
exacerbations and improve outcomes. The applicant stated that VDP
detected by HP \129\Xe was significantly different between the healthy
cohort (n = 16 subjects), mild/moderate asthma cohort (n = 8 subjects),
and severe asthma cohort (n = 13 subjects) as well as between the
healthy cohort and the combined asthma cohorts (all p < 0.002). The
applicant also noted that the forced expiratory volume in 1 second
(FEV1) pulmonary function test did not detect significant
differences between any of the cohorts (p = 0.15) whereas the
FEV1 to forced vital capacity (FVC) ratio did (p = 0.009).
---------------------------------------------------------------------------
\536\ Lin NY, Roach DJ, Willmer MM, Walkup LL, Hossain M, et al.
\129\Xe MRI as a measure of clinical disease severity for pediatric
asthma. 2021; Journal of Allergy and Clinical Immunology 147(6):
2146-2153.
---------------------------------------------------------------------------
The applicant also cited the opinion paper by Usmani et al.\537\
discussed in its first claim regarding the importance of assessing
small airways. The applicant again asserted that HP \129\XE offers the
diagnostic ability needed to assess small airways, is minimally
invasive, and does not require additional ionizing radiation. The
applicant states that this combination is not found in any other
existing diagnostic tool for pulmonary function.
---------------------------------------------------------------------------
\537\ Usmani OS, Han MK, Kaminsky DA, Hogg J, Hjobert J, et al.
Seven pillars of small airway disease in Asthma and COPD. CHEST
2021; 160(1):114-134.
---------------------------------------------------------------------------
The applicant also asserted that XENOVIEW has been demonstrated to
detect early stages of lung disease in smokers before progression to
COPD and could help diagnose patients more accurately than the use of
FEV1 and related pulmonary function tests, which the
applicant asserted can impair spirometry results. In support of this
claim, the applicant provided background from a study performed by
Fortis et al.,\538\ a retrospective cohort study to evaluate whether
slow vital capacity (SVC) instead of FVC increased the sensitivity of
spirometry to identify patients with early or mild obstructive lung
disease. The study included 854 current and former smokers in the U.S.
aged 40-80 years from the Sub-populations and Intermediate Outcome
Measures in COPD Study cohort with a postbronchodilator
FEV1/FVC >= 0.7 and FEV1% predicted of >= 80% at
enrollment. Characteristics, chest CT scan features, exacerbations, and
progression to COPD (postbronchodilator FEV1/FVC, < 0.7)
were compared to the baseline during the follow-up period between 734
participants with postbronchodilator FEV1/SVC of >= 0.7 and
120 with postbronchodilator FEV1/SVC < 0.7 at the
enrollment. The study included multivariate linear and logistic
regression models and negative binomial and interval-censored
proportion hazards regression models adjusted for demographics and
smoking exposure to examine the association of FEV1/SVC <
0.7 with those characteristics and outcomes.
---------------------------------------------------------------------------
\538\ Fortis, S., Comellas, A.P., Bhatt, S.P., Hoffman, E.A.,
Han, M.K., Bhakta, N.R., Barjaktarevic, I. (2021) Ratio of FEV1/slow
vital capacity of < 0.7 is associated with clinical, functional, and
radiologic features of obstructive lung disease in smokers with
preserved lung function. CHEST 160(1): 94-103.
---------------------------------------------------------------------------
Of the 854 current and former smokers with normal spirometry
results at enrollment, 120 participants showed a post bronchodilator
FEV1/SVC less than 0.7, and 734 participants showed an
FEV1/SVC greater than or equal to 0.7. Participants with a
postbronchodilator FEV1/SVC of less than 0.7 experienced
more emphysema, gas trapping and severe exacerbations and manifested
more COPD symptoms relative to those patients with FEV1/SVC
greater than or equal to 0.7. They also found similar results in
patients with a prebronchodilator FEV1/SVC of less than 0.7
or FEV1/SVC less than the lower limit of normal with chest
CT scan features and progression to COPD. In conclusion, the authors
believed that FEV1/SVC less than 0.7 or the lower limit of
normal may be used as a metric of early obstruction and may be a useful
tool in identifying individuals at increased risk of COPD. The authors
noted that the study had some limitations as the analysis was limited
to a cohort of heavy smokers older than 40 years and cautioned that the
study findings may not be generalizable. The authors also stated that
they did not take into consideration other risk factors for obstructive
lung disease such as occupational exposure. Fortis et al. also noted
that because FEV1/SVC ratios are not widely used, there are
no widely accepted reference values so they used 0.7 as a cutoff for
the FEV1 to true vital capacity (VC) for the main
analysis.\539\ The applicant stated that FEV1 and related
pulmonary function tests can result in increased intrathoracic
pressure, which could shorten exhalation time and impair accurate
spirometry results, and that this issue is not prevalent with HP
\129\Xe MRI.
---------------------------------------------------------------------------
\539\ Ibid.
---------------------------------------------------------------------------
The applicant stated that XENOVIEW can provide critical diagnostic
information for patients that cannot perform spirometry or tolerate the
risk of standard lung imaging, and/or require detailed information on
ventilation differences. The applicant also asserted that the safety
profile of XENOVIEW for MRI lung diagnostics is superior to alternative
lung imaging options, including PFT, because XENOVIEW does not use any
ionizing radiation or impart any ionizing radiation in the procedure,
and it offers visualization of MRI images without nephrotoxicity (in
contrast to CT images), which permits it to be used for longitudinal
therapeutic evaluation and assessment of disease progression.
The applicant asserted that HP \129\Xe MRI is able to depict airway
obstructions in mild to moderate asthma and significantly correlates
with PFTs. In support of this claim, the applicant referenced a study
by Ebner et al.,\540\ which investigated ventilation in mild to
moderate asthmatic patients and age-matched controls using HP \129\Xe
MRI and correlated findings with PFTs. In this study, 30 subjects (10
young asthmatic patients, 26 6 years; three males, seven
females; 10 older asthmatic patients, 64 6 years; three
males, seven females; 10 healthy controls) were enrolled. After
repeated PFTs 1 week apart, the subjects underwent two MRI scans within
10 minutes, inhaling 1-L volumes containing 0.5 to 1 L of HP \129\Xe.
The applicant stated that HP \129\Xe MRI detected significant
differences between young healthy subjects and young asthmatic subjects
[[Page 28311]]
(p = 0.03), between young asthmatic subjects and old asthmatic subjects
(p = 0.02), and between young healthy subjects and old healthy subjects
(p = 0.05), whereas FEV1% only detected a significant
difference between young healthy subjects and young asthmatic subjects
(p = 0.01).
---------------------------------------------------------------------------
\540\ Ebner L., He M., Virgincar R.S., Heacock T., Kaushik S.S.,
et al. Hyperpolarized \129\xenon magnetic resonance imaging to
quantify regional ventilation differences in mild to moderate
asthma: A prospective comparison between semiautomated ventilation
defect percentage calculation and pulmonary function tests. 2017;
Investigative Radiology 52: 120-127.
---------------------------------------------------------------------------
The applicant also asserted that in patients with COPD, the VDP
obtained with HP \129\Xe is significantly greater than that with HP
\3\He MRI, suggesting incomplete or delayed filling of lung regions
that may be related to the different properties inherent to HP \129\Xe
gas and physiologic and/or anatomic abnormalities in COPD. The
applicant provided a peer-reviewed journal article by Kirby et al.\541\
on HP \3\He and HP \129\Xe MRI imaging in healthy volunteers and
patients with COPD. Kirby et al. quantitatively compared HP \3\He and
HP \129\Xe MRI images in healthy volunteers and patients with COPD with
measurements from spirometry and plethysmography. In the study, 8
healthy patients and 10 COPD patients underwent MRI (5 minutes between
HP \3\He MRI and HP \129\Xe MRI), spirometry and plethysmography. VDPs
were calculated in HP \3\He and HP \129\Xe MRIs. HP \129\Xe VDP was
significantly greater than HP \3\He VDPs for patients with COPD (p <
0.0001) but not for healthy volunteers (p = 0.35).
---------------------------------------------------------------------------
\541\ Kirby M., Svenningsen S., Owrangi A., Wheatley A., Farag
A., et al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
2012;Radiology 265(2): 600-610.
---------------------------------------------------------------------------
The applicant asserted that functional alveolar wall thickness
assessed by HP \129\Xe MRI allows discrimination between healthy
subjects and healthy smokers and the applicant asserted its belief that
HP \129\Xe could be a useful tool for detecting early-stage lung
disease. The applicant referenced a prospective cohort study by Ruppert
et al.\542\ that hypothesized that the functional alveolar wall
thickness as assessed by HP \129\Xe MR spectroscopy would be elevated
in clinically healthy smokers before HP \129\Xe MR diffusion
measurements would indicate emphysematous tissue destruction. The
researchers used HP \129\Xe MR to measure the functional septal wall
thickness and apparent diffusion coefficient of the gas phase in 16
subjects with smoking-related COPD, 9 clinically healthy current or
former smokers, and 10 healthy never-smokers. The applicant stated that
the study results reported that in healthy never-smokers, the septal
wall thickness increased by 0.04 [mu]m per year of age, while that the
healthy smoker cohort exhibited normal PFT measures that did not
significantly differ from the never-smoker cohort. The applicant stated
that the study results noted that age-corrected septal wall thickness
correlated well with diffusion capacity for carbon monoxide (R\2\ =
0.56) and showed a statistically significant difference between healthy
subjects and COPD patients (p < 0.001) but was the only measure that
actually discriminated healthy subjects from healthy smokers (p <
0.006). The applicant stated that this suggests HP \129\Xe MRI can be
used to detect early stages of lung disease, and that detecting early
COPD could enable lifestyle changes and encourage patients to gain
insight into their disease to aid their health.
---------------------------------------------------------------------------
\542\ Ruppert K., Qing K., Patrie J.T., Altes T.A., Mugler J.P..
Using hyperpolarized xenon-129 MRI to quantify early-stage lung
disease in smokers. Acad. Radiol. 2019 March; 26(3): 355-366.
doi:10.1016/j.acra.2018.11.005.
---------------------------------------------------------------------------
According to the applicant, the unique properties of HP \129\Xe are
well-suited to evaluate pulmonary function in patients with lung cancer
and HP \129\Xe has a potential advantage over other imaging modalities
such as a ventilation-perfusion (VQ) scan since both gaseous and
dissolved phases can be measured to provide a more comprehensive 3-D
evaluation of ventilation and interstitial thickening. In support of
this claim, the applicant cited a case report by Song et al.\543\
involving a 64-year-old male who presented with dyspnea. In the study,
the patient's chest CT revealed a seven cm right lung mass with
mediastinal invasion and compression of the right mainstem bronchus
while bronchoscopy showed a 90% obstructing mass in the right mainstem
bronchus. Pathology was consistent with adenocarcinoma. The mass was
hypermetabolic on PET/CT with involvement of mediastinal lymph nodes.
The patient was under concurrent radiation therapy (RT) and
chemotherapy and subsequently enrolled in the HP \129\Xe study after
institutional review board approval. The study design involved the
evaluation of HP \129\Xe before and after RT. The patient's right lung
was completely expanded at diagnosis, yet the patient displayed
significant dyspnea. The applicant stated that HP \129\Xe MRI detected
non-ventilation to the right lung despite the right lung appearing
inflated in the CT scan, and that the increased FEV1 values
from pre- to post-treatment reflected re-ventilation induced by
treatment resulting from detected non-ventilation by the HP \129\Xe
MRI. The study authors noted that post-treatment HP \129\Xe MRI
confirmed re-ventilation of the lung.
---------------------------------------------------------------------------
\543\ Song, E.J., Kelsey, C.R., Driehuys, B., Rankine, L. (2018)
Functional airway obstruction observed with hyperpolarized
\129\xenon-MRI. J Med Imaging Radiat Oncol 62: 91-98.
---------------------------------------------------------------------------
The applicant further asserted that emphysema index based on HP
\3\He and HP \129\Xe diffusion MRI provides a repeatable measure of
emphysema burden, independent of gas or b value, with similar
diagnostic performance as quantitative CT or pulmonary function
metrics. The applicant referenced an article from Tafti et al.,\544\ a
retrospective study that sought to introduce and test a quantitative
framework with which to characterize emphysema burden based on HP \3\He
and HP \129\Xe apparent diffusion coefficient (ADC) maps and compare
its diagnostic performance with CT-based emphysema metrics and PFTs.
The authors indicated that emphysema is a disease characterized by
irreversible destruction of alveolar walls that causes loss of lung
elastic recoil and impaired gas exchange. The study investigated 27
patients with mild, moderate, or severe COPD and 13 age-matched healthy
control subjects participated in this retrospective study. Participants
underwent CT and multiple b value diffusion-weighted HP \3\He and HP
\129\Xe MRI examinations and standard PFTs between August 2014 and
November 2017. The ADC-based emphysema index was computed separately
for each gas and b value as the fraction of lung voxels with ADC values
greater than in the healthy group 99th percentile. The resulting values
were compared with quantitative CT results (relative lung area <-950
HU) as the reference standard. Diagnostic performance metrics included
area under the receiver operating characteristic curve (AUC). Spearman
rank correlations and Wilcoxon rank sum tests were performed between
ADC-, CT-, and PFT-based metrics, and intraclass correlation was
performed between repeated measurements. The study concluded that an
emphysema index based on HP \3\He and HP \129\Xe diffusion MRI provides
a repeatable measure of emphysema burden, independent of gas or b
value, with similar diagnostic performance as quantitative CT or
pulmonary function metrics. The applicant stated that HP \129\Xe MRI
offered higher sensitivity in detecting pulmonary obstruction, as
[[Page 28312]]
19% of subjects with COPD appeared healthy based on CT scans, and
emphysematous based on HP \3\He and HP \129\Xe MRI ADC, whereas no
subjects with COPD appeared healthy based on HP \3\He and HP \129\Xe
MRI ADC.
---------------------------------------------------------------------------
\544\ Tafti, S., Garrison, W.J., Mugler III, J.P., Shim, Y.M.,
Altes, T.A., Mata, J.F., de Lange, E.E., Cates, G.D., Ropp, A.M.,
Wang, C., Miller, G W. (2020) Emphysema index based on
hyperpolarized \3\He or \129\Xe diffusion MRI: Performance and
comparison with quantitative CT and pulmonary function tests.
Radiology 297: 201-210.
---------------------------------------------------------------------------
The applicant asserted that HP \129\Xe MRI could develop into a
tool that can guide individualized patient care and the use of HP
\129\Xe MRI may have a role as a tool for both patient selection and
measuring treatment response in future COPD clinical trials. To support
its claim that HP \129\Xe MRI provides a quantitative, reproducible
measure of treatment effectiveness, the applicant cited a study by
Mummy et al.,\545\ a prospective study characterizing changes in HP
\129\Xe gas transfer function following administration of an inhaled
long[hyphen]acting beta[hyphen]agonist/long[hyphen]acting muscarinic
receptor antagonist (LABA/LAMA) bronchodilator. The study involved 17
COPD study participants with a GOLD II/III classification per Global
Initiative for Chronic Obstructive Lung Disease criteria. The study
participants were imaged before and after 2 weeks of LABA/LAMA therapy.
According to the applicant, the study concluded that LABA/LAMA therapy
tended to preferentially improve ventilation in those subjects with
relatively preserved measures of HP \129\Xe barrier uptake and
DLCO (carbon monoxide) and noted that even in study
participants with improved ventilation, newly ventilated lung regions
often revealed persistent HP \129\Xe red blood cell (RBC) transfer
defects, an aspect of LABA/LAMA therapy response that is opaque to
spirometry. The study indicated that these results add to the body of
knowledge regarding COPD phenotypes and indicate a possible role for HP
\129\Xe gas transfer MRI as a tool for both patient selection and
measuring treatment response in future COPD clinical trials. The study
also concluded that as health care develops therapies that demonstrably
improve not only ventilation but also RBC transfer, HP \129\Xe may
develop into a tool that can guide individualized patient care.\546\
---------------------------------------------------------------------------
\545\ Mummy, D.G., Coleman, E.M., Wang, Z., Bier, E.A., Lu, J.,
Driehuys, B., Huang, Y.C. (2021) Regional gas exchange measured by
\129\Xe magnetic resonance imaging before and after combination
bronchodilators treatment in chronic obstructive pulmonary disease.
J Magn Reson Imaging 54(3): 964-974. DOI: 10.1002/jmri.27662.
\546\ Mummy, D.G., Coleman, E.M., Wang, Z., Bier, E.A., Lu, J.,
Driehuys, B., Huang, Y.C. (2021) Regional gas exchange measured by
\129\Xe magnetic resonance imaging before and after combination
bronchodilators treatment in chronic obstructive pulmonary disease.
J Magn Reson Imaging 54(3): 964-974. DOI: 10.1002/jmri.27662.
---------------------------------------------------------------------------
The applicant asserted HP \129\Xe is a useful imaging tool for
conducting pulmonary assessments on a patient-specific scale and allows
for a deeper examination of underlying pathologies and pulmonary
function test results. In support, the applicant referenced an article
by Wang et al.\547\ that indicated that HP \129\Xe MRI has emerged as a
novel means to evaluate pulmonary function via 3-D mapping of
ventilation, interstitial barrier uptake, and RBC transfer, and the
physiological interpretation of these measurements has yet to be firmly
established. The authors proposed a model that uses the three
components of HP \129\Xe MRI to estimate accessible alveolar volume
(VA), membrane conductance, and capillary blood volume
contributions to carbon monoxide (DLCO). The model was built
on a cohort of 41 healthy subjects and 101 patients with pulmonary
disorders. The study concluded that the ability to use HP \129\Xe MRI
measures of ventilation, barrier uptake, and RBC transfer to estimate
each of the underlying constituents of DLCO clarifies the
interpretation of these images while enabling their use to monitor
these aspects of gas exchange independently and regionally. The
applicant stated that HP \129\Xe MRI-derived DLCO values and
measured DLCO values were significantly correlated (p
<0.001), while ventilated volume, barrier transfer, and red blood cell
transfer were significantly different between the healthy cohort and
the individual disease cohorts.
---------------------------------------------------------------------------
\547\ Wang Z., Rankine L., Bier E.A., Mummy D., Lu J., et al.
Using hyperpolarized \129\Xe gas exchange MRI to model the regional
airspace, membrane and capillary contributions to diffusing
capacity. J Appl Physiol 130: 1398-1409, 2021. First published March
18, 2021; doi:10.1152/japplp.
---------------------------------------------------------------------------
With respect to the applicant's assertion that XENOVIEW will
provide novel actionable information that will lead to improved
treatment decisions because it will provide clinicians with information
beyond current lung imaging techniques, the applicant summarized a Song
et al.\548\ case study of a 64-year-old with dyspnea, discussed
previously. The applicant asserted that HP \129\Xe identified the right
lung to be unventilated despite a fairly normal CT appearance. The
applicant stated that XENOVIEW can safely monitor unexplained dyspnea
and that a prospective study is underway to validate the value HP
\129\Xe MRI can add to evaluate pulmonary function in patients with
lung cancer. The applicant asserted that this case report and prior
studies consistently found that HP \129\Xe MRI has imaging capabilities
above those of reporting VQ scans because both gaseous and dissolved
phases can be measured to provide more comprehensive 3-D evaluation of
ventilation and interstitial thickening. The applicant stated that
further analysis of the benefit of established regional lung function
and ventilation, when added to analysis of gaseous exchange, will
enable better patient identification for surgical planning and RT and
that dose-dependent functional changes of radiation could be evaluated
allowing guided radiation administration to limit the RT to the most
highly functional regions in the lung, reducing long-term effects of
the therapy.
---------------------------------------------------------------------------
\548\ Song, E.J., Kelsey, C.R., Driehuys, B., Rankine, L. (2018)
Functional airway obstruction observed with hyperpolarized
\129\xenon-MRI. J Med Imaging Radiat Oncol 62: 91-98.
---------------------------------------------------------------------------
Based on the information provided by the applicant in support of
the substantial clinical improvement criterion, we have the following
concerns. With respect to the applicant's claim that XENOVIEW offers a
treatment option for a patient population unresponsive to, or
ineligible for, currently available treatments, we note that XENOVIEW
is a diagnostic test and does not itself provide a treatment, but can
be used in monitoring patients with pulmonary pathologies.
With respect to the applicant's claim that XENOVIEW is able to
diagnose a medical condition in a patient population where the medical
condition is currently undetectable and diagnose a medical condition
earlier than currently available methods, we note that the studies do
not appear to provide evidence showing that use of the technology to
make a diagnosis affected the management of the patients, as under
Sec. 412.87(b)(1)(ii)(B). We also note that one of the studies cited
utilized a pediatric cohort of patients, which is a patient population
largely distinct from the Medicare population.\549\ We note that, in
other instances, the journal articles provided for review were for
clinical studies with contributors outside the U.S. such as the Ebner
et
[[Page 28313]]
al.\550\ and Crisafulli et al.\551\ articles, and that there may be
differing standards of care that could affect the detection of these
medical conditions as well as the subsequent management of the
patients. We also note that the narrative review by Crisafulli et al.
does not address the use of XENOVIEW, but rather discusses potential
future improvements in the treatment of AECOPD. As the study does not
measure the effect of XENOVIEW on actual treatment outcomes, we are
uncertain if the technology will lead to improvement in clinical
outcomes. We invite public comments as to whether the studies discussed
previously can be generalized to the Medicare population.
---------------------------------------------------------------------------
\549\ Lin N.Y., Roach D.J., Willmer M.M., Walkup L.L., Hossain
M., et al. \129\Xe MRI as a measure of clinical disease severity for
pediatric asthma. 2021; Journal of Allergy and Clinical Immunology
147(6): 2146-2153.
\550\ Ebner L., He M., Virgincar R.S., Heacock T., Kaushik S.S.,
et al. Hyperpolarized \129\xenon magnetic resonance imaging to
quantify regional ventilation differences in mild to moderate
asthma: A prospective comparison between semiautomated ventilation
defect percentage calculation and pulmonary function tests. 2017;
Investigative Radiology 52: 120-127.
\551\ Crisafulli, E., Barbeta, E., Ielpo, A., Torres, A. (2018)
Management of severe acute exacerbations of COPD: An updated
narrative review. Multidiscip Respir Med 13: 36.
---------------------------------------------------------------------------
With respect to the applicant's claim that XENOVIEW used in MRI
will provide novel actionable information that will lead to improved
treatment decisions, we question whether the results of a single case
report, consisting of only one patient, are generalizable to the
Medicare population as a whole. We also question whether XENOVIEW's use
in Song et al.\552\ was used to inform the patient treatment decision,
as it appears from the case study that the treatment for the right lung
collapse was radiation therapy for the adenocarcinoma, and that this
radiation planning was informed via CT imaging. In addition, while the
applicant asserts that XENOVIEW can provide actionable information by
early detection of lung diseases such as asthma/COPD, we question
whether this is relevant to patients in the inpatient setting. We also
note that the studies provided by the applicant do not appear to assess
the use of XENOVIEW to significantly improve clinical outcomes over
existing technologies, as they are primarily feasibility/correlation
studies,553 554 555 556 and that the studies assume but do
not provide evidence that earlier diagnosis and potentially earlier
treatment would result in better clinical outcomes. We also note that
some studies appeared to describe the use of non-XENOVIEW HP \129\Xe
(that is, xenon hyperpolarized using the XeBox-E10, which is
manufactured by Xemed, LLC), and we question whether the results of
these studies using non-XENOVIEW HP \129\Xe MRI can be extrapolated to
the use of XENOVIEW HP \129\Xe MRI.557 558 We would also be
interested in additional evidence that demonstrates how the use of
XENOVIEW results in a change in patient disease management, improved
clinical decisions, as well as improvement in clinical outcomes based
on earlier diagnosis and/or enhanced imaging.
---------------------------------------------------------------------------
\552\ Song, E.J., Kelsey, C.R., Driehuys, B., Rankine, L. (2018)
Functional airway obstruction observed with hyperpolarized
\129\xenon-MRI. J Med Imaging Radiat Oncol 62: 91-98.
\553\ Ebner L., He M., Virgincar R.S., Heacock T., Kaushik S.S.,
et al. Hyperpolarized \129\Xenon magnetic resonance imaging to
quantify regional ventilation differences in mild to moderate
asthma: A prospective comparison between semiautomated ventilation
defect percentage calculation and pulmonary function tests. 2017;
Investigative Radiology 52: 120-127.
\554\ Tafti, S., Garrison, W.J., Mugler III, J.P., Shim, Y.M.,
Altes, T.A., Mata, J.F., de Lange, E.E., Cates, G.D., Ropp, A.M.,
Wang, C., Miller, G.W. (2020) Emphysema index based on
hyperpolarized \3\He or \129\Xe diffusion MRI: Performance and
comparison with quantitative CT and pulmonary function tests.
Radiology 297: 201-210.
\555\ Kirby M., Svenningsen S., Owrangi A., Wheatley A., Farag
A., Ourladov A., Santyr G.E., Etemad-Rezai R., Coxson H.O.,
McCormack D.G., Parraga G.. Hyperpolarized \3\He and \129\Xe MR
imaging in healthy volunteers and patients with chronic obstructive
pulmonary disease. Radiology. 2012;265(2):600-610.
\556\ Wang Z., Rankine L., Bier E.A., Mummy D., Lu J., et al.
Using hyperpolarized \129\Xe gas exchange MRI to model the regional
airspace, membrane and capillary contributions to diffusing
capacity. J Appl Physiol 130: 1398-1409, 2021. First published March
18, 2021; doi:10.1152/japplp.
\557\ Ruppert K., Qing K., Patrie J.T., Altes T.A., Mugler III
J.P. Using hyperpolarized xenon-129 MRI to quantify early-stage lung
disease in smokers. Acad Radiol. 2019;26(3):355-366. doi: 10.1016/
j.acra.2018.11.005
\558\ Tafti, S., Garrison, W.J., Mugler III, J.P., Shim, Y.M.,
Altes, T.A., Mata, J.F., de Lange, E.E., Cates, G.D., Ropp, A.M.,
Wang, C., Miller, G.W. (2020) Emphysema index based on
hyperpolarized \3\He or \129\Xe diffusion MRI: Performance and
comparison with quantitative CT and pulmonary function tests.
Radiology 297: 201-210.
---------------------------------------------------------------------------
We are inviting public comments on whether XENOVIEW meets the
substantial clinical improvement criterion.
In this section, we summarize and respond to written public
comments received in response to the New Technology Town Hall meeting
notice published in the Federal Register regarding the substantial
clinical improvement criterion for XENOVIEW.
Comment: The applicant submitted a public comment in response to
three questions posed at the December 2021 New Technology Town Hall
meeting and provided additional studies. First, the applicant was asked
whether there are studies in the medical literature that have shown
that early detection of disease using XENOVIEW and followed
longitudinally have better outcomes than patients who are monitored
with PFTs or other diagnostic tools. In response, the applicant stated
that HP \129\Xe is currently under review by FDA as a drug used in MRI
and that there are no published studies reporting early detection of
disease using XENOVIEW and following longitudinally reported outcomes.
The applicant then cited the Mummy D.G., et al.\559\ prospective
study about 67 asthmatics comparing HP \3\He VDP and PFTs over 2 years
to correlate VDP levels with outcomes. The Mummy et al. study found
that HP \3\He at levels greater than 4.28% were associated with an
exacerbation incidence ratio of 2.5 (95% CI 1.3-4.7) compared to VDP
less than 4.28%. The applicant also stated that XENOVIEW VDP correlates
well with HP \3\He VDP and is more sensitive than spirometry.\560\
Further, the applicant stated that HP \129\Xe allows radiologists and
pulmonologists to evaluate images within the patient's own thoracic
cavity and contrasted HP \129\Xe with PFTs, which the applicant asserts
requires comparisons to reference equations that depend on age, sex,
height, and ethnicity.
---------------------------------------------------------------------------
\559\ Mummy D.G., Carey K.J., Evans M.D., et al. Ventilation
defects on hyperpolarized helium-3 MRI in asthma are predictive of
2-year exacerbation frequency [published online ahead of print March
13, 2020]. J Allergy Clin Immunol.
\560\ Kirby M., Svenningsen S., Owrangi A., Wheatley A., Farag
A., et al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology: Volume 265: Number 2--November 2012.
---------------------------------------------------------------------------
Next, the applicant stated additional studies report HP \129\Xe MRI
being correlated with the apparent diffusion coefficient-based
emphysema index (ADC) obtained with quantitative computed tomography
(CT).561 562 563 According to the applicant VDP,
FEV1, FEV1/FVC and ADC are measures relied upon
by pulmonologists to follow a patient's response to treatment, to
refine the patient's diagnosis and to aid patient compliance. The
applicant stated that
[[Page 28314]]
HP \129\Xe MRI provides these measures with a high degree of accuracy
and correlates well to disease clinical signs and symptoms.
---------------------------------------------------------------------------
\561\ Kirby M, Svenningsen S, Owrangi A, Wheatley A, Farag A,
Ourladov A, Santyr GE, Etemad-Rezai R, Coxson HO, McCormack DG,
Parraga G. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology. 2012;265(2):600-610.
\562\ Tafti S, Garrison WJ, Mugler III JP, Shim YM, Altes TA,
Mata JF, de Lange EE, Cates GD, Ropp AM, Wang C, Miller GW.
Emphysema index based on hyperpolarized \3\He or \129\Xe diffusion
MRI: Performance and comparison with quantitative CT and pulmonary
function tests. Radiology. 2020;297:201-210.
\563\ Doganay O, Matin T, Chen M, Kim M, McIntyre A, McGowan DR,
Bradley KM, Povey T, Gleeson FV. Time-series hyperpolarized xenon-
129 MRI of lobar lung ventilation of COPD in comparison to V/Q-
SPECT/CT and CT. Eur Radiol. 2019;29:4058-4067.
---------------------------------------------------------------------------
Next, the applicant provided a ``summary of evidence'' by first
citing a Horn et al. study that measured HP \3\He MRI to determine its
effectiveness at treatment response mapping (TRM) in response to
respiratory therapeutic agents in the lungs.\564\ According to the
applicant, 20 patients with asthma were examined in this analysis using
TRM to quantify regional physiologic response to a bronchodilator and
provide regional quantitative information on changes in inhaled gas
ventilation in response to therapy. The applicant stated that the study
concluded that TRM has potential to aid treatment decisions for the
assessment of regional lung interventions such as anti-inflammatory
therapies or targeted therapies such as thermoplasty, endobronchial
valve therapy, and lung volume reduction surgery. The applicant
asserted the findings are applicable to measurements derived from HP
\129\Xe and that HP \129\Xe can be used to provide regional insight
into alterations of both the structure and function of the lungs, and
that this is increasingly being used as an outcome measure in the
early-phase evaluation of respiratory therapeutic agents. The applicant
also noted that regionally specific therapies, such as bronchial
thermoplasty, require regional information so the efficacy of the
intervention can be assessed. The applicant also noted, but did not
cite, that previous studies have used computed tomography (CT) and
computational fluid dynamics-derived markers of airflow to assess
functional changes after bronchodilator therapy.
---------------------------------------------------------------------------
\564\ Horn FC, Marshall H, Collier GJ, Kay R, Siddiqui S,
Brightling CE, Parra-Robles J, Wild JM. Regional Ventilation Changes
in the Lung: Treatment Response Mapping by Using Hyperpolarized Gas
MR Imaging as a Quantitative Biomarker. Radiology 2017;284(3):854-
861.
---------------------------------------------------------------------------
The applicant also cited Rayment JH, et al. who performed a study
measuring the VDP in 15 CF patients between the ages of 8-18 who
underwent HP \129\Xe MRI, spirometry, plethysmography and multiple-
breath nitrogen washout at the beginning and end of inpatient treatment
of a pulmonary exacerbation. Per the applicant, VDP was calculated from
HP \129\Xe MRI obtained during a static breath hold using semi-
automated k-means clustering and linear binning approaches. The
applicant stated that Rayment et al. reported that imaging, spirometric
FEV1, lung clearance index, plethysmographic, MBW, and
symptom score outcomes improved with treatment. The applicant noted
that the study reported that VDP showed the largest relative
improvement compared to all outcome measures (-42.1%, 95% CI -52.1--
31.9%, p<0.0001). The applicant suggested that this technique can
generate outcomes that are responsive to treatment regardless of the
image analysis technique used, and that using HP Xe-129 MRI to measure
VDP as a metric of outcome response is expected to aid understanding of
the individual patient response to treatment.\565\
---------------------------------------------------------------------------
\565\ Rayment JH, Couch MJ, McDonald N, Kanhere N, Manson D,
Santyr G, Ratjen F. Hyperpolarised \129\Xe magnetic resonance
imaging to monitor treatment response in children with cystic
fibrosis. Eur Respir J 2019;53(5).
---------------------------------------------------------------------------
The applicant also cited an Altes et al.\566\ blinded study on a
population of CF patients >12 years of age with a G551D-CFTR mutation
to measure the effect of short- and long-term ivacaftor treatment on HP
\3\He MRI defined ventilation defects. According to the applicant, the
study design included: Part A (single-blind) comprised 4 weeks of
ivacaftor treatment; and Part B (open-label) comprised 48 weeks of
treatment. The applicant noted that the study's primary outcome measure
was the change from baseline in total ventilation defect (TVD; total
defect volume: Total lung volume ratio). The applicant reported that
the study findings revealed that the mean change in TVD ranged from -
8.2% (p = 0.0547) to -12.8% (p = 0.0078) in Part A (n = 8) and -6.3% (p
= 0.1953) to -9.0% (p = 0.0547) in Part B (n = 8) as assessed by human
reader and computer algorithm, respectively. The applicant stated that
the study concluded that TVD responded to ivacaftor therapy, and that
HP \3\He MRI provided an individual quantification of disease burden
that may be able to detect aspects of the disease missed by population-
based spirometry metrics.
---------------------------------------------------------------------------
\566\ Altes TA, Johnson M, Fidler M, Botfield M, Tustison NJ,
Leiva-Salinas C, de Lange EE, Froh D, Mugler JP. Use of
hyperpolarized helium-3 MRI to assess response to ivacaftor
treatment in patients with cystic fibrosis. J Cyst Fibros
2017;16(2):267-274.
---------------------------------------------------------------------------
The applicant also re-submitted the New Technology Town Hall slide
discussing the Thomen et al.\567\ study in patients with mild CF to
illustrate that HP \129\Xe MRI is a more sensitive measure than
spirometry. The applicant also provided additional evidence of HP
\129\Xe's quantitative measurement of pulmonary function from Doganay
et al.\568\ in which HP \129\Xe MRI was compared to PFT imaging
standards relied upon by pulmonologists when following patients
recommended for pharmacologic therapy. The applicant stated that in the
study, 12 COPD subjects who were subjected to rapid time-series HP
\129\Xe MRI imaging and compared to ventilation/perfusion single-photon
emission computed tomography (V/Q-SPECT), high-resolution CT and PFTs
for measuring lobar percentage ventilation. The applicant stated that
the study concluded that lobar ventilation with HP \129\Xe MRI showed a
strong correlation with lobar ventilation and perfusion measurements
derived from SPECT/CT (r = 0.644; p < 0.001 for percentage ventilation
SPECT and r = 0.767; p <0.001 for perfusion SPECT) and that the
measured whole lung HP \129\Xe MRI percentage ventilation correlated
with the PFT measurements (FEV1 with r = -0.886, p < 0.001,
and FEV1/FVC with r = -0.861, p < 0.001) better than the
emphysema score obtained from high resolution CT (FEV1 with
r = -0.635, p = 0.027; and FEV1/FVC with r = -0.652, p =
0.021).
---------------------------------------------------------------------------
\567\ Thomen RP, Walkup LL, Roach DJ, Cleveland ZI, Clancy JP,
Woods JC. Hyperpolarized \129\Xe for investigation of mild cystic
fibrosis lung disease in pediatric patients. J Cyst Fibros
2017;16(2):275-282.
\568\ Doganay O, Matin T, Chen M, Kim M, McIntyre A, McGowan DR,
Bradley KM, Povey T, Gleeson FV. Time-series hyperpolarized xenon-
129 MRI of lobar lung ventilation of COPD in comparison to V/Q-
SPECT/CT and CT. Eur Radiol. 2019;29:4058-4067.
---------------------------------------------------------------------------
The applicant repeated an assertion that XENOVIEW's sensitivity of
pulmonary regions that cannot be imaged by CT or SPECT/CT has been
found to identify signs of COPD disease earlier and more accurately
than conventional techniques,\569\ which enables clinicians to identify
patients at risk of readmission.\570\
---------------------------------------------------------------------------
\569\ Crisafulli E, Barbeta E, Ielpo A, Torres A. Management of
severe acute exacerbations of COPD: An updated narrative review.
Multidiscip Respir Med. 2018;13:36.
\570\ Press VG, Konetzka RT, White SR. Insights about the
economic impact of COPD readmissions post implementation of the
Hospital Readmission Reduction Program. Curr Opin Pulm Med.
2018;24(2):138-146.
---------------------------------------------------------------------------
Next, the applicant asserted that Kirby et al. validated HP \3\He
VDP measurements to HP \129\Xe VDP measurements.\571\ The applicant
then stated HP \3\He was the most commonly studied MRI agent; however
HP \129\Xe MRI has evolved into the ``favored'' inhaled gas for
functional pulmonary MRI due to the lower cost and higher availability
of HP \129\Xe as well as advances in hyperpolarization physics that
have allowed for greater
[[Page 28315]]
polarization efficiency of HP \129\Xe.\572\ Next, the applicant stated
that studies using HP \3\He MR images reporting treatment response
correlate well to HP \129\Xe MR images. The applicant also referenced a
table excerpted from Kirby et al., and reports that there are
significant correlations between HP \3\He and HP \129\Xe MR imaging
measurements of VDP with FEVI.\573\
---------------------------------------------------------------------------
\571\ Kirby M, Svenningsen S, Owrangi A, Wheatley A, Farag A, et
al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology: Volume 265: Number 2--November 2012.
\572\ Mugler JP, Altes TA. Hyperpolarized \129\Xe MRI of the
human lung. J Magn Reson Imaging 2013; 37: 313-331.
\573\ Kirby M, Svenningsen S, Owrangi A, Wheatley A, Farag A, et
al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology: Volume 265: Number 2--November 2012.
---------------------------------------------------------------------------
According to the applicant, VDP obtained from HP \3\He MRI was
found to be a predictor of asthma severity and predict exacerbation in
a population of asthma and COPD patients.574 575 576 The
applicant stated that HP \129\Xe VDP can be relied upon as
quantitatively similar or better than HP \3\He VDP.\577\ According to
the applicant, HP \3\He and HP \129\Xe MR images were quantitatively
compared to results from spirometry and those from plethysmography in a
population of 8 healthy volunteers and 10 patients with COPD. According
to the applicant, quantitative gold standard measurements included VDPs
of HP \3\He and HP \129\Xe MR imaging, compared to measurements of
FEVI, FEV1/FVC ratio, ADC, and CT emphysema
score. The applicant stated that tables in Kirby et al. provided a
comparison of the correlation of HP \129\Xe to gold standard PF
measurements relied upon by pulmonologists.
---------------------------------------------------------------------------
\574\ Mummy DG, Kruger SJ, Zha W, et al. Ventilation defect
percent in helium-3 magnetic resonance imaging as a biomarker of
severe outcomes in asthma. J Allergy Clin Immunol. 2018;141(3):1140-
1141 e1144.
\575\ Mummy DG, Carey KJ, Evans MD, et al. Ventilation defects
on hyperpolarized helium-3 MRI in asthma are predictive of 2-year
exacerbation frequency [published online ahead of print March 13,
2020]. J Allergy Clin Immunol.
\576\ Kirby M, Pike D, Coxson HO, McCormack DG, Parraga G.
Hyperpolarized (3)He ventilation defects used to predict pulmonary
exacerbations in mild to moderate chronic obstructive pulmonary
disease. Radiology 2014;273(3):887-896.
\577\ Kirby M, Svenningsen S, Owrangi A, Wheatley A, Farag A, et
al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology: Volume 265: Number 2--November 2012.
---------------------------------------------------------------------------
The applicant asserted that the predictive power of VDP obtained
from HP \3\He identified COPD patients with a higher likelihood of
increased hospitalization due to exacerbation, therefore HP \129\Xe MRI
VDP can be relied upon to be equally predictive. The applicant stated
that Kirby et al. concluded that, in patients with COPD, the VDP
obtained with HP \129\Xe MRI was ``significantly greater'' than that
obtained with HP \3\He, and that this was likely due to HP \129\Xe's
ability to fill lung spaces even in the presence of the physiologic
and/or anatomic abnormalities in COPD patients.\578\ The applicant
stated that because HP \129\Xe is delivered and imaged in the same
manner as HP \3\He, XENOVIEW likely shares that predictive power while
also providing more extensive detail of alveolar gas-exchange compared
to HP \3\He MRI.
---------------------------------------------------------------------------
\578\ Kirby M, Svenningsen S, Owrangi A, Wheatley A, Farag A, et
al. Hyperpolarized \3\He and \129\Xe MR imaging in healthy
volunteers and patients with chronic obstructive pulmonary disease.
Radiology: Volume 265: Number 2--November 2012.
---------------------------------------------------------------------------
Next, the applicant noted that numerous studies, including a Mummy
et al.\579\ study and a Svenningsen et al.,\580\ study have suggested
that HP \129\Xe is a useful resource to guide patient treatment
decisions of COPD and asthma, respectively, based on the deeper
understanding it provides of patient response to treatment (for
example, bronchodilators).
---------------------------------------------------------------------------
\579\ Mummy DG, Coleman EM, Wang Z, Bier EA, Lu J, Driehuys B,
Huang YC. Regional gas exchange measured by \129\Xe magnetic
resonance imaging before and after combination bronchodilators
treatment in chronic obstructive pulmonary disease. J Magn Reson
Imaging. 2021;54(3):964-974. doi: 10.1002/jmri.27662.
\580\ Svenningsen S, Eddy RL, Lim HF, Cox PG, Nair P, Parrage G.
Sputum eosinophilia and magnetic resonance imaging ventilation
heterogeneity in severe asthma. Am J Respir Crit Care Med.
2018;197(7):876-884. doi: 10.1164/rccm.201709-1948OC.
---------------------------------------------------------------------------
In summary, the applicant stated in response to the first question
asked at the New Technology Town Hall meeting that HP \129\Xe MRI
provides pulmonologists with relied upon measurements of pulmonary
function to inform treatment decisions. The applicant stated that lung
CT can only image the first six airway branches. The applicant stated
earlier disease and more subtle response to pharmacologic treatment has
been quantified because XENOVIEW provides regional function and
ventilation on 23 branches of the airway tree. Per the applicant,
XENOVIEW MRIs enable identification of COPD or lung tissue
abnormalities, leading to reduced elasticity earlier than spirometry or
lung CT.\581\
---------------------------------------------------------------------------
\581\ Doganay O, Chen M, Matin T, Kim M, McIntyre A, et al.
Magnetic resonance imaging of the time course of hyperpolarized.
\129\Xe gas exchange in the human lungs and heart. Eur Radiol.
2019;29:2283-2292.
---------------------------------------------------------------------------
The next two questions asked at the New Technology Town Hall
meeting pertained to the ``gold standard'' for diagnosis when comparing
sensitivity for HP \129\Xe and FEV1, and a request to share
``receiver operator characteristics'' for the comparison of diagnostic
accuracy. The applicant stated that the evidence for these answers was
related and provided a combined response.
According to the applicant, pulmonary function is reported using
FEV1 measured by spirometry for FEV1/FVC <0.7,
yet lacks accuracy at the individual patient level.\582\ Next, the
applicant stated high resolution CT (HRCT) and in some cases SPECT/(CT)
have been added to aid accuracy in diagnosis to inform treatment
decisions. The applicant stated that these diagnostic tools are the
gold standard(s) for measuring pulmonary function as a measure of
diminished lung capacity.\583\
---------------------------------------------------------------------------
\582\ Salzman SH. Which Pulmonary Function Tests Best
Differentiate Between COPD Phenotypes? Respiratory Care. 2012;57:50-
60.
\583\ Mallallah F, Packham A, Lee E, Hind D. Is hyperpolarised
gas magnetic resonance imaging a valid and reliable tool to detect
lung health in cystic fibrosis patients? A COSMIN systematic review.
2021; Journal of Cystic Fibrosis online 14 January 2021.
---------------------------------------------------------------------------
The applicant explained that due to the versatility of HP \129\Xe
MRI, XENOVIEW can produce different measurements for PF related to
disease with the accuracy reported by receiver operator characteristics
(ROC). The applicant referenced Ebner, et al., a retrospective study
that reported ROC data on the relationship of the ventilation defect
scores (VDSs) derived from HP \129\Xe MRI identified with clinically
relevant airway obstruction. The applicant stated that healthy
volunteers (n=27) were compared to patients with asthma (n=20), and
COPD (n=8), and that all the subjects underwent spirometry 1 day before
MRI to establish the presence of airway obstruction (FEV1/
FVC <70%). The applicant stated that five blinded readers assessed the
degree of ventilation impairment and assigned a VDS (range, 0-100%).
According to the applicant, the study found that VDS measured with HP
\129\Xe MRI correlated with the severity of airway obstruction and is
significantly different between healthy control subjects and patients
with mild to moderate airway obstruction. The applicant stated that
while FEV1/FVC is an imperfect gold standard, Ebner et al
applied HP \129\Xe MRI, a less effort-dependent and reproducible test,
to establish a threshold for clinically significant ventilation defects
to enable informed treatment decisions.\584\
---------------------------------------------------------------------------
\584\ Ebner L, Virgincar R, He M, Choudhury KR, Robertson SH et
al. Multi-Reader Determination of Clinically Significant Airway
Obstruction using Hyperpolarized \129\Xe Ventilation MRI. AJR Am J
Roentgenol. 2019 April; 212(4): 758-7.
---------------------------------------------------------------------------
According to the applicant, Ruppert et al.\585\ were able to detect
early stages of
[[Page 28316]]
lung disease in smokers before it progressed to COPD detected by
spirometry. The applicant stated that in this study, the functional
septal wall thickness and apparent diffusion coefficient of the gas
phase was compared across 16 patients with smoking-related COPD, 9
clinically healthy current or former smokers, and 10 healthy never
smokers. The applicant stated that a table from Ruppert et al. showed
the ROC area under curve (AUC) provides evidence to aid in
understanding HP \129\Xe MRI when considering the metrics of early-
stage lung disease.\586\ According to the applicant, HP \129\Xe MRI
produced favorable metrics for determining early-stage lung disease
compared to FEV1. The applicant reported while the study had
a small sample size, the ROC and AUC indicate HP \129\Xe MR imaging
does detect patients with early lung disfunction.
---------------------------------------------------------------------------
\585\ Ruppert K, Qing K, Patrie JT, Altes TA, Mugler III JP.
Using hyperpolarized xenon-129 MRI to quantify early-stage lung
disease in smokers. Acad Radiol. 2019;26(3):355-366. doi: 10.1016/
j.acra.2018.11.005.
\586\ Ruppert K, Qing K, Patrie JT, Altes TA, Mugler III JP.
Using hyperpolarized xenon-129 MRI to quantify early-stage lung
disease in smokers. Acad Radiol. 2019;26(3):355-366. doi: 10.1016/
j.acra.2018.11.005.
---------------------------------------------------------------------------
The applicant stated that in a separate study by Tafti et al.,\587\
a table reported that ADC yielded a much higher ROC AUC of >=0.92
[0.83, 1.00] when used to determine emphysema. The applicant stated
that the ADC emphysema index showed near-perfect sensitivity in a
sample of 17 patients, all of whom were measured with both HP \3\He and
HP \129\Xe (95% CI: 94%, 100%), but somewhat lower specificity (14 of
19 = 74% for HP \3\He [95% CI: 49%, 99%]; 13 of 19 = 68% for HP \129\Xe
[95% CI: 42%, 94%]).
---------------------------------------------------------------------------
\587\ Tafti S, Garrison WJ, Mugler III JP, Shim YM, Altes TA,
Mata JF, de Lange EE, Cates GD, Ropp AM, Wang C, Miller GW.
Emphysema index based on hyperpolarized \3\He or \129\Xe diffusion
MRI: Performance and comparison with quantitative CT and pulmonary
function tests. Radiology. 2020;297:201-210.
---------------------------------------------------------------------------
The applicant stated that Lin et al.\588\ showed, in a population
of children with asthma, a difference in HP \129\Xe compared to
spirometry related to patient's clinical signs and symptoms. The
applicant stated that in this study of 37 children with asthma, \129\Xe
MRI was able to distinguish between control patients and patients with
disease, whereas spirometry did not. The applicant stated Lin et al.
demonstrated sensitivity, specificity and PPV values of HP \129\Xe to
provide reliable prediction of asthma severity. The applicant stated
that currently, there are no adequate predictive diagnostic tools to
clearly measure clinical severity of pediatric asthma that concurrently
provide information about regional ventilation differences.\589\ The
applicant stated that results from HP \129\Xe MRI are correlated with
increased asthma severity, as well as increased healthcare utilization
(HCU) and oral corticosteroid (OCS) use. According to the applicant,
even with relatively modest cohort numbers, ROC analysis demonstrated
that VDP and image scoring can predict increased asthma severity and
HCU in a pediatric asthma cohort. The applicant stated that the
improved predictive value, high safety profile, and short and tolerable
imaging process allows for longitudinal follow-up in children.
According to the applicant, the ROC curves from Lin et al. demonstrated
that the number of defects (AUC, 0.83) is more predictive of healthcare
utilization (HCU) than VDP (AUC, 0.73), and that the number of defects
is more predictive of severe asthma (AUC, 0.86) than is VDP (AUC,
0.80).\590\ The applicant stated that these findings are consistent
with HP \129\Xe MRI (similar to HP \3\He) VDP in COPD patients as
predictive of a higher likelihood of increased hospitalization.
---------------------------------------------------------------------------
\588\ Lin NY, Roach DJ, Willmer MM, Walkup LL, Hossain M, et al.
\129\Xe MRI as a measure of clinical disease severity for pediatric
asthma. 2021; Journal of Allergy and Clinical Immunology 147(6):
2146-2153.
\589\ Teague WG, Tustison NJ, Altes TA. Ventilation
heterogeneity in asthma. J Asthma 2014;51:677-84.
\590\ Lin NY, Roach DJ, Willmer MM, Walkup LL, Hossain M, et al.
\129\Xe MRI as a measure of clinical disease severity for pediatric
asthma. 2021; Journal of Allergy and Clinical Immunology 147(6):
2146-2153.
---------------------------------------------------------------------------
Response: We thank the applicant for its comments and will take
this information into consideration when deciding whether to approve
new technology add-on payments for XENOVIEW. Regarding XENOVIEW, we
note the applicant stated there are no published studies reporting
early detection of disease using XENOVIEW that followed longitudinally
reported outcomes. We also note that many of the articles submitted by
the applicant were not about XENOVIEW, but rather described the usage
of hyperpolarized 3-Helium (or HP \3\He) imaging and the correlation of
measurements obtained through HP \3\He imaging with existing standard
of care imaging modalities such as spirometry. We question whether
results from studies that utilize HP \3\He MRI can be extrapolated to
the use of HP \129\Xe MRI. We also note that several citations provided
by the applicant are limited to pediatric populations, and we question
whether the results would be generalizable to a Medicare population.
7. Proposed FY 2023 Applications for New Technology Add-On Payments
(Alternative Pathways)
As discussed previously, beginning with applications for FY 2021,
under the regulations at Sec. 412.87(c), 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, under the
regulations at Sec. 412.87(d), a medical product that is designated by
FDA as a 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 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 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 be within the 2-3 year newness period to be
considered ``new,'' and must also 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
[[Page 28317]]
medical technology will no longer be considered ``new'' under the
criterion of this section.
We received 19 applications for new technology add-on payments for
FY 2023 under the new technology add-on payment alternative pathways.
Six applicants withdrew applications prior to the issuance of this
proposed rule. Of the remaining 13 applications, 11 of the technologies
received a Breakthrough Device designation from FDA, 1 has a pending
Breakthrough Device designation from FDA, and the remaining application
was designated as a QIDP by FDA and is also requesting approval under
the LPAD pathway from FDA.
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. 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 (e)(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 2022 IPPS/LTCH PPS proposed rule, for
applications under the alternative new technology add-on payment
pathway, in this proposed rule we are making a proposal to approve or
disapprove each of these 13 applications for FY 2023 new technology
add-on payments. Therefore, in this section of the preamble of this
proposed rule, we provide background information on each alternative
pathway application and propose whether or not each technology would be
eligible for the new technology add-on payment for FY 2023. We refer
readers to section II.H.8. of the preamble of 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 further discussion of the
alternative new technology add-on payment pathways for these
technologies.
a. Alternative Pathway for Breakthrough Devices
(1) CERAMENT[supreg] G
BONESUPPORT AB submitted an application for new technology-add on
payments for CERAMENT[supreg] G for FY 2023. Per the applicant,
CERAMENT[supreg] G is an injectable bone-void filler made of calcium
sulfate, hydroxyapatite, and gentamicin sulfate indicated for the
surgical treatment of osteomyelitis. Per the applicant, this bone graft
substitute fills gaps resulting from debridement of infected bone and
prevents colonization of sensitive bacteria, promoting bone healing in
two ways. The applicant stated that the primary mode of action is for
CERAMENT[supreg] G to act as a resorbable ceramic bone-void filler
intended to fill gaps and voids in the skeleton system created when
infected bone is debrided. The applicant also stated that the secondary
mode of action is to prevent the colonization of gentamicin-sensitive
microorganisms in order to protect bone healing. Per the applicant,
CERAMENT[supreg] G may eliminate the need to harvest autologous bone,
avoiding pain and infection at the donor site. We note that BONESUPPORT
Inc. previously submitted an application for new technology add-on
payments for CERAMENT[supreg] G for FY 2022, as summarized in the FY
2022 IPPS/LTCH PPS proposed rule (86 FR 25368 through 25373) but the
technology did not meet the deadline of July 1, 2021, for FDA approval
or clearance of the technology and, therefore, was not eligible for
consideration for new technology add-on payments for FY 2022 (86 FR
45126 through 45127).
According to the applicant, CERAMENT[supreg] G is designated as a
Breakthrough Device for use as a bone-void filler as an adjunct to
systemic antibiotic therapy and surgical debridement as part of the
surgical treatment of osteomyelitis. The applicant indicated that it
anticipates FDA will grant its De Novo classification request in the
second quarter of calendar year 2022. The applicant applied for and
received a unique ICD-10-PCS procedure code to identify cases involving
the administration of CERAMENT[supreg] G in 2021. Effective October 1,
2021, CERAMENT[supreg] G administration can be identified by ICD-10-PCS
procedure code XWOV0P7 (Introduction of antibiotic eluting bone void
filler into bones, open approach, new technology group 7), which is
unique to CERAMENT[supreg] G administration. The applicant stated that
the following existing ICD-10-CM codes for osteomyelitis appropriately
describe the proposed indication for which the device received
Breakthrough Device designation (``Breakthrough Device Indication''):
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.280
With respect to the cost criterion, the applicant identified
candidate cases using ICD-10-PCS procedure and ICD-10-CM diagnosis
codes, which are detailed in the tables in this section. With these
codes identified, the
[[Page 28318]]
applicant then went through the Grouper logic in the MS-DRG v39.0
Definitions Manual and located where cases with these codes would be
assigned in the MS-DRG system. This process yielded 13 MS-DRGs which
the applicant used for their analysis. The applicant also submitted an
additional subanalysis using only cases from the applicant's top three
identified MS-DRGs (464, 493, and 504), to demonstrate that the
technology meets the cost criterion.
Under the first analysis, the applicant searched claims in the FY
2019 MedPAR final rule dataset within the 13 identified MS-DRGs that
reported one of the M86 ICD-10-CM diagnosis codes listed previously in
combination with the ICD-10-PCS procedure codes listed in the following
table, which identify procedures that could involve the use of
CERAMENT[supreg] G as an adjunct to systemic antibiotic therapy and
surgical debridement where there is a need for supplemental bone void
filler material.
[GRAPHIC] [TIFF OMITTED] TP10MY22.281
[[Page 28319]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.282
[[Page 28320]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.283
[[Page 28321]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.284
The applicant identified 11,620 cases across 13 MS-DRGs as
identified in the table that follows.
[GRAPHIC] [TIFF OMITTED] TP10MY22.285
[[Page 28322]]
BILLING CODE 4120-01-C
The applicant noted that candidate cases for CERAMENT[supreg] G
with osteomyelitis would qualify for the CC/MCC MS-DRGs because
osteomyelitis is listed in the Grouper as a CC condition. Therefore,
the applicant concluded that cases with osteomyelitis would not be
grouped in the uncomplicated MS-DRGs (for example, 465, 494, etc.). The
applicant stated that because osteomyelitis is never assigned to
uncomplicated surgical MS-DRGs, it excluded uncomplicated MS-DRGs from
its analysis.
The applicant then removed charges for the prior technology that
may be replaced by CERAMENT[supreg] G. The applicant conducted a market
analysis that identified 3 types of prior technology devices:
Poly(methyl methacrylate) (PMMA) manually mixed with antibiotics, PMMA
pre-loaded with antibiotics, and calcium sulfate (CaS) mixed with
antibiotics. The applicant researched the average sales price (ASP) for
major competitors for 5cc and 10cc of each device type and calculated a
weighted average cost of $444 per 5cc and $727 per 10 cc.\591\ Then the
applicant converted costs to charges by dividing costs by the Supplies
& Equipment CCR of 0.297 (86 FR 44966). Using this CCR, $444 per 5cc
and $727 per 10cc yielded an estimated hospital charge of prior
technologies of $1,495 per 5cc and $2,449 per 10cc. The applicant
explained that the total amount of antibiotics depends on the amount of
product required for different sized bones. The applicant then
standardized the charges and applied a 4-year inflation factor of
1.281834 based on the inflation factor used to update the outlier
threshold in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45542).
---------------------------------------------------------------------------
\591\ The applicant's analysis was informed by 2019 and 2020
data for Osteoset, Stimulan, and Calcigen S (calcium sulfates mixed
with antibiotics), Palacos, Cobalt (PMMA manually mixed with
antibiotics), Cobalt G, Biomet Bone Cement R, and Refobacin Bone
Cement R (PMMA pre-loaded with antibiotics) from three sources: an
iData Market Research 2019 Sku Data Report, Global Data US Hospital
Bone Grafts and Substitutes Q3 2019 Report, and feedback from sales
representatives in the field.
---------------------------------------------------------------------------
The applicant added estimated charges for the new technology by
dividing the estimated, expected hospital list price for the device
(based on expected 5/10/15 cc costs for CERAMENT[supreg] G, by MS-DRG),
by the aforementioned Supplies & Equipment CCR of 0.297.
The applicant calculated a final inflated case-weighted average
standardized charge per case of $135,258 and an average case-weighted
threshold of $86,603. 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.
The applicant also provided an alternate cost analysis using the
applicant's top three identified MS-DRGs (464, 493, and 504), which
together constituted more than half of the applicant's identified
cases. Using the same methodology and data sources above, the applicant
calculated a final inflated case-weighted average standardized charge
per case of $112,316 and an average case-weighted threshold of $77,375.
The applicant maintained that CERAMENT[supreg] G meets the cost
criterion under this alternate analysis.
We agree with the applicant that CERAMENT[supreg] G meets the cost
criterion and therefore, subject to the technology receiving FDA
marketing authorization for use as a bone-void filler as an adjunct to
systemic antibiotic therapy and surgical debridement as part of the
surgical treatment of osteomyelitis by July 1, 2022, we are proposing
to approve CERAMENT[supreg] G for new technology add-on payments for FY
2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the total cost of CERAMENT[supreg] G for a typical
patient is $7,567 per procedure. Per the applicant, the amount of
CERAMENT[supreg] G used per patient depends on the complexity of the
patient's injury, subsequent comorbidities, as well as the location and
size of the bone void. The applicant expects that an average patient
will require ~10cc per procedure, based on the case weighted volume of
expected utilization across the MS-DRGs. From this weighted average,
the applicant derived the average, weighted cost of $7,567 per patient.
We note 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% of the average cost of
the technology, or 65% of the costs in excess of the MS-DRG payment for
the case. As a result, we are proposing that the maximum new technology
add-on payment for a case involving the use of the product
CERAMENT[supreg] G would be $4,918.55 for FY 2022 (that is, 65% of the
average cost of the technology).
We are inviting public comments on whether CERAMENT[supreg] G meets
the cost criterion and our proposal to approve new technology add-on
payments for CERAMENT[supreg] G for FY 2023, subject to
CERAMENT[supreg] G receiving FDA marketing authorization for use as a
bone-void filler as an adjunct to systemic antibiotic therapy and
surgical debridement as part of the surgical treatment of osteomyelitis
by July 1, 2022.
(2) GORE[supreg] TAG[supreg] Thoracic BranchEndoprosthesis (TBE Device)
W.L. Gore and Associates, Inc., submitted an application for new
technology add-on payments for the GORE[supreg] TAG[supreg] Thoracic
Branch Endoprosthesis (TBE) device for FY 2023. According to the
applicant, the GORE[supreg] TAG[supreg] TBE device is a modular device
consisting of three components, an Aortic Component, a Side Branch
Component, and an optional Aortic Extender Component, each of which is
pre-mounted on a catheter delivery system for treatment of thoracic
aortic aneurysms, traumatic aortic transection, and aortic dissection.
According to the applicant, the GORE[supreg] TAG[supreg] TBE device
was granted designation under the Expedited Access Pathway (EAP) by FDA
(and is therefore considered part of the Breakthrough Devices Program
by FDA) on July 17, 2015, for endovascular repair of descending
thoracic aortic and aortic arch for patients who have appropriate
anatomy. The applicant indicated that it anticipates receiving
premarket approval of the GORE[supreg] TAG[supreg] TBE device as a
Class III device from FDA in Spring 2022 with a proposed indication for
endovascular repair of lesions of the descending thoracic aorta, while
maintaining flow into the left subclavian artery, in patients who have
adequate iliac/femoral access, and eligible proximal aorta, left
subclavian, or distal landing zones (isolated lesion patients only).
Since the indication for which the applicant anticipates receiving
premarket approval is included within the scope of the EAP designation,
it appears that the proposed PMA indication is appropriate for new
technology add-on payment under the alternative pathway criteria.
The applicant noted that a combination of two existing ICD-10-PCS
procedure codes can be used to uniquely identify the GORE[supreg]
TAG[supreg] TBE: 02VW4EZ (Restriction of thoracic aorta, descending
with branched or fenestrated intraluminal device, one or two arteries,
percutaneous endoscopic approach), in combination with 02VX4EZ
(Restriction of thoracic aorta, ascending/arch with branched or
fenestrated intraluminal device, one or two arteries, percutaneous
endoscopic approach). Per the applicant, the GORE[supreg] TAG[supreg]
TBE device is placed such that it
[[Page 28323]]
straddles two anatomic regions, the descending thoracic aorta and
thoracic aortic arch, thereby necessitating the use of both ICD-10-PCS
procedure codes to accurately describe the use of the device.
With regard to the cost criterion, the applicant searched the FY
2019 MedPAR dataset from the FY 2022 IPPS proposed rule for cases
reporting a combination of a thoracic endovascular repair (TEVAR)
procedure and a bypass procedure. The applicant listed the following
ICD-10-PCS codes for TEVAR procedures and bypass procedures, which the
applicant used to identify potential cases that may be eligible for
treatment with the GORE[supreg] TAG[supreg] TBE device. Per the
applicant, cases with at least one ICD-10-PCS procedure code from each
category were included in the analysis.
[GRAPHIC] [TIFF OMITTED] TP10MY22.286
[GRAPHIC] [TIFF OMITTED] TP10MY22.287
The applicant identified 210 cases mapping to five MS-DRGs. The
applicant then removed charges for the technology being replaced. The
applicant stated that the use of TAG[supreg] Conformable devices in
cases that also use the GORE[supreg] TAG[supreg] TBE device is entirely
dependent on the patient's anatomy. The applicant explained that the
average case utilizing the GORE[supreg] TAG[supreg] TBE device uses 0.6
TAG[supreg] Conformable devices, compared to an average of 1.4
TAG[supreg] Conformable devices per procedure for current TEVAR cases,
resulting in a difference of 0.8 TAG[supreg] Conformable devices which
will no longer be used in cases utilizing the GORE[supreg] TAG[supreg]
TBE device. Accordingly, 80% of all device implant charges were removed
from the claims to be conservative, per the applicant. The applicant
then removed other charges related to the prior technology. According
to the applicant, a research study \592\ that compared 24 patients
treated with TBE to 31 patients treated with the traditional method at
one facility found that TBE device cases have a 19% reduction in
operating room (OR) time compared to the OR time for the combined
procedures (TEVAR with a bypass procedure), and a 48% reduction in
length of stay. Accordingly, the applicant removed 19% of OR charges
(revenue code 0360), removed 48% of routine charges (revenue code 01XX)
when a claim showed routine charges, and removed 48% of intensive care
unit (ICU) charges if a claim included no routine charges. The
applicant then standardized the charges and applied a 4-year inflation
factor of 1.2818 based on the inflation factor used in the FY 2022
IPPS/LTCH PPS final rule (86 FR 45538), to update the charges from FY
2019 to FY 2023. The applicant then added charges for the new
technology by dividing the average per patient cost of the GORE[supreg]
TAG[supreg] TBE device by the national CCR for implantable devices
(0.293) from the FY 2022 IPPS/LTCH PPS final rule (86 FR 44966). The
applicant calculated a final inflated case-weighted average
standardized charge per case of $400,515 and an average case-weighted
threshold of $217,182. Because the final inflated average case-weighted
standardized charge per case exceeded the average case-weighted
threshold
[[Page 28324]]
amount, the applicant asserted that the technology meets the cost
criterion.
---------------------------------------------------------------------------
\592\ Shultze W, Baxter R, Gable C, et al. Comparison Of
Surgical Debranching Versus Branched Endografts In Zone 2 TEVAR.
Oral presentation at the Society for Vascular Surgery Meeting; March
2021, Miami FL. https://symposium.scvs.org/abstracts/2021/M76.cgi.
---------------------------------------------------------------------------
We note that the charges removed for prior technology are based on
length of stay in a small study conducted at a single institution.
Specifically, the study involved 24 patients who received the TBE
device during elective procedures and 31 who had the procedures with
bypass. Three of these procedures were emergent and only 14 and 17,
respectively, were procedures in Zone 2 where the GORE[supreg]
TAG[supreg] TBE would be indicated. Given the small percentage of
procedures that directly relate to the proposed GORE[supreg]
TAG[supreg] TBE indication, we question the extent to which these
results are generalizable to the cost analysis performed above and the
greater Medicare population. Additionally, the applicant did not
specify the revenue codes used to identify and remove intensive care
unit charges. We note the applicant listed two ICD-10-PCS codes
(03S43ZZ and 03SQ3ZZ) in their analysis which are percutaneous
procedures and question whether the inclusion of these codes is
appropriate as the devices currently used to repair the aortic arch
require the creation of a bypass performed in an open surgery. We also
question whether the cases that the applicant identified are
appropriately representative of cases eligible for treatment with
GORE[supreg] TAG[supreg] TBE and request additional information to
clarify this issue.
Subject to the applicant adequately addressing these concerns, we
would agree that the technology meets the cost criterion and therefore
are proposing to approve the GORE[supreg] TAG[supreg] TBE device for
new technology add-on payments for FY 2023, subject to the technology
receiving FDA marketing authorization for the proposed indication by
July 1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the per-patient anticipated hospital cost of the
GORE[supreg] TAG[supreg] TBE device is $42,780. We note 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% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. In the event we
receive supplemental information from the applicant to adequately
address our concerns regarding the cost criterion, and we were to
approve new technology add-on payments for the GORE[supreg] TAG[supreg]
TBE device in the final rule, the maximum new technology add-on payment
for a case involving the use of the GORE[supreg] TAG[supreg] TBE device
would be $27,807 for FY 2023 (that is, 65% of the average cost of the
technology).
We are inviting public comments on whether the GORE[supreg]
TAG[supreg] TBE device meets the cost criterion and our proposal to
approve new technology add-on payments for the GORE[supreg] TAG[supreg]
TBE device for FY 2023, subject to the technology receiving FDA
marketing authorization for the proposed indication that corresponds to
the EAP designation by July 1, 2022.
(3) iFuse Bedrock Granite Implant System
SI-BONE, Inc., submitted an application for new technology add-on
payments for the iFuse Bedrock Granite Implant System for FY 2023.
According to the applicant, the iFuse Bedrock Granite Implant System is
a sterile, single-use permanent implant intended to provide sacropelvic
fusion of the sacroiliac joint and fixation to the pelvis when used in
conjunction with commercially available pedicle screw fixation systems
as a foundational element for segmental spinal fusion. The applicant
states that the joint fusion occurs as a result of the device's porous
surface and interstices, and fixation occurs through the device's
helical threaded design and traditional posterior fixation rod
connection. Per the applicant, the iFuse Bedrock Granite Implant System
can be placed into the pelvis in two trajectories: Sacroalar-iliac
(SAI) trajectory (that is, into the sacrum, across the SI joint and
into the ilium) or directly into the ilium, and joint fusion occurs
only when the SAI trajectory is used.
According to the applicant, the iFuse Bedrock Granite Implant
System received FDA Breakthrough Device designation on November 23,
2021 for sacropelvic fixation and as an adjunct for sacroiliac joint
fusion (when used with commercially available sacroiliac joint fusion
promoting devices) in conjunction with commercially available posterior
pedicle screw systems for the treatment of the acute and chronic
instabilities or deformities of the thoracic, lumbar, and sacral spine;
degenerative disc disease (DDD) as defined by back pain of discogenic
origin with degeneration of the disc confirmed by patient history and
radiographic studies; severe spondylolisthesis (Grades 3 and 4) of the
L5-S1 vertebra in skeletally mature patients receiving fusions by
autogenous bone graft having implants attached to the lumbar and sacral
spine (L3 to sacrum) with removal of the implants after the attainment
of a solid fusion; spondylolisthesis; trauma (that is, fracture or
dislocation); spinal stenosis; deformities or curvatures (that is,
scoliosis, kyphosis, and/or lordosis); spinal tumor; pseudarthrosis;
and/or failed previous fusion. The applicant is seeking 510(k)
clearance from FDA for the same indication.
The applicant stated that ICD-10-PCS codes that may be utilized to
describe the placement of an internal fixation device into the pelvic
bone or acetabulum, listed in the following table, do not distinctly
identify the iFuse Bedrock Granite Implant System. The applicant
submitted a request to the ICD-10 Coordination and Maintenance
Committee for approval of a unique code for FY 2023 to identify the
technology.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.288
With regard to the cost criterion, the applicant conducted two
analyses based on 100% of identified claims and 78% of identified
claims. To identify potential cases where the iFuse Bedrock Granite
Implant System could be
[[Page 28325]]
utilized, the applicant searched the FY 2019 MedPAR final rule file for
claims reporting a combination of at least one of the ICD-10-PCS
procedure codes for the placement of an internal fixation device into
the pelvic bone or acetabulum, noted previously, and at least one of
the following ICD-10-CM diagnosis codes used to describe the indication
under the Breakthrough Device designation.
[GRAPHIC] [TIFF OMITTED] TP10MY22.289
For the analysis using 100% of cases, the applicant identified
2,165 cases mapping to the following 26 MS-DRGs:
[[Page 28326]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.290
[[Page 28327]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.291
BILLING CODE 4120-01-C
The applicant then removed 50% of the charges associated with
medical supplies and implantable devices (revenue centers 027x and
0624). The applicant stated that the removal of 50% of the charges
associated with medical supplies and implantable devices reflects a
conservative estimate as the iFuse Bedrock Granite Implant System is
used in conjunction with commercially available pedicle screw fixation
systems as a foundational element for segmental spinal fusion. The
applicant then standardized the charges and applied the three-year
inflation factor of 20.4% used to update the outlier threshold in the
FY 2022 IPPS/LTCH PPS final rule (86 FR 45542) to update the charges
from FY 2019 to FY 2022. The applicant then added charges for the new
technology by dividing the per-patient anticipated hospital cost of the
iFuse Bedrock Granite Implant System by the national average cost-to-
charge ratio for implantable devices (0.239) from the FY 2022 IPPS/LTCH
PPS final rule. Under the analysis based on 100% of identified claims,
the applicant calculated a final inflated case-weighted average
standardized charge per case of $254,264 and an average case-weighted
threshold of $159,841.
For the analysis using 78% of cases, the applicant identified 1,682
cases mapping to 4 MS-DRGs. The applicant conducted the same analysis
noted previously and determined a final inflated case-weighted average
standardized charge per case of $253,333 and an average case-weighted
threshold of $164,561. 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.
We agree with the applicant that iFuse Bedrock Granite Implant
System meets the cost criterion and therefore are proposing to approve
the iFuse Bedrock Granite Implant System for new technology add-on
payments for FY 2023, subject to the technology receiving FDA marketing
authorization for the indication corresponding to the Breakthrough
Device designation by July 1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the per-patient anticipated hospital cost of the
iFuse Bedrock Granite Implant System is $15,120. We note 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% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. As a result, we
are proposing that the maximum new technology add-on payment for a case
involving the use of the iFuse Bedrock Granite Implant System would be
$9,828 for FY 2023 (that is, 65% of the average cost of the
technology).
We are inviting public comments on whether the iFuse Bedrock
Granite Implant System meets the cost criterion and our proposal to
approve new technology add-on payments for the iFuse Bedrock Granite
Implant System for FY 2023, subject to the technology receiving FDA
marketing authorization for the indication corresponding to the
Breakthrough Device designation by July 1, 2022.
(4) LigaPASS 2.0 PJK Prevention System
Medtronic submitted an application for new technology add-on
payments for the LigaPASS 2.0 PJK Prevention System for FY 2023. Per
the applicant, the LigaPASS 2.0 PJK Prevention System is intended to
mitigate the risk of post-operative proximal junctional kyphosis (PJK)
and proximal junctional failure (PJF) in patients with spinal
[[Page 28328]]
deformities. The applicant states that the LigaPASS 2.0 PJK Prevention
System is designed to restore balance and stability as a complement to
a posterior thoracolumbar fixation system, and provides surgeons the
ability to mimic anatomical muscle and ligament functionality and
stabilization between vertebrae adjacent to fused levels in a spine
surgery. According to the applicant, the LigaPASS 2.0 PJK Prevention
System consists of a polyester (PET) band and titanium alloy medial
open connector with two set screws. The applicant indicates the
LigaPASS 2.0 PJK Prevention System bands are laced around the vertebra
independently of the vertebra anatomy and then connected to a LigaPASS
2.0 PJK Prevention System connector to make the rod-bone connection,
allowing the surgeon to create a posterior vertebra anchorage without
the use of a pedicle screw or hook.
According to the applicant, the LigaPASS 2.0 PJK Prevention System
was granted Breakthrough Device designation on September 2, 2021, for
spinal trauma surgery, used in sublaminar or facet wiring techniques;
spinal reconstructive surgery, incorporated into construct for the
purpose of correction of spinal deformities such as idiopathic and
neuromuscular scoliosis in patients 8 years of age and older, adult
scoliosis and kyphosis; spinal degenerative surgery as an adjunct to
spinal fusions; intended for use at the non-fused level(s) adjacent to
a posterior spinal instrumentation construct when ligament augmentation
is considered appropriate to mitigate the risk of post-operative PJK
and PJF. The applicant noted that a 510(k) has been submitted to FDA
for the same indication (K213659). The applicant stated that the
LigaPASS 2.0 PJK Prevention System includes components from two
predicate devices: The LigaPASS 2.0 connector (K172021), previously
cleared to provide temporary stabilization as a bone anchor during the
development of solid bony fusion, and the LigaPASS 2.0 band (K173506),
previously cleared to aid in the repair of bone fractures. According to
the applicant, there are no technological differences between the
subject device and its predicates; the only difference would be the
added PJK/PJF indication covered by the Breakthrough Device
designation. The applicant indicated that it is seeking new technology
add-on payment only for the LigaPASS 2.0 PJK Prevention System's
proposed new PJK and PJF indication for which the device has been
designated as a Breakthrough Device by FDA. According to the applicant,
there are no ICD-10-PCS codes that uniquely identify procedures
involving the use of the LigaPASS 2.0 PJK Prevention System. The
applicant also noted there are no unique ICD-10-CM diagnosis codes that
describe the indication for prophylactic use of the LigaPASS 2.0 PJK
Prevention System for PJK/PJF prevention covered by the Breakthrough
Device designation. The applicant has submitted a request for a unique
ICD-10-CM diagnosis code and a unique ICD-10-PCS code that can be used
together to uniquely identify cases involving use of the technology for
the Breakthrough Device designation for the technology.
With regard to the cost criterion, the applicant provided the
following cost analysis to demonstrate that the LigaPASS 2.0 PJK
Prevention System meets the cost criterion. The applicant searched the
FY 2019 MedPAR dataset for cases representing patients who may be
eligible for LigaPASS 2.0 PJK Prevention System. The applicant stated
they conducted a thorough review of ICD-10-PCS codes for procedures in
which the LigaPASS 2.0 PJK Prevention System might be placed into the
spine to prevent PJK/PJF in an adult patient who is diagnosed with
spinal deformity. The applicant provided the following ICD-10-PCS
procedure codes and ICD-10-CM diagnosis codes used to identify cases
representing patients who may be eligible for the LigaPASS 2.0 PJK
Prevention System.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.122
[[Page 28329]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.123
[[Page 28330]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.124
[[Page 28331]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.125
[[Page 28332]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.126
[[Page 28333]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.127
[[Page 28334]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.128
[[Page 28335]]
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[[Page 28336]]
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[[Page 28337]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.131
[[Page 28338]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.132
[GRAPHIC] [TIFF OMITTED] TP10MY22.133
[[Page 28339]]
The applicant identified 433,845 cases using the combination of
ICD-10-PCS and ICD-10-CM codes which mapped to the following 11 MS-
DRGs:
[GRAPHIC] [TIFF OMITTED] TP10MY22.134
BILLING CODE 4120-01-C
The applicant did not remove charges for prior technology. The
applicant standardized the charges and applied a 4-year inflation
factor of 1.281834 based on the inflation factor used to update the
outlier threshold in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45542), to update the charges from FY 2019 to FY 2023. The applicant
then added charges for the new technology by dividing the per-patient
anticipated hospital cost of the LigaPASS 2.0 PJK Prevention System by
the national average cost-to-charge ratio for implantable devices
(0.239) from the FY 2022 IPPS/LTCH PPS final rule (86 FR 44966). The
applicant also added related charges for the new technology, estimated
by the cost of 15 additional minutes of operating room time and 15
additional minutes of nursing time divided by the national average
cost-to-charge ratios for Operating Room (0.167) and Other Services
(0.344), respectively, from the FY 2022 IPPS/LTCH PPS final rule (86 FR
44966). The applicant calculated a final inflated case-weighted average
standardized charge per case of $386,183 and an average case-weighted
threshold of $165,473. 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.
We agree with the applicant that the LigaPASS 2.0 PJK Prevention
System meets the cost criterion and therefore are proposing to approve
the LigaPASS 2.0 PJK Prevention System for new technology add-on
payments for FY 2023, subject to the technology receiving FDA marketing
authorization for the indication corresponding to the Breakthrough
Device designation by July 1, 2022.
Based on the preliminary information from the applicant at the time
of this proposed rule, the cost per case of the LigaPASS 2.0 PJK
Prevention System is $17,392, which includes $10,458 for 2 bands and
$6,934 for 2 connectors per surgery. We note 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% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case. As a result, we are
proposing that the maximum new technology add-on payment for a case
involving the use of the LigaPASS 2.0 PJK Prevention System would be
$11,305 for FY 2023 (that is, 65% of the average cost of the
technology).
We are inviting public comments on whether the LigaPASS 2.0 PJK
Prevention System meets the cost criterion and our proposal to approve
new technology add-on payments for LigaPASS 2.0 PJK Prevention System
for FY 2023, subject to the technology receiving FDA marketing
authorization for the indication corresponding to the Breakthrough
Device designation by July 1, 2022.
(5) Magnus Neuromodulation System With SAINT Technology
Magnus Medical, Inc. submitted an application for new technology
add-on payments for Magnus Neuromodulation System (MNS) with Stanford
Accelerated Intelligent Neuromodulation Therapy (SAINT) technology for
FY 2023. Per the applicant, the Magnus Neuromodulation System with
SAINT technology is a transcranial magnetic stimulation (TMS) device
with intermittent theta burst (iTBS) capability and includes a
neuronavigation system to direct neurostimulation to individualized
targets, and has target identification software that identifies
individualized targets in the brain for stimulation using structural
and functional MRI outputs. According to the applicant, the Magnus
Neuromodulation System with SAINT technology utilizes magnetic pulses
delivered to the prefrontal cortex in order to treat major depressive
disorder (MDD), and has redesigned aspects of TMS to personalize the
treatment and optimize individual patient response. These aspects
include the identification of a target for stimulation, the dose or
amount of stimulation, and the stimulation pattern.
The applicant stated that on July 2, 2021, the FDA designated the
Magnus Transcranial Magnetic Stimulation (TMS) System with MINT (Magnus
Intelligent Neuromodulation Therapy) as a Breakthrough Device for the
treatment of major depressive disorder (MDD) in adult patients who have
failed to receive satisfactory improvement
[[Page 28340]]
from prior antidepressant medication in the current episode. According
to the applicant, the Magnus Neuromodulation System with SAINT
technology is the same system that received the Breakthrough Device
designation, but with a revised name. Per the applicant, Magnus
Neuromodulation System with SAINT technology is a Class II device. The
applicant stated that it is seeking FDA 510(k) clearance for the same
indication, which the applicant expects to receive by June 1, 2022.
According to the applicant, there are currently no ICD-10-PCS codes
to distinctly identify the Magnus Neuromodulation System with SAINT
technology. The applicant submitted a request for approval for a unique
ICD-10-PCS procedure code for Magnus Neuromodulation System with SAINT
technology beginning in FY 2023. The applicant stated that the
following ICD-10-CM diagnosis codes may be used to identify cases
corresponding to the proposed Breakthrough Device indication for use of
Magnus Neuromodulation System with SAINT technology: F32.2 (Major
depressive affective disorder, single episode, severe, without mention
of psychotic behavior) and F33.3 (Major depressive affective disorder,
recurrent episode, severe, without mention of psychotic behavior).
With respect to the cost criterion, the applicant completed an
analysis, as well as an additional subanalysis including only cases
containing the ICD-10-CM diagnosis codes that correspond to their
Breakthrough Device indication, to demonstrate that the Magnus
Neuromodulation System with SAINT technology meets the cost criterion.
Under the main analysis, after determining that cases representing
patients who may be eligible for treatment with Magnus Neuromodulation
System with SAINT technology would map to MS-DRG 885 (Psychoses), the
applicant determined a case count of 68,602 based on the number of
cases reported for MS-DRG 885 in the FY 2023 New Technology Thresholds
data file published with the FY 2022 IPPS/LTCH PPS final rule. The
applicant then searched the FY 2020 Inpatient Standard Analytic File
(IPSAF) for claims incurred during FY 2020 with an MS-DRG of 885. The
applicant aggregated the charges at the facility level and calculated a
weighted average of covered charges across all facilities.
The applicant stated that it declined to remove charges for prior
technology, as the applicant determined that analogous technologies are
currently used almost exclusively on an outpatient basis. The applicant
then standardized the charges using inputs from the FY 2022
Standardizing File and the geographic adjustment factor (GAF) from the
IPPS FY 2022 final rule impact file. The applicant applied the 3-year
inflation factor used in the FY 2022 IPPS/LTCH PPS final rule and
correction notice to calculate outlier threshold charges, which the
applicant stated as 1.204686 (86 FR 45542). The applicant then added
charges for the new technology by dividing the cost of Magnus
Neuromodulation System with SAINT technology by the national average
CCR for the Other Services, which is 0.334 (86 FR 44966), and inflating
the charges using the same three year-inflation factor. The applicant
added costs using the Outpatient Standard Analytic File (OPSAF) for FY
2020 data to populate estimated charges related to the technology and
specifically included the following charges related to procedures from
the OSPAF 2020:
Brain Stimulation Consultation (completed on day 1 or 2 of
the admission): Average weighted charges for CPT codes 99253-99255
($481.91).
Neuro Navigation (completed on day 1 or 2 of the
admission): Average weighted charges for CPT code 61782 ($3,871.77).
This procedure is performed every day before stimulation treatment and
the day of the fMRI (Functional MRI) (6 instances on separate days).
Functional MRI (fMRI) (completed on day 1 or day 2 of the
admission): Average charges for CPT code 70554 ($3,333.89).
Motor Threshold Determination (completed on the first day
of the brain stimulation sessions): Average charges for CPT code 90867
within revenue code 900 ($639.05).
Brain Stimulation Sessions (10 sessions a day across 5
treatment days, that is 50 sessions): Average charges for CPT code
90868 within revenue code 900 ($502.63).
The applicant calculated a final inflated average case-weighted
standardized charge per case of $120,840 which exceeded the average
case-weighted threshold amount of $34,073. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that Magnus
Neuromodulation System with SAINT technology meets the cost criterion.
Under the subanalysis, the applicant included only cases within MS-
DRG 885 reporting an ICD-10-CM diagnosis code of F32.2 or F33.3, as
these two diagnosis codes match their Breakthrough Device indication.
The applicant identified 2,787 cases containing either of these two
ICD-10-CM diagnosis codes within MS-DRG 885. The applicant then applied
the same methodology for calculations as in the main analysis. The
calculations in this sub-analysis resulted in a case-weighted average
standardized charge per case of $29,882 and a final inflated average
case weight standardized charge per case of $125,152. The final
inflated average case-weighted standardized charge per case under this
subanalysis also exceeded the average case-weighted threshold amount of
$34,073.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
Magnus Neuromodulation System with SAINT technology to the hospital to
be a $12,500 fee per patient. The applicant stated that the cost of the
technology consists of the three individual components of the Magnus
Neuromodulation System with SAINT technology: The neurostimulation
hardware, the neuronavigation hardware, and the target identification
software. The applicant also noted that none of these were operating
costs. 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 payment of 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 (86 FR 45145). Based on the information from the
applicant, it appears that the costs of the Magnus Neuromodulation
System with SAINT technology only include capital costs. Therefore,
even if the technology meets the cost criterion, it appears that the
Magnus Neuromodulation System with SAINT technology is not eligible for
new technology add-on payment 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). However, we are inviting
public comments on whether the Magnus Neuromodulation System with SAINT
technology has any operating costs, and if it meets the cost criterion.
If the Magnus Neuromodulation System with SAINT technology does have
operating costs, since it appears to meet the cost criterion, we are
proposing to approve
[[Page 28341]]
new technology add-on payments for only the operating costs of the
Magnus Neuromodulation System with SAINT technology for FY 2023,
subject to the technology receiving FDA marketing authorization for the
treatment of MDD in adult patients who have failed to receive
satisfactory improvement from prior antidepressant medication in the
current episode, by July 1, 2022.
(6) Nelli[supreg] Seizure Monitoring System
Neuro Event Labs, Inc. submitted an application for new technology
add-on payments for the Nelli[supreg] Seizure Monitoring System for FY
2023. Per the applicant, the Nelli[supreg] Seizure Monitoring System is
software designed to automate the analysis of audio and video data to
identify seizure events with a positive motor component as an adjunct
to seizure monitoring in a hospital inpatient or home setting for
adults and children 6 years of age and older. The applicant stated that
data is collected while the patient is `observed' using the
Nelli[supreg] Seizure Monitoring System hardware (Personal Recording
Unit [PRU]), which temporarily stores and pre-processes raw media data
to extract only periods likely to contain clinically relevant activity.
The applicant then stated that data is transmitted via a secure
internet connection to the Nelli[supreg] Seizure Monitoring System
software running on a remote server where it is processed using
analysis algorithms which create and categorize media samples that may
be indicative of epileptic seizure events. Per the applicant, the
software provides objective summaries of semiological components of
identified events (including velocity and acceleration of movements,
seizure frequency, seizure duration, heart rate, and respiratory rate)
to enable the detection and classification of epileptic events using
pretrained artificial intelligence (AI).
According to the applicant, the Nelli[supreg] Seizure Monitoring
System received Breakthrough Device designation from FDA on October 9,
2020 for the automated analysis of audio and video data to identify
seizure events with a positive motor component in children and adults
as well as to characterize seizures and peri-ictal events. The
applicant stated that the Nelli[supreg] Seizure Monitoring System is
not yet commercially available as it is awaiting 510(k) clearance of
the device from the FDA for the same indication, which the applicant
submitted on August 17, 2021.
According to the applicant, there are currently no ICD-10-PCS
procedure codes to distinctly identify the Nelli[supreg] Seizure
Monitoring System. The applicant stated that the inpatient population
for which the Nelli[supreg] Seizure Monitoring System is indicated
would undergo standard video EEG monitoring, which is described by the
ICD-10-PCS code 4A10X4Z (Monitoring of central nervous electrical
activity, external approach). The applicant has submitted a request to
the ICD-10 Coordination and Maintenance Committee for approval of a
unique code for FY 2023 to identify the technology.
With respect to the cost criterion, the applicant conducted two
analyses to demonstrate that the Nelli[supreg] Seizure Monitoring
System meets the cost criterion, one based on 100% of identified
claims, and second based on 91.1% of identified claims.
Under the first scenario, which included 100% of claims, the
applicant searched the FY 2020 MedPAR database for cases representing
patients who may be eligible for the Nelli[supreg] Seizure Monitoring
System. The applicant extracted all inpatient claims for which ICD-10-
PCS code 4A10X4Z (Monitoring of central nervous electrical activity,
external approach) appeared in conjunction with any of the ICD-10-CM
codes listed in the table below. The applicant stated this approach to
identifying cases is based on the methodology used in a recent paper,
which assessed the ability of using code-based queries to identify
inpatient epilepsy monitoring unit (EMU) admissions from billing
records in a large academic medical center over a 4-year period, 2016-
2019.\593\
---------------------------------------------------------------------------
\593\ Kamitaki B.K., Rishty S., Mani R., et al. Using ICD-10
codes to identify elective epilepsy monitoring unit admissions from
administrative billing data: A validation study. Epilepsy Behav.
2020;111:107194.
[GRAPHIC] [TIFF OMITTED] TP10MY22.135
[[Page 28342]]
After imputing a case count of 11 for those MS-DRGs with fewer than
11 cases, the applicant identified 9,506 claims mapping to the
following 11 MS-DRGs, with over 90% of cases mapping to MS-DRGs 100
(Seizures with MCC) and 101 (Seizures without MCC):
[GRAPHIC] [TIFF OMITTED] TP10MY22.136
The applicant did not remove charges for prior technology as it
asserted there is no technology being replaced when the Nelli[supreg]
Seizure Monitoring System is used in a hospital inpatient setting. The
applicant then standardized the charges by applying the 3-year
inflation factor of 1.204686 used in the FY 2022 IPPS/LTCH PPS final
rule and correction notice to calculate outlier threshold charges (86
FR 45542). The applicant then added charges for the new technology by
dividing the cost of the Nelli[supreg] Seizure Monitoring System by the
national average CCR for ``Other Services,'' which is 0.344 as
published in the FY 2022 IPPS/LTCH IPPS final rule (86 FR 44966).
The applicant calculated a case-weighted average standardized
charge per case of $56,770 and a final inflated average case-weighted
standardized charge per case of $71,297, both of which exceeded the
average case-weighted threshold amount of $48,474.
Under the second scenario, the applicant included only cases
mapping to MS-DRGs 100 and 101 (seizures with and without MCC,
respectively) as these two MS-DRGs represented 91.1% of patients
undergoing video EEG, which the applicant identified using the ICD-10-
PCS code 4A10X4Z (Monitoring of central nervous electrical activity,
external approach). Per the applicant, 30.2% of the procedures mapped
to MS-DRG 100 and 60.9% of the procedures mapped to MS-DRG 101. The
applicant asserted that these patients more likely represent the
inpatient EMU population for which the Nelli[supreg] Seizure Monitoring
System would be especially applicable. The applicant identified 6,182
cases mapping to these 2 MS-DRGs. The applicant then applied the same
methodology for calculations as in the first analysis. The calculations
in this sub-analysis resulted in a case-weighted average standardized
charge per case of $55,524 and a final inflated average case weight
standardized charge per case of $69,796. Both of these amounts exceed
the case-weighted threshold amount of $48,404.
Because the final inflated case-weighted average standardized
charge per case for each scenario exceeded the average case-weighted
threshold amount for all scenarios, the applicant asserted that the
Nelli[supreg] Seizure Monitoring System meets the cost criterion.
We agree that the Nelli[supreg] Seizure Monitoring System meets the
cost criterion and therefore are proposing to approve the Nelli[supreg]
Seizure Monitoring System for new technology add on payments for FY
2023, subject to the technology receiving FDA marketing authorization
for the automated analysis of audio and video data to identify seizure
events with a positive motor component in children and adults by July
1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the non-capital cost of
the Nelli[supreg] Seizure Monitoring System to the hospital to be
$1,000 per patient for the semiological report and seizure detection
notification produced following patient assessment. We note 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. The applicant based the cost per case of its technology on
two pricing models that it currently uses in Europe. The first pricing
model consists of an approximately $350 per day charge for the
technology. The applicant stated that this results in a typical cost to
the hospital of around $1,000 USD (excluding capital costs) for an
average patient stay of 3-4 days in an EMU. The applicant stated that
the second pricing model is a single 1000 [euro] per-patient fee for
measurement of readings and producing the report, regardless of the
number of days the system is used. Therefore, based on the information
provided by the applicant, it appears that the average cost per case
for the use of the Nelli[supreg] Seizure Monitoring System is $1000
USD. Under Sec. 412.88(a)(2), we limit new technology add-on payments
to the lesser of 65% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. As a result, we
are proposing that the maximum new technology add-on payment for a case
involving the use of the Nelli[supreg] Seizure Monitoring System would
be $650 for FY 2023 (that is 65% of the average cost of the
technology).
We are inviting public comments on whether the Nelli[supreg]
Seizure Monitoring System meets the cost criterion and our proposal to
approve new technology add-on payments for the Nelli[supreg] Seizure
Monitoring System for FY 2023, subject to the technology receiving FDA
marketing authorization for the automated analysis of audio and video
data to identify seizure events with a positive motor component in
children and adults by July 1, 2022.
(7) Phagenyx[supreg] System
Phagenesis Ltd. submitted an application for new technology-add on
payments for the Phagenyx[supreg] System for
[[Page 28343]]
FY 2023. The Phagenyx[supreg] System (Phagenyx[supreg]) is a
neurostimulation device for the treatment of neurogenic dysphagia,
which is often seen after stroke, traumatic brain injury, or prolonged
mechanical ventilation. Per the applicant, the system is comprised of a
sterile single-use per patient catheter (the PNX-1000 catheter),
introduced nasally and extending as far as the patient's stomach; and
the (reusable) EPSB3 Base Station, described as a touch screen user
interface that facilitates the optimization of stimulation levels and
stores patient and treatment information. Per the applicant, treatment
involves the use of electric pulses to stimulate sensory nerves in the
oropharynx. The applicant is requesting new technology add-on payments
for the PNX-1000 catheter only. We note that Phagenesis Ltd. previously
submitted an application for new technology add-on payments for the
Phagenyx[supreg] System for FY 2022, as summarized in the FY 2022 IPPS/
LTCH PPS proposed rule (86 FR 25382 through 25384) but the technology
did not meet the deadline of July 1, 2021, for FDA approval or
clearance of the technology and, therefore, was not eligible for
consideration for new technology add-on payments for FY 2022 (86 FR
45126 through 45127).
Per the applicant, Phagenyx[supreg] received Breakthrough Device
designation on December 4, 2019 for use in treating neurogenic
dysphagia in adult tracheotomized patients weaned from ventilation. The
Breakthrough Device designation was revised on January 29, 2021 to
include the treatment of nonprogressive neurogenic dysphagia in adult
patients, for which the applicant indicated that it anticipates FDA
will grant a De Novo classification request in the second quarter of
calendar year 2022.
The applicant applied for and received a unique ICD-10-PCS
procedure code to identify cases involving the administration of
Phagenyx[supreg] effective for FY 2022. Phagenyx[supreg] administration
can now be identified by the ICD-10-PCS procedure code XWHD7Q7
(Insertion of neurostimulator lead into mouth and pharynx, via natural
or artificial opening, new technology group 7), which is unique to
Phagenyx[supreg] administration.
With respect to the cost criterion, the applicant provided an
analysis, as well as an additional subanalysis containing only MS-DRGs
having at least 1% of the entire sample volume, to demonstrate that the
technology meets the cost criterion. Under the first analysis, the
applicant first identified discharges from the 2019 MedPAR final rule
dataset reporting one of the following ICD-10-CM codes for dysphagia:
[GRAPHIC] [TIFF OMITTED] TP10MY22.137
The applicant then removed all discharges reporting one of the
following ICD-10-CM codes for a progressive neurodegenerative disease
or condition:
[GRAPHIC] [TIFF OMITTED] TP10MY22.138
The applicant included only inpatient fee-for-service discharges (claim
type ``60'') and excluded Medicare Advantage discharges.
After imputing a value of 11 cases for any MS-DRG with a discharge
count under 11, the applicant identified 391,136 cases spanning 722 MS-
DRGs. The applicant explained that it did not remove charges for prior
technology as Phagenyx[supreg] does not replace any existing therapy
for treating neurogenic dysphagia. The applicant then standardized the
charges using the FY 2019 final rule and correction notice impact file
and excluded any discharges without a standardized charge. The
applicant applied a 4-year inflation factor of 1.281834 to update the
charges from FY 2019 to FY 2023, based on the inflation factor used to
update the outlier threshold in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45542). The applicant then added charges for the new technology
by dividing the estimated cost of Phagenyx[supreg] by the national
cost-to-charge ratio for supplies and equipment of .297 from the FY
2022 IPPS/LTCH PPS final rule (86 FR 44966). The applicant determined a
final inflated case weighted average standardized charge per case of
$115,910, which exceeded the case weighted threshold of $68,761.
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.
The applicant submitted an additional analysis containing only
cases mapping to MS-DRGs with at least 1% of the
[[Page 28344]]
entire sample volume. This secondary analysis contained 19 MS-DRGs (vs.
722 MS-DRGs in the original analysis). Using the same methodology
above, the applicant determined a final inflated case weighted
standardized charge per case of $102,682 and a case-weighted threshold
of $60,674. Because the final inflated case weighted standardized
charge per case exceeded the case-weighted threshold under this second
analysis, the applicant maintained that the technology meets the cost
criterion.
We agree with the applicant that Phagenyx[supreg] meets the cost
criterion and are therefore proposing to approve Phagenyx[supreg] for
new technology add-on payments for FY 2023, subject to the technology
receiving FDA marketing authorization for the indication corresponding
to the Breakthrough Device designation by July 1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the cost of Phagenyx[supreg] is $5,000 per
catheter, which is the subject of this application. We note 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% of the average cost of the technology, or
65% of the costs in excess of the MS-DRG payment for the case. As a
result, we are proposing that the maximum new technology add-on payment
for a case involving the use of Phagenyx[supreg] would be $3,250 for FY
2023 (that is, 65% of the average cost of the technology).
We are inviting public comments on whether Phagenyx[supreg] meets
the cost criterion and our proposal to approve new technology add-on
payments for Phagenyx[supreg] for FY 2023 for the indication
corresponding to the updated Breakthrough Device designation, subject
to Phagenyx[supreg] receiving FDA marketing authorization for that
indication by July 1, 2022.
(8) Precision TAVITM Coronary Obstruction Module
DASI Simulations submitted an application for new technology add-on
payments for the Precision Transcatheter Aortic Valve Implantation
(TAVI)\TM\ Coronary Obstruction Module for FY 2023. According to the
applicant, the Precision TAVI Coronary Obstruction Module, which would
be an added feature of the Precision TAVI Software System, is intended
to provide intelligent decision support powered by artificial
intelligence (AI) and machine learning to help physicians accurately
predict potential coronary artery obstructions in transcatheter aortic
valve replacement (TAVR) procedures. The applicant stated that the
technology may assist physicians in the evaluation of patients with
severe aortic stenosis when considering surgical replacement as opposed
to trans-catheter replacement procedures, as well as other
interventional or protection measures, when used with the Precision
TAVI\TM\ Software System.
The applicant stated that the Precision TAVI\TM\ Coronary
Obstruction Module has not yet received FDA Breakthrough Device
designation, but that it expects to receive Breakthrough Device
designation for the following indication: Precision TAVITM
Coronary Obstruction Module utilizes an additional proprietary software
to analyze the results of the simulation module and output coronary
obstruction risk biomarkers corresponding to each implantation
simulation scenario. For scenarios involving TAVR in a failed surgical
valve or a failed transcatheter valve, the computational test will also
include use of anatomic characteristics before and after simulated
bioprosthetic or native aortic scallop intentional laceration to
prevent iatrogenic coronary artery obstruction (BASILICA) procedure.
The applicant indicated that it anticipates receiving 510(k) clearance
for the Precision TAVITM Coronary Obstruction Module from
FDA by July 1, 2022 for the same indication. According to the
applicant, the device will be available on the market immediately after
receiving FDA clearance. We note that the proposed indication as stated
in the application does not describe a disease or population to be
treated and we therefore question whether this information is the
expected indication or some other description of the technology.
According to the applicant, there are currently no ICD-10-PCS codes
that uniquely identify the Precision TAVI\TM\ Coronary Obstruction
Module. The applicant submitted a request to the ICD-10 Coordination
and Maintenance Committee for approval of a unique code for FY 2023 to
identify the Precision TAVITM Coronary Obstruction Module.
With regard to the cost criterion, the applicant provided the
following analysis. To identify potential cases where the Precision
TAVI\TM\ Coronary Obstruction Module could be utilized, the applicant
searched the FY 2019 MedPAR Limited Data Set for cases reporting either
of the two ICD-10-PCS procedure codes to describe TAVR procedures,
02RF38Z (Replacement of aortic valve with zooplastic tissue,
percutaneous approach) and 02RF38H (Replacement of aortic valve with
zooplastic tissue, transapical, percutaneous approach), consistent with
the indication for which the applicant anticipates receiving
Breakthrough Device designation.
The applicant identified 40,407 total claims across 60 MS-DRGs. The
applicant stated that it did not remove charges associated with
Medical/Surgical Supplies and Devices (revenue centers 027x and 0624)
because the use of the Precision TAVI\TM\ Coronary Obstruction Module
is additive, and does not replace other supplies or devices utilized in
the TAVR procedures analyzed. The applicant then standardized the
charges and applied the 3-year inflation factor of 1.204686 used to
update the outlier threshold in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45542) to update the charges from FY 2019 to FY 2022. The
applicant then added charges for the new technology. The applicant
multiplied the cost of the technology by the national cost-to-charge
ratio for radiology from the FY2022 IPPS/LTCH PPS final rule (0.136)
(86 FR 44966) to calculate estimated average hospital charges
associated with the device.
The applicant calculated a final inflated case-weighted average
standardized charge per case of $240,685 and an average case-weighted
threshold of $181,410. 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.
We have the following concern regarding the applicant's analysis.
We note that the applicant used the ICD-10-PCS codes for TAVR to
identify cases where the Precision TAVI\TM\ Coronary Obstruction Module
may be used. However, according to the applicant, the software can
identify cases where TAVR should not be performed. We question whether
these potentially lower cost cases are reflected in the applicant's
cost analysis, as a TAVR procedure code would not be on the claim.
Subject to the applicant adequately addressing this concern, we
would agree that the technology meets the cost criterion and propose to
approve the Precision TAVITM Coronary Obstruction Module for
new technology add-on payments for FY 2023, subject to the technology
receiving Breakthrough Device designation and FDA marketing
authorization for the same indication by July 1, 2022.
Based on preliminary information from the applicant at the time of
this
[[Page 28345]]
proposed rule, the cost of Precision TAVITM Coronary
Obstruction Module is $1,995 per patient. We note 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% of the average cost of the technology, or 65% of
the costs in excess of the MS-DRG payment for the case. As a result, we
are proposing that the maximum new technology add-on payment for a case
involving the use of Precision TAVITM Coronary Obstruction
Module would be $1,296.75 for FY 2023 (that is, 65% of the average cost
of the technology). We are inviting public comments on whether the
Precision TAVI\TM\ Coronary Obstruction Module meets the cost criterion
and our proposal to approve new technology add-on payments for the
Precision TAVI\TM\ Coronary Obstruction Module for FY 2022 subject to
the technology receiving Breakthrough Device designation and FDA
marketing authorization by July 1, 2022 for the same indication as
described previously.
(9) ThoraflexTM Hybrid Device
Terumo Aortic submitted an application for new technology-add on
payments for the ThoraflexTM Hybrid Device
(ThoraflexTM) for FY 2023. Per the applicant, the device is
a sterile single-use, gelatin sealed Frozen Elephant Trunk (FET)
surgical medical device. The applicant explained that the device is
deployed through an opened aortic arch and then positioned into the
descending thoracic aorta. The applicant further explained that, once
it is completely deployed, the collar is sutured to the aorta, and
graft anastomoses are then performed in a manner depending upon the
chosen product design (which the applicant specified as either the
Plexus or the Ante-Flo). The device includes a proximal crimped
polyester surgical graft, central polyester collar, and distal nitinol
ring stents supported by thin wall polyester fabric. The applicant also
noted that the device has a unique gelatin sealant that acts as a seal,
preventing blood loss through the polyester fabric product wall. We
note that Terumo Aortic previously submitted an application for new
technology add-on payments for the ThoraflexTM Hybrid Device
for FY 2022, as summarized in the FY 2022 IPPS/LTCH PPS proposed rule
(86 FR 25390) which was withdrawn prior to the issuance of the FY 2022
IPPS/LTCH PPS final rule (86 FR 45127).
According to the applicant, the ThoraflexTM Hybrid
Device received Breakthrough Device designation on March 20, 2020 for
the open surgical repair or replacement of damaged or diseased vessels
of the aortic arch and descending aorta, with or without involvement of
the ascending aorta, in cases of aneurysm and/or dissection. The
applicant is seeking premarket approval of the device for the same
indication. According to the applicant, the ICD-10 Coordination and
Maintenance Committee approved the following ICD-10-PCS codes to
specifically describe the use of the ThoraflexTM Hybrid
Device, effective October 1, 2021: X2RX0N7 (Replacement of thoracic
aorta arch with branched synthetic substitute with intraluminal device,
new technology group 7) and X2VW0N7 (Restriction of thoracic descending
aorta with branched synthetic substitute with intraluminal device, new
technology group 7).
With respect to the cost criterion, the applicant conducted two
analyses based on 100% of identified claims and 74% of identified
claims. To identify potential cases where the ThoraflexTM
Hybrid Device could be utilized, the applicant searched the FY 2019
MedPAR file for claims reporting the following ICD-10-PCS codes for
thoracic aortic replacement procedures: 02RX08Z (Replacement of
thoracic aorta, ascending/arch with zooplastic tissue, open approach),
02RX0JZ (Replacement of thoracic aorta, ascending/arch with synthetic
tissue, open approach), and 02RX0KZ (Replacement of thoracic aorta,
ascending/arch with nonautologous tissue substitute, open approach).
For the analysis using 100% of cases, the applicant identified
5,374 cases mapping to 21 MS-DRGs. The applicant then removed charges
for the technology being replaced. Per the applicant, the use of the
ThoraflexTM Hybrid device is expected to replace a portion
of prior technologies. The applicant explained that because an estimate
of the percentage of these total charges that would be replaced could
not be determined, it removed 100% of charges associated with medical/
surgical supplies and devices (revenue centers 027x and 0624). The
applicant then standardized the charges and applied the 3-year outlier
inflation factor of 1.204686 used to update the outlier threshold in
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45542) to update the
charges from FY 2019 to FY 2022. The applicant then added charges for
the new technology. The applicant multiplied the cost of the technology
by the national cost-to-charge ratio for implantable devices from the
FY 2022 IPPS/LTCH PPS final rule (0.293) to calculate estimated average
hospital charges associated with the device. Under this analysis, based
on 100% of identified claims, the applicant calculated a final inflated
case-weighted average standardized charge per case of $420,924 and an
average case-weighted threshold of $230,659.
Under the analysis based on 74% of cases, the applicant used the
same methodology, which identified 3,980 cases across MS-DRGs 219 and
220. The applicant determined the average case-weighted threshold of
$211,423 and a final inflated average standardized charge per case of
$373,273. 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.
We agree with the applicant that the ThoraflexTM Hybrid
Device meets the cost criterion and therefore are proposing to approve
the ThoraflexTM Hybrid Device for new technology add-on
payments for FY 2023, subject to the technology receiving FDA marketing
authorization for the open surgical repair or replacement of damaged or
diseased vessels of the aortic arch and descending aorta, with or
without involvement of the ascending aorta, in cases of aneurysm and/or
dissection by July 1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the cost of ThoraflexTM Hybrid Device is
$35,000 per patient. We note 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% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case. As a result, we are
proposing that the maximum new technology add-on payment for a case
involving the use of ThoraflexTM Hybrid Device would be
$22,750 per patient for FY 2023 (that is, 65% of the average cost of
the technology).
We are inviting public comments on whether the
ThoraflexTM Hybrid Device meets the cost criterion and our
proposal to approve new technology add-on payments for the
ThoraflexTM Hybrid Device for FY 2023, subject to
ThoraflexTM Hybrid Device receiving FDA marketing
authorization by July 1, 2022 for the open surgical repair or
replacement of damaged or diseased
[[Page 28346]]
vessels of the aortic arch and descending aorta, with or without
involvement of the ascending aorta, in cases of aneurysm and/or
dissection.
(10) TOPS\TM\ System
Premia Spine, Inc., submitted an application for new technology
add-on payments for the TOPS\TM\ System for FY 2023. According to the
applicant, the TOPS\TM\ System is a motion preserving device comprised
of a titanium construct with an interlocking polycarbonate urethane
articulating core that is inserted into the lumbar vertebral joint and
anchored using pedicle screws after posterior spinal decompression
surgery. The applicant stated that the TOPS\TM\ System replaces
anatomical structures, such as the lamina and the facet joints, which
are removed during spinal decompression treatment to alleviate pain.
Per the applicant, unlike spinal fusion, the TOPSTM System
preserves normal biomechanical motion while providing spinal
stabilization after decompression.
According to the applicant, the TOPS\TM\ System received
Breakthrough Device designation from FDA on October 26, 2020, for
patients between 35 and 80 years of age suffering from neurogenic
claudication resulting from degenerative spondylolisthesis up to Grade
I with moderate to severe lumbar spinal stenosis and either the
thickening of the ligamentum flavum or scaring facet joint capsule at
one level from L2 to L5. The applicant indicated that it expects to
receive FDA premarket approval of the TOPS\TM\ System by Q2, 2022 for
the same indication.
According to the applicant, ICD-10-PCS procedure code 0SH00DZ
(Insertion of facet replacement spinal stabilization device into lumbar
vertebral joint, open approach) may be used to identify the TOPS\TM\
System, but the code does not uniquely identify the technology. The
applicant submitted a request to the ICD-10 Coordination & Maintenance
Committee for a new ICD-10-PCS code to uniquely identify the TOPS\TM\
System.
With respect to the cost criterion, the applicant provided the
following cost analysis. To identify cases representing patients who
may be eligible for the TOPS\TM\ System, the applicant searched the FY
2019 MedPAR dataset for cases reporting a combination of ICD-10-PCS
procedure code 0SH00DZ (Insertion of facet replacement spinal
stabilization device into lumbar vertebral joint, open approach) with a
relevant diagnosis code. The applicant identified the following MS-DRG
for the TOPS\TM\ System: 518 (Back and Neck Procedures except Spinal
Fusion with MCC or Disc Device or Neurostimulator).
The applicant identified 2,614 cases mapping to MS-DRG 518. The
applicant then removed charges for prior technology. The applicant
stated that in analyzing the MedPAR data, 100% of charges associated
with Medical/Surgical Supplies and Devices (revenue centers 027x and
0624) were removed. The applicant explained that use of the TOPS\TM\
System will replace a portion of devices included in these claims but
will not replace all devices, nor any medical supplies required to
perform the procedure. The applicant noted that an estimate of the
percentage of total charges for devices that would be replaced could
not be determined and therefore, to be as conservative as possible, the
analysis removed 100% of these charges. The applicant then standardized
the charges and applied the three-year inflation factor of 20.4% used
to update the outlier threshold in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45542), to update the charges from FY 2019 to FY 2022. The
applicant then added charges for the new technology by dividing the
per-patient anticipated hospital cost of the TOPS\TM\ System by the
national average cost-to-charge ratio for implantable devices (0.239)
from the FY 2022 IPPS/LTCH PPS final rule. The applicant calculated a
final inflated case-weighted average standardized charge per case of
$152,935 and an average case-weighted threshold of $109,174. 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.
We agree with the applicant that the TOPS\TM\ System meets the cost
criterion and therefore are proposing to approve the TOPS\TM\ System
for new technology add-on payments for FY 2023, subject to the
technology receiving FDA marketing authorization for the indication
corresponding to the Breakthrough Device designation by July 1, 2022.
Based on preliminary information from the applicant at the time of
this proposed rule, the per-patient anticipated hospital cost of the
TOPS\TM\ System is $15,000. We note 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% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case. As a result, we are
proposing that the maximum new technology add-on payment for a case
involving the use of the TOPS System would be $9,750 for FY 2023 (that
is, 65% of the average cost of the technology).
We are inviting public comments on whether the TOPS\TM\ System
meets the cost criterion and our proposal to approve new technology
add-on payments for the TOPS\TM\ System for FY 2023, subject to the
technology receiving FDA marketing authorization for the indication
corresponding to the Breakthrough Device designation by July 1, 2022.
(11) VITARIA[supreg] System
LivaNova, PLC submitted an application for new technology add-on
payments for the VITARIA[supreg] System for FY 2023. According to the
applicant, the VITARIA[supreg] System is an active implantable
neuromodulation system that uses vagus nerve stimulation to deliver
autonomic regulation therapy. The applicant reported the
VITARIA[supreg] System includes a pulse generator and an electrical
lead, which are implanted under the skin, without requiring a vascular
procedure. Per the applicant the electrical lead attaches the pulse
generator to the 10th cranial nerve (vagus nerve). The applicant stated
that after implantation is completed, a hand-held wand positioned on
the skin over the implanted pulse generator and a computer tablet are
used together externally to adjust the intensity of the electrical
impulses delivered from the pulse generator through the electrical lead
to stimulate the vagus nerve. Per the applicant, the VITARIA[supreg]
System is intended for use in patients with moderate to severe heart
failure (New York Heart Association classification of Class II or Class
III) and left ventricular dysfunction (ejection fraction (EF) of 35% or
less) who remain symptomatic despite receiving medical treatment in
line with current treatment guidelines.
According to the applicant, the VITARIA[supreg] System received
designation under the EAP (and is therefore considered part of the
Breakthrough Devices Program by FDA \594\) on October 24, 2016, for
patients who have moderate to severe heart failure (NYHA Class II/III),
with left ventricular dysfunction (EF of 40% or less), who remain
symptomatic despite stable, optimal heart failure drug therapy and are
not candidates for cardiac resynchronization therapy (CRT). Per the
applicant, FDA approved an amendment to its investigational device
exemption (IDE) trial on November 16,
[[Page 28347]]
2018, to include CRT or CRT-D recipients who have been receiving
cardiac resynchronization therapy (CRT) according to guideline directed
medical therapy (GDMT) and meet all of the other indications for use.
According to the applicant, FDA premarket approval of the
VITARIA[supreg] System is expected by June 30, 2022 for the proposed
indication for the symptomatic improvement of heart failure patients
who have reduced left ventricular ejection fraction and chronic heart
failure despite guideline-directed medical treatment. We note that, as
previously stated, under the eligibility criteria for approval under
the alternative pathway for certain transformative devices, only the
use of the technology for the indication that corresponds to the
technology's Breakthrough Device designation would be eligible for the
new technology add-on payment for FY 2023. The applicant stated that
the indication for which they are seeking the new technology add-on
payment is for patients who have moderate to severe heart failure (NYHA
Class II/III), with left ventricular dysfunction, who remain
symptomatic despite stable, optimal heart failure drug therapy and are
not candidates for cardiac resynchronization therapy (CRT).
---------------------------------------------------------------------------
\594\ https://www.fda.gov/medical-devices/how-study-and-market-your-device/breakthrough-devices-program.
---------------------------------------------------------------------------
Per the applicant, ICD-10-PCS procedure codes that can currently be
used to identify procedures involving the use of the VITARIA[supreg]
System are not unique to the VITARIA[supreg] System and may also be
used for other cranial nerve stimulators: 00HE0MZ (Insertion of
neurostimulator lead into cranial nerve, open approach) and 0JH60BZ
(Insertion of single array stimulator generator into chest subcutaneous
tissue and fascia, open approach). The applicant submitted a request to
the ICD-10 Coordination and Maintenance Committee for approval of a
code for FY 2023 to uniquely identify procedures involving the use of
the VITARIA[supreg] System. Additionally, the applicant submitted a FY
2023 MS-DRG reclassification request, as discussed further in section
II.D.3.b. of the preamble of this proposed rule.
The applicant also stated that the ICD-10-CM diagnosis codes in the
following table identify the EAP designation.
[GRAPHIC] [TIFF OMITTED] TP10MY22.139
We note that the ICD-10-CM diagnosis codes listed by the applicant
include those for diastolic heart failure, which is not part of the
indication for which the applicant stated the device had received EAP
designation. As such, we would appreciate additional information
regarding the rationale for inclusion of codes I50.30 through I50.33.
In addition, we believe that the following additional 13 ICD-10 CM
diagnosis codes could also be used to identify the EAP designation for
which the applicant is seeking the new technology add-on payment:
[[Page 28348]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.140
We invite public comment regarding the extent to which this is the
most appropriate list of ICD-10 CM diagnosis codes and is reflective of
the indication for which the applicant is seeking the new technology
add-on payment.
With respect to the cost criterion, the applicant provided the
following cost analysis. To identify potential cases where the
VITARIA[supreg] System could be utilized, the applicant searched the FY
2019 MedPAR dataset for claims reporting the aforementioned ICD-10-PCS
codes (00HE0MZ and 0JH60BZ). Using the FY 2022 MS-DRG Grouper (Version
39.0), the applicant identified three MS-DRGs to which the preceding
ICD-10-PCS codes mapped and limited discharges to these MS-DRGs: 252
(Other Vascular Procedures with MCC, 253 (Other Vascular Procedures
with CC, and 254 (Other Vascular Procedures without CC/MCC).
The applicant identified 66,438 cases mapping to the three MS-DRGs.
The applicant then removed charges for medical/surgical supplies and
devices at revenue centers 027x and 0624, since the applicant expects
the VITARIA[supreg] System to replace all of the current device charges
included in the claims. The applicant then standardized the charges and
applied the three-year inflation factor of 20.4% used to update the
outlier threshold in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45538), to update the charges from FY 2019 to FY 2022. The applicant
did not add charges for the new technology because the applicant has
not yet determined the average sales price for the device. According to
the applicant, no other charges related to the new technology were
included in the cost calculations, as the applicant assumes no other
charges are required to implant the VITARIA[supreg] System. Under the
analysis, the applicant calculated a final inflated case-weighted
average standardized charge per case of $97,567 and an average case-
weighted threshold of $93,472. 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.
With regard to the cost criterion for the VITARIA[supreg] System,
we note that the applicant identified MS-DRGs which may represent a
population broader than those cases which are eligible for treatment by
the VITARIA[supreg] System, and we question whether this cost analysis
is sufficiently representative of cases which would be eligible for
treatment with the technology.
Subject to the applicant adequately addressing this concern, we
would agree with the applicant that the VITARIA[supreg] System meets
the cost criterion and therefore are proposing to approve the
VITARIA[supreg] System for new technology add-on payments for FY 2023,
subject to the technology receiving FDA marketing authorization by July
1, 2022 for patients who have moderate to severe heart failure (NYHA
Class II/III), with left ventricular dysfunction (EF<=40%), who remain
symptomatic despite stable, optimal heart failure drug therapy and are
not candidates for cardiac resynchronization therapy (CRT).
Per the applicant, the anticipated cost for the VITARIA[supreg]
System will be available once the device receives FDA approval. While
the applicant has not stated which components of the system would
comprise the cost, the applicant has stated that the system is used in
conjunction with a computer tablet and hand-held wand that are used
together externally, which appear to be capital expenses. We note that
as discussed in prior rulemaking (86 FR 45134) and 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. Because the applicant has not provided
an estimate for the cost of the VITARIA[supreg] System at the time of
this proposed rule, we expect the applicant to submit cost information
prior to the final rule, and we will provide an update regarding the
new technology add-on payment amount for the technology, if approved,
in the final rule. Any new technology add-on payment for the
VITARIA[supreg] System would be subject to our policy under Sec.
412.88(a)(2) where we limit new technology add-on payments to the
lesser of 65% of the average cost of the technology, or 65% of the
costs in excess of the MS-DRG payment for the case.
We are inviting public comments on whether the VITARIA[supreg]
System meets the cost criterion and our proposal to approve new
technology add-on payments for the VITARIA[supreg] System for FY 2023,
subject to the technology receiving FDA marketing authorization by July
1, 2022 for patients who have moderate to severe heart failure (NYHA
Class II/III), with left ventricular dysfunction (EF<=40%), who remain
symptomatic despite stable, optimal heart failure drug therapy and are
not
[[Page 28349]]
candidates for cardiac resynchronization therapy (CRT).
(12) ViviStim[supreg] Paired VNS System
MicroTransponder, Inc. submitted an application for new technology
add-on payments for the ViviStim[supreg] Paired VNS System for FY 2023.
According to the applicant, the ViviStim[supreg] Paired VNS System is a
paired vagus nerve stimulation therapy intended to stimulate the vagus
nerve during rehabilitation therapy to reduce upper extremity motor
deficits and improve motor function in chronic ischemic stroke patients
with moderate to severe arm impairment. The applicant stated that the
Vivistim[supreg] Paired VNS System is comprised of an Implantable Pulse
Generator (IPG), an implantable stimulation Lead, and an external
paired stimulation controller which is composed of the external
Wireless Transmitter (WT) and the external Stroke Application and
Programming Software (SAPS). According to the applicant, the external
paired stimulation controller (SAPS and WT) enables the implanted
components (the IPG and Lead) to stimulate the vagus nerve during
rehabilitation. The applicant stated that patients undergo 25-30 hours
of in-clinic rehabilitation over 6 weeks, where the ViviStim[supreg]
Paired VNS System is actively paired with rehabilitation by a
therapist. The applicant further stated that following this in-clinic
rehabilitation period, when directed by a physician and with
appropriate programming to the IPG, the patient can initiate at-home
use by swiping a magnet over the IPG implant site which activates the
IPG to deliver stimulation while rehabilitation movements are
performed.
The applicant stated that the ViviStim[supreg] Paired VNS System
was designated as a Breakthrough Device on February 10, 2021 for use in
stimulating the vagus nerve during rehabilitation therapy in order to
reduce upper extremity motor deficits and improve motor function in
chronic ischemic stroke patients with moderate to severe arm
impairment. According to the applicant, the ViviStim[supreg] Paired VNS
System received FDA premarket approval on August 27, 2021 as a Class
III implantable device for the same indication. The applicant stated
that the technology is not yet commercially available due to
manufacturing delays.
According to the applicant, there are no unique ICD-10-PCS
procedure codes to report the implantation of the device. The applicant
noted that together the following two ICD-10-PCS codes describe the
insertion of the ViviStim[supreg] Paired VNS System: 0JH60BZ (Insertion
of single array stimulator generator into chest subcutaneous tissue and
fascia, open approach) and 00HE0MZ (Insertion of neurostimulator lead
into cranial nerve, open approach). The applicant noted that these
codes may be used for any cranial nerve stimulator insertion procedure,
including VNS therapy for treatment resistant depression, VNS therapy
for refractory epilepsy, and upper airway stimulation to treat
obstructive sleep apnea. The applicant has submitted a request to the
ICD-10 Coordination and Maintenance Committee for approval of a unique
code for FY 2022 to identify insertion of the ViviStim[supreg] Paired
VNS System.
The applicant also provided the ICD-10-CM diagnosis codes in the
table below. The applicant stated that moderate to severe upper limb
impairment is described in the ICD-10-CM as monoplegia (single limb) or
hemiplegia (single laterality, including upper limb). The applicant
stated that the FY 2021 ICD-10-CM code set \595\ includes monoplegia
and hemiplegia as a sequela of infarction (stroke), and delineates
codes based upon stroke type (hemorrhagic versus ischemic). Therefore,
the applicant states that the ICD-10-CM diagnosis codes in the table
below describe chronic moderate to severe upper arm impairment as a
sequela of ischemic stroke, and are related to the use of the
ViviStim[supreg] Paired VNS System.
---------------------------------------------------------------------------
\595\ https://www.cms.gov/medicare/icd-10/2021-icd-10-cm,
effective October 1, 2020 through September 30, 2021.
[GRAPHIC] [TIFF OMITTED] TP10MY22.141
With respect to the cost criterion, the applicant presented the
following analysis. The applicant searched the FY 2019 MedPAR claims
data set released with the FY 2022 IPPS/LTCH PPS final rule for cases
representing patients who may be eligible for the ViviStim[supreg]
Paired VNS System. The applicant identified cases reporting the ICD-10-
PCS codes 0JH60BZ and 00HE0MZ in combination with one of the ICD-10-CM
diagnosis codes above describing moderate to severe upper limb
impairment. The applicant then mapped the cases to the appropriate MS-
DRGs using MS-DRG Grouper Version 39.0. After imputing a case count of
11 for those MS-DRGs with fewer than 11 cases, the applicant identified
285 claims mapping to 12 MS-DRGs, with 65% of cases mapping to MS-DRGs
024 (Craniotomy with Major Device Implant or Acute Complex CNS
Principal Diagnosis without MCC), 041 (Peripheral Cranial Nerve and
Other Nervous System Procedures with CC or Peripheral Neurostimulator)
and 042 (Peripheral Cranial Nerve and Other Nervous System Procedures
without CC/MCC).
The applicant then removed 100% of charges associated with Medical/
Surgical Supplies and Devices (prior technology, revenue centers 027X,
and
[[Page 28350]]
0624). The applicant asserted that the use of the Vivistim[supreg]
Paired VNS System is expected to replace the majority of existing
technologies, although some devices will still be required to perform
the procedure. The applicant stated that because it could not determine
the estimated percentage of the total charges that would be replaced,
it removed 100% of these total charges to be as conservative as
possible. The applicant did not remove charges related to the
technology being replaced, stating that the financial impact of
utilizing the Vivistim[supreg] Paired VNS System on hospital resources
compared to prior technologies other than on Medical Supplies is
minimal, and that 100% of charges for Medical/Surgical Supplies had
been removed in the previous step.
The applicant standardized the charges by applying the three-year
inflation factor of 1.20469 used in the FY 2022 IPPS/LTCH PPS final
rule and correction notice to calculate outlier threshold charges (86
FR 45542). The applicant then added charges for the new technology by
dividing the cost of the ViviStim[supreg] Paired VNS System by the
national average CCR for implantable devices which is 0.293 as
published in the FY 2022 IPPS/LTCH IPPS final rule (86 FR 44966). The
applicant calculated a final inflated average case-weighted
standardized charge per case of $200,398 which exceeded the average
case-weighted threshold amount of $107,963. Because the final inflated
average case-weighted standardized charge per case exceeded the average
case-weighted threshold amount, the applicant maintained that the
ViviStim[supreg] Paired VNS System meets the cost criterion.
We agree with the applicant that the ViviStim[supreg] Paired VNS
System meets the cost criterion and are therefore proposing to approve
the ViviStim[supreg] Paired VNS System for new technology add-on
payments for FY 2023.
Based on preliminary information from the applicant at the time of
this proposed rule, the applicant anticipated the total cost of the
ViviStim[supreg] Paired VNS System to the hospital to be $36,000 per
patient. According to the applicant, this cost represents the entire
per-patient cost of the system to hospital providers--specifically for
the cost of the Implantable Pulse Generator and stimulation lead. Per
the applicant, there is no charge associated with the external paired
stimulation controller and the magnet/take-home patient programmer. The
applicant stated that the external paired stimulation controller may be
used on multiple patients and that it retains a service agreement with
each provider to own, maintain, and update the hardware and software
that resides on that device component. The applicant has also stated
that they have this service agreement with providers for the magnet/
take-home patient programmer. Therefore, as the applicant has stated
they retain and maintain the reusable hardware components at no charge
to the providers, it appears that capital components are not included
in the cost of the technology. We welcome public comment on the cost
information provided by the applicant for the purpose of calculating
the new technology add-on payment amount.
We note 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% of the
average cost of the technology, or 65% of the costs in excess of the
MS-DRG payment for the case. As a result, we are proposing that the
maximum new technology add-on payment for a case involving the use of
the ViviStim[supreg] Paired VNS System would be $23,400 for FY 2023
(that is, 65% of the average cost of the technology).
We invite public comments on whether the ViviStim[supreg] Paired
VNS System meets the cost criterion and our proposal to approve new
technology add-on payments for the ViviStim[supreg] Paired VNS System
for FY 2023 for use in stimulating the vagus nerve during
rehabilitation therapy in order to reduce upper extremity motor
deficits and improve motor function in chronic ischemic stroke patients
with moderate to severe arm impairment.
b. Alternative Pathways for Qualified Infectious Disease Products
(QIDPs)
(1) DefenCathTM (Solution of Taurolidine (13.5 mg/mL) and
Heparin (1000 USP Units/mL))
CorMedix Inc. submitted an application for new technology add-on
payments for DefenCathTM (solution of taurolidine (13.5 mg/
mL) and heparin (1000 USP Units/mL)) for FY 2023. The applicant stated
that DefenCathTM is a proprietary formulation of
taurolidine, a thiadiazinane antimicrobial, and heparin, an anti-
coagulant, that is under development for use as catheter lock solution,
with the aim of reducing the risk of catheter-related bloodstream
infections (CRBI) from in-dwelling catheters in patients undergoing
hemodialysis (HD) through a central venous catheter (CVC). According to
the applicant, in vitro studies of DefenCathTM indicate
broad antimicrobial activity against gram-positive and gram-negative
bacteria, including antibiotic resistant strains as well as
mycobacteria and clinically relevant fungi. The applicant stated that
DefenCathTM is available in a single-dose vial, which is
sufficient to fill both lumens of the HD catheter, and is instilled
into the catheter lumen as a lock solution at the conclusion of each
dialysis session and aspirated at the beginning of the next dialysis
session. The applicant noted that DefenCathTM cannot be
flushed or injected into the patient and that dosing is calibrated to
the volume of the catheter lumens.
Per the applicant, DefenCathTM was designated by FDA as
a Qualified Infectious Disease Product (QIDP) in 2015 for the
prevention of CRBSI in patients with end-stage renal disease (ESRD)
receiving HD through a central venous catheter, and has been granted
FDA Fast Track status. The applicant indicated that it is pursuing an
NDA under FDA's LPAD for the same indication, which the applicant also
stated received Priority Review. The applicant noted that FDA issued a
Complete Response Letter in 2021 denying the NDA due to concerns with
the third-party manufacturing facility. The applicant stated that the
NDA has been resubmitted and anticipates approval before July 1, 2022.
We note that, as an application submitted under the alternative pathway
for certain antimicrobial products at Sec. 412.87(d),
DefenCathTM is eligible for conditional approval for new
technology add-on payments if it 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 (that is, July 1, 2023).
According to the applicant, there are no ICD-10-PCS codes that
specifically identify catheter lock solutions. The applicant submitted
a request for approval of a unique ICD-10-PCS procedure code to
identify use of DefencathTM beginning FY 2023.
With regard to the cost criterion, the applicant provided two
analyses to demonstrate that DefenCathTM meets the cost
criterion. The applicant first searched the FY 2019 MedPAR file
released with the FY 2022 IPPS final rule for claims based on the
presence of one of the following ICD-10-CM diagnosis codes used to
identify ESRD, chronic kidney disease (CKD), acute kidney injury (AKI)
or acute tubular necrosis (ATN).
[[Page 28351]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.142
Per the applicant, DefenCathTM will be used for patients
receiving HD through a CVC. The applicant stated that coding to
identify this population is difficult because the available CVC codes
only describe the insertion of a CVC. The applicant asserted that it is
not possible to identify in the MedPAR file those patients who had
previously received a CVC and are now hospitalized and receiving HD.
Therefore, the applicant developed two sets of selection criteria:
Claims with codes for HD (Analysis A) and claims with codes for both HD
and CVC (Analysis B). The applicant asserted that Analysis A overstates
the population of patients eligible for DefenCathTM because
it includes any patient receiving HD, regardless of whether a central
venous catheter is used. The applicant also asserted that Analysis B
undercounts the potential cases because CVC codes are not always
available on inpatient claims.
In the first analysis (Analysis A), which included only claims with
codes for chronic HD, the applicant searched for claims based on the
presence of one of the ICD-10-CM diagnosis codes listed above and then
limited the selection criteria to claims including ICD-10-CM diagnosis
code Z49.31 (encounter for adequacy testing for HD) or one of the
following ICD-10-PCS procedure codes for HD:
[GRAPHIC] [TIFF OMITTED] TP10MY22.143
After imputing a case count of 11 to any MS-DRG with fewer than 11
cases in the FY 2019 MedPAR file released with the FY 2022 IPPS final
rule, the applicant identified a total of 490,790 cases mapping to 512
MS-DRGs. The table below shows the top 20 MS-DRGs, which account for
57% of all cases included in Analysis A.
[[Page 28352]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.144
For Analysis B, the applicant used the same case selection criteria
as Analysis A (the presence of an ICD-10- procedure or diagnosis code
for HD only) but further limited cases to those that include one of the
following ICD-10 procedure codes for the insertion of a CVC.
[GRAPHIC] [TIFF OMITTED] TP10MY22.145
The applicant asserted that the patient population in Analysis B
(HD and central venous catheter) is more likely to receive
DefenCathTM during an inpatient stay. After imputing a case
count of 11 to any MS-DRG with fewer than 11 cases, the applicant
identified a total of 60,679 cases mapping to 408 MS-DRGs. The table
below shows the top 20 MS-DRGs by case count, which account for 72% of
all cases included in Analysis B.
[[Page 28353]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.146
In both analyses, the applicant did not remove charges for prior
technology because DefenCathTM would not replace other
therapies a patient may receive during an inpatient stay. The applicant
standardized the charges using the FY 2022 IPPS final rule impact file
and applied a 4-year inflation factor of 1.281834 to update the charges
from FY 2019 to FY 2023 based on the inflation factor used to update
the outlier threshold in the FY 2022 IPPS/LTCH PPS final rule (86 FR
45542). The applicant did not add charges for new technology as the
cost of DefenCathTM has not yet been determined but believes
that the technology meets the cost criterion without the additional
charges.
The applicant calculated a final inflated case-weighted average
standardized charge per case of $116,221 for Analysis A and a final
inflated case-weighted average standardized charge per case of $203,746
for Analysis B. The applicant also determined an average case weighted
threshold amount of $77,290 in Scenario A and $96,645 in Scenario B.
Because the final inflated case-weighted average standardized charge
per case for each scenario exceeded the average case-weighted threshold
amount for both scenarios, the applicant asserted that
DefenCathTM meets the cost criterion.
We agree that the technology meets the cost criterion and are
therefore proposing to approve DefenCathTM for new
technology add on payments for FY 2023, subject to the technology
receiving FDA approval for the prevention of CRBSI in patients with
ESRD receiving HD through a central venous catheter by July 1, 2022.
The applicant has not provided an estimate for the cost of
DefenCathTM at the time of this proposed rule. We expect the
applicant to submit cost information prior to the final rule, and we
will provide an update regarding the new technology add-on payment
amount for the technology, if approved, in the final rule. Any new
technology add-on payment for DefenCathTM would be subject
to our policy under Sec. 412.88(a)(2) where we limit new technology
add-on payments for QIDPs to the lesser of 75% of the average cost of
the technology, or 75% of the costs in excess of the MS-DRG payment for
the case.
We are inviting comments on whether DefenCathTM meets
the cost criterion and our proposal to approve DefenCathTM
for new technology add-on payments for FY 2023, subject to the
technology receiving marketing authorization consistent with its QIDP
designation by July 1, 2022.
8. Proposed Use of National Drug Codes (NDCs) To Identify Cases
Involving Use of Therapeutic Agents Approved for New Technology Add-On
Payment
As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49434
through 49435), as a part of the transition to the ICD-10-CM diagnosis
and ICD-10-PCS procedure coding system from the ICD-9-CM coding system,
CMS established the use of Section ``X'' New Technology codes within
the ICD-10-PCS classification to more specifically identify new
technologies or procedures that have historically not been captured
through ICD-9-CM codes, or to more precisely describe information on a
specific procedure or technology than is found with the other sections
of ICD-10-PCS. However, CMS has continued to receive comments from
stakeholders, including representatives from hospital associations,
software vendors, professional societies, and coding professionals,
opposing the continued creation of new ICD-10-PCS (for example, Section
X) procedure codes for the purpose of administering the new technology
add-on payment for drugs and biologics. Specifically, public comments
from the ICD-10 Coordination and Maintenance Committee Meetings have
stated that the ICD-10-PCS classification system was not intended to
represent unique drugs/therapeutic agents and is not an appropriate
code set for this purpose. Commenters explained that, since the
implementation of ICD-10, Section X codes have been established for
procedures describing the administration of a drug/therapeutic agent,
which historically were not typically coded in the inpatient hospital
setting. Commenters stated their belief
[[Page 28354]]
that it was not logical nor should it be expected for hospital coding
professionals to seek codes for the administration of drugs within the
ICD-10-PCS classification system. In addition, we note that over the
past three years, the number of applications for new technology add-on
payments has continued to increase, which has subsequently resulted in
an increasing number of requests for unique ICD-10-PCS (for example,
Section X) procedure codes specifically for the purposes of
administering the new technology add-on payments.
The current process of requesting, proposing, finalizing and
assigning new ICD-10-PCS procedure codes to identify and describe the
administration of drugs involves several steps, as described further in
this section, and frequently results in a number of procedure codes
that are created unnecessarily when the drug/therapeutic agents do not
receive approval for the new technology add-on payments, as the
administration of drugs/therapeutic agents is not typically coded in
the inpatient hospital setting. Applicants seeking a unique ICD-10-PCS
(for example, Section X) procedure code to identify the use of their
technology for purposes of new technology add-on payments must complete
the code request process prior to learning the outcome of their new
technology add-on payment application. This process involves a number
of steps, including: Gathering relevant information and submitting the
ICD-10-PCS code request; developing a slide deck for the ICD-10
Coordination and Maintenance Committee Meeting; and reviewing the
background paper draft for the ICD-10 Coordination and Maintenance
Committee Meeting agenda and meeting materials. CMS also expends
significant time, effort, and resources to administer this process,
which is compounded by the increasing number of requests for unique
ICD-10-PCS (for example, Section X) procedure codes. CMS must work with
applicants to review, prepare, and present the code proposals at ICD-10
Coordination and Maintenance Committee Meetings, then review and
summarize public comments received in response to the meetings, and
ultimately make a decision on the codes requested for new technology
add-on payment policy purposes before the outcome of the new technology
add-on payment application (approval or denial) is known. Following the
end of the three-year timeframe for which a code was created in
connection with a new technology add-on payment application, the
disposition of the Section X code is addressed at a later ICD-10
Coordination and Maintenance Committee meeting and CMS subsequently
receives public comments that must be reviewed regarding this
disposition.
Stakeholders submitted comments that suggested alternative options
to the use of Section X procedure codes to identify therapeutic agents
for the administration of the new technology add-on payment policy. The
majority of commenters supported using National Drug Codes (NDCs),
because it would avoid creating duplicate codes within the ICD-10-PCS
and NDC code sets to identify the same technology/product, which would
allow for predictive and efficient coding. Commenters also stated that
using NDCs would generate product data on inpatient claims that would
allow for outcomes analyses, thus providing the same benefit as a
unique ICD-10-PCS code. Some commenters suggested using the 3E0
Administration Table within the ICD-10-PCS code set, as opposed to
Section X, as they stated this would be a more intuitive location for
coders to look for ICD-10-PCS procedure codes describing the
administration of therapeutic agents. However, a commenter noted that
this would be unsustainable due to the potentially large number of new
products coming to market. A few commenters also suggested using
different drug terminologies, such as RxNorm, in lieu of using Section
X codes for the time period needed to administer the new technology
add-on payment.
We also note that we have previously established the use of NDCs as
an alternative code set for the purposes of administering the new
technology add-on payment in circumstances where an ICD-10-PCS code was
not available to uniquely identify the use of the technology. In the FY
2013 IPPS/LTCH PPS final rule (77 FR 53351 through 53354), we
established the use of the NDC code set to identify oral medications
where no inpatient procedure was associated, to report the oral
administration of the drug DIFICIDTM. We finalized that the
NDC for DIFICIDTM would be used in conjunction with an ICD-
9-CM diagnosis code to uniquely identify the indication for which
administration of the drug (technology) was performed for new
technology add-on payment purposes. In the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41311), we stated that we believed that the circumstances
with respect to the identification of eligible cases reporting the use
of VABOMERETM, which was administered by IV infusion, were
similar to those addressed in the FY 2013 IPPS/LTCH PPS final rule with
regard to DIFICIDTM because we also did not have current
ICD-10-PCS code(s) to uniquely identify the use of
VABOMERETM to make the new technology add-on payments.
Therefore, consistent with our approach in FY 2013, we stated that we
would identify cases involving the use of VABOMERETM that
were eligible for FY 2019 new technology add-on payments using its NDCs
65293-0009-01 or 70842-0120-01 \596\ (VABOMERETM Meropenem-
Vaborbactam Vial). At the time of its new technology add-on payment
application approval, VABOMERETM was not assigned a
corresponding ICD-10-PCS procedure or ICD-10-CM diagnosis code along
with its NDCs. In addition, cases involving the use of two therapeutic
agents that qualify for NCTAP, which is administered similarly to the
new technology add-on payment, are identified using the NDCs for these
products for the purposes of the NCTAP, because there are not currently
ICD-10-PCS procedure codes that uniquely describe the administration of
these therapies.\597\
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\596\ We note that these are not the FDA assigned NDCs, but
rather have been converted from 10-digit NDCs assigned by FDA to the
HIPAA compliant 11-digit format.
\597\ New COVID-19 Treatments Add-On Payment (NCTAP) https://www.cms.gov/medicare/covid-19/new-covid-19-treatments-add-payment-nctap.
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We believe that our previous policies regarding the use of NDCs to
identify the administration of certain therapeutic agents can be
consistently applied toward broader future usage of the NDCs to
identify therapeutic agents eligible for the new technology add-on
payment. Additionally, we believe that the use of an existing code set
to identify therapeutic agents eligible for the new technology add-on
payment would address concerns raised by commenters regarding the use
of the ICD-10-PCS classification system to identify these agents, and
reduce the need for applicants to seek a unique ICD-10-PCS code through
the ICD-10-PCS Section X code request process in advance of a
determination on their new technology add-on payment applications.
Therefore, as we discuss further in this section, we are proposing for
FY 2024 to instead use NDCs to identify cases involving the use of
therapeutic agents approved for the new technology add-on payment. We
anticipate that this proposal would reduce work for hospital coding
professionals in becoming familiar with newly created ICD-10-PCS
Section X codes to describe the administration of
[[Page 28355]]
therapeutic agents and in searching for these codes within the
documentation and within the classification in what may be non-
intuitive locations. We also expect this proposed change would address
concerns regarding the creation of duplicative codes within the ICD-10-
PCS procedure coding system to describe the administration of
therapeutic agents, which would also reduce the need for vendors to
incorporate additional procedure codes into their coding products; for
educators to provide training on these codes; and for programmers to
maintain codes that may be seldom reported on inpatient claims but for
the purposes of the new technology add-on payment, in their databases.
It would also reduce efforts associated with determining the
disposition of procedure codes describing therapeutic agents that have
reached the end of their three-year new technology add-on payment
timeframe.
Furthermore, we believe that NDCs are a viable alternative to
Section X codes for the administration of the new technology add-on
payment for therapeutic agents. We believe inpatient hospital staff are
familiar with using NDCs, and as stated earlier, we have also
previously utilized NDCs to administer the new technology add-on
payment. However, to allow for adequate time to implement this regular
usage of NDCs with the new technology add-on payment for health care
providers and hospital coding professionals, we are proposing a
transitional period for FY 2023. During this transitional period, we
would utilize NDCs to identify the administration of therapeutic agents
for new technology add-on payment purposes. However, we would also
utilize ICD-10-PCS Section X codes, including codes newly created for
FY 2023, for therapeutic agents during the FY 2023 new technology add-
on payment application cycle. Beginning with the FY 2024 new technology
add-on payment application cycle, we would utilize only NDCs to
identify claims involving the administration of therapeutic agents
approved for the new technology add-on payment, with the exception of
claims involving therapeutic agents that are not assigned an NDC by FDA
(for example, blood, blood products, etc.) and are approved for the new
technology add-on payment. Cases involving the use of these
technologies approved for the new technology add-on payment would
continue to be identified based on the assigned ICD-10-PCS procedure
code. A unique ICD-10-PCS procedure code would also still be needed to
identify cases involving the use of CAR T-cell and other
immunotherapies that may be assigned to Pre-MDC MS-DRG 018, because the
ICD-10 MS-DRG GROUPER logic for assignment to Pre-MDC MS-DRG 018 is
comprised of the procedure codes describing these CAR T-cell and other
immunotherapy products. Therefore, under this proposal, beginning with
FY 2024 new technology add-on payment applications submitted for a
therapeutic agent, CMS would review the information and inform the
applicant, in advance of the deadline for submitting an ICD-10-PCS
procedure code request to the ICD-10 Coordination and Maintenance
Committee for consideration at the March meeting, if it would be
necessary to submit such a code request for purposes of identifying
cases involving the use of the therapeutic agent for the new technology
add-on payment, if approved, or if, based on the information made
available with the application, the NDC could be used to identify such
cases, and therefore, the applicant would not need to submit an ICD-10-
PCS procedure code request. For each applicable technology that may be
approved for new technology add-on payment, we would indicate the
NDC(s) to use to identify cases involving the administration of the
therapeutic agent for purposes of the new technology add-on payment.
Specifically, we are proposing that, during the transitional period
beginning with discharges on or after October 1, 2022 (FY 2023), the
administration of therapeutic agents newly approved for new technology
add-on payments would be uniquely identified using either their
respective NDC(s) or ICD-10-PCS procedure code(s), in combination with
ICD-10-CM codes when appropriate. As stated in our FY 2013 IPPS/LTCH
PPS final rule, the use of the NDCs ``does not preclude CMS from using
additional ICD-9-CM procedure or diagnosis codes to identify cases for
this new technology in conjunction with this alternative code set'' (77
FR 53352). Therefore, when necessary, we may require the use of
additional ICD-10-PCS procedure and/or ICD-10-CM diagnosis codes to
uniquely identify cases using these technologies. We would continue the
use of the existing ICD-10-PCS procedure codes to identify the
administration of therapeutic agents previously approved for the new
technology add-on payment and that remain eligible for the new
technology add-on payment for FY 2023.
We are further proposing that, beginning with discharges on or
after October 1, 2023 (FY 2024), the administration of therapeutic
agents newly approved for the new technology add-on payments beginning
FY 2024 or a subsequent fiscal year would be uniquely identified only
by their respective NDC(s), along with the corresponding existing ICD-
10 code(s) required to uniquely identify the therapeutic agents, when
necessary, to make the new technology add-on payments. For technologies
that were newly approved for new technology add-on payments for FY 2023
(beginning with discharges on or after October 1, 2022) and remain
eligible for the new technology add-on payment for FY 2024 or a
subsequent fiscal year, we would continue to allow the use of either
the existing ICD-10-PCS procedure codes or NDCs to identify the
administration of those therapeutic agents. For technologies that were
newly approved for new technology add-on payments prior to FY 2023 and
remain eligible for the new technology add-on payment for FY 2024 or a
subsequent fiscal year, we would continue to use the existing ICD-10-
PCS procedure codes to identify the administration of those therapeutic
agents.
We are inviting public comments on our proposal to utilize NDCs to
identify claims involving the use of therapeutic agents approved for
new technology add-on payments, including any potential concerns
regarding adoption of this code set for the identification of
therapeutic agents for purposes of new technology add-on payments.
9. Proposal to Publicly Post New Technology Add-On Payment Applications
As noted in section II.F.1.f. of the preamble of this proposed
rule, applicants for new technology add-on payments for new medical
services or technologies 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), along with a significant sample of data to
demonstrate the new medical service or technology meets the high-cost
threshold (OMB-0938-1347). See section II.F.1.f. of the preamble of
this proposed rule for further details on the data and evidence that
can be submitted. We post complete application information and final
deadlines for submitting a full application on the CMS website at
[[Page 28356]]
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech. We also post on the same website tracking
forms completed by each applicant, which include the name of each
applicant, name of the technology, and a brief description so that
interested parties can identify the new medical services or
technologies under review before the annual proposed rule.
Additionally, section 1886(d)(5)(K)(viii) of the Act provides for a
mechanism for public input before the publication of a proposed rule
regarding whether a medical service or technology represents a
substantial clinical improvement. Consistent with the Act, we hold an
annual Town Hall meeting, typically in December following notice of the
meeting in the Federal Register.
As set forth in 42 CFR 412.87(e)(1), CMS considers whether a
technology meets the criteria for the new technology add-on payment and
announces the results as part of its annual updates and changes to the
IPPS. Accordingly, in drafting the proposed rule, CMS reviews each new
technology add-on payment application it receives under the pathway
specified by the applicant at the time of application submission, along
with supplemental information \598\ obtained from the applicant,
information provided at the Town Hall meeting, and comments received in
response to the Town Hall meeting. In the proposed rule, CMS summarizes
the information contained in the application, including the applicant's
explanation of what the technology does, background on the disease
process, information about the FDA approval/clearance, and the
applicant's assertions and supporting data on how the technology meets
the new technology add-on payment criteria under Sec. 412.87. In
summarizing this information for inclusion in the proposed rule, CMS
restates or paraphrases information contained in the application and
attempts to avoid misrepresenting or omitting any of an applicant's
claims. CMS also tries to ensure that sufficient information is
provided in the proposed rule to facilitate public comments on whether
the medical service or technology meets the new technology add-on
payment criteria. Currently, however, CMS does not make the
applications themselves, as completed by the applicants, publicly
available. In addition, CMS generally does not take into consideration
information that is marked as confidential when determining whether a
technology meets the criteria for new technology add-on payments.
---------------------------------------------------------------------------
\598\ For the FY 2023 new technology add-on payment
applications, the supplemental information deadline to guarantee
inclusion in the IPPS proposed rule was December 17, 2021.
---------------------------------------------------------------------------
We note that in the past, CMS has received requests from the public
to access and review the new technology add-on payment applications to
further facilitate comment on whether a technology meets the new
technology add-on payment criteria. In consideration of this issue, we
agree that review of the original source information from the
applications for new technology add-on payments may help to inform
public comment. Further, making this information publicly available may
foster greater input from experts in the stakeholder community based on
their review of the completed application forms and related materials.
Accordingly, as we discuss further in this section, we believe that
providing additional information to the public by publicly posting the
applications and certain related materials online may help to further
engage the public and foster greater input and insights on the various
new medical services and technologies presented annually for
consideration for new technology add-on payments.
We also believe that posting the applications online would reduce
the risk that we may inadvertently omit or misrepresent relevant
information submitted by applicants, or are perceived as
misrepresenting such information, in our summaries in the rules. It
also would streamline our evaluation process, including the
identification of critical questions in the proposed rule, particularly
as the number and complexity of the applications have been increasing
over time. That is, by making the applications available to the public
online, we would afford more time for CMS to process and analyze the
supporting data and evidence rather than reiterate parts of the
application in the rule.
Therefore, to increase transparency, enable increased stakeholder
engagement, and further improve and streamline our evaluation process,
we are proposing to publicly post online future applications for new
technology add-on payments. Specifically, beginning with the FY 2024
application cycle, we propose to post online the completed application
forms and certain related materials (for example, attachments, uploaded
supportive materials) that we receive from applicants. Additionally, we
propose to post information acquired subsequent to the application
submission (for example, comments received after the New Technology
Town Hall, updated application information, additional clinical
studies, etc.). We propose that we would not post the cost and volume
information the applicant provides in the application form itself or as
attached materials, or any material included with the application that
the applicant indicates is not releasable to the public because the
applicant does not own the copyright or the applicant does not have the
appropriate license to make the material available to the public, as
further described in the next paragraph. We propose that we would
publicly post the completed application forms and related materials no
later than the issuance of the proposed rule, which would afford the
public the full public comment period to review the information
provided by the applicant in its application.
With respect to copyrighted materials, we propose that on the
application form itself, the applicant would be asked to provide a
representation that the applicant owns the copyright or otherwise has
the appropriate license to make all the copyrighted material included
with its application public with the exception of those materials
identified by the applicant as not releasable to the public, as
applicable. For any material included with the application that the
applicant indicates as copyrighted and/or not otherwise releasable to
the public, we propose that the applicant must either provide a link to
where the material can be accessed or provide an abstract or summary of
the material that CMS can make public, and CMS will then post that link
or abstract or summary online, along with the other posted application
materials. We invite comments on this proposal.
Under our current practice, we include in the final rule
information on the cost of each technology that is approved for the new
technology add-on payment for the purposes of calculating the maximum
add-on payment, and information on the anticipated volume of the
technology for purposes of the impact analysis. For the proposed rule,
specifically for applications submitted under the alternative pathway,
our current practice is to propose whether or not to approve the
application based on the eligibility criteria for the alternative
pathway under 42 CFR 412.87(c) or (d) and, where cost information is
available from the applicant, to use this information in proposing a
maximum add-on payment amount. Where cost information is not yet
available, we note our expectation is that the applicant will submit
cost information prior to the final rule, and indicate that we will
provide an update
[[Page 28357]]
regarding the new technology add-on payment amount for the technology,
if approved, in the final rule. We note that we would continue this
same approach with respect to including cost and volume information in
the proposed and final rules. However, as noted, under our proposal to
post online the new technology add-on payment applications, we would
not include cost and volume information for either traditional or
alternative pathway applications as part of the application materials
that would be posted online.
We note that at times an applicant may furnish information marked
as proprietary or trade secret information along with its application
for new technology add-on payments. Currently, the application
specifies that data provided in the application or tracking form may be
subject to disclosure and instructs the applicant to mark any
proprietary or trade secret information so that CMS can attempt, to the
extent allowed under Federal law, to keep the information protected
from public view.\599\ This instruction would change under our proposal
such that information included in the application, other than cost and
volume information, would be made publicly available online through
posting of the application. Therefore, the applicant should not submit
as part of its application any such proprietary or trade secret
information that it does not want to be made publicly available online.
As noted, under our existing practice we generally do not consider
information that is marked as confidential, proprietary, or trade
secret when determining whether a technology meets the criteria for new
technology add-on payments.
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\599\ See new technology add-on payment application included in
the FY 2023 New Technology Application Packet, available at: https://www.cms.gov/files/zip/fy-2023-new-technology-application-packet.zip; and FY 2023 Tracking Forms, available at: https://www.cms.gov/files/document/fy-2023-tracking-forms-applicants.pdf.
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This proposal would not change the current timeline or evaluation
process for new technology add-on payments, the criteria used to assess
applications, or the deadlines for various data submissions.
Additionally, we do not expect added burdens on prospective applicants
as a result of this proposal since we are not proposing to
fundamentally change the information collected in the application
itself or the supplemental information that would be furnished to
support the application. As noted, the aim of this proposed policy
change is to increase accuracy, transparency, and efficiency for both
CMS and stakeholders.
In connection with this proposal to post the new technology
applications online, we expect we would also make changes to the
summaries that appear in the annual proposed and final rules, given
that the public would have access to the submitted applications
themselves (excluding certain information and materials as described
previously), while also continuing to provide sufficient information in
the rules to facilitate public comments on whether a medical service or
technology meets the new technology add-on payment criteria.
Specifically, we do not anticipate summarizing each entire application
in the Federal Register as we have in the past, given the expanded and
public access to the applications under the proposal. In some
instances, such as the discussion of the substantial clinical
improvement criterion, we expect to provide a more concise summary of
the evidence or a more targeted discussion of the applicant's claims
about how that criterion is met based on the evidence and supporting
data (although this may vary depending on the application, new medical
service or technology, and the nature of supporting materials
provided). We expect that we would continue to generally include, at a
high-level, the following information in the proposed and final rules:
The technology and applicant name; a description of what the technology
does; background on the disease process; the FDA approval/clearance
status; and a summary of the applicant's assertions. We also expect to
provide more succinct information as part of the summaries in the
proposed and final rules regarding the applicant's assertions as to how
the medical service or technology meets the newness, cost, and
substantial clinical improvement criteria. For example, we would
provide a list of the applicant's assertions for whether the technology
meets the three sub-criteria under the substantial clinical improvement
criterion \600\ and a list of the sources of data submitted in support
of the assertions, along with references to the application in support
of these lists. In the proposed rule, we would also continue to provide
discussion of the concerns or issues we identified with respect to
applications submitted under the traditional pathway, and for an
alternative pathway application, we intend to continue to propose
whether to approve or disapprove the application, including noting any
concerns we have identified, and, as applicable, the maximum add-on
payment amount, where cost information is available. In the final rule,
we would continue to provide an explanation of our determination of
whether a medical service or technology meets the applicable new
technology add-on payment criteria and, for approved technologies, the
final add-on payment amounts. As noted, we believe the proposal to post
online the completed application forms and other information described
previously would afford greater transparency during the annual
rulemaking, for purposes of determining whether a medical service or
technology is eligible for new technology add-on payments.
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\600\ Sub-criteria referenced are those listed in Question 36 of
the new technology add-on payment application, specifically
Questions 36a-36c.
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We are seeking public comment on our proposal to publicly post
online the completed application forms and certain related materials
and updated application information submitted subsequent to the initial
application submission for new technology add-on payments, beginning
with applications for FY 2024.
III. Proposed 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 proposed FY 2023 hospital wage index based
on the statistical areas appears under section III.A.2. of the preamble
of this proposed 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, IV. The OMB control number for this information
collection request is 0938-0050, which expired on March 31, 2022. A
reinstatement of the information collection request is currently being
developed. The public will have an opportunity to review and submit
[[Page 28358]]
comments on the reinstatement through a public notice and comment
period separate from this rulemaking. 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 proposed adjustment for FY 2023 is
discussed in section II.B. of the Addendum to this proposed rule.
As discussed in section III.I. of the preamble of this proposed
rule, we also take into account the geographic reclassification of
hospitals in accordance with sections 1886(d)(8)(B) and 1886(d)(10) of
the Act when calculating IPPS payment amounts. Under section
1886(d)(8)(D) of the Act, the Secretary is required to adjust the
standardized amounts so as to ensure that aggregate payments under the
IPPS after implementation of the provisions of sections 1886(d)(8)(B),
1886(d)(8)(C), and 1886(d)(10) of the Act are equal to the aggregate
prospective payments that would have been made absent these provisions.
The proposed budget neutrality adjustment for FY 2023 is discussed in
section II.A.4.b. of the Addendum to this proposed rule.
Section 1886(d)(3)(E) of the Act also provides for the collection
of data every 3 years on the occupational mix of employees for short-
term, acute care hospitals participating in the Medicare program, in
order to construct an occupational mix adjustment to the wage index.
(The OMB control number for approved collection of this information is
0938-0907, which expires on September 30, 2022.) A discussion of the
occupational mix adjustment that we are proposing to apply to the FY
2023 wage index appears under sections III.E. and F. of the preamble of
this proposed rule.
2. Core-Based Statistical Areas (CBSAs) for the Proposed FY 2023
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
Statistical Areas to Census Bureau population estimates 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. After
reviewing OMB Bulletin No. 20-01, we determined that the changes in
Bulletin 20-01 encompassed delineation changes that would not affect
the Medicare wage index for FY 2022. While we adopted the updates set
forth in OMB Bulletin No. 20-01 in the FY 2022 IPPS/LTCH PPS final rule
(86 FR 45163 through
[[Page 28359]]
45164) consistent with our general policy of adopting OMB delineation
updates, we also noted that specific wage index updates would not be
necessary for FY 2022 as a result of adopting these updates. In other
words, the updates set forth in OMB Bulletin No. 20-01 would not affect
any hospital's geographic area for purposes of the wage index
calculation for FY 2022. For a complete discussion of the adoption of
the updates set forth in OMB Bulletin No. 20-01, we refer readers to
the FY 2022 IPPS/LTCH PPS final rule (86 FR 45163 through 45164. For FY
2023, we would continue 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 previously OMB Bulletin No. 20-01 did not require any wage
area updates.
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 was set to expire at the end of FY 2021. However, given the
unprecedented nature of the ongoing COVID-19 public health emergency
(PHE), we adopted a policy in the FY 2022 IPPS/LTCH PPS final rule to
apply an extended transition to the FY 2022 wage index for hospitals
that received the transition in FY 2021. Specifically, we continued a
wage index transition for FY 2022 (for hospitals that received the
transition in FY 2021) under which we applied 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. We also applied a budget neutrality
adjustment to the standardized amount so that our transition in FY 2022
was implemented in a budget neutral manner under our authority in
section 1886(d)(5)(I) of the Act. We refer the reader to the FY 2022
IPPS/LTCH PPS final rule (85 FR 45164 through 45165) for a complete
discussion of this transition. We also refer readers to section III.N.
of the preamble of this proposed rule which discusses our proposal with
regard to a permanent wage index transition for a hospital's wage index
that applies a 5 percent cap on any decrease in the hospital's wage
index compared to its wage index from the prior fiscal year.
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. We refer the
reader to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through
38130) for a complete discussion of our adoption of FIPS county codes.
Based on the latest information included in the Census Bureau's
website at https://www.census.gov/programs-surveys/geography/technical-documentation/county-changes.2010.html, the Census Bureau has made the
following updates to the FIPS codes for counties or county equivalent
entities:
Chugach Census Area, AK (FIPS State County Code 02-063)
and Copper River Census Area, AK (FIPS State County Code 02-066), were
created from former Valdez-Cordova Census Area (02-261) which was
located in CBSA 02. The CBSA code for these two new county equivalents
remains 02.
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 addition, we believe that using the latest FIPS
codes allows us to maintain a more accurate and up-to-date payment
system that reflects the reality of population shifts and labor market
conditions. Therefore, we are proposing to implement these FIPS code
updates listed previously, effective October 1, 2022, beginning with
the FY 2023 wage indexes. We are proposing to use these update changes
to calculate area wage indexes in a manner that is generally consistent
with the CBSA-based methodologies finalized in the FY 2005 IPPS final
rule (69 FR 49026 through 49034) and the 2015 IPPS/LTCH PPS final rule
(79 FR 49951 through 49963). We note that while the county update
changes listed above changed the county names, the CBSAs to which these
counties map did not change from the prior counties. Therefore, there
would be no impact or change to hospitals in these counties for
purposes of the hospital wage index as a result of our implementation
of these FIPS code updates.
For FY 2023, Tables 2 and 3 associated with this proposed 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. We are inviting public comments
on our proposals.
B. Worksheet S-3 Wage Data for the Proposed FY 2023 Wage Index
The proposed FY 2023 wage index values are based on the data
collected from the Medicare cost reports submitted by hospitals for
cost reporting periods beginning in FY 2019 (the FY 2022 wage indexes
were based on data
[[Page 28360]]
from cost reporting periods beginning during FY 2018).
1. Included Categories of Costs
The proposed FY 2023 wage index includes all of the following
categories of data associated with costs paid under the IPPS (as well
as outpatient costs):
Salaries and hours from short-term, acute care hospitals
(including paid lunch hours and hours associated with military leave
and jury duty).
Home office costs and hours.
Certain contract labor costs and hours, which include
direct patient care, certain top management, pharmacy, laboratory, and
nonteaching physician Part A services, and certain contract indirect
patient care services (as discussed in the FY 2008 final rule with
comment period (72 FR 47315 through 47317)).
Wage-related costs, including pension costs (based on
policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586
through 51590) and modified in the FY 2016 IPPS/LTCH PPS final rule (80
FR 49505 through 49508)) and other deferred compensation costs.
2. Excluded Categories of Costs
Consistent with the wage index methodology for FY 2022, the
proposed wage index for FY 2023 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 proposed FY 2023 wage index also
excludes the salaries, hours, and wage-related costs of hospital-based
rural health clinics (RHCs), and Federally Qualified Health Centers
(FQHCs) because Medicare pays for these costs outside of the IPPS (68
FR 45395). In addition, salaries, hours, and wage-related costs of CAHs
are excluded from the wage index for the reasons explained in the FY
2004 IPPS final rule (68 FR 45397 through 45398). For FY 2020 and
subsequent years, other wage-related costs are also excluded from the
calculation of the wage index. As discussed in the FY 2019 IPPS/LTCH
final rule (83 FR 41365 through 41369), other wage-related costs
reported on Worksheet S-3, Part II, Line 18 and Worksheet S-3, Part IV,
Line 25 and subscripts, as well as all other wage-related costs, such
as contract labor costs, are excluded from the calculation of the wage
index.
3. Use of Wage Index Data by Suppliers and Providers Other Than Acute
Care Hospitals Under the IPPS
Data collected for the IPPS wage index also are currently used to
calculate wage indexes applicable to suppliers and other providers,
such as SNFs, home health agencies (HHAs), ambulatory surgical centers
(ASCs), and hospices. In addition, they are used for prospective
payments to IRFs, IPFs, and LTCHs, and for hospital outpatient
services. We note that, in the IPPS rules, we do not address comments
pertaining to the wage indexes of any supplier or provider except IPPS
providers and LTCHs. Such comments should be made in response to
separate proposed rules for those suppliers and providers.
C. Verification of Worksheet S-3 Wage Data
The wage data for the proposed FY 2023 wage index were obtained
from Worksheet S-3, Parts II, III and IV of the Medicare cost report,
CMS Form 2552-10 for cost reporting periods beginning on or after
October 1, 2018, and before October 1, 2019. (As noted in section
III.A.1 of the preamble of this proposed rule, the OMB control number
for this information collection request is 0938-0050, which expired on
March 31, 2022. A reinstatement of the information collection request
is currently being developed. The public will have an opportunity to
review and submit comments on the reinstatement through a public notice
and comment period separate from this rulemaking). For wage index
purposes, we refer to cost reports beginning on or after October 1,
2018, and before October 1, 2019 as the ``FY 2019 cost report,'' the
``FY 2019 wage data,'' or the ``FY 2019 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
proposed FY 2023 wage index includes FY 2019 data submitted to us as of
February 5, 2022. As in past years, we performed an extensive review of
the wage data, mostly through the use of edits designed to identify
aberrant data.
Consistent with the IPPS and LTCH PPS ratesetting, our policy
principles with regard to the wage index include generally using the
most current data and information available which is usually data on a
four year lag (for example, for the FY 2022 wage index we used cost
report data from FY 2018) . In section I.F. of the preamble of this
proposed rule, we discuss our analysis of the best available data for
use in the development of this FY 2023 IPPS/LTCH PPS proposed rule
given the potential impact of the public health emergency (PHE) for the
Coronavirus Disease (COVID-19). For the FY 2023 wage index, the best
available data typically would be from the FY 2019 wage data. Our
review and analysis of the FY 2019 wage data shows that the data is not
significantly impacted by COVID-19 PHE. A comparison of providers shows
similar trends in those with cost reports ending during the PHE as
compared to providers without cost reports ending during the PHE. The
data also shows that changes in the Average Hourly Wage (AHW) for
providers were consistent between providers with cost reports ending
during the PHE as compared to providers without cost reports ending
during the PHE. It appears that the overall impact of the COVID-19 PHE
on the FY 2019 wage data has been minimal.
Additionally, the changes in the wage data from FY 2018 to FY 2019
show similar trends in the change of the data from FY 2017 to FY 2018.
Therefore, we are proposing to use the FY 2019 wage data for the FY
2023 wage index.
We asked our MACs to revise or verify data elements that result in
specific edit failures. For the proposed FY 2023 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 2023 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, 2022.
In constructing the proposed FY 2023 wage index, we included the
wage data for facilities that were IPPS hospitals in FY 2019, inclusive
of those facilities that have since terminated their participation in
the program as hospitals, as long as those data did not fail any of our
edits for reasonableness. We believe that including the wage data for
these hospitals is, in general, appropriate to reflect the economic
conditions in the various labor market areas during the relevant past
period and to ensure that the current wage
[[Page 28361]]
index represents the labor market area's current wages as compared to
the national average of wages. However, we excluded the wage data for
CAHs as discussed in the FY 2004 IPPS final rule (68 FR 45397 through
45398); that is, any hospital that is designated as a CAH by 7 days
prior to the publication of the preliminary wage index public use file
(PUF) is excluded from the calculation of the wage index. For the
proposed rule, we removed 3 hospitals that converted to CAH status on
or after January 24, 2021, the cut-off date for CAH exclusion from the
FY 2022 wage index, and through and including January 21, 2022, the
cut-off date for CAH exclusion from the FY 2023 wage index. In summary,
we calculated the proposed FY 2023 wage index using the Worksheet S-3,
Parts II and III wage data of 3,112 hospitals.
For the proposed FY 2023 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 proposed FY 2023
wage index associated with this proposed rule (available via the
internet on the CMS website), includes separate wage data for the
campuses of 26 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
[GRAPHIC] [TIFF OMITTED] TP10MY22.147
[[Page 28362]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.148
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.
D. Method for Computing the Proposed FY 2023 Unadjusted Wage Index
The method used to compute the proposed FY 2023 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 are not proposing 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 proposed wage index (in this case, for
FY 2023, these were data from cost reports for cost reporting periods
beginning on or after October 1, 2018, and before October 1, 2019). In
addition, we included data from some hospitals that had cost reporting
periods beginning before October 2018 and reported a cost reporting
period covering all of FY 2019. 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 2019 data. We note
that, if a hospital had more than one cost reporting period beginning
during FY 2019 (for example, a hospital had two short cost reporting
periods beginning on or after October 1, 2018, and before October 1,
2019), 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,
[[Page 28363]]
and 35 on CMS Form 2552-10. However, we note that the wages and hours
on these lines are not incorporated into Line 101, Column 1 of
Worksheet A, which, through the electronic cost reporting software,
flows directly to Line 1 of Worksheet S-3, Part II. Therefore, the
first step in the wage index calculation is to compute a ``revised''
Line 1, by adding to the Line 1 on Worksheet S-3, Part II (for wages
and hours respectively) the amounts on Lines 28, 33, and 35.) In
calculating a hospital's Net Salaries (we note that we previously used
the term ``average'' salaries in the FY 2012 IPPS/LTCH PPS final rule
(76 FR 51592), but we now use the term ``net'' salaries) plus wage-
related costs, we first compute the following: Subtract from Line 1
(total salaries) the GME and CRNA costs reported on CMS Form 2552-10,
Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on Lines 3, 5
and 6, home office salaries reported on Line 8, and exclude salaries
reported on Lines 9 and 10 (that is, direct salaries attributable to
SNF services, home health services, and other subprovider components
not subject to the IPPS). We also subtract from Line 1 the salaries for
which no hours were reported. Therefore, the formula for Net Salaries
(from Worksheet S-3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 + Line 4.01 +
Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)).
To determine Total Salaries plus Wage-Related Costs, we add to the
Net Salaries the costs of contract labor for direct patient care,
certain top management, pharmacy, laboratory, and nonteaching physician
Part A services (Lines 11, 12 and 13), home office salaries and wage-
related costs reported by the hospital on Lines 14.01, 14.02, and 15,
and nonexcluded area wage-related costs (Lines 17, 22, 25.50, 25.51,
and 25.52). We note that contract labor and home office salaries for
which no corresponding hours are reported are not included. In
addition, wage-related costs for nonteaching physician Part A employees
(Line 22) are excluded if no corresponding salaries are reported for
those employees on Line 4. The formula for Total Salaries plus Wage-
Related Costs (from Worksheet S-3, Part II) is the following: ((Line 1
+ Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 + Line 4.01 + Line 5 +
Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 +
Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15) + (Line 17 + Line 22
+ 25.50 + 25.51 + 25.52).
Step 3.--Hours.--With the exception of wage-related costs, for
which there are no associated hours, we compute total hours using the
same methods as described for salaries in Step 2. The formula for Total
Hours (from Worksheet S-3, Part II) is the following:
((Line 1 + Line 28 + Line 33 + Line 35)-(Line 2 + Line 3 + Line 4.01 +
Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) +
(Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15).
Step 4.--For each hospital reporting both total overhead salaries
and total 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 above ratio by the total overhead salaries and hours reported on
Lines 26 through 43 of Worksheet S-3, Part II. Next, we compute the
amounts of overhead wage-related costs to be allocated to 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, 2018, through April 15,
2020, for private industry hospital workers from the Bureau of Labor
Statistics' (BLS') Compensation and Working Conditions. We use the ECI
because it reflects the price increase associated with total
compensation (salaries plus fringes) rather than just the increase in
salaries. In addition, the ECI includes managers as well as other
hospital workers. This methodology to compute the monthly update
factors uses actual quarterly ECI data and assures that the update
factors match the actual quarterly and annual percent changes. We also
note that, since April 2006 with the publication of March 2006 data,
the BLS' ECI uses a different classification system, the North American
Industrial Classification System (NAICS), instead of the Standard
Industrial Codes (SICs), which no longer exist. We have consistently
used the ECI as the data source for our wages and salaries and other
price proxies in the IPPS market basket, and we are not proposing to
make any changes to the usage of the ECI for FY 2023. 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)
[[Page 28364]]
for all hospitals in each labor market area to determine an average
hourly wage for the area.
Step 8.--We add the total adjusted salaries plus wage-related costs
obtained in Step 5 for all hospitals in the Nation and then divide the
sum by the national sum of total hours from Step 4 to arrive at a
national average hourly wage.
Step 9.--For each urban or rural labor market area, we calculate
the hospital wage index value, unadjusted for occupational mix, by
dividing the area average hourly wage obtained in Step 7 by the
national average hourly wage computed in Step 8.
Step 10.--For each urban labor market area for which we do not have
any hospital wage data (either because there are no IPPS hospitals in
that labor market area, or there are IPPS hospitals in that area but
their data are either too new to be reflected in the current year's
wage index calculation, or their data are aberrant and are deleted from
the wage index), we 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 proposed FY 2023
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 proposed
rule for the policy regarding rural areas that do not have IPPS
hospitals.
Step 11.--Section 4410 of Public Law 105-33 provides that, for
discharges on or after October 1, 1997, the area wage index applicable
to any hospital that is located in an urban area of a State may not be
less than the area wage index applicable to hospitals located in rural
areas in that State. The areas affected by this provision are
identified in Table 2 listed in section VI. of the Addendum to the
proposed 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, 2018, through April 15,
2020, 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 are not proposing any changes to the usage of the
ECI for FY 2023. 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 28365]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.149
For example, the midpoint of a cost reporting period beginning
January 1, 2019, and ending December 31, 2019, is June 30, 2019. An
adjustment factor of 1.01630 was applied to the wages of a hospital
with such a cost reporting period.
Previously, we also would provide a Puerto Rico overall average
hourly wage. As discussed in the FY 2017 IPPS/LTCH PPS final rule (81
FR 56915), prior to January 1, 2016, Puerto Rico hospitals were paid
based on 75 percent of the national standardized amount and 25 percent
of the Puerto Rico-specific standardized amount. As a result, we
calculated a Puerto Rico 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 2023, there is no Puerto Rico-
specific overall average hourly wage or wage index.
Based on the methodology, as previously discussed, the proposed FY
2023 unadjusted national average hourly wage is the following:
[GRAPHIC] [TIFF OMITTED] TP10MY22.150
BILLING CODE 4120-01-C
E. Proposed Occupational Mix Adjustment to the FY 2023 Wage Index
As stated earlier, section 1886(d)(3)(E) of the Act provides for
the collection of data every 3 years on the occupational mix of
employees for each short-term, acute care hospital participating in the
Medicare program, in order to construct an occupational mix adjustment
to the wage index, for application beginning October 1, 2004 (the FY
2005 wage index). The purpose of the occupational mix adjustment is to
control for the effect of hospitals' employment choices on the wage
index. For example, hospitals may choose to employ different
combinations of registered nurses, licensed practical nurses, nursing
aides, and medical assistants for the purpose of providing nursing care
to their patients. The varying labor costs associated with these
choices reflect hospital management decisions rather than geographic
differences in the costs of labor.
1. Use of 2019 Medicare Wage Index Occupational Mix Survey for the FY
2023 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
[[Page 28366]]
care hospital participating in the Medicare program. As discussed in
the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25402 through 25403) and
final rule (86 FR 45173), we collected data in 2019 to compute the
occupational mix adjustment for the FY 2022, FY 2023, and FY 2024 wage
indexes. The FY 2023 occupational mix adjustment is based on the
calendar year (CY) 2019 survey. Hospitals were required to submit their
completed 2019 surveys (Form CMS-10079, OMB Number 0938-0907,
expiration date September 30, 2022) to their MACs by September 3, 2020.
It should be noted that this collection of information was approved
under OMB control number 0938-0907 with an expiration date of September
30, 2022. Prior to the expiration date, CMS will submit an extension
request to OMB. The extension request will be announced in the Federal
Register via the required 60-day and 30-day notice and comment periods.
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 2023
For FY 2023, we are proposing 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 proposed FY 2023 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 proposed rule (which is
available via the internet on the CMS website), which contains the
proposed FY 2023 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 proposed 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 proposed FY 2023 wage index. For the proposed FY 2023 wage
index, we are using the Worksheet S-3, Parts II and III wage data of
3,112 hospitals, and we used the occupational mix surveys of 3,010
hospitals for which we also had Worksheet S-3 wage data, which
represented a ``response'' rate of 97 percent (3,010/3,112). For the
proposed FY 2023 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
proposed FY 2023 occupational mix adjusted national average hourly wage
is the following:
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TP10MY22.151
F. Analysis and Implementation of the Proposed Occupational Mix
Adjustment and the Proposed FY 2023 Occupational Mix Adjusted Wage
Index
As discussed in section III.E. of the preamble of this proposed
rule, for FY 2023, we are applying the occupational mix adjustment to
100 percent of the FY 2023 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 proposed FY 2023 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] TP10MY22.152
[[Page 28367]]
The proposed 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] TP10MY22.153
We compared the proposed FY 2023 occupational mix adjusted wage
indexes for each CBSA to the proposed unadjusted wage indexes for each
CBSA. Applying the occupational mix adjustment to the wage data
resulted in the following:
[GRAPHIC] [TIFF OMITTED] TP10MY22.154
BILLING CODE 4120-01-C
These results indicate that a smaller percentage of urban areas
(55.8 percent) would benefit from the occupational mix adjustment than
would rural areas (57.4 percent).
III. Proposed Changes to the Hospital Wage Index for Acute Care
Hospitals
G. Application of the Rural Floor, Application of the Imputed Floor,
Application of the State Frontier Floor, Continuation of the Low Wage
Index Hospital Policy, and Proposed 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). For FY 2023, we are proposing to
continue to calculate the rural floor without the wage data of
hospitals that have reclassified as rural under Sec. 412.103. 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)
[[Page 28368]]
of the Act. We are proposing to continue to apply this policy for FY
2023.
We note that the FY 2020 rural floor policy and the related budget
neutrality adjustment are the subject of pending litigation, including
in Citrus HMA, LLC, d/b/a Seven Rivers Regional Medical Center v.
Becerra, No. 1:20-cv-00707 (D.D.C.) (hereafter referred to as Citrus).
On April 8, 2022, the district court in Citrus granted in part the
plaintiff hospitals' motion for summary judgment and denied the
Secretary's cross-motion for summary judgment. The court found that the
Secretary did not have authority under section 4410(a) of the Balanced
Budget Act of 1997 to establish a rural floor lower than the rural wage
index for a state. While Citrus involves only FY 2020, the court's
decision--which is subject to potential appeal--may have implications
for FY 2023 payment rates. We are continuing to evaluate the court's
decision, and although we are proposing for the rural floor wage index
policy (and the related budget neutrality adjustment) to continue for
FY 2023, we may decide to take a different approach in the final rule,
depending on public comments or developments in the court proceedings.
Based on the FY 2023 wage index associated with this proposed 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
192 hospitals would receive an increase in their FY 2023 proposed wage
index due to the application of the rural floor.
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)(4)(vi), we
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
[[Page 28369]]
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 apply the imputed floor after the application of the rural floor and
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.
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 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'' includes 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) are
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 (Medicare Geographic Classification
Review Board (MGCRB) reclassifications) are not 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 one State,
Connecticut, that would be eligible for the imputed floor 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 this 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 2023: New Jersey, Rhode Island,
Delaware, Connecticut, and Washington, DC.
In the FY 2022 IPPS/LTCH PPS final rule, we revised 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. The imputed floor
will be applied for FY 2023 in accordance with the policies adopted in
the FY 2022 IPPS/LTCH PPS final rule. For more information regarding
our implementation of the imputed floor required by section
1886(d)(3)(E)(iv) of the Act, we refer readers to the discussion in the
FY 2022 IPPS/LTCH PPS final rule (86 FR 45176 through 45178).
3. State Frontier Floor for FY 2023
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 this FY 2023 IPPS/
LTCH PPS proposed rule, we are not proposing any changes to the
frontier floor policy for FY 2023. In this proposed rule, 44 hospitals
would receive the frontier floor value of 1.0000 for their FY 2023
proposed 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
proposed FY 2023 wage index are identified in Table 2 associated with
this proposed rule, which is available via the internet on the CMS
website.
4. Continuation of the Low Wage Index Hospital Policy; Proposed 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) our intention 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. We note that the FY 2020
low wage index hospital policy and the related budget neutrality
adjustment are the subject of pending litigation, including in
Bridgeport Hospital, et al., v. Becerra, No. 1:20-cv-01574 (D.D.C.)
(hereafter referred to as Bridgeport). On March 2, 2022, the district
court in Bridgeport granted in part the plaintiff hospitals' motion for
summary judgment and denied the Secretary's cross-motion for summary
judgment. The court found that the
[[Page 28370]]
Secretary did not have authority under section 1886(d)(3)(E) or
1886(d)(5)(I)(i) of the Act to adopt the low wage index hospital policy
and ordered additional briefing on the appropriate remedy. While
Bridgeport involves only FY 2020, the court's decision--which is not
final at this time and is also subject to potential appeal--may have
implications for FY 2023 payment rates. We are continuing to evaluate
the court's decision, and although we are proposing for the low wage
index hospital policy (and the related budget neutrality adjustment,
proposed below) to continue for FY 2023, we may decide to take a
different approach in the final rule, depending on public comments or
developments in the court proceedings.
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 2023 and for subsequent fiscal years during which the low
wage index hospital policy is in effect, we are proposing to apply a
budget neutrality adjustment in the same manner as we applied it in FYs
2020, 2021, and 2022, as a uniform budget neutrality factor applied to
the standardized amount. We refer readers to section II.A.4.f. of the
addendum to this proposed rule for further discussion of the budget
neutrality adjustment for FY 2023. For purposes of the low wage index
hospital policy, based on the data for this proposed rule, the table
displays the 25th percentile wage index value across all hospitals for
FY 2023.
[GRAPHIC] [TIFF OMITTED] TP10MY22.155
H. Proposed FY 2023 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 2023 IPPS/LTCH PPS proposed 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 proposed rule for a discussion of the wage index
tables for FY 2023.
I. Proposed Revisions to the Wage Index Based on Hospital
Redesignations and Reclassifications
1. General Policies and Effects of Reclassification and Redesignation
Under section 1886(d)(10) of the Act, the Medicare Geographic
Classification Review Board (MGCRB) considers applications by hospitals
for geographic reclassification for purposes of payment under the IPPS.
Hospitals must apply to the MGCRB to reclassify not later than 13
months prior to the start of the fiscal year for which reclassification
is sought (usually by September 1). Generally, hospitals must be
proximate to the labor market area to which they are seeking
reclassification and must demonstrate characteristics similar to
hospitals located in that area. The MGCRB issues its decisions by the
end of February for reclassifications that become effective for the
following fiscal year (beginning October 1). The regulations applicable
to reclassifications by the MGCRB are located in 42 CFR 412.230 through
412.280. (We refer readers to a discussion in the FY 2002 IPPS final
rule (66 FR 39874 and 39875) regarding how the MGCRB defines mileage
for purposes of the proximity requirements.) The general policies for
reclassifications and redesignations and the policies for the effects
of hospitals' reclassifications and redesignations on the wage index
are discussed in the FY 2012 IPPS/LTCH PPS final rule for the FY 2012
final wage index (76 FR 51595 and 51596). 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), in which
we finalized the April 21, 2016 IFC, 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).
On May 10, 2021, we published an interim final rule with comment
period
[[Page 28371]]
(IFC) in the Federal Register (86 FR 24735 through 24739) that included
provisions amending our regulations to allow hospitals with a rural
redesignation to reclassify through the MGCRB using the rural
reclassified area as the geographic area in which the hospital is
located. We revised our regulation so that the redesignated rural area,
and not the hospital's geographic urban area, is considered the area a
Sec. 412.103 hospital is located in for purposes of meeting MGCRB
reclassification criteria, including the average hourly wage
comparisons required by Sec. 412.230(a)(5)(i) and (d)(1)(iii)(C).
Similarly, we revised the regulations to consider the redesignated
rural area, and not the geographic urban area, as 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 prereclassified average hourly wage
for the area in which the hospital is located. Effective for
reclassification applications due to the MGCRB for reclassification
beginning in 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 refer readers to the May 10,
2021 IFC (86 FR 24735 through 24739) and the FY 2022 IPPS/LTCH PPS
final rule (86 FR 45187 through 45190), in which we finalized the May
10, 2021 IFC, for a full discussion of these policies.
2. MGCRB Reclassification and Redesignation Issues for FY 2023
a. FY 2023 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 proposed rule was drafted, the MGCRB had
completed its review of FY 2023 reclassification requests. Based on
such reviews, there are 491 hospitals approved for wage index
reclassifications by the MGCRB starting in FY 2023. Because MGCRB wage
index reclassifications are effective for 3 years, for FY 2023,
hospitals reclassified beginning in FY 2021 or FY 2022 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 288 hospitals approved for wage index reclassifications in
FY 2021 that will continue for FY 2023, and 304 hospitals approved for
wage index reclassifications in FY 2022 that will continue for FY 2023.
Of all the hospitals approved for reclassification for FY 2021, FY 2022
and FY 2023, based upon the review at the time of the proposed rule,
1,083 hospitals are in a MGCRB reclassification status for FY 2023
(with 192 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).
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 2023, the CBSAs assigned in the FY 2021 IPPS/LTCH
final rule continue to be in effect.
Applications for FY 2024 reclassifications are due to the MGCRB by
September 1, 2022. We note that this is also the deadline for canceling
a previous wage index reclassification withdrawal or termination under
42 CFR 412.273(d). Applications and other information about MGCRB
reclassifications may be obtained beginning in mid-July 2022, via the
internet on the CMS website at https://www.cms.gov/Regulations/andGuidance/Review/Boards/MGCRB/index.html, or by calling the MGCRB at
(410) 786-1174. This collection of information was previously approved
under OMB Control Number 0938-0573 which expired on January 31, 2021. A
reinstatement of this PRA package is currently being developed. The
public will have an opportunity to review and submit comments regarding
the reinstatement of this PRA package through a public notice and
comment period separate from this rulemaking.
b. Clarification of Method for Submission Under Sec. 412.273
The regulations at 42 CFR 412.273 set forth the procedures for
withdrawing an MGCRB application, terminating an approved 3-year
reclassification, or canceling a previous withdrawal or termination
(also referred to as a reinstatement). The timing of such requests is
specified at Sec. 412.273(c) for terminations and withdrawals and at
paragraph (d)(2) for canceling a previous withdrawal or termination.
However, the method of submission is not clearly specified in the
regulations, other than the requirement that a request to cancel a
previous withdrawal or termination (a reinstatement), or to withdraw an
application or terminate an approved reclassification, be in writing
according to Sec. 412.273(d)(2) and (e). It has come to our attention
that this may be a source of confusion for hospital representatives
seeking to submit such requests. It is possible that hospital
representatives would attempt to send such requests to the MGCRB via
mail, email, or fax, rather than in the manner that the MGCRB can most
efficiently track and process.
Beginning with applications from hospitals to reclassify for FY
2020, the MGCRB requires applications, supporting documents, and
subsequent correspondence to be filed electronically through the MGCRB
module of the Office of Hearings Case and Document Management System
(``OH CDMS''). The MGCRB issues all of its notices and decisions via
email and these documents are accessible electronically through OH
CDMS. Registration instructions and the system user manual are
available at https://www.cms.gov/Regulations-and-Guidance/ReviewBoards/MGCRB/Electronic-Filing.html.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42313), we revised
the regulations at Sec. 412.256(a)(1) to require
[[Page 28372]]
applications for reclassification to be submitted to the MGCRB
according to the method prescribed by the MGCRB. However, the
regulations at Sec. 412.273 for withdrawals, terminations, or
cancelations of a previous withdrawal or termination (reinstatement) do
not similarly specify a required manner of submission. Therefore, to
eliminate potential confusion about how to submit withdrawal,
termination, or cancelation (reinstatement) requests, we are proposing
to align the regulations at Sec. 412.273 for withdrawal, termination,
or cancelation (reinstatement) requests with the regulations at Sec.
412.256 for new applications by specifying that withdrawal,
termination, or cancelation (reinstatement) requests also must be
submitted to the MGCRB according to the method prescribed by the MGCRB.
Specifically, we are proposing to revise Sec. 412.273(d)(2) for
timing and process of cancellation requests and Sec. 412.273(e) for
withdrawal and termination requests. We are proposing to revise Sec.
412.273(d)(2) to state that cancellation requests must be submitted in
writing to the MGCRB according to the method prescribed by the MGCRB no
later than the deadline for submitting reclassification applications
for the following fiscal year, as specified in Sec. 412.256(a)(2). We
are also proposing to revise Sec. 412.273(e) by adding that requests
to withdraw an application or terminate an approved reclassification
must be submitted in writing to the MGCRB according to the method
prescribed by the MGCRB. We believe these proposed revisions to the
regulations would eliminate potential confusion; align our policy for
withdrawals, terminations, and cancelations (reinstatements) with our
policy for applications; and ensure requests are submitted to the MGCRB
through the method for submission that they can most efficiently
process.
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 [email protected]. In the FY
2018 IPPS/LTCH PPS final rule (82 FR 38147 through 38148), we finalized
a policy revision to require a Lugar hospital that qualifies for and
accepts the out-migration adjustment, or that no longer wishes to
accept the out-migration adjustment and instead elects to return to its
deemed urban status, to notify CMS within 45 days from the date of
public display of the proposed rule at the Office of the Federal
Register. These revised notification timeframes were effective
beginning October 1, 2017. In addition, in the FY 2018 IPPS/LTCH PPS
final rule (82 FR 38148), we clarified that both requests to waive and
to reinstate ``Lugar'' status may be sent to [email protected]. To
ensure proper accounting, we request hospitals to include their CCN,
and either ``waive Lugar'' or ``reinstate Lugar'', in the subject line
of these requests.
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. Proposed 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 of the American Community
Survey (ACS), an official Census Bureau survey, utilizing 2008 through
2012 (5-year)
[[Page 28373]]
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 are proposing to use them again for FY 2023, as we believe
they continue to be appropriate. 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 2023, 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 2023, we
are not proposing 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).)
Table 2 associated with this proposed rule (which is available via
the internet on the CMS website) includes the proposed out-migration
adjustments for the FY 2023 wage index. In addition, Table 4A
associated with this proposed 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 2023 identified by FIPS county code, the proposed FY
2023 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
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.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through
41374), we codified certain policies regarding multicampus hospitals in
the regulations at 42 CFR 412.92, 412.96, 412.103, and 412.108. We
stated that reclassifications from urban to rural under 42 CFR 412.103
apply to the entire hospital (that is, the main campus and its remote
location(s)). We also stated that a main campus of a hospital cannot
obtain an SCH, RRC, or MDH status, or rural reclassification under 42
CFR 412.103, independently or separately from its remote location(s),
and vice versa. However, we are aware that some urban hospitals operate
one or more remote location(s) in a State's rural area. In light of
this scenario, we wish to clarify that rural reclassification under 42
CFR 412.103 applies to the main campus and any remote location located
in an urban area. Under section 1886(d)(8)(E) of the Act, rural
reclassification is available only to a hospital that is located in an
urban area and satisfies the criteria specified in the statute. Thus, a
remote location that is located in a rural area would not qualify for
rural reclassification under section 1886(d)(8)(E) of the Act, as
implemented under 42 CFR 412.103. We are proposing to add 42 CFR
412.103(a)(8) to clarify that for a multicampus hospital, approved
rural reclassification status applies to the main campus and any remote
location located in an urban area, including a main campus or any
remote location deemed urban under section 1886(d)(8)(B) of the Act.
We are also aware that CMS has not consistently reflected the
412.103 rural reclassification status in Table 2 of the annual IPPS/
LTCH PPS rulemaking for certain remote locations of hospitals that are
located in a different CBSA than the main campus. If a remote location
of a hospital is located in a different CBSA than the main campus of
the hospital, it is CMS's longstanding policy to assign that remote
location a wage index based on its own geographic area in order to
comply with the statutory requirement to adjust for geographic
differences in hospital wage levels (section 1886(d)(3)(E) of the Act).
Hospitals are required to identify and allocate wages and hours based
on FTEs for remote locations located in different CBSA on Worksheet S-
2, Part I, Lines 165 and 166 of form CMS-2552-10. In calculating wage
index values, CMS identifies the allocated wage data for these remote
locations in Table 2 with a ``B'' in the 3rd position of the CCN.
As discussed previously, for a multicampus hospital, rural
reclassification under 42 CFR 412.103 applies to the main campus and
any remote location located in an urban area. The wage index
implications of this policy are that, barring another form of wage
index reclassification (for example, MGCRB reclassification), a main
campus or remote location with approved 412.103 rural reclassification
status would be assigned the rural wage index of its State. For FY
2023, we will list the 412.103 rural reclassification status for remote
locations (a remote location is listed with a ``B'' in the third digit
of the CCN) in Table 2 of the appendix to the proposed rule. We note
that, as of the date this proposed rule is issued, only one ``B''
location (36B020) would be assigned its State's rural wage index in FY
2023 due to the 412.103 rural reclassification status of the main
provider (360020). This location appears to have ceased inpatient
activities, so we do not expect a negative financial impact for FY
2023. However, hospitals with 412.103 rural reclassification status and
a remote location in a different CBSA should evaluate potential wage
index outcomes for its remote location(s) when withdrawing or
terminating MGCRB reclassification, or canceling 412.103 rural
reclassification status. For example, if a hospital with 412.103 rural
reclassification status withdraws a separate active MGCRB
reclassification for a remote location, that remote location may be
assigned the State's rural wage index value, effective for 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 and the CY
2019 occupational mix data files for the proposed FY 2023 wage index
were
[[Page 28374]]
made available on May 24, 2021 through the internet on the CMS website
at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy2023-wage-index-home-page.
On January 28, 2022, we posted a public use file (PUF) at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy2023-wage-index-home-page containing FY 2023 wage index
data available as of January 28, 2022. 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,
2018 through September 30, 2019; that is, FY 2019 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 28, 2022
wage data PUF, and a tab containing the CY 2019 occupational mix data
of the hospitals deleted from the January 28, 2022 occupational mix
PUF. In a memorandum dated January 20, 2022, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
January 28, 2022 wage index data PUFs, and the process and timeframe
for requesting revisions in accordance with the FY 2023 Hospital Wage
Index Development Time Table available at https://www.cms.gov/files/document/fy2023-wi-time-table.pdf.
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 May 11, 2021, we instructed all MACs to
inform the IPPS hospitals that they service of the availability of the
preliminary wage index data files and the CY 2019 occupational mix
survey data files posted on May 24, 2021, and the process and timeframe
for requesting revisions.
If a hospital wished to request a change to its data as shown in
the May 24, 2021, preliminary wage data files and occupational mix 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 2, 2021. 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. We note, CMS issued a waiver due to Hurricane Ida and modified
the September 2, 2021, deadline specified in the FY 2023 Hospital Wage
Index Development Time Table for certain hospitals. Specifically, CMS
granted an extension until October 4, 2021, for hospitals in the States
of Louisiana and Mississippi to request revisions to and provide
documentation for their FY 2019 Worksheet S-3 wage data and CY 2019
occupational mix data as included in the May 24, 2021 preliminary
Public Use Files (PUFs), respectively. According to the waiver, MACs
must receive the revision requests and supporting documentation by
October 4, 2021. If hospitals encountered difficulty meeting the
extended deadline, hospitals were to communicate their concerns to CMS
via their MAC for CMS to consider an additional extension if CMS
determined it was warranted. Details regarding this waiver are
available on the CMS website at https://www.cms.gov/current-non-covid-emergencies, Additional IPPS Hospital Blanket Waivers (https://www.cms.gov/files/document/hurrican-ida-additional-ipps-hospital-blanket-waivers.pdf). November 15, 2021, 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 4, 2021, 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 2022. CMS published the wage
index PUFs that included hospitals' revised wage index data on January
28, 2022. Hospitals had until February 15, 2022, to submit requests to
the MACs to correct errors in the January 28, 2022 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 28,
2022, 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 15, 2022, for the FY 2023 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 18, 2022. 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 1,
2022. Data that were incorrect in the preliminary or January 28, 2022
wage index data PUFs, but for which no correction request was received
by the February 15, 2022 deadline, are not considered for correction at
this stage. In addition, April 1, 2022, was the deadline for hospitals
to dispute data corrections made by CMS of which the hospital was
notified after the January 28, 2022, PUF and at least 14 calendar days
prior to April 1, 2022 (that is, March 18, 2022), 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 1, 2022, for the
FY 2023 wage index). We refer readers to the FY 2023 Hospital Wage
Index Development Time Table for complete details.
Hospitals are given the opportunity to examine Table 2 associated
with this proposed rule, which is listed in section VI. of the Addendum
to the proposed rule and available via the internet on the CMS website
at https://www.cms.gov/medicare/acute-inpatient-pps/fy-2023-ipps-proposed-rule-home-page. Table 2 associated with the proposed rule
contains each hospital's proposed adjusted average hourly wage used to
construct the wage index values for the past 3 years, including the
proposed FY 2023 wage index which was constructed from FY 2019 data. We
note 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 2022.
We plan to post the final wage index data PUFs in late April 2022
on the CMS website at https://www.cms.gov/medicaremedicare-fee-service-paymentacuteinpatientppswage-index-files/fy2023-wage-index-home-page.
The April 2022 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
[[Page 28375]]
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 18, 2022, 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 2022 wage index data PUFs, changes
to the wage and occupational mix data can 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 18, 2022.
Requests for correction of errors that were not, but could
have been, identified during the hospital's review of the January 28,
2022, 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 2022 final wage index data PUFs, a
hospital believes that its wage or occupational mix data are incorrect
due to a MAC or CMS error in the entry or tabulation of the final data,
the hospital is given the opportunity to notify both its MAC and CMS
regarding why the hospital believes an error exists and provide all
supporting information, including relevant dates (for example, when it
first became aware of the error). The hospital is required to send its
request to CMS and to the MAC so that it is received no later than May
27, 2022. May 27, 2022, is 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 1, 2022 (that is, March 19,
2022), and at least 14 calendar days prior to May 27, 2022 (that is,
May 13, 2022), that do 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 27, 2022 (that is,
May 14, 2022), may be appealed to the Provider Reimbursement Review
Board (PRRB)). In accordance with the FY 2023 Hospital Wage Index
Development Time Table posted on the CMS website at https://www.cms.gov/files/document/fy2023-wi-time-table.pdf, the May appeals
are required to be sent via mail and email to CMS and the MACs. We
refer readers to the FY 2023 Hospital Wage Index Development Time Table
for complete details.
Verified corrections to the wage index data received timely (that
is, by May 27, 2022) by CMS and the MACs will be incorporated into the
final FY 2023 wage index, which will be effective October 1, 2022.
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 2023 payment rates.
Accordingly, 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 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 2022, 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 2023 wage index by August
2022, and the implementation of the FY 2023 wage index on October 1,
2022. 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 27,
2022, 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 27, 2022, for the FY 2023
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.
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 27, 2022, deadline for the
FY 2023 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.
[[Page 28376]]
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 27, 2022 deadline for the FY 2023 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 28 Public Use
File (PUF)
The process set forth with the wage index time table discussed in
section III.L.1. of the preamble of this proposed 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 28 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 28 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 28 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 2023 Hospital Wage Index Development Time Table,
as well as in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through
38156).
M. Proposed Labor-Related Share for the FY 2023 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
[[Page 28377]]
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 2022 IPPS/LTCH PPS final rule (86 FR 45194 through
45208), we rebased and revised the hospital market basket. We
established a 2018-based IPPS hospital market basket to replace the FY
2014-based IPPS hospital market basket, effective October 1, 2021.
Using the 2018-based IPPS market basket, we finalized a labor-related
share of 67.6 percent for discharges occurring on or after October 1,
2021. In addition, in FY 2022, we implemented this revised and rebased
labor-related share in a budget neutral manner (86 FR 45193). However,
consistent with section 1886(d)(3)(E) of the Act, we did not take into
account the additional payments that would be made as a result of
hospitals with a wage index less than or equal to 1.0000 being paid
using a labor-related share lower than the labor-related share of
hospitals with a wage index greater than 1.0000.
The labor-related share is used to determine the proportion of the
national IPPS base payment rate to which the area wage index is
applied. We include a cost category in the labor-related share if the
costs are labor intensive and vary with the local labor market. In the
FY 2022 IPPS/LTCH PPS final rule (86 FR 45204 through 45207), we
included in the labor-related share the national average proportion of
operating costs that are attributable to the following cost categories
in the 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. In this proposed rule,
for FY 2023, we are not proposing to make any further changes to the
labor-related share. For FY 2023, we are proposing to continue to use a
labor-related share of 67.6 percent for discharges occurring on or
after October 1, 2022.
As discussed in section V.A. of the preamble of this proposed 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 2023, we are
not proposing a Puerto Rico-specific labor-related share percentage or
a nonlabor-related share percentage.
Tables 1A and 1B, which are published in section VI. of the
Addendum to this FY 2023 IPPS/LTCH PPS proposed rule and available via
the internet on the CMS website, reflect the proposed national labor-
related share. Table 1C, in section VI. of the Addendum to this FY 2023
IPPS/LTCH PPS proposed rule and available via the internet on the CMS
website, reflects the proposed national labor-related share for
hospitals located in Puerto Rico. For FY 2023, for all IPPS hospitals
(including Puerto Rico hospitals) whose wage indexes are less than or
equal to 1.0000, we are proposing to apply 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 2023, we are proposing to apply the wage
index to a proposed labor-related share of 67.6 percent of the national
standardized amount.
N. Proposed Permanent Cap on Wage Index Decreases
1. Proposed Permanent Cap Policy for the Wage Index
In the FY 2020 IPPS/LTCH PPS final rule, CMS implemented a
transition policy for FY 2020 to place a 5 percent cap on any decrease
in a hospital's wage index from the hospital's final wage index in FY
2019 so that a hospital's final wage index for FY 2020 will not be less
than 95 percent of its final wage index for FY 2019 (84 FR 42336
through 42337). We implemented this transition due to the combined
effect of the policy changes for the FY 2020 wage index (including
policies to address wage index disparities between high and low wage
index hospitals), which we believed could lead to significant decreases
in the wage index values for some hospitals. We stated that this
transition would allow the effects of our proposed policies to be
phased in over 2 years with no estimated reduction in the wage index of
more than 5 percent in FY 2020 (that is, no cap would be applied the
second year). We also stated that we believed 5 percent is a reasonable
level for the cap because it would effectively mitigate any significant
decreases in the wage index for FY 2020. We applied a budget neutrality
adjustment factor to the FY 2020 standardized amount for all hospitals
to achieve budget neutrality for the transition policy (84 FR 42337
through 42338).
In the FY 2021 IPPS/LTCH PPS final rule (85 FR 58753 through
58755), to mitigate the effect of our adoption of the revised OMB
delineations in OMB Bulletin 18-04, we implemented for FY 2021 the same
5 percent cap transition policy that we had implemented for FY 2020.
Specifically, we placed a 5 percent cap 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 will not be less than 95
percent of its final wage index for FY 2020. We stated that for FY
2021, we did not believe it was necessary to implement the multifaceted
transitions (including a 1-year blended wage index) we established in
FY 2015 for the adoption of the new OMB delineations based on the new
decennial census data. The 5 percent cap transition policy resulted in
some hospitals receiving a transition adjustment that were not directly
affected by the adoption of the revised OMB delineations (85 FR 58754).
We applied a budget neutrality adjustment to the FY 2021 standardized
amount to achieve budget neutrality for the transition policy (85 FR
58755).
[[Page 28378]]
In the FY 2022 IPPS/LTCH PPS proposed rule (86 FR 25397), given the
unprecedented nature of the ongoing COVID-19 PHE, we solicited comments
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. We received several
comments strongly recommending CMS extend a transition policy similar
to that implemented in FY 2020 and FY 2021. Commenters also 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. While we did not adopt
the commenters' suggestion for a permanent 5 percent cap policy, we did
finalize a transition policy for FY 2022 in the FY 2022 IPPS/LTCH PPS
final rule (86 FR 45164). Specifically, for hospitals that received the
transition in FY 2021, we continued a wage index transition for FY 2022
under which we 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. We applied a budget neutrality adjustment to the FY 2022
standardized amount so that the transition is implemented in a budget
neutral manner (86 FR 45165).
For FY 2023 and subsequent years, we have further considered the
comments we received during the FY 2022 rulemaking recommending a
permanent 5 percent cap policy to prevent large year-to-year variations
in wage index values as a means to reduce overall volatility for
hospitals. In the past, we have established temporary transition
policies (as described above) when there have been significant changes
to wage index policy, and we have limited the duration of each
transition in order to phase in the effects of those policy changes. In
taking this temporary approach in the past, we have sought to mitigate
short-term instability and fluctuations that can negatively impact
hospitals. We also recognize that, absent any specific change in wage
index policy, significant year-to-year fluctuations in an area's wage
index can occur due to external factors beyond a hospital's control,
such as the COVID-19 PHE. For an individual hospital, these
fluctuations can be difficult to predict. We recognize that
predictability in Medicare payments is important to enable hospitals to
budget and plan their operations.
In light of these considerations, we are proposing a permanent
approach to smooth year-to-year decreases in hospitals' wage indexes.
We are proposing a policy that we believe increases the predictability
of IPPS payments for hospitals and mitigates instability and
significant negative impacts to hospitals resulting from changes to the
wage index. We also believe our proposed permanent policy would
eliminate the need for temporary and potentially uncertain transition
adjustments to the wage index in the future due to specific policy
changes or circumstances outside hospitals' control (for example, in
the event we adopt any future OMB revisions to the CBSA delineations).
As a result of this proposed policy, an otherwise rare but relatively
large year-to-year decrease in the wage index value for an individual
hospital would be phased in, providing the hospital with additional
time to plan appropriately and explore potential reclassification
options, if applicable. For example, if a change in OMB delineations
resulted in a hospital's wage index decreasing by more than 10 percent
in any given year, this proposed policy could provide at least one
additional year to phase in the decrease beyond a single ``transition''
year methodology, such as the transition policy finalized in the FY
2015 IPPS/LTCH PPS final rule (79 FR 49957 through 49962).
Typical year-to-year variation in the wage index has historically
been within 5 percent, and we expect this will continue to be the case
in future years. Because hospitals are usually experienced with this
level of wage index fluctuation, we believe applying a 5-percent cap on
all wage index decreases each year, regardless of the reason for the
decrease, would effectively mitigate instability in IPPS payments due
to any significant wage index decreases that may affect hospitals in a
year. In addition, we believe that the predictability resulting from a
5 percent cap on all wage index decreases would enable hospitals to
more effectively budget and plan their operations. Because applying a
5-percent cap on all wage index decreases would represent a small
overall impact on the labor market area wage index system, we believe
it would ensure the wage index is a relative measure of the value of
labor in prescribed labor market areas. We estimate that applying a 5-
percent cap on all wage index decreases would have a very small effect
on the proposed budget neutrality factor associated with the proposed
cap applied to the standardized amount for FY 2023 (discussed in
section III.N.2 of the preamble of this proposed rule). Because the
wage index is a measure of the value of labor (wage and wage-related
costs) in a prescribed labor market area relative to the national
average, we anticipate that in the absence of proposed policy changes
most hospitals will not experience year-to-year wage index declines
greater than 5 percent in any given year. Therefore, we anticipate that
the impact to the proposed budget neutrality factor associated with the
proposed cap in future years would continue to be minimal. We also
believe that when the 5-percent cap would be applied under this
proposal, in general it is likely that it would be applied similarly to
all hospitals in the same labor market area, as the hospital average
hourly wage data in the CBSA (and any relative decreases compared to
the national average hourly wage) would be similar. While in certain
circumstances this policy may result in some hospitals in a CBSA
receiving a higher wage index than others in the same area, we believe
the impact would be temporary.
For the reasons discussed in this section, we believe a 5-percent
cap on wage index decreases would be appropriate for the IPPS.
Therefore, for FY 2023 and subsequent years, we are proposing to apply
a 5-percent cap on any decrease to a hospital's wage index from its
wage index in the prior FY, regardless of the circumstances causing the
decline. That is, we are proposing that a hospital's wage index for FY
2023 would not be less than 95 percent of its final wage index for FY
2022, and that for subsequent years, a hospital's wage index would not
be less than 95 percent of its final wage index for the prior FY. This
also means that if a hospital's prior FY wage index is calculated with
the application of the 5-percent cap, the following year's wage index
would not be less than 95 percent of the hospital's capped wage index
in the prior FY. For example, if a hospital's wage index for FY 2023 is
calculated with the application of the 5-percent cap, then its wage
index for FY 2024 would not be less than 95 percent of its capped wage
index in FY 2023. We would reflect the proposed wage index cap policy
at 42 CFR 412.64(h). Specifically, we are proposing to add a new
paragraph at 42 CFR 412.64(h)(7) to state that beginning with fiscal
year 2023, if CMS determines that a hospital's wage index value for a
fiscal year would decrease by more than 5 percent as compared to the
hospital's wage index value for the prior fiscal year, CMS limits the
decrease to 5 percent for the fiscal year.
[[Page 28379]]
We have authority to implement this proposed wage index cap policy
and the associated proposed budget neutrality adjustment (discussed
below in section III.N.2. of the preamble of this proposed rule) under
section 1886(d)(3)(E) of the Act, which gives the Secretary broad
authority to adjust for area differences in hospital wage levels by a
factor (established by the Secretary) reflecting the relative hospital
wage level in the geographic area of the hospital compared to the
national average hospital wage level, and requires those adjustments to
be budget neutral. In addition, we have authority to implement this
proposed wage index cap policy and the associated proposed budget
neutrality adjustment (discussed below in section III.N.2. of the
preamble of this proposed rule) as an adjustment under section
1886(d)(5)(I)(i) of the Act, which similarly gives the Secretary broad
authority to provide by regulation for such other exceptions and
adjustments to such payment amounts under subsection (d) as the
Secretary deems appropriate.
We are proposing to apply the proposed wage index cap policy
described above for a FY using the final wage index applicable to the
hospital on the last day of the prior FY (except for newly opened
hospitals, as discussed below). In general, the final wage index
applicable to the hospital on the last day of the prior FY would be the
wage index value listed for the hospital in Table 2 of the IPPS/LTCH
PPS final rule for that prior FY (including any correction notices, if
applicable). In rulemaking for a FY, we intend to relist the wage index
values from Table 2 of the IPPS/LTCH PPS final rule for the prior FY,
with updates as described below. Under the proposed wage index cap
policy described above, we would use these values to determine a
hospital's wage index for a FY by capping it at 95 percent of the final
wage index applicable to the hospital on the last day of the prior FY
(in general, the wage index value listed for the hospital in Table 2 of
the IPPS/LTCH PPS final rule for the prior FY). We note, consistent
with our past application of the 5 percent cap transition policy (see
the FY 2020 IPPS/LTCH PPS final rule (84 FR 42337)), the proposed wage
index cap policy described above would apply to hospitals whose wage
index is reduced by obtaining a urban to rural reclassification under
42 CFR 412.103. Specifically, a hospital that obtains a rural
reclassification under 42 CFR 412.103 may be assigned its State's rural
wage index.\601\ While other forms of wage index reclassification are
effective with the start of a Federal fiscal year, pursuant to 42 CFR
412.103(d)(1), the effective date of an approved rural reclassification
is the filing date of the application. Therefore, the wage index values
for hospitals that obtain rural reclassification under 42 CFR 412.103
may change in the middle of a Federal fiscal year and thus may not be
reflected in Table 2 of the IPPS/LTCH PPS final rule for that year. For
example, if a hospital was assigned its geographic wage index of 1.0001
in Table 2 of the FY 2022 IPPS/LTCH PPS final rule, but obtained a
rural reclassification on December 1, 2021 and was assigned its state's
rural wage index of 0.9600 for the remainder of FY 2022; the FY 2023
cap would be based on the 0.9600 value, not the 1.0001 value listed in
Table 2 of the FY 2022 IPPS/LTCH PPS final rule. As in previous years,
we would instruct hospitals that obtain a rural reclassification under
42 CFR 412.103 to contact their MAC to ensure that their assigned wage
index does not result in a greater than 5 percent decrease from the
hospital's prior year wage index value (see the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42337) and the FY 2021 IPPS/LTCH PPS final rule (85
FR 58754)).
---------------------------------------------------------------------------
\601\ As discussed in the FY 2016 IFC (81 FR 23428 through
23438), hospitals with simultaneous reclassifications under 412.103
and either Lugar or MGCRB reclassification process are not assigned
their State's rural wage index.
---------------------------------------------------------------------------
In Table 2 associated with this proposed rule, which is available
via the internet on the CMS website, we list the FY 2022 final wage
index value for all hospitals in column C. For additional clarity, we
have identified hospitals that have obtained rural reclassification
after the FY 2022 lock-in date, as described in 42 CFR 412.103(b)(6),
and that were assigned a different wage index than what was listed in
Table 2 associated with the FY 2022 IPPS/LTCH PPS correction notice
(available on the internet at https://www.cms.gov/files/zip/fy-2022-ipps-fr-tables-2-3-4a-4b.zip). In Table 2 associated with this proposed
rule, the FY 2022 wage index column for these hospitals will not use
the values listed in Table 2 associated with the FY 2022 IPPS/LTCH PPS
correction notice (available on the internet at https://www.cms.gov/files/zip/fy-2022-ipps-fr-tables-2-3-4a-4b.zip), but will instead be
updated with the wage index value that is currently assigned to the
hospitals. Under our proposal described above, we would apply the
proposed wage index cap using the actual final wage index value
assigned to the hospital on the last day of the prior Federal fiscal
year rather than the value listed in Table 2 of the prior FY final
rule. We are providing a supplemental data file (posted on the FY 2023
proposed rule web page at https://www.cms.gov/medicare/medicare-fee-
for-service-payment/acuteinpatientpps) which lists all hospitals that
have obtained rural reclassification under 42 CFR 412.103 after the FY
2022 lock-in date and that have no other form of wage index
reclassification applicable to them at this time. This list will be
revised for the final rule to add additional hospitals without another
form of reclassification that obtain rural reclassification under 42
CFR 412.103 before the FY 2023 lock-in date as described in 42 CFR
412.103(b)(6).
Hospitals that obtain rural reclassification after the FY 2023
lock-in date will not be listed as being reclassified as rural in the
FY 2023 IPPS/LTCH PPS final rule. If we finalize the proposed wage
index cap policy described above, these hospitals should contact their
MAC to ensure that the assigned rural wage index value is not less than
95 percent of their final wage index value for FY 2022 (that is, the
wage index assigned to the hospital as of September 30, 2022).
For newly opened hospitals, we propose to apply the proposed wage
index cap policy described previously for a FY using the wage index
value the hospital was assigned for the prior FY. A new hospital would
be paid the wage index for the area in which it is geographically
located for its first full or partial fiscal year, and it would not
receive a cap for that first year because it would not have been
assigned a wage index in the prior year. Also, it is possible a new
hospital may not be listed in Table 2 for several years since the
hospitals listed in Table 2 are based on historical data. If we
finalize the proposed wage index cap policy described above, a new
hospital may contact their MAC to ensure that their assigned wage index
value for the upcoming FY is not less than 95 percent of the value
assigned to them for the prior Federal fiscal year. For example, if a
hospital begins operations on July 1, 2022, and is assigned its area
wage index of 0.9000 for the remainder of FY 2022, its FY 2023 wage
index would be capped at 95 percent of that value, and could not be
lower than 0.8550 (0.95 x 0.9000) regardless of whether it was listed
in Table 2 in the FY 2022 IPPS/LTCH PPS final rule. A hospital that
opens on December 1, 2022 would not be eligible for a capped wage index
in FY 2023, as it was not assigned a wage index during FY 2022.We
finally note
[[Page 28380]]
that if we adopt these proposals as final policy, we would examine the
effects of the policy on an ongoing basis in the future in order to
assess whether it effectively and appropriately accomplishes the goal
of increasing predictability and stability in IPPS payments.
2. Proposed Permanent Cap Budget Neutrality
We are proposing to implement the proposed wage index cap policy
(discussed above in section III.N.1 of the preamble of this proposed
rule) in a budget neutral manner through a national adjustment to the
standardized amount each fiscal year as we have implemented similar
past transition policies involving a cap on wage index decreases (for
example, see the FY 2021 IPPS/LTCH PPS final rule (85 FR 58755) and the
FY 2022 IPPS/LTCH PPS final rule (86 FR 45164 through 45165)). We
believe application of the proposed wage index cap policy should not
increase estimated aggregate Medicare payments beyond the payments that
would be made had we never applied the cap.
Specifically, we are proposing to apply a budget neutrality
adjustment to ensure that estimated aggregate payments under our
proposed wage index cap policy for hospitals that would have a decrease
in their wage indexes for the upcoming fiscal year of more than 5
percent would equal what estimated aggregate payments would have been
without the proposed wage index cap policy. To determine the proposed
associated budget neutrality factor, we compare estimated aggregate
IPPS payments with and without the proposed wage index cap policy. As
discussed above in section III.N.1 of the preamble of this proposed
rule, we have authority to implement this proposed budget neutrality
adjustment under sections 1886(d)(3)(E) and (d)(5)(I)(i) of the Act. We
note that the proposed budget neutrality adjustment would be updated,
as appropriate, based on the final rule data. We refer readers to the
Addendum of this proposed rule for further information regarding the
proposed budget neutrality calculations.
IV. Proposed Payment Adjustment for Medicare Disproportionate Share
Hospitals (DSHs) for FY 2023 (Sec. 412.106)
A. 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 proposed
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. 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
[[Page 28381]]
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 was 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.
B. 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). For this proposed rule, we estimated DSH status for all
hospitals using the most recent available SSI ratios and information
from the most recent available Provider Specific File. We note FY 2019
SSI ratios available on the CMS website are the most recent available
SSI ratios at the time of developing this proposed rule. If more recent
data on DSH eligibility become available before the final rule, then we
would use such data in the final rule. 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. In this FY 2023 IPPS/LTCH PPS proposed rule, we
discuss our specific policies regarding eligibility to receive
empirically justified Medicare DSH payments and uncompensated care
payments for FY 2023 with respect to the following hospitals:
Subsection (d) Puerto Rico hospitals that are eligible for
DSH payments also are eligible to receive empirically justified
Medicare DSH payments and uncompensated care payments under the new
payment methodology (78 FR 50623 and 79 FR 50006).
Maryland hospitals are not eligible to receive empirically
justified Medicare DSH payments and uncompensated care payments under
the payment methodology of section 1886(r) of the Act because they are
not paid under the IPPS. As discussed in the FY 2019 IPPS/LTCH PPS
final rule (83 FR 41402 through 41403), CMS and the State have entered
into an agreement to govern payments to Maryland hospitals under a new
payment model, the Maryland Total Cost of Care (TCOC) Model, which
began on January 1, 2019. Under the Maryland TCOC Model, Maryland
hospitals will not be paid under the IPPS in FY 2023, 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
[[Page 28382]]
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 interim empirically justified Medicare DSH and interim
uncompensated care payments as we do for all other IPPS hospitals.
We note that there has not been legislation at the time of
development of this proposed rule that would extend the MDH program
beyond September 30, 2022. However, if the MDH program were to be
extended beyond its current expiration date, similar to how it was
extended under the Bipartisan Budget Act of 2018, we would continue to
make a determination concerning an MDH's eligibility for interim
uncompensated care payments based on the hospital's estimated DSH
status for the applicable 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. The BPCI Advanced Model's
final performance year will end on December 31, 2023. 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. We refer the
reader 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 (Pub. L.
114-255), enacted December 13, 2016, again amended section 410A of
Public Law 108-173 to require a 10-year extension period (in place of
the 5-year extension required by the Affordable Care Act), therefore
requiring an additional 5-year participation period for the
demonstration program. Section 15003 of Public Law 114-255 also
required a solicitation for applications for additional hospitals to
participate in the demonstration program. The period of performance for
this 5-year extension period ended December 31, 2021. The Consolidated
Appropriations Act, 2021 (Pub. L. 116-260) amended section 410A of
Public Law 108-173 to extend the Rural Community Hospital Demonstration
Program for an additional 5-year period. The period of participation
for the last hospital in the demonstration under this most recent
legislative authorization would extend until June 30, 2028, as outlined
in section V.K. of the preamble of this proposed rule. 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.
At the time of development of this proposed rule, we believe 26
hospitals may participate in the demonstration program at the start of
FY 2023.
C. Empirically Justified Medicare DSH Payments
As we have discussed earlier, section 1886(r)(1) of the Act
requires the Secretary to pay 25 percent of the amount of the 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 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 https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2014-Transmittals-Items/R5P240.html.
D. 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
[[Page 28383]]
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 the preamble of
this proposed rule, we discuss the data sources and methodologies for
computing each of these factors, our final policies for FYs 2014
through 2022, and our proposed policies for FY 2023.
1. Proposed Calculation of Factor 1 for FY 2023
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 this FY 2023 IPPS/LTCH PPS proposed rule, in order to determine
Factor 1 in the uncompensated care payment formula for FY 2023, we are
proposing 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 section 1886(r)(1) of the Act.
Consistent with the policy that has applied in previous years, these
estimates will not be revised or updated subsequent to the publication
of our final projections in the FY 2023 IPPS/LTCH PPS final rule.
Therefore, in order to determine the two elements of proposed
Factor 1 for FY 2023 (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
proposed rule, we used the most recently available projections of
Medicare DSH payments for the fiscal year, as calculated by CMS' Office
of the Actuary (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
2020 through FY 2023 are discussed in the table titled ``Factors
Applied for FY 2020 through FY 2023 to Estimate Medicare DSH
Expenditures Using FY 2019 Baseline.''
For purposes of calculating Factor 1 and modeling the impact of
this FY 2023 IPPS/LTCH PPS proposed rule, we used the Office of the
Actuary's January 2022 Medicare DSH estimates, which were based on data
from the September 2021 update of the Medicare Hospital Cost Report
Information System (HCRIS) and the FY 2022 IPPS/LTCH PPS final rule
IPPS Impact File, published in conjunction with the publication of the
FY 2022 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 2022 Medicare DSH estimates. Furthermore,
because section 1886(r) of the Act specifies that the uncompensated
care payment is in addition to the empirically justified Medicare DSH
payment (25 percent of DSH payments that would be made without regard
to section 1886(r) of the Act), Maryland hospitals, which are not
eligible to receive DSH payments, were also excluded from the Office of
the Actuary's January 2022 Medicare DSH estimates. The 26 hospitals
that are anticipated to participate in the Rural Community Hospital
Demonstration Program in FY 2023 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 uncompensated
care payments.
For this proposed rule, using the data sources as previously
discussed, the Office of the Actuary's January 2022 estimate of
Medicare DSH payments for FY 2023 without regard to the application of
section 1886(r)(1) of the Act, is approximately $13.266 billion.
Therefore, also based on the January 2022 estimate, the estimate of
empirically justified Medicare DSH payments for FY 2023, with the
application of section 1886(r)(1) of the Act, is approximately $3.316
billion (or 25 percent of the total amount of estimated Medicare DSH
payments for FY 2023). Under Sec. 412.106(g)(1)(i) of the regulations,
Factor 1 is the difference between these two OACT estimates. Therefore,
in this proposed rule, we are proposing that Factor 1 for FY 2023 would
be $9,949,258,556.56, which is equal to 75 percent of the total amount
of estimated Medicare DSH payments for FY 2023 ($13,266 million minus
$3,316 million). We note that consistent with our approach in previous
rulemakings, OACT intends to use more recent data that may become
available for purposes of projecting the final Factor 1 estimates for
the FY 2023 IPPS/LTCH PPS final 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
[[Page 28384]]
the Factor 1 estimates for the final rule are generally consistent with
those used for the Midsession Review of the President's Budget. As we
have in the past, for additional information on the development of the
President's Budget, we refer readers to the Office of Management and
Budget website at https://www.whitehouse.gov/omb/budget. Consistent
with historical practice, we expect that the Midsession Review will
have updated economic assumptions and actuarial analysis, which would
be used for the development of Factor 1 estimates in the final rule.
For a general overview of the principal steps involved in
projecting future inpatient costs and utilization, we refer readers to
the ``2021 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 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).
In this proposed rule, we include information regarding the data
sources, methods, and assumptions employed by the actuaries in
determining the OACT's estimate of Factor 1. In summary, we indicate
the historical HCRIS data update OACT used to identify Medicare DSH
payments, we explain that the most recent Medicare DSH payment
adjustments provided in the IPPS Impact File were used, and we provide
the components of all the update factors that were applied to the
historical data to estimate the Medicare DSH payments for the upcoming
fiscal year, along with the associated rationale and assumptions. This
discussion also includes a description of the ``Other'' and
``Discharges'' assumptions, and also provides additional information
regarding how we address the Medicaid and CHIP expansion.
The Office of the Actuary's estimates for FY 2023 for this proposed
rule began with a baseline of $13.808 billion in Medicare DSH
expenditures for FY 2019. The following table shows the factors applied
to update this baseline through the current estimate for FY 2023:
[GRAPHIC] [TIFF OMITTED] TP10MY22.156
In this table, the discharges column shows the changes in the
number of Medicare fee-for-service (FFS) inpatient hospital discharges.
The discharge figures for FY 2020 and FY 2021 are based on Medicare
claims data that have been adjusted by a completion factor to account
for incomplete claims data. We note that these claims include the
impact of the pandemic. The discharge figure for FY 2022 is based on
preliminary data. The discharge figure for FY 2023 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
2023 reflect the actual impact and estimated future 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 2020 and FY
2021 are based on actual claims data adjusted by a completion factor.
We note that these claims include the impact of the pandemic. The case-
mix figure for FY 2022 is based on preliminary data. The case-mix
factor figures for FY 2020 to FY 2023 reflect the actual impact and
estimated future impact of the COVID-19 pandemic. 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 proposed 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
2021-2023 and approximately 75 percent in 2024 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 from the COVID-19 pandemic. We note that, based on
the
[[Page 28385]]
most recent available data, Medicaid enrollment is estimated to change
as follows: 2.0 percent in FY 2020, 9.5 percent in FY 2021, 4.2 percent
in FY 2022, and -5.7 percent in FY 2023.
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/Researc/Statistics/Data/and/Systems/Research/ActuarialStudies/MedicaidReport. 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 at the time of developing this proposed rule, the
OACT assumed per capita spending for Medicaid beneficiaries who
enrolled due to the expansion to be 80 percent of the average per
capita expenditures for a pre-expansion Medicaid beneficiary due to the
better health of these beneficiaries. The 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. In the future, the assumption about the average per-
capita expenditures of Medicaid beneficiaries who enrolled due to the
COVID-19 pandemic may change, given that the pandemic is ongoing.
The following table shows the factors that are included in the
``Update'' column of the previous table:
[GRAPHIC] [TIFF OMITTED] TP10MY22.157
2. Calculation of Proposed Factor 2 for FY 2023
(a) 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. We are proposing to use a methodology
similar to the one that was used in FY 2018 through FY 2022 to
determine Factor 2 for FY 2023.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38197 and 38198), we
explained that we determined the data source for the rate of
uninsurance that, on balance, best meets all of our considerations and
is consistent with the statutory requirement that the estimate of the
rate of uninsurance be based on data from the Census Bureau or other
sources the Secretary determines appropriate 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. We note that the NHEA estimates of uninsurance
are for the total resident-based U.S. population, including all people
who usually reside in the 50 States or the District of Columbia, but
excluding individuals 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 the U.S., plus a
small (typically less that 0.2 percent of population) adjustment to
reflect Census undercounts. Thus, the NHEA estimates of uninsurance are
for U.S. residents of all ages and are not limited to a specific age
cohort, such as the population under the age of 65. As we explained in
the FY 2018 IPPS/
[[Page 28386]]
LTCH PPS proposed and final rules, we believe it is appropriate to use
an estimate that reflects the rate 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 U.S. that influence uncompensated care for hospitals than an
estimate that reflects only legal residents.
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 2020, 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 2020. 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 https://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
2018, OACT extrapolates from the 2009 CPS data through 2018 using data
from the National Health Interview Survey (NHIS). The NHIS is one of
the major data collection programs of the National Center for Health
Statistics (NCHS), which is part of the Centers for Disease Control and
Prevention (CDC). The 2019 estimate was extrapolated using the 2019/
2018 trend from the American Community Survey (ACS). The 2020 estimate
was extrapolated using the 2020/2018 trend from the CPS as published by
the Census Bureau. The U.S. Census Bureau is the data collection agent
for the NHIS, the ACS, and the CPS. 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/
. For information regarding the data collection issues regarding the
2020 ACS, we refer readers to the Census Bureau's website at https://www.census.gov/newsroom/blogs/random-samplings/2021/10/pandemic-impact-on-2020-acs-1-year-data.html. Since the 2020 ACS data were not
available, the ACS data were not used for purposes of estimating the
number of uninsured individuals for 2020.
The next metrics needed to compute Factor 2 for FY 2023 are
projections of the rate of uninsurance in both CY 2022 and CY 2023. On
an annual basis, OACT projects enrollment and spending trends for the
coming 10-year period. The most recent projections are for 2021 through
2030. 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 and 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.
(b) Proposed Factor 2 for FY 2023
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 2022 and
2023 is 8.9 percent and 9.3 percent, respectively. As required by
section 1886(r)(2)(B)(ii) of the Act, the Chief Actuary of CMS has
certified these estimates. We refer readers to OACT's Memorandum on
Certification of Rates of Uninsured prepared for this FY 2023 IPPS/LTCH
PPS proposed rule for further details on the methodology and
assumptions that were used in the projection of these rates of
uninsurance.\602\
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\602\ OACT Memorandum on Certification of Rates of Uninsured.
March 28, 2022. Available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInPatientPPS/dsh.html.
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As with the CBO estimates on which we based Factor 2 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 are proposing to continue to apply the
weighted average approach used in past fiscal years in order to
estimate the rate of uninsurance for FY 2023.
The OACT has certified the estimate of the rate of uninsurance for
FY 2023 determined using this weighted average approach to be
reasonable and appropriate for purposes of section 1886(r)(2)(B)(ii) of
the Act. We note that we may 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 2023.
The calculation of the proposed Factor 2 for FY 2023 is as follows:
Percent of individuals without insurance for CY 2013: 14 percent.
Percent of individuals without insurance for CY 2022: 8.9 percent.
Percent of individuals without insurance for CY 2023: 9.3 percent.
[[Page 28387]]
Percent of individuals without insurance for FY 2023 (0.25 times
0.089) + (0.75 times 0.093): 9.2 percent.
1-[verbar]((0.092-0.14)/0.14)[verbar] = 1-0.3429 = 0.6571 (65.71
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 are proposing that Factor
2 for FY 2023 would be 65.71 percent.
The proposed FY 2023 uncompensated care amount is equivalent to
this proposed rule's Factor 1 multiplied by this proposed rule's Factor
2, which is $9,949,258,556.56 * 0.6571 = $6,537,657,797.52.
[GRAPHIC] [TIFF OMITTED] TP10MY22.158
In addition, it has recently come to our attention that the
provision of the regulations that addresses Factor 2 inadvertently
omits any reference to the statutory methodology in section
1886(r)(2)(B)(ii) of the Act for determining Factor 2 for FY 2018 and
subsequent fiscal years. Accordingly, we are proposing a technical
change to the regulation at Sec. 412.106 to update paragraph
(g)(1)(ii) to reflect the statutory requirements governing the
determination of Factor 2 for FY 2018 and subsequent fiscal years. We
have determined Factor 2 for FY 2018 through FY 2022 consistent with
the plain language of section 1886(r)(2)(B)(ii) of the Act; therefore,
this proposed technical change is intended merely to update our
regulations to reflect the methodology for determining Factor 2 that
has applied since FY 2018 and will continue to apply for FY 2023 and
subsequent fiscal years.
We are inviting public comments on our proposed Factor 2 for FY
2023 and on the proposed technical change to the regulation at Sec.
412.106(g)(1)(ii).
3. Calculation of Proposed Factor 3 for FY 2023
(a) General Background
Section 1886(r)(2)(C) of the Act defines Factor 3 in the
calculation of the uncompensated care payment. As we have discussed
earlier, section 1886(r)(2)(C) of the Act states that Factor 3 is equal
to the percent, for each subsection (d) hospital, that represents the
quotient of: (1) The amount of uncompensated care for such hospital for
a period selected by the Secretary (as estimated by the Secretary,
based on appropriate data (including, in the case where the Secretary
determines alternative data are available that are a better proxy for
the costs of subsection (d) hospitals for treating the uninsured, the
use of such alternative data)); and (2) the aggregate amount of
uncompensated care for all subsection (d) hospitals that receive a
payment under section 1886(r) of the Act for such period (as so
estimated, based on such data).
Therefore, Factor 3 is a hospital-specific value that expresses the
proportion of the estimated uncompensated care amount for each
subsection (d) hospital and each subsection (d) Puerto Rico hospital
with the potential to receive Medicare DSH payments relative to the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the fiscal year for which the
uncompensated care payment is to be made. Factor 3 is applied to the
product of Factor 1 and Factor 2 to determine the amount of the
uncompensated care payment that each eligible hospital will receive for
FY 2014 and subsequent fiscal years. In order to implement the
statutory requirements for this factor of the uncompensated care
payment formula, it was necessary to determine: (1) The definition of
uncompensated care or, in other words, the specific items that are to
be included in the numerator (that is, the estimated uncompensated care
amount for an individual hospital) and the denominator (that is, the
estimated uncompensated care amount for all hospitals estimated to
receive Medicare DSH payments in the applicable fiscal year); (2) the
data source(s) for the estimated uncompensated care amount; and (3) the
timing and manner of computing the quotient for each hospital estimated
to receive Medicare DSH payments. The statute instructs the Secretary
to estimate the amounts of uncompensated care for a period based on
appropriate data. In addition, we 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. We
refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38201
through
[[Page 28388]]
38203) for a complete discussion of these analyses.
In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38206), we
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. 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, which
reflected the most recent available information regarding these
hospitals' low-income insured days before any expansion of Medicaid (82
FR 38208 through 38212).
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41414), we stated
that 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 were currently available for FY 2014 or FY 2015 that
would be a better proxy for the costs of subsection (d) hospitals for
treating individuals who are uninsured. 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 3 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
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.
In the FY 2020 IPPS/LTCH PPS final rule (84 FR 42368), we finalized
our proposal to use a single year of audited 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 more recent 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
explained that mixing audited and unaudited data for individual
hospitals by averaging multiple years of data could potentially lead to
a less smooth result. We also 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 would be 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 of ``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). 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).
This is the same definition that we initially adopted in the FY 2018
IPPS/LTCH PPS final rule. 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 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. The OMB control number for this information collection
request is 0938-0050, which expired on March 31, 2022. A reinstatement
of the information collection request is currently being developed. The
public will have an opportunity to review and submit comments on the
reinstatement through a public notice and comment period separate from
this rulemaking.
(b) Background on the Methodology Used To Calculate Factor 3 for FY
2022
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
[[Page 28389]]
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 2022 IPPS/LTCH PPS final rule, we continued to apply 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; (3) the modified new hospital
policy that was finalized in the FY 2020 IPPS/LTCH PPS final rule; (4)
the new merger policy adopted in the FY 2021 IPPS/LTCH PPS final rule
that accounts for the merger effective date; and (5) 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. We discuss these policies in
greater detail in this section.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45244), 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 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 cost report for the applicable fiscal year.
That is, for FY 2022, we will revise the numerator of Factor 3 for a
newly merged hospital to reflect the uncompensated care costs reported
on the newly merged hospital's FY 2022 cost report.
In FY 2022 IPPS/LTCH PPS final rule, 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
originally adopted in 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. We also applied the modified policy that was
adopted in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58829) 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 2022 IPPS/LTCH PPS final rule (86 FR 25454), we continued
the modified new hospital policy for new hospitals that do not have
data for the cost reporting period(s) used in the Factor 3 calculation
(that is, the most recent cost reporting year for which audits have
been conducted). 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 during the fiscal year. However, because these
hospitals do not have a cost report for the cost reporting period used
in the Factor 3 calculation and the projection of eligibility for DSH
payments is still preliminary, we are unable to calculate a prospective
Factor 3 for these hospitals and they do not receive interim
uncompensated care payments. The MAC will make a final determination
concerning whether the hospital is eligible to receive Medicare DSH
payments for the fiscal year at cost report settlement. Thus, for FY
2022, if a new 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 same
denominator that was used in the prospective Factor 3 calculation for
FY 2022 (that is, the sum of the uncompensated care costs reported on
Worksheet S-10 of the FY 2018 cost reports for all DSH-eligible
hospitals).
In the FY 2022 IPPS/LTCH PPS final rule, we continued the new
merger policy that accounts for the merger effective date, that was
originally adopted in FY 2021. To more accurately estimate
uncompensated care costs (UCC) for the hospitals involved in a merger
when the merger effective date occurs partway through the surviving
hospital's cost reporting period, we apply 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 the UCC
of the surviving hospital for purposes of determining Factor 3 for the
merged hospital.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 25454 and 25455), 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
[[Page 28390]]
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 (86 FR 45245). However, because we audit the
Worksheet S-10 data for a number of hospitals, we no longer believe it
is necessary to apply the trim methodology for hospitals whose cost
report has been audited. Accordingly, for FY 2022, we continued the
policy adopted in FY 2021 under which we exclude hospitals that were
part of the audits for the fiscal year used in the Factor 3 calculation
from the trim methodology for potentially aberrant UCC. We also
continued to apply a modified trim methodology for all-inclusive rate
providers (AIRPs) with potentially aberrant UCC (86 FR 45235). 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 cost report for the most recent cost reporting year
for which audits have been conducted, we 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 addition, in the FY 2022 IPPS/LTCH PPS final rule (86 FR 45245
and 452456), we finalized an alternative trim specific to hospitals
that are not projected to be DSH-eligible and that do not have audited
FY 2018 Worksheet S-10 data for use in determining Factor 3. We
explained that we believe this new alternative 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. Specifically, we finalized that, for the hospitals
that would be subject to the 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 stated that we believe if a hospital subject to this 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 noted 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.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45242 and 45243), 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).
We refer readers to the FY 2022 IPPS/LTCH PPS final rule (86 FR
45236) for a discussion of the approach that we continued to apply in
FY 2022 to determine Factor 3 for new Puerto Rico hospitals. In brief,
Puerto Rico hospitals that do not have a FY 2013 cost report were
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.
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) for
subsequent fiscal years, in the FY 2022 IPPS/LTCH PPS final 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.
Therefore, for FY 2022, we applied the following methodology to
compute Factor 3 for each hospital:
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 amended 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 finalized a conforming
change to limit the reference to Puerto Rico hospitals in Sec.
412.106(g)(1)(iii)(C)(8) to those Puerto Rico hospitals that have a
cost report for 2013.
(c) Proposed Changes to the Methodology for Calculating Factor 3 for FY
2023 and Subsequent Fiscal Years
As described in the FY 2022 IPPS/LTCH PPS final rule, commenters
expressed concerns that the use of only one year of data to determine
Factor 3 would lead to significant variations in year-to-year
uncompensated care
[[Page 28391]]
payments. Some stakeholders recommended the use of two years of
historical Worksheet S-10 data (86 FR 45237). In the FY 2022 IPPS/LTCH
PPS final rule, we stated that we would 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. The
audits of FY 2019 cost reports began in 2021 and those audited reports
are now available, in time for the development of this proposed rule.
Feedback from previous audits and lessons learned were incorporated
into the audit process for the FY 2019 reports.
In consideration of the comments discussed in the FY 2022 IPPS/LTCH
PPS final rule, for FY 2023, we are proposing to determine Factor 3
using the average of the audited FY 2018 and audited FY 2019 reports.
We believe this proposal addresses concerns from stakeholders regarding
year-to-year fluctuations in uncompensated care payments. In addition,
taking into consideration the comments recommending that CMS transition
to the use of three years of audited data, we expect that FY 2024 will
be the first year that three years of audited data will be available at
the time of rulemaking. Accordingly, for FY 2024 and subsequent fiscal
years, we propose to use a three-year average of the uncompensated care
data from the three most recent fiscal years for which audited data are
available to determine Factor 3. Specifically, for FY 2024, we would
expect to use data from FY 2018, FY 2019, and FY 2020 reports to
calculate uncompensated care payments. In other words, for each of the
three most recent fiscal years for which audited data are available at
the time of rulemaking for the applicable fiscal year, we would divide
a hospital's uncompensated care costs for the fiscal year by the
estimated total uncompensated care costs of all DSH hospitals for that
fiscal year. We would then calculate an average of those proportions to
determine the hospital's Factor 3 for the applicable Federal fiscal
year. We believe this proposed approach is generally consistent with
our past practice of using the most recent single year of audited data
from the Worksheet S-10, while also addressing commenters' concerns
regarding year-to-year fluctuations in uncompensated care payments.
Consistent with past methodology when multiple years of data were used
in the Factor 3 methodology, we propose that if a hospital does not
have data for all three years, we would determine Factor 3 based on an
average of the hospital's available data.
As discussed in the earlier background section describing the
methodology used to calculate Factor 3 for FY 2022, since the FY 2014
final rule, we have determined Factor 3 for IHS and Tribal hospitals
and Puerto Rico hospitals, based on the low-income insured days proxy
for uncompensated care costs. In the FY 2022 IPPS/LTCH PPS final rule,
we discussed comments we had received from IHS/Tribal hospitals and
Puerto Rico hospitals about the significant challenges they face in
relation to uncompensated care reporting (86 FR 45242 and45243). For
example, 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 (86 FR
45242). Another commenter expressed concerns that Puerto Rico hospitals
were understating the components of uncompensated care costs, and
indicated that technical education is needed to address the challenges
Puerto Rico hospitals have regarding charity care and bad debt
reporting, which the commenter stated would take years to address (86
FR 45243).
To the extent the commenters have identified specific challenges
for IHS/Tribal hospitals and Puerto Rico hospitals in reporting
uncompensated care costs on Worksheet S-10, it is possible that after a
sufficient number of years these reporting challenges could be
addressed. However, despite the reporting challenges described by
commenters, we are concerned that the historical 2013-based data on
low-income insured days, which has been used as an alternative to data
on uncompensated care costs from the Worksheet S-10 to determine Factor
3 for IHS/Tribal hospitals and Puerto Rico hospitals, is no longer a
good proxy for the costs of these hospitals in treating the uninsured,
given the time that has elapsed since 2013. In 2023, this data will be
ten years old and there is no obvious way to update the information
given our stated concerns surrounding the differential impact of state
Medicaid expansions after 2013. In light of these concerns, we can no
longer conclude that alternative data to the data on uncompensated care
costs reported on Worksheet S-10 are currently available for IHS/Tribal
hospitals and Puerto Rico hospitals that are a better proxy for the
costs of these hospitals in treating the uninsured. Accordingly, for FY
2023 and subsequent fiscal years, we are proposing to discontinue the
use of low-income insured days as a proxy for the uncompensated care
costs of these hospitals and are proposing to use the same data to
determine Factor 3 for IHS and Tribal hospitals and Puerto Rico
hospitals as for other hospitals. Specifically, we would determine
Factor 3 for IHS and Tribal hospitals and Puerto Rico hospitals based
on the average of the uncompensated care data reported on Worksheet S-
10 of their FY 2018 and FY 2019 cost reports. However, we are seeking
comments on alternatives both to our proposal to use data on
uncompensated care costs from the Worksheet S-10 to determine Factor 3
for IHS/Tribal hospitals and Puerto Rico hospitals and to the continued
use of low-income insured days as a proxy for the uncompensated care
costs of these hospitals. We are also seeking comments on how to best
measure and define the uncompensated care costs associated with these
hospitals that might not otherwise be captured in Factor 3 calculations
based on Worksheet S-10 data. Because we recognize that our proposal to
discontinue the use of the low-income insured days proxy and to rely
solely on Worksheet S-10 data to calculate Factor 3 of the
uncompensated care payment methodology for IHS/Tribal hospitals and
Puerto Rico hospitals could result in a significant financial
disruption for these hospitals, we are proposing to establish a new
supplemental payment for IHS/Tribal hospitals and Puerto Rico
hospitals, beginning in FY 2023. We refer readers to section IV.E of
the preamble of this proposed rule for a complete discussion of the
proposed new supplemental payment.
Prior to the proposed rulemaking for FY 2023, CMS consulted with
IHS and Tribes regarding our policies for determining uncompensated
care payments. They expressed that uncompensated care payments are
critical to the providers and should be maintained at their current
levels, at a minimum. We have considered this recent input along with
previous input from stakeholders in the development of our proposed
policies. We also welcome additional input from stakeholders regarding
the unique circumstances of IHS/Tribal hospitals and Puerto Rico
hospitals and/or any mitigating factors, as this will inform our
considerations about our proposal to determine Factor 3 for these
hospitals using data from Worksheet S-10 and the related proposal to
establish a new
[[Page 28392]]
supplemental payment for IHS/Tribal hospitals and Puerto Rico
hospitals.
For purposes of this FY 2023 proposed rule, we have used the
December 2021 HCRIS extract to calculate Factor 3. We note that we
intend to use the March 2022 update of HCRIS to calculate Factor 3 for
the FY 2023 IPPS/LTCH PPS final rule. However, we may consider the use
of more recent data that may become available after March 2022, but
prior to the development of the final rule, if appropriate, for
purposes of calculating the final Factor 3 for the FY 2023 IPPS/LTCH
PPS final rule.
For purposes of determining Factor 3 for FY 2023 and subsequent
fiscal years, we will apply the following policies: (1) The merger
policies that were 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
(85 FR 58828 and 58829) to incorporate the use of a multiplier to
account for merger effective date; (2) the policy for hospitals with
multiple cost reports, beginning in the same fiscal year, of using the
longest cost report and annualizing 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 (85 FR
58829) and as further modified as proposed in this section, 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 and as further modified as proposed in this section; (5)
the newly merged hospital policy, as modified as proposed in this
section; 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, as
modified as proposed in this section.
Because we are proposing to use multiple years of cost reports to
determine Factor 3 starting in FY 2023, we have determined that it is
also necessary to make a further modification to the policy regarding
cost reports that start in one fiscal year and span the entirety of the
following fiscal year. Specifically, in the rare cases when we use a
cost report that starts in one fiscal year and spans the entirety of
the subsequent Federal fiscal year to determine uncompensated care
costs for the subsequent Federal fiscal year, we would not use the same
cost report to determine the hospital's uncompensated care costs for
the earlier fiscal year. Using the same cost report to determine
uncompensated care costs for both fiscal years would not be consistent
with our intent to smooth year-to-year variation in uncompensated care
costs. As an alternative, we propose to use the hospital's most recent
prior cost report, if that cost report spans the applicable period. In
other words, in determining Factor 3 for FY 2023, we would not use the
same cost report to determine the hospital's uncompensated care costs
for both FY 2018 and FY 2019. Rather, we would use the cost report that
spans the entirety of FY 2019 to determine uncompensated care costs for
FY 2019 and we would use the hospital's most recent prior cost report
to determine its uncompensated care costs for FY 2018, provided that
cost report spans some portion of Federal fiscal year 2018.
Proposed Scaling Factor
To address the effects of the calculating Factor 3 using data from
multiple fiscal years, we are proposing to apply a scaling factor to
the Factor 3 values calculated for all DSH eligible hospitals so that
total uncompensated care payments to hospitals that are projected to be
eligible for DSH for a fiscal year will be consistent with the
estimated amount available to make uncompensated care payments for that
fiscal year. Specifically, we are proposing to adopt a policy under
which we divide 1 (the expected sum of all DSH-eligible hospitals'
Factor 3 values) by the actual sum of all DSH-eligible hospitals'
Factor 3 values and then multiply the quotient by the uncompensated
care payment determined for each DSH-eligible hospital to obtain a
scaled uncompensated care payment amount for each hospital. This
process is designed to ensure that the sum of the scaled uncompensated
care payments for all hospitals that are projected to be DSH-eligible
is consistent with the estimate of the total amount available to make
uncompensated care payments for the applicable fiscal year. We note
that a similar scaling factor methodology was previously used in both
FY 2018 (82 FR 38214 and 38215) and FY 2019 (83 FR 41414), when the
Factor 3 calculation also included multiple years of data.
Proposed Modifications to New Hospital Policy for Purposes of
Factor 3
We are proposing to modify the new hospital policy that was
initially adopted in the FY 2020 IPPS/LTCH PPS final rule to determine
Factor 3 for new hospitals. Consistent with our proposal to use
multiple years of cost reports to determine Factor 3, we are proposing
to define new hospitals as hospitals that do not have cost report data
for the most recent year of data being used in the Factor 3
calculation. In other words, the cut-off date for the new hospital
policy is the beginning of the Federal fiscal year after the most
recent year for which audits of the Worksheet S-10 data have been
conducted. For FY 2023, the FY 2019 cost reports are the most recent
year of cost reports for which audits of Worksheet S-10 data have been
conducted. Thus, hospitals with CCNs established on or after October 1,
2019, would be subject to the new hospital policy in FY 2023.
Under this proposed modification to the new hospital policy, we
would continue the policy established in the FY 2020 IPPS/LTCH PPS
final rule (84 FR 42370) that 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 would not
receive interim uncompensated care payments during FY 2023 because we
would have no FY 2018 or FY 2019 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
2023 cost report.
We are also proposing to modify the methodology used to calculate
Factor 3 for new hospitals. Specifically, we propose to determine
Factor 3 for new hospitals using a denominator based solely on
uncompensated care costs from cost reports for the most recent fiscal
year for which audits have been conducted. For example, if a new
hospital is ultimately determined to be eligible for Medicare DSH
payments for FY 2023, 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 2023 cost report, and the denominator is the sum of the
uncompensated care costs reported on Worksheet S-10 of the FY 2019 cost
reports for all DSH-eligible hospitals. In addition, we are proposing
to apply a scaling factor, as discussed previously, to the Factor 3
calculation for a new hospital. We believe applying the scaling factor
is appropriate for purposes of calculating Factor 3 for all hospitals,
including new hospitals and hospitals that are treated as new
[[Page 28393]]
hospitals, in order to improve consistency and predictability across
all hospitals.
Proposed Modifications to the Newly Merged Hospital Policy
We will continue 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 where 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
report will be annualized for purposes of the Factor 3 calculation.
Consistent with the proposed modification to the methodology used to
determine Factor 3 for new hospitals described previously, we are
proposing to determine Factor 3 for newly merged hospitals using a
denominator that is the sum of the uncompensated care costs for all
DSH-eligible hospitals, as reported on Worksheet S-10 of their cost
reports for the most recent fiscal year for which audits have been
conducted. In addition, we would apply a scaling factor, as discussed
previously, to the Factor 3 calculation for a newly merged hospital. We
believe applying the scaling factor is appropriate for purposes of
calculating Factor 3 for all hospitals, including new hospitals and
hospitals that are treated as new hospitals, in order to improve
consistency and predictability across all hospitals.
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, for FY 2023, the eligibility of a newly
merged hospital to receive interim uncompensated care payments and the
amount of any interim uncompensated care payments, will be based on the
uncompensated care costs from the FY 2018 and FY 2019 cost reports
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 2023 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 2023 cost report. The denominator would be the sum of the
uncompensated care costs reported on Worksheet S-10 of the FY 2019 cost
reports for all DSH-eligible hospitals, which is the most recent fiscal
year for which audits have been conducted.
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 will apply
the following steps to determine the applicable CCR for FY 2018 reports
and FY 2019 reports separately:
Step 1: Remove Maryland hospitals. In addition, we will remove all-
inclusive rate providers because their CCRs are not comparable to the
CCRs calculated for other IPPS hospitals.
Step 2: Calculate a CCR ``ceiling'' for the applicable fiscal year
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 the applicable
fiscal year 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 the applicable fiscal year greater than
3 standard deviations above the national geometric mean for that fiscal
year (that is, the CCR ``ceiling''). For this proposed rule, the
statewide average CCR was applied to 8 hospitals' FY 2018 reports, of
which 3 hospitals had FY 2018 Worksheet S-10 data. The statewide
average CCR was applied to 14 hospitals' FY 2019 reports, of which 6
hospitals had FY 2019 Worksheet S-10 data.
Step 5: For hospitals that did not report a CCR on Worksheet S-10,
Line 1, we assign them the statewide average CCR for the applicable
fiscal year as determined in step 3.
After completing the previously described steps, we re-calculate
the hospital's uncompensated care costs (Line 30) for the applicable
fiscal year using the trimmed CCR (the statewide average CCR (urban or
rural, as applicable)).
Proposed Modifications to the Uncompensated Care Data Trim
Methodology
After applying the CCR trim methodology, there are rare situations
where a hospital has potentially aberrant uncompensated care data for a
fiscal year 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
IPPS/LTCH PPS final rule (85 FR 58832), if the hospital's uncompensated
care costs for FY 2018 or FY 2019 are an extremely high ratio (greater
than 50 percent) of its total operating costs in the applicable fiscal
year, 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 for the applicable fiscal year. Specifically,
if a hospital's FY 2018 cost report is determined to include
potentially
[[Page 28394]]
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 2023. Because we are proposing to use
multiple years of cost reports in the Factor 3 calculation for FY 2023,
we would apply this same approach to address potentially aberrant data
in the FY 2019 cost report, by trimming based on the hospital's FY 2020
cost report.
We note that we have audited the FY 2018 and the FY 2019 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 a fiscal year
for which a hospital's UCC data have been audited.
In addition to the UCC trim methodology, we will continue to apply
a trim specific to certain hospitals that do not have audited FY 2018
Worksheet S-10 data and/or audited FY 2019 Worksheet S-10 data. We note
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). Similar to the approach initially adopted in the FY
2022 IPPS/LTCH PPS final rule (86 FR 45245 and 45246), we are proposing
to continue 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 that is the median total uncompensated care cost
reported on most recent audited cost reports for hospitals that were
projected to be DSH-eligible. We continue to believe these thresholds
are appropriate, in order to address potentially aberrant data.
However, we are proposing to modify the calculation to include
Worksheet S-10 data from IHS/Tribal hospitals and Puerto Rico hospitals
consistent with our proposal in this proposed rule to begin using
Worksheet S-10 data to determine Factor 3 for these hospitals. We also
propose to apply the same thresholds to identify potentially aberrant
charity care costs data for all cost reporting years that are used in
determining Factor 3. We note that based on calculations from the FY
2019 reports, the threshold amounts were similar to FY 2018 reports;
therefore, we believe it is reasonable to use the same thresholds to
identify aberrant data for both years. Thus, under this proposal, in FY
2023 we would use the same thresholds to identify potentially aberrant
data for both FY 2018 and FY 2019 reports. In addition, we are
proposing to apply the same threshold amounts originally calculated for
the FY 2018 reports to identify potentially aberrant data for
subsequent fiscal years, which we believe will facilitate transparency
and predictability. Therefore, for FY 2023 and subsequent fiscal years,
we are proposing 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, we would exclude the hospital from the prospective Factor 3
calculation. This trim would only impact hospitals that are not
currently projected to be DSH-eligible; 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.
Consistent with the approach adopted in the FY 2022 IPPS/LTCH PPS final
rule, if a hospital would be trimmed under both the UCC trim
methodology and this alternative trim, we would apply this trim in
place of the existing UCC trim methodology. We continue to believe this
alternative trim more appropriately addresses potentially aberrant
insured patient charity care costs compared to the UCC trim
methodology, because the UCC 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 propose to continue to apply the policy adopted in
the FY 2022 IPPS/LTCH PPS final rule, for the hospitals that would be
subject to this alternative trim and are ultimately determined to be
DSH-eligible at cost report settlement. We believe if a hospital
subject to this 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 2023 Worksheet S-10 has been reviewed. Accordingly, the
MAC would calculate a Factor 3 for the hospital only after reviewing
the uncompensated care information reported on Worksheet S-10 of the
hospital's FY 2023 cost report. We would then calculate Factor 3 for a
hospital subject to this alternative trim using the same methodology
used to determine Factor 3 for new hospitals. Specifically, the
numerator would reflect the uncompensated care costs reported on the
hospital's FY 2023 cost report, while the denominator would reflect the
sum of the uncompensated care costs reported on Worksheet S-10 of the
FY 2019 costs reports of all DSH-eligible hospitals. In addition,
consistent with our proposed approach for new hospitals, we would apply
a scaling factor, as discussed previously, to the Factor 3 calculation
for these hospitals. We believe applying the scaling factor is
appropriate for purposes of calculating Factor 3 for all hospitals,
including new hospitals and hospitals that are treated as new
hospitals, in order to improve consistency and predictability across
all hospitals.
Summary of Methodology
In summary, for FY 2023, we propose to compute Factor 3 for each
hospital using the following steps:
Step 1: Select the hospital's longest cost report from its Federal
fiscal year (FY) 2018 cost reports and the longest cost report from its
FY 2019 cost reports. (Alternatively, in the rare case when the
hospital has no cost report for a particular year because the cost
report for the previous Federal fiscal year spanned the more recent
Federal fiscal yeartime period, the previous Federal fiscal year cost
report would be used in this step. In the rare case, that using a
previous Federal fiscal year cost report results in a period without a
report, then we propose to use the prior year report, if that cost
report spanned the applicable period. (For example, if a hospital does
not have a FY 2019 cost report because the hospital's FY 2018 cost
report spanned the FY 2019 time period, then we would use the FY 2018
cost report that spanned the FY 2019 time period for this step. Using
the same example, where the hospital's FY 2018 report is used for the
FY 2019 time period, then we would use the hospital's FY 2017 report if
it spans some of the FY 2018 time period. In other words, we would not
use the same cost report for both the FY 2019 and the FY 2018 time
periods.) In general, we note that, for purposes of the Factor 3
methodology, references to a fiscal year cost report are to the cost
report that
[[Page 28395]]
spans the relevant Federal fiscal year period.
Step 2: Annualize the uncompensated care costs (UCC) from Worksheet
S-10 Line 30, if a 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 the all DSH eligible hospitals using
annualized uncompensated care costs (Worksheet S-10 Line 30) based on
FY 2018 cost report data and FY 2019 cost report (from Step 1, 2 or 3).
New hospitals and other hospitals that are treated as if they are new
hospitals for purposes of Factor 3 are excluded from this calculation.
Step 5: Average the Factor 3 values from Step 4; that is, add the
Factor 3 values for FY 2018 and FY 2019 for each hospital, and divide
that amount by the number of cost reporting periods with data to
compute an average Factor 3 for the hospital. Multiply by a scaling
factor.
For FY 2024 and subsequent fiscal years, these steps would be
calculated using the most recent three years of audited cost reports.
(For example, in FY 2024, the FY 2018, FY 2019, and FY 2020 reports
would be used.)
We are proposing to make a conforming change to the existing
regulation at Sec. 412.106(g)(1)(iii)(C)(8) and to add a new
regulation at Sec. 412.106(g)(1)(iii)(C)(10) to reflect our proposal
to calculate Factor 3 based on the most recent two years of audited
data on uncompensated care costs in FY 2023. We are also proposing to
add Sec. 412.106(g)(1)(iii)(C)(11) to reflect our proposal to
calculate Factor 3 for FY 2024 and subsequent fiscal years based on a
3-year average of the most recent available audited data on
uncompensated care costs.
(d) Proposal Related to the 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.
In the FY 2022 IPPS/LTCH PPS final rule (86 FR 45247 and 45248), we
modified this calculation for FY 2022 to be based on an average of FY
2018 and FY 2019 historical discharge data, rather than a 3-year
average that included 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 COVID-19 pandemic. For the same reason, we are
now proposing to modify this calculation for FY 2023 to be based on the
average of FY 2018, FY 2019, and FY 2021 historical discharge data,
rather than a 3-year average of the most recent three years of
discharge data from FY 2019, FY 2020, and FY 2021. We believe that
computing a 3-year average using the most recent three years would
potentially underestimate the number of discharges for FY 2023, due to
the effects of the COVID-19 pandemic in FY 2020, which was the first
year of the COVID-19 pandemic. Therefore, we believe the proposed
modification may result in a better estimate of the number of
discharges during FY 2023, for purposes of the interim uncompensated
care payment calculation. In addition, we note that our proposal to
include discharge data from FY 2021 to compute this 3-year average is
consistent with the proposed use of FY 2021 Medicare claims in the IPPS
ratesetting, as discussed in section I.F. of the preamble of this
proposed rule. Under this proposal, the resulting 3-year average of the
number of discharges would be used to calculate a per discharge payment
amount that will be used to make interim uncompensated care payments to
each projected DSH-eligible hospital during FY 2023. The interim
uncompensated care payments made to a hospital during the fiscal year
will be 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 FY 2023.
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 the hospital's projected FY 2023 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 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 this 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.
(e) 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
[[Page 28396]]
conjunction with this proposed 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 2023 (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 an uncompensated care 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 new hospitals and hospitals
that are subject to the alternative trim for hospitals with potentially
aberrant data that are not projected to be DSH-eligible.
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 11 hospitals that
would be subject to the alternative trim for hospitals with potentially
aberrant data that are not projected to be DSH-eligible, with a N/A in
the Factor 3 column.
Hospitals have 60 days from the date of public display of this FY
2023 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 this 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 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).
Stakeholders may submit issues or concerns that are specific to the
information included in the table and supplemental data file by email
to the CMS inbox at [email protected]. We will address issues
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 2023 IPPS/LTCH PPS final rule. All other comments
submitted in response to our proposed policies for determining
uncompensated care payments for FY 2023 must be submitted in one of
three ways found in the ADDRESSES section of this proposed rule before
the 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 2023, we are again proposing that hospitals will have 15
business days from the date of public display of the FY 2023 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. Any changes to Factor 3 would be
posted on the CMS website and would be effective beginning October 1,
2022. 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, we currently expect to use data from
the March 2022 HCRIS extract for the FY 2023 final rule, which
contributes to our increased confidence that hospitals would be able to
comment on mergers and report any upload discrepancies during the
comment period for this proposed rule. However, as previously
indicated, we may consider using more recent data that may become
available after March 2022, but before the final rule for the purpose
of calculating the final Factor 3s for the FY 2023 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 2023 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.
We are inviting public comments on our proposed methodology for
calculating Factor 3 for FY 2023 and subsequent fiscal years,
including, but not limited to, our proposal to use the most recent
audited Worksheet S-10 data from FY 2018 and FY 2019 cost reports to
determine Factor 3 for FY 2023, and our proposal to begin using the
three most recent years of audited Worksheet S-10 data starting in FY
2024.
E. Proposed Supplemental Payment for Indian Health Service and Tribal
Hospitals and Puerto Rico Hospitals for FY 2023 and Subsequent Fiscal
Years
In the IPPS/LTCH PPS rulemaking for several previous fiscal years,
Indian Health Service (IHS) and Tribal hospitals and hospitals located
in Puerto Rico have commented about the unique challenges they face
with respect to uncompensated care due to structural differences in
health care delivery and financing in these areas compared to the rest
of the country. We refer the readers to FY 2022 IPPS/LTCH PPS final
rule (86 FR 45242 and 45243) and the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58824 and 58825) for a discussion of these comments. We
appreciate the concerns raised and the input offered by commenters
regarding the methodology for calculating uncompensated care payments
for IHS/Tribal hospitals and the Puerto Rico hospitals. As discussed in
greater detail in this section, after taking into consideration
stakeholders' longstanding concerns and their input on potential
approaches to address these concerns, CMS is proposing to establish a
new permanent supplemental payment under the IPPS for IHS/Tribal
hospitals and hospitals located in Puerto Rico. As discussed in greater
detail in this section, we believe this proposed new supplemental
payment would mitigate the anticipated impact on IHS/Tribal hospitals
and hospitals located in Puerto Rico from our proposal to discontinue
the use of low-income insured days as a proxy for their uncompensated
care costs for purposes of determining Factor 3 of the uncompensated
care payment methodology by providing for an additional payment to
these hospitals that would be determined based upon the difference
between the amount of the uncompensated care payment determined for the
hospital using Worksheet S-10 data and an approximation of the amount
the hospital would have received if we had continued to use low-income
days as a proxy for uncompensated care.
As background, beginning in the FY 2018 IPPS/LTCH PPS final rule
when we first included Worksheet S-10 data in the calculation of Factor
3, and continuing through the FY 2022 IPPS/LTCH PPS final rule, we
relied on the authority under section 1886(r)(2)(C)(i) of the Act to
use alternative data that is a better proxy for the costs of hospitals
for treating the uninsured in order to determine Factor 3 for IHS/
Tribal and Puerto Rico hospitals using low-income insured days as a
proxy for uncompensated care costs. Since FY
[[Page 28397]]
2019, Factor 3 for these hospitals has been determined using FY 2013
Medicaid days and the most recent available data on SSI days. We have
explained our belief that this approach was appropriate as the FY 2013
Medicaid days 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 low-income
insured 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
initially adopted in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56953
through 56956). For FY 2023 and subsequent fiscal years, as discussed
in the previous section, we are proposing to discontinue the use of
low-income insured days as a proxy for uncompensated care costs. We
recognize that this proposal would result in a significant financial
disruption to the IHS/Tribal hospitals and hospitals located in Puerto
Rico. For the vast majority of these hospitals, the proposal to use
uncompensated care data reported on Worksheet S-10 to determine Factor
3 of the uncompensated care payment methodology is expected to result
in an approximately 90 to 100 percent reduction in uncompensated care
payments for FY 2023 compared to FY 2022. For a discussion of the
anticipated impact of the proposal to use uncompensated care costs from
Worksheet S-10 to determine uncompensated care payments for IHS/Tribal
hospitals and Puerto Rico hospitals and the proposal to establish a new
supplemental payment for these hospitals, we refer the readers to
section I.H. of the Appendix A of this proposed rule.
In consideration of the unique circumstances faced by the hospitals
and the comments received from IHS/Tribal hospitals and Puerto Rico
hospitals in response to prior rulemaking, raising concerns regarding
financial stability in the event of a change in the data used to
determine Factor 3, we are proposing to use our exceptions and
adjustments authority under section 1886(d)(5)(I) of the Act to
establish a new permanent supplemental payment under the IPPS for IHS/
Tribal hospitals and hospitals located in Puerto Rico, beginning in FY
2023. Section 1886(d)(5)(I) of the Act authorizes the Secretary to
provide by regulation for such other exceptions and adjustments to the
payment amounts under section 1886(d) of the Act as the Secretary deems
appropriate. We have determined, after taking into consideration
stakeholders' comments from prior rulemakings, that the supplemental
payment is necessary so as not to cause undue long-term financial
disruption to these hospitals as a result of our proposal to
discontinue the use of low-income insured days as a proxy for
uncompensated care in determining Factor 3 for IHS/Tribal hospitals and
Puerto Rico hospitals beginning in FY 2023. We believe the proposed
supplemental payment would help to mitigate the anticipated impact of
the proposed changes to the uncompensated care payment methodology for
these hospitals and therefore prevent undue long-term financial
disruption for these providers.
This proposed new supplemental payment would not change in any way
the DSH payment methodology under section 1886(d)(5)(F) or the
uncompensated care payment methodology under section 1886(r).
Therefore, the total uncompensated care payment amount discussed in the
previous section of the preamble of this proposed rule, would not be
affected by this proposal to establish a supplemental payment for IHS/
Tribal and hospitals located in Puerto Rico nor would there be any
impact on the amount of the uncompensated care payment determined for
each DSH-eligible hospital under Sec. 412.106(g)(1) of the
regulations.
For IHS and Tribal hospitals and hospitals located in Puerto Rico
for which Factor 3 of the uncompensated care payment methodology was
determined using the low-income insured days proxy in FY 2022, we
propose to calculate a supplemental payment as follows. We would use
the hospital's FY 2022 uncompensated care payment as the starting point
for this calculation. We believe using the FY 2022 uncompensated care
payment is an appropriate starting point because FY 2022 is the most
recent year for which we used low-income insured days data in the
determination of uncompensated care payments for IHS/Tribal hospitals
and Puerto Rico hospitals and the purpose of the supplemental payment
is to avoid undue long-term financial disruption to these hospitals as
a result of our proposal to discontinue the use of low-income insured
days as a proxy for uncompensated care beginning in FY 2023. The base
year amount would be calculated as the hospital's FY 2022 uncompensated
care payment adjusted by one plus the percent change in the total
uncompensated care amount between the applicable year (for example, FY
2023 for purposes of this rulemaking) and FY 2022, where the total
uncompensated care amount for a year is determined as the product of
Factor 1 and Factor 2 for the applicable year. For the hospitals that
were not projected to be DSH eligible in FY 2022, we propose to use the
uncompensated care payment that the hospital would receive, if the
hospital were to be determined to be DSH eligible in FY 2022 at cost
report settlement. For purposes of this proposed rule, the percent
change between the proposed FY 2023 uncompensated care amount and final
FY 2022 uncompensated care amount is projected to be negative 9.1
percent. (This negative 9.1 percent change is calculated based on the
difference between the proposed FY 2023 uncompensated care amount of
approximately $6.537 billion and the final FY 2022 uncompensated care
amount of approximately $7.192 billion, divided by the final FY 2022
uncompensated care amount). Therefore, we propose to calculate each
hospital's base year amount for FY 2023 by multiplying its FY 2022
uncompensated care amount by 0.909 (1-0.091). The hospital's
supplemental payment for a fiscal year would then be determined as the
difference between the hospital's base year amount and its
uncompensated care payment for the applicable fiscal year as determined
under Sec. 412.106(g). If the base year amount is equal to or lower
than the hospital's uncompensated care payment for the current fiscal
year, then the hospital would not receive a supplemental payment
because the hospital would not be experiencing financial disruption in
that year as a result of the use of uncompensated care data from the
Worksheet S-10 in determining Factor 3 of the uncompensated care
payment methodology.
We propose to align the eligibility and payment processes for the
new supplemental payment with the processes used to make uncompensated
care payments. Consistent with the process for determining eligibility
to receive interim uncompensated care payments adopted in the FY 2014
IPPS/LTCH final rule, for the supplemental payment, we propose to base
eligibility to receive interim supplemental payments on a projection of
DSH eligibility for the applicable fiscal year. In addition, consistent
with the approach that is used to calculate interim uncompensated care
payments on a per discharge basis, for the supplemental payment, we
propose to
[[Page 28398]]
use an average of historical discharges to calculate a per discharge
amount for interim supplemental payments. We refer readers to the FY
2014 IPPS/LTCH PPS final rule for additional background and discussion
of uncompensated care payment processes (78 FR 50643 through 50647).
Consistent with our proposal to use 3-years of historical discharges to
determine interim uncompensated care payments for a fiscal year, the
amount of a hospital's supplemental payment calculated for a fiscal
year would be divided by the hospital's historical 3-year average of
discharges computed using the most recent available data to determine
an estimated per discharge payment amount.
For FY 2023, we propose to use FY 2018, FY 2019, and FY 2021
discharge data to determine a hospital's historical 3-year average of
discharges, because we continue to believe the FY 2020 discharge data
would underestimate discharges, due to the effects of the COVID-19
pandemic in FY 2020. In addition, consistent with the policy of
including per-discharge uncompensated care payment amounts in the
outlier calculation, which was initially adopted in the FY 2014 IPPS/
LTCH PPS final rule, we are proposing to use our authority under
section 1886(d)(5)(I) to include the per-discharge supplemental payment
in the outlier payment determination under section 1886(d)(5)(A) of the
Act. We refer readers to the Addendum for further discussion of the
outlier payment calculation.
Consistent with the process used to reconcile interim uncompensated
care payments, we propose that the MAC would reconcile the interim
supplemental payments at cost report settlement to ensure that the
hospital receives the full amount of the supplemental payment that was
determined prior to the start of the fiscal year. Consistent with the
process used for cost reporting periods that span multiple Federal
fiscal years, we propose that a pro rata supplemental payment
calculation may be made if the hospital's cost reporting period differs
from the Federal fiscal year. Thus, the final supplemental payment
amounts that would be included on a cost report spanning two Federal
fiscal years would be the pro rata share of the supplemental payment
associated with each Federal fiscal year. This pro rata share would be
determined based on the proportion of the applicable Federal fiscal
year that is included in that cost reporting period. We refer readers
to the FY 2014 interim final rule for additional background and
discussion of the processes for determining pro rata uncompensated care
payments (78 FR 61191 through 61196).
We propose that the MAC would make a final determination with
respect to a hospital's eligibility to receive the supplemental payment
for a fiscal year, in conjunction with its final determination of the
hospital's eligibility for DSH payments and uncompensated care payments
for that fiscal year. We note that if a hospital is determined not to
be DSH eligible for a fiscal year then the hospital would not be
eligible to receive a supplemental payment for that fiscal year. We
believe linking eligibility for the supplemental payment to eligibility
for DSH payments and the uncompensated care payment is appropriate
because a hospital that is not eligible to receive an uncompensated
care payment for a fiscal year would not experience any financial
disruption due to the discontinuation of the low-income insured days
proxy and the use of Worksheet S-10 data in determining Factor 3 for
that fiscal year.
In addition, we propose that IHS/Tribal hospitals and Puerto Rico
hospitals that do not have a FY 2022 Factor 3 amount determined under
Sec. 412.106(g)(1)(iii)(C)(9) using the low-income insured days proxy
or that are new hospitals that begin participating in the Medicare
program on or after October 1, 2022, would not be eligible to receive
the supplemental payment. These hospitals will not experience any
reduction to their uncompensated care payments due to the proposed
discontinuation of the low-income insured days proxy because they are
not currently receiving uncompensated care payments determined using
the proxy.
We propose to redesignate the existing provision at Sec.
412.106(h) as Sec. 412.106(i) and to add a new provision at Sec.
412.106(h) to reflect the methodology for calculating the supplemental
payment for FY 2023 and subsequent fiscal years.
We are seeking comments on our proposal to establish a new
supplemental payment for IHS/Tribal hospitals and Puerto Rico
hospitals. As discussed in section IV.D.3. of the preamble of this
proposed rule, which includes our proposed changes to the methodology
for determining Factor 3 of the uncompensated care payment methodology
for FY 2023 and subsequent fiscal years, we also are seeking comments
on alternatives both to our proposal to use data on uncompensated care
costs from the Worksheet S-10 to determine Factor 3 for IHS/Tribal
hospitals and Puerto Rico hospitals and to the continued use of low-
income insured days as a proxy for the uncompensated care costs of
these hospitals. In addition, we are also seeking comments on how to
best measure and define the uncompensated care costs associated with
these hospitals that might not otherwise be captured in Factor 3
calculations based on Worksheet S-10 data.
F. Medicare Disproportionate Share Hospital (DSH) Payments: Counting
Days Associated With Section 1115 Demonstrations in the Medicaid
Fraction (Sec. 412.106)
States use section 1115(a) demonstrations to test changes to their
Medicaid programs that generally cannot be made using other Medicaid
authorities, including to provide health insurance to groups that
generally could not or have not been made eligible for ``medical
assistance under a State plan approved under title XIX'' (Medicaid
benefits). These groups, commonly referred to as expansion populations
or expansion waiver groups, are specific, finite groups defined in the
demonstration approval letter and special terms and conditions for each
demonstration. (We note in the discussion that follows, we use the term
``demonstration'' rather than ``project'' and/or ``waiver'' and the
term ``groups'' instead of ``populations,'' as this terminology is
generally more consistent with the implementation of the provisions of
section 1115 of the Social Security Act.)
On January 20, 2000, we issued an interim final rule with comment
period (65 FR 3136) (hereinafter, January 2000 interim final rule),
followed by a final rule issued on August 1, 2000 (65 FR 47086 through
47087), that changed the Secretary's policy on how to treat the patient
days of certain patients that receive Medicaid benefits under a section
1115 demonstration in calculating the Medicare DSH adjustment.
Previously, hospitals could include only the days for those patients
receiving Medicaid benefits under a section 1115 demonstration who
were, or could have been made, eligible for Medicaid under the State
plan. Patient days of those demonstration expansion groups that were
not and could not be made eligible for Medicaid under the State plan
were not to be included for purposes of determining Medicaid patient
days in calculating the Medicare DSH patient percentage.
Under the policy adopted in the January 2000 interim final rule (65
FR 3136), hospitals could include in the numerator of the Medicaid
fraction all patient days of groups made eligible for Title XIX
matching payments through a
[[Page 28399]]
section 1115 demonstration, whether or not those individuals were, or
could be made, eligible for Medicaid under a State plan (assuming they
were not also entitled to benefits under Medicare Part A). This policy
was effective for discharges occurring on or after January 20, 2000. In
the January 2000 interim final rule (65 FR 3137), we explained that
allowing hospitals to include patient days for section 1115
demonstration expansion groups in the Medicare DSH calculation is fully
consistent with the Congressional goals of the Medicare DSH adjustment
to recognize the higher costs to hospitals of treating low-income
individuals covered under Medicaid.
In the FY 2004 IPPS final rule (68 FR 45420 and 45421), we further
revised our regulations to limit the types of section 1115
demonstrations for which patient days could be counted in the numerator
of the Medicaid fraction. We explained that in allowing hospitals to
include patient days of section 1115 demonstration expansion groups,
our intention was to include patient days of those groups who under a
demonstration receive benefits, including inpatient benefits, that are
similar to the benefits provided to Medicaid beneficiaries under a
State plan. We had become aware, however, that certain section 1115
demonstrations provide expansion groups with benefit packages so
limited that the benefits are unlike the relatively expansive health
insurance (including insurance for inpatient hospital services)
provided under a Medicaid State plan. We explained that these limited
section 1115 demonstrations extend benefits only for specific services
and do not include similarly expansive benefits.
In the FY 2004 IPPS final rule, we specifically discussed family
planning benefits offered through a section 1115 demonstration as an
example of the kind of demonstration days that should not be counted in
the Medicaid fraction because the benefits granted to the expansion
group are too limited. Our intention in discussing family planning
benefits under a section 1115 demonstration was to provide a concrete
example of how the changes being made in the FY 2004 IPPS final rule
would refine the Secretary's policy (set forth in the January 2000
interim final rule (65 FR 3136)) to allow only the days of those
demonstration expansion groups who are provided Medicaid benefits, and
specifically inpatient hospital benefits, like the health care
insurance that Medicaid beneficiaries receive under a State plan, to be
included in the numerator of the Medicaid fraction of the Medicare DSH
calculation. Moreover, this example was intended to illustrate the kind
of benefits offered through a section 1115 demonstration that are so
limited that the patients receiving them should not be considered
eligible for Medicaid for purposes of the DSH calculation.
Because of the limited nature of the Medicaid benefits provided to
expansion groups under some demonstrations, as compared to the benefits
provided to the Medicaid population under a State plan, we determined
it was appropriate to exclude the patient days of patients provided
limited benefits under a section 1115 demonstration from the
determination of Medicaid days for purposes of the DSH calculation.
Therefore, in the FY 2004 IPPS final rule (68 FR 45420 and 45421), we
revised the language of Sec. 412.106(b)(4)(i) to provide that for
purposes of determining the Medicaid fraction, a patient is deemed
eligible for Medicaid on a given day only if the patient is eligible
for inpatient hospital services under an approved State Medicaid plan
or under a section 1115 demonstration. Thus, under our current
regulations, hospitals are allowed to count patient days in the
numerator of the Medicaid fraction only if they are days of patients
made eligible for inpatient hospital services under either a State
Medicaid plan or a section 1115 demonstration, who are not also
entitled to benefits under Medicare Part A.
In 2005, the Ninth Circuit held that demonstration expansion groups
receive care ``under the State plan'' and that, accordingly, our pre-
2000 practice of excluding them from the numerator of the Medicaid
fraction was contrary to the plain language of the Act.\603\
Subsequently, the District Court for the District of Columbia reached
the same conclusion, reasoning that if our policy of counting the days
of demonstration expansion groups after 2000 was correct, then patients
in demonstration expansion groups were necessarily ``eligible for
medical assistance under a State plan'' (that is, Medicaid) and the Act
had always required inclusion of their days.\604\
---------------------------------------------------------------------------
\603\ Portland Adventist Med. Ctr. v. Thompson, 399 F.3d 1091,
1096 (9th Cir. 2005).
\604\ Cookeville Reg'l Med. Ctr. v. Thompson, No. 04-1053, 2005
WL 3276219, at *4-6 (D.D.C. Oct. 28, 2005).
---------------------------------------------------------------------------
Shortly after these court decisions, Congress, in early 2006,
enacted the Deficit Reduction Act of 2005 (the DRA). Section 5002 of
the DRA amended section 1886(d)(5)(F)(vi) of the Act to clarify our
authority to include or exclude days of expansion groups from the DSH
calculation. First, section 5002(a) of the DRA clarified that groups
that receive Medicaid benefits through a section 1115 demonstration are
not ``eligible for medical assistance under a State plan'' by referring
to them as ``not so eligible.'' This provision effectively overruled
the earlier court decisions that held that expansion groups were, in
fact, made eligible for Medicaid. Second, the statute made explicit
that the Secretary nevertheless has the discretion to include in the
Medicaid fraction days of patients who are not eligible for Medicaid if
they ``are regarded as'' being eligible for Medicaid ``because they
receive benefits under a demonstration project approved under title
XI.'' This statutory language endorsed and codified the Secretary's
view that it is appropriate to include in the DSH calculation days of
patients who are treated as if they were eligible for Medicaid under
the authority of section 1115(a)(2). Third, the DRA granted the
Secretary the discretion to include or exclude the days of patients who
are regarded as being eligible for Medicaid in the numerator of the
Medicaid fraction ``to the extent and for the period the Secretary
determines appropriate.'' Finally, section 5002(b) of the DRA expressly
ratified our policy on counting demonstration days in the Medicaid
fraction. Our pre-2000 policy was not to include days of section 1115
demonstration expansion groups in the numerator of the Medicaid
fraction unless they could have been made eligible for Medicaid under a
State plan. As discussed previously, we changed our policy in 2000 to
permit inclusion in the Medicaid fraction of all patient days of groups
made eligible for matching payments under Title XIX through a section
1115 demonstration. By the time the DRA was enacted, CMS had further
refined this policy, and we included in the Medicaid fraction the days
of only a small subset of demonstration expansion groups regarded as
eligible for Medicaid: Those that were eligible to receive inpatient
hospital insurance benefits under the terms of a section 1115
demonstration.
Considering this history, and the text of the DRA, we understand
the Secretary's authority to include the days of patients who receive
benefits through a section1115 demonstration in the numerator of the
Medicaid fraction of the DSH calculation as requiring two
determinations. First, we must determine whether the patients at issue
``are regarded as'' being eligible for Medicaid. Second, if they are,
the Secretary then has the discretion to determine whether to count
those
[[Page 28400]]
patients in the DSH calculation and for what period.
We do not believe that the DRA gave the Secretary blanket authority
to count in the Medicaid fraction any patient who is in any way related
to a section 1115 demonstration. Rather, our authority under section
1886(d)(5)(F)(vi) of the Act remains limited to including the days of
expansion groups--those for whom a state seeks Federal Medicaid
matching funds in order to provide health insurance to individuals
through a demonstration that is comparable to Medicaid state plan
benefits--that is, patients who ``are regarded as'' ``eligible for
medical assistance under a State plan approved under title XIX.''
Because the existing language of regulations already addressed the
treatment of section 1115 days, we did not believe it was necessary to
update our regulations after the DRA explicitly granted us the
discretion to include or exclude section 1115 days.
More recently, section 1115 demonstrations have been used to
authorize the funding of uncompensated care pools that help to offset
hospitals' costs for treating uninsured and underinsured individuals.
These pools do not extend health insurance directly to such
individuals. Rather, such funding pools benefit patients less directly
by helping hospitals treat the uninsured and underinsured and stay
financially viable to treat patients eligible for Medicaid under a
state plan. Unlike demonstrations that expand the group of people who
receive Medicaid benefits beyond those groups eligible under the State
plan, uncompensated care pools do not provide inpatient health
insurance to patients or, like insurance, make payments on behalf of
specific, covered individuals. These uncompensated care pools serve
essentially the same function as Medicaid DSH payments under sections
1902(a)(13)(A)(iv) and 1923 of the Act by indirectly subsidizing the
cost of treating the uninsured and underinsured.
We also note that demonstrations can simultaneously authorize
different programs within a single demonstration, thereby creating a
group regarded as Medicaid eligible because they receive health
insurance through the demonstration while also creating a separate
uncompensated/undercompensated care pool for providers that does not
directly extend health insurance to individuals.
Recently, courts have decided a series of cases (Bethesda Health,
Inc. v. Azar, 980 F.3d 121 (D.C. Cir. 2020); Forrest General Hospital
v. Azar, 926 F.3d 221 (5th Cir. 2019); HealthAlliance Hospitals, Inc.
v. Azar, 346 F. Supp. 3d 43 (D.D.C. 2018)) interpreting the current
language of the regulation at Sec. 412.106(b)(4) to require CMS to
count in the numerator of the Medicaid fraction patient days for which
hospitals have received payment from an uncompensated care pool
authorized by a section 1115 demonstration and the days of patients who
receive premium assistance under a section 1115 demonstration.
Interpreting the regulatory language that was adopted before the DRA
was enacted, these courts have concluded that if a hospital received
payment for otherwise uncompensated inpatient hospital treatment of a
patient, that patient is ``eligible for inpatient hospital services''
within the meaning of the current regulation. Likewise, a court has
concluded that patients who receive premium assistance to pay for
private insurance that covers inpatient hospital services are
``eligible for inpatient hospital services'' within the meaning of the
current regulation.
As discussed previously, that was not our intent when we adopted
the current language of the regulation, and in the FY 2022 IPPS/LTCH
PPS proposed rule (86 FR 25459), we stated that we continued to believe
that it is not appropriate to include patient days associated with
funding pools and premium assistance authorized by section 1115
demonstrations in the Medicaid fraction of the Medicare DSH calculation
because the benefits offered under these demonstrations are not similar
to Medicaid benefits under a State plan and may offset costs that
hospitals incur when treating uninsured and underinsured individuals.
In the FY 2022 IPPS/LTCH PPS proposed rule, we proposed a revision to
our regulations to more clearly state that in order for an inpatient
day to be counted in the Medicaid fraction of the Medicare DSH
calculation, the section 1115 demonstration must provide inpatient
hospital insurance benefits directly to the individual whose day is
being considered for inclusion, and we proposed to revise our
regulations to reflect this requirement. We specifically discussed
that, under the proposed change, days of patients who receive premium
assistance through a section 1115 demonstration and the days of
patients for which hospitals receive payments from an uncompensated/
undercompensated care pool created by a section 1115 demonstration
would not be included in the calculation of the Medicaid fraction of
the Medicare DSH calculation because neither premium assistance nor
uncompensated/undercompensated care pools are inpatient hospital
insurance benefits directly provided to individuals, nor are they
comparable to the level of benefits available under a Medicaid State
plan such that the individuals should be ``regarded as'' ``eligible for
medical assistance under a State plan.''
Commenters generally disagreed with our proposal, arguing that both
premium assistance programs and uncompensated/undercompensated care
pools are used to provide individuals with inpatient hospital services,
either by reimbursing hospitals for the same services as the Medicaid
program in the case of uncompensated/undercompensated care pools or by
allowing individuals to purchase insurance with benefits similar to
Medicaid benefits offered under a State plan in the case of premium
assistance, and thus should be included in calculating the Medicaid
fraction. Following review of these comments, in the final rule with
comment period published in the Federal Register on December 27, 2021,
which finalized certain provisions of the FY 2022 IPPS/LTCH PPS
proposed rule related to Medicare graduate medical education payments
for teaching and Medicare organ acquisition payment, we stated that
after further consideration of the issue, we had determined not to move
forward with our proposal and planned to revisit the issue of section
1115 demonstration days in future rulemaking (86 FR 73418).
After considering the comments we received in response to the FY
2022 IPPS/LTCH PPS proposed rule, we continue to believe that, in order
for days associated with section 1115 demonstrations to be counted in
the numerator of the Medicaid fraction, the statute requires those days
to be of patients who can be ``regarded as'' eligible for Medicaid.
Accordingly, we propose to modify our regulations to explicitly state
our view that ``regarded as eligible'' for Medicaid only includes
patients who receive health insurance through a section 1115
demonstration where state expenditures to provide the insurance may be
matched with funds from Title XIX. Furthermore, we believe that it is
appropriate, and therefore propose, to use our discretion under the Act
to include only the days of patients ``regarded as'' eligible for
Medicaid who receive health insurance through a section 1115
demonstration that provides essential health benefits (EHB) as set
forth in 42 CFR part 440, subpart C, for an Alternative Benefit Plan,
which is a uniform benchmark and a standard that is broadly used. This
would be a change from the current regulation that
[[Page 28401]]
requires a demonstration only provide inpatient hospital benefits for
days to be counted in the DSH calculation. We believe that by applying
the standard of EHB to identify which section 1115 days may be included
in the DSH calculation, both providers and CMS contractors will be able
to distinguish between section 1115 demonstrations, or parts of
demonstrations, that provide benefits to individuals whose patient days
are properly counted in the Medicaid fraction from those demonstrations
or parts of demonstrations (like uncompensated/undercompensated care
pools) that are not properly included.
Consistent with our interpretation of the Medicare DSH statute, the
evolution of our policy on counting section 1115 demonstration days in
the Medicaid fraction of the Medicare DSH calculation as set forth in
our regulations, and considering the series of adverse cases
interpreting the current regulation, we are proposing to amend the
regulation to preclude counting days of patients associated with
uncompensated/undercompensated care pools in the numerator of the
Medicaid fraction. While these pools may result in hospitals receiving
some payment for inpatient hospital services they provide to uninsured
or underinsured individuals, such payments are not a form of health
insurance and do not entitle any particular individual to any specific
benefit. Rather, payments from uncompensated/undercompensated care
pools essentially function as supplemental Medicaid DSH payments. As we
have consistently stated, individuals eligible for benefits under Title
XIX are eligible for specific benefits related to the provision of
inpatient hospital services (in the form of inpatient hospital
insurance). Because funding pool payments to hospitals do not inure to
any specific individual, nor do uncompensated/undercompensated care
pools provide any health insurance to any patient, it cannot reasonably
be argued that patients associated with uncompensated care for which
hospitals are reimbursed through section 1115 demonstration-authorized
funding pools may be ``regarded as'' eligible for Medicaid. Individuals
who receive health insurance through a section 1115 demonstration are
being treated as if they were eligible for Medicaid. In contrast,
uninsured or underinsured individuals, whether or not they benefit from
uncompensated care pool payments to hospitals, do not have health
insurance provided by the Medicaid program. Thus, we continue to
believe that days associated with uncompensated/undercompensated care
pools must be excluded from the Medicaid fraction of the Medicare DSH
calculation.
Even if the statute could be read to permit patient groups whose
uncompensated care is paid for from a section 1115 demonstration-
authorized funding pool to be ``regarded as'' eligible for Medicaid
(which the Secretary does not agree the statute permits), those groups
may be quite distinct from the groups who are eligible for Medicaid
under a State plan, and therefore we are proposing to use our
discretion under section 1886(d)(5)(F)(vi) of the Act to exclude from
the Medicaid fraction the days of patients whose care costs may be
reimbursed to the hospitals through uncompensated/undercompensated care
pools.
However, in further considering the comments regarding the
treatment of the days of patients provided premium assistance through a
section 1115 demonstration, we have concluded that patients receiving
premium assistance through a section 1115 demonstration to purchase
health insurance can be ``regarded as'' eligible for Medicaid under
section 1886(d)(5)(F)(vi). Indeed, it may be difficult to distinguish
between a patient who receives 100 percent, or nearly 100 percent
(``all or substantially all,'' as defined below), in premium assistance
under a section 1115 demonstration to purchase health insurance from a
patient who is eligible for medical assistance under the State plan and
may be enrolled in a Medicaid managed care plan. Both patients receive
health insurance funded through a program of cooperative federalism and
paid for with Title XIX funds. Therefore, upon further review we
propose, for purposes of the DSH calculation, to ``regard as'' eligible
for Medicaid those patients who use premium assistance they obtain
through a section 1115 demonstration to buy and pay for all or
substantially all (as defined below) of the cost of the health
insurance.
Additionally, using the discretion granted to the Secretary under
section 1886(d)(5)(F)(vi) of the Act to determine the extent to which
patient days of patients ``regarded as'' eligible for Medicaid will be
included in the Medicaid fraction, we further propose to include in the
Medicaid fraction only those days of patients who have bought health
insurance that provides EHB using premium assistance obtained through a
section 1115 demonstration that is equal to at least 90 percent of the
cost of the health insurance. As some commenters pointed out, some
section 1115 demonstrations that provide premium assistance to
enrollees require the insurance bought to be offered through the
State's Health Insurance Exchange, and as a result the insurance that
is available under these demonstrations is individual health insurance
that is required to provide EHB, including inpatient hospital benefits.
Further, we believe ``all or substantially all'' in the context of
purchasing hospital insurance with premium assistance requires the
premium assistance be equal to at least 90 percent of the cost of the
insurance. We picked people who receive premium assistance of at least
90 percent of the cost of the hospital insurance that provides EHB
because this level of benefit is similar to the benefits received by
individuals who are eligible for Title XIX programs, and as such, it
would be appropriate to include the days of these individuals in the
numerator of the Medicaid fraction, if the individual is also not
entitled to benefits under Medicare Part A. Individuals who receive
less premium assistance are not receiving benefits similar to the
benefits received by individuals eligible for Medicaid under a State
plan. Therefore, we believe it is appropriate to exclude from the
Medicaid fraction days of individuals who use premium assistance to buy
health insurance that does not provide EHB or for whom the premium
assistance provided by the demonstration accounts for less than 90
percent of the cost of the health insurance. Individual health
insurance that is not grandfathered coverage, which is required to
identify itself as grandfathered, is generally required to provide EHB.
Additionally, depending on the state, information on health insurance
that provides EHB may be available directly from individual states (for
example, through a state's Insurance Commissioner).
Accordingly, in this proposed rule, we are proposing to revise our
regulations at Sec. 412.106(b)(4) to explicitly reflect our
interpretation of the language ``regarded as'' ``eligible for medical
assistance under a State plan approved under title XIX'' in section
1886(d)(5)(F)(vi) of the Act, to mean patients who receive health
insurance through a section 1115 demonstration itself or purchase such
insurance with the use of premium assistance provided by a section 1115
demonstration. Moreover, of the groups we ``regard'' as Medicaid
eligible, we propose that only the days of those individuals that
obtain health insurance that provides EHB (defined as meeting the EHB
requirements set forth in 42 CFR part
[[Page 28402]]
440, subpart C, for an Alternative Benefit Plan), and if bought with
premium assistance, for which the premium assistance is equal to or
greater than 90 percent of the cost of the health insurance, are
included in the Medicaid fraction of the DSH calculation, provided the
patient is not also entitled to Medicare Part A.
As discussed previously, uncompensated/undercompensated care pools
serve essentially the same function as Medicaid DSH by indirectly
subsidizing the cost of treating the uninsured and underinsured, while
not extending health insurance to additional groups. Accordingly, we do
not interpret the statute as authorizing the Secretary to ``regard as''
Medicaid eligible patients with uncompensated care costs for which a
hospital is reimbursed by a section 1115 demonstration-authorized
uncompensated care funding pool. Additionally, even if section
1886(d)(5)(F)(vi) of the Act could be interpreted to permit patients
with uncompensated care costs for which a hospital is reimbursed by a
demonstration funding pool to be ``regarded as'' Medicaid eligible, we
invoke our discretion to exclude such patient days from being counted
in the Medicaid fraction of the DSH payment calculation because
uncompensated/undercompensated care pools do not provide health
insurance to individuals.
We propose that these changes would be effective for discharges
occurring on or after October 1, 2022.
V. Other Decisions and Changes to the IPPS for Operating Costs
A. Proposed Changes in the Inpatient Hospital Update for FY 2022 (Sec.
412.64(d))
1. Proposed FY 2023 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 2023, we are setting the applicable percentage
increase by applying the adjustments listed in this section in the same
sequence as we did for FY 2022. (We note that section
1886(b)(3)(B)(xii) of the Act required an additional reduction each
year only for FYs 2010 through 2019.) Specifically, consistent with
section 1886(b)(3)(B) of the Act, as amended by sections 3401(a) and
10319(a) of the Affordable Care Act, we are setting the applicable
percentage increase by applying the following adjustments in the
following sequence. The applicable percentage increase under the IPPS
for FY 2023 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 FY 2022
IPPS/LTCH PPS final rule (86 FR 45194 through 45204), we replaced the
2014-based IPPS operating and capital market baskets with the rebased
and revised 2018-based IPPS operating and capital market baskets
beginning in FY 2022.
We are proposing to base the FY 2023 market basket update used to
determine the applicable percentage increase for the IPPS on IHS Global
Inc.'s (IGI's) fourth quarter 2021 forecast of the 2018-based IPPS
market basket rate-of-increase with historical data through third
quarter 2021, which is estimated to be 3.1 percent. We also are
proposing that if more recent data subsequently become available (for
example, a more recent estimate of the market basket update), we would
use such data, if appropriate, to determine the FY 2023 market basket
update in the final rule.
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 U.S. Department of
Labor's Bureau of Labor Statistics (BLS) publishes the official
measures of productivity for the U.S. economy. We note that previously
the productivity measure referenced in section 1886(b)(3)(B)(xi)(II)
was published by BLS as private nonfarm business multifactor
productivity. Beginning with the November 18, 2021 release of
productivity data, BLS replaced the term multifactor productivity (MFP)
with total factor productivity (TFP). BLS noted that this is a change
in terminology only and will not affect the data or methodology. As a
result of the BLS name change, the productivity measure referenced in
section 1886(b)(3)(B)(xi)(II) is now published by BLS as private
nonfarm business total factor productivity. However, as mentioned, the
data and methods are unchanged. Please see www.bls.gov for the BLS
historical published TFP data. A complete description of IGI's TFP
projection methodology is available on the CMS website at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch. In addition, we
note that beginning with the 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 2023, we are proposing a productivity adjustment of 0.4
percent. Similar to the market basket update, for this proposed rule,
the estimate of the proposed FY 2023 productivity adjustment is based
on IGI's fourth quarter 2021 forecast As noted previously, we are
proposing that if more recent data subsequently become available, we
would use such data, if appropriate, to determine the FY 2023
productivity adjustment for the final rule.
Based on these data, we have determined four proposed applicable
percentage increases to the standardized amount for FY 2023, as
specified in the following table:
[[Page 28403]]
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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 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 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). Therefore, under current law,
the MDH program will expire at the end of FY 2022. We refer readers to
section V.D. of the preamble of this proposed rule for further
discussion of the expiration of the MDH program.
For FY 2023, we are proposing the following updates to the
hospital-specific rates applicable to SCHs: A proposed update of 2.7
percent for a hospital that submits quality data and is a meaningful
EHR user; a proposed update of 0.375 percent for a hospital that
submits quality data and is not a meaningful EHR user; a proposed
update of 1.925 percent for a hospital that fails to submit quality
data and is a meaningful EHR user; and a proposed update of -0.4
percent for a hospital that fails to submit quality data and is not an
meaningful EHR user. As noted previously, for this proposed rule, the
FY 2023 market basket update is based on IGI's fourth quarter 2021
forecast of the 2018-based IPPS market basket with historical data
through third quarter 2021. Similarly, for this proposed rule, the FY
2023 productivity adjustment is based on IGI's fourth quarter 2021
forecast. We are proposing that if more recent data subsequently become
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.
2. Proposed FY 2023 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 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 2023, consistent with section 1886(b)(3)(B) of the Act, as
amended by section 602 of Public Law 114-113, we
[[Page 28404]]
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 66\2/3\ 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 2021 forecast of the 2018-based IPPS
market basket update with historical data through third quarter 2021,
for this FY 2023 proposed rule, in accordance with section
1886(b)(3)(B) of the Act, as discussed previously, for Puerto Rico
hospitals we are proposing a market basket update of 3.1 percent and a
productivity adjustment of 0.4 percent. Therefore, for FY 2023,
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 have
determined the following proposed applicable percentage increases to
the standardized amount for FY 2023 for Puerto Rico hospitals:
For a Puerto Rico hospital that is a meaningful EHR user,
we are proposing an applicable percentage increase to the FY 2023
operating standardized amount of 2.7 percent (that is, the FY 2023
estimate of the proposed market basket rate-of-increase of 3.1 percent
less an adjustment of 0.4 percentage point for the proposed
productivity adjustment).
For a Puerto Rico hospital that is not a meaningful EHR
user, we are proposing an applicable percentage increase to the
operating standardized amount of 1.15 percent (that is, the FY 2023
estimate of the proposed market basket rate-of-increase of 3.1 percent,
less an adjustment of 1.55 percentage point (the proposed market basket
rate-of-increase of 3.1 percent x 0.75 x (\2/3\) for failure to be a
meaningful EHR user), and less an adjustment of 0.4 percentage point
for the proposed productivity adjustment).
As noted previously, we are proposing that if more recent data
subsequently become available, we would use such data, if appropriate,
to determine the FY 2023 market basket update and the productivity
adjustment for the FY 2023 IPPS/LTCH PPS final rule.
B. Rural Referral Centers (RRCs) Proposed 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 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
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.
In the FY 2022 final rule (86 FR 45217), in light of the COVID-19
PHE, we amended the regulations at 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. We also
amended the regulations at 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 amended the regulations 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.
1. Case-Mix Index (CMI)
Section 412.96(c)(1) provides that CMS establish updated national
and regional CMI values in each year's annual notice of prospective
payment rates for purposes of determining RRC status. The methodology
we used to determine the national and regional CMI values is set forth
in the regulations at Sec. 412.96(c)(1)(ii). The proposed national
median CMI value for FY 2023 is based on the CMI values of all urban
hospitals nationwide, and the proposed regional
[[Page 28405]]
median CMI values for FY 2023 are based on the CMI values of all urban
hospitals within each census region, excluding those hospitals with
approved teaching programs (that is, those hospitals that train
residents in an approved GME program as provided in Sec. 413.75).
These proposed values are based on discharges occurring during FY 2021
(October 1, 2020 through September 30, 2021), and include bills posted
to CMS' records through December 2021. We believe that this is the best
available data for use in calculating the proposed national and
regional median CMI values and is consistent with our proposal to use
the FY 2021 MedPAR claims data for FY 2023 ratesetting. We refer the
reader to section I.F. of the preamble of this proposed rule for a
complete discussion regarding our proposal to use the latest available
data (that is, the FY 2021 MedPAR data) as the best available data for
purposes of this FY 2023 rulemaking.
In this FY 2023 IPPS/LTCH PPS proposed rule, we are proposing 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, 2022, they must have a CMI
value for FY 2021 that is at least--
1.8251 (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 are set forth in the table
in this section of this rule. We intend to update the proposed CMI
values in the FY 2023 final rule to reflect the updated FY 2021 MedPAR
file, which will contain data from additional bills received through
March 2022.
[GRAPHIC] [TIFF OMITTED] TP10MY22.160
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. For FY 2023, we are
proposing to update the regional standards based on discharges for
urban hospitals' cost reporting periods that began during FY 2020 (that
is, October 1, 2019 through September 30, 2020), which are the latest
cost report data available at the time this proposed rule was
developed. We believe that this is the best available data for use in
calculating the proposed median number of discharges by region and is
consistent with our data proposal to use cost report data from cost
reporting periods beginning during FY 2020 for FY 2023 ratesetting. We
refer the reader to section I.F. of the preamble of this proposed rule
for a complete discussion regarding our proposal to use the latest
available data (that is, cost reports beginning during FY 2020) as the
best available data for purposes of this FY 2023 rulemaking. Therefore,
we are proposing 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, 2022, must have, as the number
of discharges for its cost reporting period that began during FY 2020,
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 proposed number of discharges as set forth in this
table. We intend to update these numbers in the FY 2023 final rule
based on the latest available cost report data.
[[Page 28406]]
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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 proposed 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. Proposed Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)
1. Expiration of Temporary Changes to Low-Volume Hospital Payment
Policy
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 under section 1886(d)(12) of the Act for FYs 2019 through
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, and the preexisting
low-volume hospital payment adjustment methodology and qualifying
criteria, as implemented in FY 2005 and discussed later in this
section, will resume. (For additional information on the temporary
changes to the low-volume hospital payment policy, we refer readers to
the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398 through 41401). We
also note, in that same final rule, we amended the regulations at 42
CFR 412.101 to reflect the provisions of section 50204 of the
Bipartisan Budget Act of 2018.) We discuss the proposed payment
policies for FY 2023 in section V.C.3. of the preamble of this proposed
rule.
2. 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 2022 IPPS/LTCH PPS final rule (86 FR 45219
through 45221), 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. 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 determines
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).
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. Section 1886(d)(12)(C)(i) of the Act
defines a low-volume hospital, for FYs 2005 through 2010 and FY 2023
and subsequent years, as a subsection (d) hospital that the Secretary
determines is located more than 25 road miles from another subsection
(d) hospital and that has less than 800 discharges during the fiscal
year. Section 1886(d)(12)(C)(ii) of the Act further stipulates that the
term ``discharge'' means an inpatient acute care discharge of an
individual, regardless of whether the individual is entitled to
benefits under Medicare Part A (except with respect to FYs 2011 through
2018). Therefore, for FYs 2005 through 2010 and FY 2019 and subsequent
years, the term ``discharge'' refers to total discharges, regardless of
payer (that is, Medicare and non-Medicare discharges), and as such the
term discharge continues to refer to total discharges for FY 2023 and
subsequent years. Furthermore, section 1886(d)(12)(B) of the Act
requires, for discharges occurring in FYs 2005 through 2010 and FY 2023
and subsequent years, that the Secretary determine an applicable
percentage increase for these low-volume hospitals based on the
``empirical relationship'' between the standardized cost-per-case for
such hospitals and the total number of discharges of such hospitals and
the amount of the additional incremental costs (if any) that are
associated with such number of discharges. The statute thus mandates
that the Secretary develop an empirically justifiable adjustment based
on the relationship
[[Page 28407]]
between costs and discharges for these low-volume hospitals. Section
1886(d)(12)(B)(iii) of the Act limits the applicable percentage
increase adjustment to no more than 25 percent.
Based on an analysis we conducted for the FY 2005 IPPS final rule
(69 FR 49099 through 49102), a 25-percent low-volume adjustment to all
qualifying hospitals with less than 200 discharges was found to be most
consistent with the statutory requirement to provide relief to low-
volume hospitals where there is empirical evidence that higher
incremental costs are associated with low numbers of total discharges.
In the FY 2006 IPPS final rule (70 FR 47432 through 47434), we stated
that multivariate analyses supported the existing low-volume adjustment
implemented in FY 2005. Accordingly, under the existing regulations, 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). For additional
information on the low-volume hospital payment adjustment for FY 2019
through FY 2022, we refer readers to the FY 2019 IPPS/LTCH PPS final
rule (83 FR 41398 through 41399).)
3. Proposed Payment Adjustment for FY 2023 and Subsequent Fiscal Years
In accordance with section 1886(d)(12) of the Act, beginning with
FY 2023, the low-volume hospital definition and payment adjustment
methodology will revert back to the statutory requirements that were in
effect prior to the amendments made by the Affordable Care Act and
subsequent legislation. Therefore, effective for FY 2023 and subsequent
years, under current policy at Sec. 412.101(b), in order to qualify as
a low-volume hospital, a subsection (d) hospital must be more than 25
road miles from another subsection (d) hospital and have less than 200
discharges (that is, less than 200 discharges total, including both
Medicare and non-Medicare discharges) during the fiscal year. For FY
2023 and subsequent years, the statute specifies that a low-volume
hospital must have less than 800 discharges during the fiscal year.
However, as required by section 1886(d)(12)(B)(i) of the Act and as
discussed earlier, the Secretary has developed an empirically
justifiable payment adjustment based on the relationship, for IPPS
hospitals with less than 800 discharges, between the additional
incremental costs (if any) that are associated with a particular number
of discharges. Based on an analysis we conducted for the FY 2005 IPPS
final rule (69 FR 49099 through 49102), a 25-percent low-volume
adjustment to all qualifying hospitals with less than 200 discharges
was found to be most consistent with the statutory requirement to
provide relief for low-volume hospitals where there is empirical
evidence that higher incremental costs are associated with low numbers
of total discharges. (Under the policy we established in that same
final rule, hospitals with between 200 and 799 discharges do not
receive a low-volume hospital adjustment.)
For FYs 2005 through 2010 and FY 2018 and subsequent years, the
discharge determination is made based on the hospital's number of total
discharges, that is, Medicare and non-Medicare discharges. The
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 (Sec. 412.101(b)(2)(i)). 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. We note that,
for FYs 2011 through 2018, we used the most recently available MedPAR
data to determine the hospital's Medicare discharges because only
Medicare discharges were used to determine if a hospital met the
discharge criterion for those years.
In addition to the discharge criterion, a hospital must also meet
the mileage criterion to qualify for the low-volume payment adjustment.
As specified by section 1886(d)(12)(C)(i) of the Act, a low-volume
hospital must be more than 25 road miles (or 15 road miles for FYs 2011
through 2022) from another subsection (d) hospital. Accordingly, for FY
2023 and for subsequent fiscal years, in addition to the discharge
criterion, the eligibility for the low-volume payment adjustment is
also dependent upon the hospital meeting the mileage criterion at Sec.
412.101(b)(2)(i), which specifies that a hospital must be located more
than 25 road miles from the nearest subsection (d) hospital, consistent
with section 1886(d)(12)(C)(i) of the Act. We define, at Sec.
412.101(a), the term ``road miles'' to mean ``miles'' as defined at
Sec. 412.92(c)(1) (75 FR 50238 through 50275 and 50414).
4. 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, most recently in the FY 2022
IPPS/LTCH PPS final rule (86 FR 45219 through 45221), 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, 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
[[Page 28408]]
discharges were not used to determine if a hospital met the discharge
criterion for those years.) Therefore, a hospital must refer to its
most recently submitted cost report for total discharges (Medicare and
non-Medicare) 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 2023, a hospital must
be located more than 25 road miles from the nearest subsection (d)
hospital. (We define in Sec. 412.101(a) the term ``road miles'' to
mean ``miles'' as defined in Sec. 412.92(c)(1) (75 FR 50238 through
50275 and 50414).) For establishing that the hospital meets the mileage
criterion, the use of a web-based mapping tool as part of the
documentation is acceptable. The MAC will determine if the information
submitted by the hospital, such as the name and street address of the
nearest hospitals, location on a map, and distance from the hospital
requesting low-volume hospital status, is sufficient to document that
it meets the mileage criterion. If not, the MAC will follow up with the
hospital to obtain additional necessary information to determine
whether or not the hospital meets the applicable mileage criterion.
In accordance with our previously established process, a hospital
must make a written request for low-volume hospital status that is
received by its MAC by September 1 immediately preceding the start of
the Federal fiscal year for which the hospital is applying for low-
volume hospital status in order for the applicable low-volume hospital
payment adjustment to be applied to payments for its discharges for the
fiscal year beginning on or after October 1 immediately following the
request (that is, the start of the Federal fiscal year). For a hospital
whose request for low volume hospital status is received after
September 1, if the MAC determines the hospital meets the criteria to
qualify as a low-volume hospital, the MAC will apply the applicable
low-volume hospital payment adjustment to determine payment for the
hospital's discharges for the fiscal year, effective prospectively
within 30 days of the date of the MAC's low-volume status
determination.
Consistent with this previously established process, for FY 2023,
we are proposing 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). Specifically,
for FY 2023, a hospital must make a written request for low-volume
hospital status that is received by its MAC no later than September 1,
2022, in order for the 25-percent, low-volume, add-on payment
adjustment to be applied to payments for its discharges beginning on or
after October 1, 2022. If a hospital's written request for low-volume
hospital status for FY 2023 is received after September 1, 2022, 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 2023
discharges, effective prospectively within 30 days of the date of the
MAC's low-volume hospital status determination.
Under this process, a hospital that qualified for the low-volume
hospital payment adjustment for FY 2022 may continue to receive a low-
volume hospital payment adjustment for FY 2023 without reapplying if it
meets both the discharge criterion and the mileage criterion applicable
for FY 2023. As discussed previously, for FY 2023 the discharge and the
mileage criteria are reverting to the statutory requirements that were
in effect prior to FY 2011, and to the preexisting low-volume hospital
qualifying criteria, as implemented in FY 2005 and specified in the
existing regulations at Sec. 412.101(b)(2)(i). As in previous years,
we are proposing that such a hospital must send written verification
that is received by its MAC no later than September 1, 2022, stating
that it meets the mileage criterion applicable for FY 2023 (that is, is
located more than 25 road miles from the nearest ``subsection (d)''
hospital). For FY 2023, we are further proposing that this written
verification must also state, based upon the most recently submitted
cost report, that the hospital meets the discharge criterion applicable
for FY 2023 (that is, less than 200 discharges total, including both
Medicare and non-Medicare discharges). If a hospital's request for low-
volume hospital status for FY 2023 is received after September 1, 2022,
and if the MAC determines the hospital meets the criteria to qualify as
a low-volume hospital, the MAC will apply the 25-percent, low-volume,
add-on payment adjustment to determine the payment for the hospital's
FY 2023 discharges, effective prospectively within 30 days of the date
of the MAC's low-volume hospital status determination.
In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41398 through 41401
and 41702), in accordance with the provisions of section 50204 of the
Bipartisan Budget Act of 2018, for FY 2023 and subsequent fiscal years,
we made conforming changes to the regulations at 42 CFR 412.101 to
reflect that the low-volume payment adjustment policy in effect for
these years is the same low-volume hospital payment adjustment policy
in effect for FYs 2005 through 2010. Under these revisions, beginning
with FY 2023, consistent with current law, the low-volume hospital
qualifying criteria and payment adjustment methodology will return to
the criteria and methodology that were in effect prior to the
amendments made by the Affordable Care Act (that is, the low-volume
hospital payment policy in effect for FYs 2005 through 2010).
Therefore, no further revisions to the policy or to the regulations at
Sec. 412.101 are required to conform them to the statutory requirement
that the low-volume hospital policy in effect prior to the Affordable
Care Act will again be in effect for FY 2023 and subsequent years.
D. Proposed Changes in the Medicare-Dependent, Small Rural Hospital
(MDH) Program (Sec. 412.108)
1. Background for the MDH Program
Section 1886(d)(5)(G) of the Act provides special payment
protections, under the IPPS, to a Medicare-dependent, small rural
hospital (MDH). (For additional information on the MDH program and the
payment methodology, we refer readers to the FY 2012 IPPS/LTCH PPS
final rule (76 FR 51683 through 51684).) As discussed in section VB of
the preamble of this proposed rule, the MDH program provisions at
section 1886(d)(5)(G) of the Act will expire at the end of FY 2022.
Beginning with discharges occurring on or after October 1, 2022, all
hospitals that previously qualified for MDH status will be paid based
on the Federal rate.
Since the extension of the MDH program through FY 2012 provided by
section 3124 of the Affordable Care Act, the MDH program had been
extended by subsequent legislation as follows: Section 606 of the ATRA
(Pub. L. 112- 240) extended the MDH program through FY 2013 (that is,
for discharges occurring before October 1, 2013). Section 1106 of the
Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) extended the MDH
program through the
[[Page 28409]]
first half of FY 2014 (that is, for discharges occurring before April
1, 2014). Section 106 of the PAMA (Pub. L. 113-93) extended the MDH
program through the first half of FY 2015 (that is, for discharges
occurring before April 1, 2015). Section 205 of the MACRA (Pub. L. 114-
10) extended the MDH program through FY 2017 (that is, for discharges
occurring before October 1, 2017). Section 50205 of the Bipartisan
Budget Act (Pub. L. 115- 123) extended the MDH program through FY 2022
(that is for discharges occurring before October 1, 2022). For
additional information on the extensions of the MDH program after FY
2012, we refer readers to the following Federal Register documents: The
FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through 53405 and 53413
through 53414); the FY 2013 IPPS notification (78 FR 14689); the FY
2014 IPPS/LTCH PPS final rule (78 FR 50647 through 50649); the FY 2014
interim final rule with comment period (79 FR 15025 through 15027); the
FY 2014 notification (79 FR 34446 through 34449); the FY 2015 IPPS/LTCH
PPS final rule (79 FR 50022 through 50024); the August 2015 interim
final rule with comment period (80 FR 49596); the FY 2017 IPPS/LTCH PPS
final rule (81 FR 57054 through 57057); the FY 2018 notice (83 FR 18303
through 18305); and the FY 2019 IPPS/LTCH PPS final rule (83 FR 41429).
2. Expiration of the MDH Program
Because section 50205 of the Bipartisan Budget Act extended the MDH
program through FY 2022 only, beginning October 1, 2022, the MDH
program will no longer be in effect. Because the MDH program is not
authorized by statute beyond September 30, 2022, beginning October 1,
2022, all hospitals that previously qualified for MDH status under
section 1886(d)(5)(G) of the Act will no longer have MDH status and
will be paid based on the IPPS Federal rate.
When the MDH program was set to expire at the end of FY 2012, in
the FY 2013 IPPS/LTCH PPS final rule (77 FR 53404 through 53405), we
revised our sole community hospital (SCH) policies to allow MDHs to
apply for SCH status in advance of the expiration of the MDH program
and be paid as such under certain conditions. We codified these changes
in the regulations at Sec. 412.92(b)(2)(i) and (v). Specifically, the
existing regulations at Sec. 412.92(b)(2)(i) and (v) allow for an
effective date of an approval of SCH status that is the day following
the expiration date of the MDH program. We note that these same
conditions apply to MDHs that intend to apply for SCH status with the
expiration of the MDH program on September 30, 2022. Therefore, in
order for an MDH to receive SCH status effective October 1, 2022, the
MDH must apply for SCH status at least 30 days before the expiration of
the MDH program; that is, the MDH must apply for SCH status by
September 1, 2022. The MDH also must request that, if approved as an
SCH, the SCH status be effective with the expiration of the MDH
program; that is, the MDH must request that the SCH status, if
approved, be effective October 1, 2022, immediately after its MDH
status expires with the expiration of the MDH program on September 30,
2022. We emphasize that an MDH that applies for SCH status in
anticipation of the expiration of the MDH program would not qualify for
the October 1, 2022, effective date for SCH status if it does not apply
by the September 1, 2022, deadline. If the MDH does not apply by the
September 1, 2022, deadline, the hospital would instead be subject to
the usual effective date for SCH classification; that is, as of the
date the MAC receives the complete application as specified at Sec.
412.92(b)(2)(i).
We note that the regulations governing the MDH program are found at
Sec. 412.108 and the MDH program is also cited in the general payment
rules in the regulations at Sec. 412.90. As stated earlier, under
current law, the MDH program will expire at the end of FY 2022, which
is already reflected in Sec. Sec. 412.108 and 412.90(j). As such, we
are not proposing specific amendments to the regulations at Sec.
412.108 or Sec. 412.90 to reflect the expiration of the MDH program.
However, we are proposing that if the MDH program were to be extended
by law, similar to how it was extended through FY 2013, by the ATRA
(Pub. L. 112-240); through March 31, 2014, by the Pathway for SGR
Reform Act of 2013 (Pub. L. 113-167); through March 31, 2015, by the
PAMA (Pub. L. 113-93); through FY 2017, by the MACRA (Pub. L. 114-10);
and most recently through FY 2022, by the Bipartisan Budget Act of 2018
(Pub. L. 115-123), we would make conforming changes to the regulations
governing the MDH program at Sec. 412.108(a)(1) and (c)(2)(iii) and
the general payment rules at Sec. 412.90(j) to reflect such an
extension of the MDH program. These conforming changes would only be
made if the MDH program were to be extended by statute beyond September
30, 2022.
E. Proposed 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
2023, the formula multiplier is 1.35. We estimate that application of
this formula multiplier for the FY 2023 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.
F. Payment for Indirect and Direct Graduate Medical Education Costs
(Sec. Sec. 412.105 and 413.75 Through 413.83)
1. Background
Section 1886(h) of the Act, as added by section 9202 of the
Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 (Pub. L.
99-272) and as currently implemented in the regulations at 42 CFR
413.75 through 413.83, establishes a methodology for determining
payments to hospitals for the direct costs of approved graduate medical
education (GME) programs. Section 1886(h)(2) of the Act sets forth a
methodology for the determination of a hospital-specific base-period
per resident amount (PRA) that is calculated by dividing a hospital's
allowable direct costs of GME in a base period by its number of full-
time equivalent (FTE) residents in the base period. The base period is,
for most hospitals, the hospital's cost reporting period beginning in
FY 1984 (that is, October 1, 1983 through September 30, 1984). The base
year PRA is updated annually for inflation. In general, Medicare direct
GME payments are calculated by multiplying the hospital's updated PRA
by the weighted number of FTE residents working in all areas of the
hospital complex (and at nonprovider sites, when applicable), and the
[[Page 28410]]
hospital's Medicare share of total inpatient days.
Section 1886(d)(5)(B) of the Act provides for a payment adjustment
known as the indirect medical education (IME) adjustment under the IPPS
for hospitals that have residents in an approved GME program, in order
to account for the higher indirect patient care costs of teaching
hospitals relative to nonteaching hospitals. The regulations regarding
the calculation of this additional payment are located at 42 CFR
412.105. The hospital's IME adjustment applied to the DRG payments is
calculated based on the ratio of the hospital's number of FTE residents
training in either the inpatient or outpatient departments of the IPPS
hospital (and, for discharges occurring on or after October 1, 1997, at
non-provider sites, when applicable) to the number of inpatient
hospital beds.
The calculation of both direct GME payments and the IME payment
adjustment is affected by the number of FTE residents that a hospital
is allowed to count. Generally, the greater the number of FTE residents
a hospital counts, the greater the amount of Medicare direct GME and
IME payments the hospital will receive. In an attempt to end the
implicit incentive for hospitals to increase the number of FTE
residents, Congress, through the Balanced Budget Act of 1997 (Pub. L.
105-33), established a limit on the number of allopathic and
osteopathic residents that a hospital may include in its FTE resident
count for direct GME and IME payment purposes. Under section
1886(h)(4)(F) of the Act, for cost reporting periods beginning on or
after October 1, 1997, a hospital's unweighted FTE count of residents
for purposes of direct GME may not exceed the hospital's unweighted FTE
count for direct GME in its most recent cost reporting period ending on
or before December 31, 1996. Under section 1886(d)(5)(B)(v) of the Act,
a similar limit based on the FTE count for IME during that cost
reporting period is applied, effective for discharges occurring on or
after October 1, 1997. Dental and podiatric residents are not included
in this statutorily mandated cap.
a. Direct GME Payment Formula
As mentioned previously, Medicare direct GME payments are
calculated by multiplying the hospital's updated PRA by the weighted
number of FTE residents working in all areas of the hospital complex
(and at nonprovider sites, when applicable), and the hospital's
Medicare share of total inpatient days. Section 1886(h)(4) of the Act
specifies the methodology for determining the amount of FTE residents
to be included in a hospital's direct GME payment formula. That is, the
number of FTE residents training at a hospital (or in non-provider
sites as applicable) would not necessarily equal the sum of those FTE
residents used in the hospital's direct GME payment formula, since
certain rules and factors are applied to adjust the count of FTE
residents for direct GME payment purposes. First, section 1886(h)(4)(C)
of the Act requires that a ``weighting factor'' of either 1.0 or 0.5 be
applied to each FTE resident, as follows: In calculating the number of
FTE residents in an approved residency program on or after July 1,
1987, for a resident who is not in the resident's initial residency
period, the weighting factor is 0.50. Section 1886(h)(5)(F) of the Act
defines the term ``initial residency period'' as the ``period of board
eligibility,'' with certain exceptions. Finally, section 1886(h)(4)(G)
of the Act states that the term ``period of board eligibility'' means,
for a resident, the minimum number of years of formal training
necessary to satisfy the requirements for initial board eligibility in
the particular specialty for which the resident is training. The direct
GME calculation and our policy on applying the weighting factors to
each FTE resident based on the FTE resident's status within or beyond
the initial residency period (IRP) was established in the September 29,
1989, Federal Register (54 FR 40287, 40292, 40305-6), and implemented
in the regulations at 42 CFR 413.86(f) (now 42 CFR 413.79(a) and (b)).
Thus, the FTE count used in the direct GME payment formula must be
a weighted FTE count when a hospital is training residents beyond their
IRPs. However, the direct GME FTE cap is an unweighted number. That is,
under section 1886(h)(4)(F) of the Act, for cost reporting periods
beginning on or after October 1, 1997, a hospital's unweighted FTE
count of residents for purposes of direct GME may not exceed the
hospital's unweighted FTE count for direct GME in its most recent cost
reporting period ending on or before December 31, 1996 (that is the
hospital's unweighted 1996 FTE cap or FTE cap). Regulations regarding
the FTE caps and unweighted FTE counts were first published in the
August 29, 1997, Federal Register. To address situations where a
hospital's weighted FTE count exceeds its unweighted 1996 FTE cap, we
established a policy effective for cost reporting periods beginning on
or after October 1, 1997, to bring the weighted FTE count within the
unweighted FTE cap using the following ratio on the Medicare cost
report: ((1996 unweighted FTE cap/current year unweighted FTE count) x
(current year total weighted FTE count)) (see 62 FR 46005 and 63 FR
26,330 (May 12, 1998)). In the August 1, 2001, Federal Register (66 FR
39893 through 39896), we modified this ratio effective for cost
reporting periods beginning on or after October 1, 2001, to separately
account for a hospital's current year weighted primary care and
obstetrics/gynecology (OB/GYN) FTE count and primary care and OB/GYN
PRA, and current year weighted other FTE count and other PRA, as
follows: (FTE cap/unweighted total FTEs in the cost reporting period) x
(weighted primary care and OB/GYN FTEs in the cost reporting period)
plus (FTE cap/unweighted total FTEs in the cost reporting period) x
(weighted nonprimary care FTEs in the cost reporting period). The sum
of the products is the current year allowable weighted FTE count. In
addition, effective for cost reporting periods beginning on or after
October 1, 2001, the direct GME payment is calculated using two
separate rolling averages, one for primary care and OB/GYN FTE
residents, and one for nonprimary care FTE residents. These
calculations were implemented at 42 CFR 413.86(g)(4) and (5)
respectively, currently 42 CFR 413.79(c)(2)(iii) and (d)(3).
2. Milton S. Hershey Medical Center, et al. v. Becerra Litigation
On May 17, 2021, the U.S. District Court for the District of
Columbia ruled against CMS's method of calculating direct GME payments
to teaching hospitals when those hospitals' weighted FTE counts exceed
their direct GME FTE cap. In Milton S. Hershey Medical Center, et al.
v. Becerra (Slip. Op., 2021 WL 1966572, May 17, 2021), the court
ordered CMS to recalculate reimbursement owed, holding that CMS's
regulation impermissibly modified the statutory weighting factors
discussed previously. The plaintiffs in these consolidated cases
alleged that as far back as 2005, the proportional reduction that CMS
applied to the weighted FTE count when the weighted FTE count exceeded
the FTE cap conflicted with the Medicare statute, and it was an
arbitrary and capricious exercise of agency discretion under the
Administrative Procedure Act. The Court held that the proportional
reduction methodology improperly modified the weighting factors
statutorily assigned to residents and fellows. The court ordered CMS to
pay
[[Page 28411]]
the plaintiffs according to a more favorable method.
For example, a hospital has a direct GME cap of 100, trains 90 FTE
residents weighted at 1.0 and 10 FTE fellows weighted at 0.5, for a
total unweighted count of 100, and a total weighted FTE count of 95.
Under current methodology, the proportional reduction is:
(100 cap/100 current year unweighted count) x 95 (current year weighted
count) = 95.
If that hospital adds 10 more fellows and exceeds the cap with an
unweighted total of 110 (90 residents and 20 fellows), its weighted FTE
count of 100 is reduced as follows:
(100 cap/110 current year unweighted count) x 100 (current year
weighted count) = 90.91.
The plaintiffs argued that CMS's proportional reduction method
unlawfully reduced the weighting factor of 0.5 to an amount less than
that, thereby reducing the capped unweighted FTE amount (100 reduced to
90.91 in the example) to which they were entitled for direct GME
payment purposes. The court granted the plaintiffs' motion for summary
judgment, denied defendant's, and remanded to the Agency so that it
could recalculate plaintiffs' reimbursement payments consistent with
the court's opinion. The court held that CMS's proportional reduction
methodology, enacted at 42 CFR 413.79(c)(2)(iii), was inconsistent with
the statutory weighting factors. In response to the court's decision,
we are proposing to implement a modified policy applicable to all
teaching hospitals, effective as of October 1, 2001, which would
replace the existing policy at 42 CFR 413.79(c)(2)(iii). While the
proportional reduction method struck down in Hershey was first
effective for cost reports beginning on or after October 1, 1997, we
are unaware of any open or reopenable NPRs for the 1997-2001 period
where the proportional reduction method caused a provider's payments to
be lower than they would be under our proposed new policy, but we
welcome comments alerting us of such NPRs. The proportional reduction
method was amended to its present form effective for cost reporting
periods beginning on or after October 2001. See current 42 CFR
413.79(c)(2)(ii), (iii). We are therefore proposing to modify the
policy embodied in 42 CFR 413.79(c)(2)(iii), which the Court found
unlawful in Hershey.
Because the Hershey court concluded that Sec. 413.79(c)(2)(iii)
was inconsistent with the statute, and the Secretary did not appeal,
the Secretary ``has no promulgated rule governing'' DGME payments to
teaching hospitals over the cap for cost reporting periods beginning on
or after October 1, 2001. (See Allina Health Servs. v. Price, 863 F.3d
937, 939 (D.C. Cir. 2017).) The Secretary is required to ``establish
rules consistent with this paragraph for the computation of the number
of full-time-equivalent residents in an approved medical residency
training program'' (42 U.S.C. 1395ww(h)(4)). We believe that, in order
to comply with the statutory requirement to make rules governing the
computation of FTEs, it is necessary to engage in a retroactive
rulemaking to establish the statutorily-required rule effective for
cost reporting periods beginning on or after October 1, 2001. Doing so
via notice-and-comment rulemaking is in the public interest because it
will permit interested stakeholders to comment on the proposed approach
and allow the agency to have the benefit of those comments in the
development of a final rule. This is particularly true in this
situation, where the existing policy was promulgated via an interim
final rule with comment period, and the agency received no comments on
the policy the court held unlawful and finalized it as originally
proposed.
Because we are proposing to establish this policy retroactively, it
would cover cost reporting periods for which many NPRs have already
been final settled. Consistent with Sec. 405.1885(c)(2), any final
rule retroactively adopting the proposed new policy would not be the
basis for reopening final settled NPRs.
a. Change to Direct GME Calculation in Response to Decision in Milton
S. Hershey Medical Center et al. v. Becerra
After reviewing the statutory language regarding the direct GME FTE
cap and the court's opinion, we have decided to propose a modified
policy to be applied for cost reporting periods beginning on October 1,
2001, as described previously. The proposed modified policy would
address situations for applying the FTE cap when a hospital's weighted
FTE count is greater than its FTE cap, but would not reduce the
weighting factor of residents that are beyond their IRP to an amount
less than 0.5. Section 1886(h)(4)(F) of the Act states that for
purposes of a cost reporting period beginning on or after October 1,
1997, the total number of FTE residents before application of weighting
factors may not exceed the number of such FTEs for the hospital's most
recent cost reporting period ending on or before December 31, 1996.
Under current policy, we interpreted this to mean that only a
hospital's unweighted (before application of weighting factors)
allopathic and osteopathic FTE count was compared to its FTE cap, and
if the unweighted allopathic and osteopathic FTE count exceeded the FTE
cap, then the proportional reduction is made to the weighted FTE
counts. Under this modified proposed policy, in the instance where a
hospital's unweighted allopathic and osteopathic FTE count exceeds its
FTE cap, we propose to add a step to also compare the total weighted
allopathic and osteopathic FTE count to the FTE cap. If the total
weighted allopathic and osteopathic FTE count is equal to or less than
the FTE cap, then no adjustments would be made to the respective
primary care & OB/GYN weighted FTE counts or the other weighted FTE
counts. If the total weighted allopathic and osteopathic FTE count
exceeds the FTE cap, then we would adjust the respective primary care &
OB/GYN weighted FTE counts or the other weighted FTE counts to make the
total weighted FTE count equal the FTE cap, as follows:
((primary care & OB/GYN weighted FTEs/total weighted FTEs) x FTE cap))
+ ((other weighted FTEs/total weighted FTEs) x FTE cap)).
The sum would be the current year total allowable weighted FTE
count, which would be reported on Worksheet E-4, line 9, column 3.
More specific to the Medicare cost report, we propose to revise the
instructions to Worksheet E-4, line 9 to state: If line 6 is less than
or equal to line 5, enter the amounts from line 8, columns 1 and 2, in
columns 1 and 2, of this line. Otherwise, if the total weighted FTE
count from line 8, column 3 is greater than the amount on line 5, then
enter in column 1 the result of ((primary care & OBGYN weighted FTEs/
total weighted FTEs) x FTE cap)). Enter in column 2 the result of
((other weighted FTEs/total weighted FTEs) x FTE cap)). Enter in column
3 the sum of
((primary care & OBGYN weighted FTEs/total weighted FTEs) x FTE cap)) +
((other weighted FTEs/total weighted FTEs) x FTE cap)).
Example 1: Hospital with a FTE cap of 100 trains 120 FTEs with a
weight of 1.0, and 105 FTEs with a weight of 0.5, consisting of 70
weighted primary care & OBGYN FTEs and 35 weighted other FTEs. Since
the total weighted count of 105 (Worksheet E-4, line 8, column 3)
exceeds the FTE cap of 100 (Worksheet E-4, line 5), the Hospital
reports the following adjusted weighted FTE counts on Worksheet E-4:
[[Page 28412]]
Line 9, column 1: ((70 weighted primary care & OBGYN FTEs/105 total
weighted FTEs) x 100 cap)) = 66.67.
Line 9, column 2: ((35 weighted other FTEs/105 total weighted FTEs) x
100 cap)) = 33.33.
Line 9, column 3: 66.67 FTEs + 33.33 FTEs = 100.
Example 2: Hospital with a FTE cap of 100 trains 102 unweighted
FTEs, equating to 96 weighted FTEs. This 96-weighted count consists of
30 weighted primary care & OBGYN FTEs, and 66 weighted other FTEs.
Since the total weighted count of 96 (Worksheet E-4, line 8, column 3)
is less than the FTE cap of 100 (Worksheet E-4, line 5), then no
further adjustment is needed; enter the amounts from line 8, columns 1
and 2, in columns 1 and 2, of line 9.
Example 3: Hospital with a cap of 100 FTEs trains 90 FTEs with a
weight of 1.0, and 20 FTEs with a weight of 0.5. Since the total
weighted count is 100 (90 + (20 x 0.5)), then no further adjustment is
needed. Enter the amounts from line 8, columns 1 and 2, in columns 1
and 2 of line 9.
Under section 1886(h)(4)(G)(i) and 42 CFR 413.79(d)(3), a
hospital's weighted FTE count for payment purposes is the 3-year
average of its current year weighted FTEs, prior year weighted FTEs,
and penultimate year FTEs (for primary care & OBGYN FTEs and other FTEs
respectively). Effective for cost reporting periods beginning on or
after October 1, 2001, we are proposing to implement this modified
methodology for the purpose of determining the prior year weighted FTE
count on line 12 of Worksheet E-4, and for the purpose of determining
the penultimate year's weighted FTE count on line 13 of Worksheet E-4,
even though the prior and penultimate years' FTE counts would be from
cost reporting periods prior to October 1, 2001. In this manner, the
modified methodology would be fully applied to determining the direct
GME payment for cost reporting periods beginning on or after October 1,
2001. Therefore, we are proposing to modify the cost report
instructions on Worksheet E-4, lines 12 and 13, respectively to state
that effective for cost reporting periods beginning on or after October
1, 2001, if subject to the cap in the prior year or penultimate year
respectively, if the prior/penultimate year total weighted FTE count
from line 8, column 3 is greater than the amount on line 5 from the
prior/penultimate year, then enter in column 1 the result of ((primary
care & OBGYN weighted FTEs/total weighted FTEs) x FTE cap)). Enter in
column 2 the result of ((other weighted FTEs/total weighted FTEs) x FTE
cap)) plus the amount on line 10, column 2. These instructions do not
in any way modify or reopen final-settled prior and penultimate year
NPRs.
We are proposing to amend the regulations text at 42 CFR
413.79(c)(2)(iii) to state that, effective for cost reporting periods
beginning on or after October 1, 2001, if the hospital's unweighted
number of FTE residents exceeds the limit described in this section,
and the number of weighted FTE residents in accordance with Sec.
413.79(b) also exceeds that limit, the respective primary care and
obstetrics and gynecology weighted FTE counts and other weighted FTE
counts are adjusted to make the total weighted FTE count equal the
limit. If the number of FTE residents weighted in accordance with Sec.
413.79(b) does not exceed that limit, then the allowable weighted FTE
count is the actual weighted FTE count.
3. Reasonable Cost Payment for Nursing and Allied Health Education
Programs
a. General
Under section 1861(v) of the Act, Medicare has historically paid
providers for Medicare's share of the costs that providers incur in
connection with approved educational activities. Approved nursing and
allied health (NAH) education programs are those that are, in part,
operated by a provider, and meet State licensure requirements, or are
recognized by a national accrediting body. The costs of these programs
are excluded from the definition of inpatient hospital operating costs
and are not included in the calculation of payment rates for hospitals
or hospital units paid under the IPPS, IRF PPS, or IPF PPS, and are
excluded from the rate-of-increase ceiling for certain facilities not
paid on a PPS. These costs are separately identified and ``passed
through'' (that is, paid separately on a reasonable cost basis).
Existing regulations on NAH education program costs are located at
Sec. 413.85. The most recent rulemakings on these regulations were in
the January 12, 2001 final rule (66 FR 3358 through 3374), and in the
August 1, 2003, final rule (68 FR 45423 and 45434).
b. Medicare+Choice Nursing and Allied Health Education Payments
Section 541 of the Balanced Budget Refinement Act (BBRA) of 1999
provides for additional payments to hospitals for costs of nursing and
allied health education associated with services to Medicare+Choice
(now called Medicare Advantage (MA)) enrollees. Hospitals that operate
approved nursing or allied health education programs and receive
Medicare reasonable cost reimbursement for these programs would receive
additional payments from Medicare Advantage organizations. Section 541
of the nBBRA limits total spending under the provision to no more than
$60 million in any calendar year (CY). (In this document, we refer to
the total amount of $60 million or less as the payment ``pool''.)
Section 541 of the BBRA also provides that direct Graduate Medical
Education (GME) payments for Medicare+Choice utilization are reduced to
the extent that these additional payments are made for nursing and
allied health education programs. This provision was effective for
portions of cost reporting periods occurring in a CY, on or after
January 1, 2000.
Section 512 of the Benefits Improvement and Protection Act (BIPA)
of 2000 changed the formula for determining the additional amounts to
be paid to hospitals for MA nursing and allied health costs. Under
section 541 of the BBRA, the additional payment amount was determined
based on the proportion of each individual hospital's nursing and
allied health education payment to total nursing and allied health
education payments made to all hospitals. However, this formula did not
account for a hospital's specific MA utilization. Section 512 of the
BIPA revised this payment formula to specifically account for each
hospital's MA utilization. This provision was effective for portions of
cost reporting periods occurring in a CY, beginning with CY 2001, and
was implemented in the August 1, 2001 IPPS final rule (66 FR 39909 and
39910).
The regulations at 42 CFR 413.87 codified both of these statutory
provisions. We first implemented the BBRA NAH MA provision in the
August 1, 2000 IPPS interim final rule with comment period (IFC) (65 FR
47036 through 47039). In that IFC, we outlined the qualifying
conditions for a hospital to receive the NAH MA payment, how we would
calculate the NAH MA payment pool, and how a qualifying hospital would
calculate its ``share'' of payment from that pool. Determining a
hospital's NAH MA payment essentially involves applying a ratio of the
hospital-specific NAH Part A payments, total inpatient days, and MA
inpatient days, to national totals of those same amounts, from cost
reporting periods ending in the fiscal year that is 2 years prior to
the current calendar year. The formula is as follows:
(((Hospital NAH pass-through payment / Hospital Part A Inpatient Days)
*
[[Page 28413]]
Hospital MA Inpatient Days) / ((National NAH pass-through payment /
National Part A Inpatient Days) * National MA Inpatient Days)) *
Current Year Payment Pool.
With regard to determining the total national amounts for NAH pass-
through payment, Part A inpatient days, and MA inpatient days, we note
that section 1886(l) of the Act, as added by section 541 of the BBRA,
gives the Secretary the discretion to ``estimate'' the national
components of the formula noted previously. For example, section
1886(l)(2)(A) states that the Secretary would estimate the ratio of
payments for all hospitals for portions of cost reporting periods
occurring in the year under subsection (h)(3)(D) to total direct
graduate medical education payments estimated for the same portions of
periods under subsection (h)(3). Accordingly, we made the following
statements in the August 1, 2000 IFC:
Each year, we would determine and publish in a proposed
rule and a final rule the total amount of nursing and allied health
education payments made across all hospitals during the fiscal year
that is 2 years prior to the current calendar year (65 FR 47038). We
would use the best available cost reporting data for the applicable
hospitals from the Hospital Cost Report Information System (HCRIS) for
cost reporting periods in the fiscal year that is 2 years prior to the
current calendar year (65 FR 47038).
To calculate the pool, in accordance with section 1886(l)
of the Act, we would ``estimate'' a total amount for each calendar
year, not to exceed $60 million (65 FR 47038).
To calculate the proportional reduction to Medicare+Choice
(now MA) Direct GME payments, we stated that the percentage is
estimated by calculating the ratio of the Medicare+Choice nursing and
allied health payment ``pool'' for the current calendar year to the
projected total Medicare+Choice direct GME payments made across all
hospitals for the current calendar year. We stated that the projections
of Medicare+Choice direct GME and Part A direct GME are based on the
best available cost report data from the HCRIS (for example, for
calendar year 2000, the projections are based on the best available
cost report data from HCRIS 1998), and these payment amounts were
increased using the increases allowed by section 1886(h) of the Act for
these services (using the percentage applicable for the current
calendar year for Medicare+Choice direct GME and the Consumer Price
Index (CPI) increases for Part A direct GME). We also stated that we
would publish the applicable percentage reduction each year in the IPPS
proposed and final rules (65 FR 47038).
Thus, in the August 1, 2000, IFC, we described our policy regarding
the timing and source of the national data components for the NAH MA
add-on payment and the percent reduction to the direct GME MA payments,
and we stated that we would publish the rates for each calendar year in
the IPPS proposed and final rules. While the rates for CY 2000 were
published in the August 1, 2000, IFC (see 65 FR 47038 and 47039), the
rates for subsequent CYs were only issued through Change Requests (CRs)
(CR 2692, CR 11642, CR 12407). After recent issuance of the CY 2019
rates in CR 12407 on August 19, 2021, we reviewed our update
procedures, and were reminded that the August 1, 2000 IFC states that
we would publish the NAH MA rates and direct GME percent reduction
every year in the IPPS rules. Accordingly, for CY 2020 and forward, the
NAH MA add-on rates will be proposed and included in the IPPS proposed
and final rules, and we are also reiterating the data sources we would
use.
In this FY 2023 IPPS proposed rule, we are proposing the NAH MA
add-on rates as well as the direct GME MA percent reductions for CYs
2020 and 2021. In this proposed rule, we are proposing to issue the
rates for CYs 2020 and 2021 because we believe we have sufficient HCRIS
data to develop the rates for these years, and these rate years are
most needed to ensure accurate and timely cost report settlements of
cost reports with portions overlapping with CYs 2020 and 2021. We
expect to propose to issue the rates for CY 2022 in the FY 2024 IPPS
proposed rule, and the rates for CY 2023 in the FY 2025 IPPS proposed
rule, and so forth.
Consistent with the use of HCRIS data for past CYs, for CY 2020, we
propose to use data from cost reports ending in FY 2018 HCRIS (the
fiscal year that is 2 years prior to the calendar year of 2020) to
compile these national amounts: NAH pass-through payment, Part A
Inpatient Days, MA Inpatient Days. We propose to use data from cost
reports ending in FY 2019 HCRIS (the fiscal year that is 2 years prior
to the calendar year of 2021) to compile the same national amounts for
CY 2021. However, to calculate the ``pool'' and the direct GME MA
percent reduction, we ``project'' Part A direct GME payments and MA
direct GME payments for the current calendar years, which in this
proposed rule, are CYs 2020 and 2021, based on the ``best available
cost report data from the HCRIS'' (65 FR 47038). Next, consistent with
the method we described previously from the August 1, 2000 IFC, we
increase these payment amounts from midpoint to midpoint of the
appropriate calendar year using the increases allowed by section
1886(h) of the Act for these services (using the percentage applicable
for the current calendar year for MA direct GME, and the Consumer Price
Index-Urban (CPI-U) increases for Part A direct GME. For CY 2020, the
direct GME projections are based on FY 2019 HCRIS. For CY 2021, the
direct GME projections are based on FY 2019 HCRIS. For calendar years
2020 and 2021, the proposed national rates and percentages, and their
data sources are set forth in this table. We intend to update these
numbers in the FY 2023 final rule based on the latest available cost
report data.
[[Page 28414]]
[GRAPHIC] [TIFF OMITTED] TP10MY22.162
We are not proposing any changes to the regulations text at 42 CFR
413.87 at this time, as our proposal to include the nursing and allied
health MA rates in the IPPS rulemaking is consistent with current
regulations.
4. Proposal To Allow Medicare GME Affiliation Agreements Within Certain
Rural Track FTE Limitations
Sections 1886(h)(4)(F) and 1886(d)(5)(B)(v) of the Act established
limits on the number of allopathic and osteopathic residents that
hospitals may count for purposes of calculating direct GME payments and
the IME adjustment, respectively, thereby establishing hospital-
specific direct GME and IME full-time equivalent (FTE) resident caps.
However, under the authority granted by section 1886(h)(4)(H)(ii) of
the Act, the Secretary may issue rules to allow institutions that are
members of the same affiliated group to apply their direct GME and IME
FTE resident caps on an aggregate basis through a Medicare GME
affiliation agreement. The Secretary's regulations permit hospitals,
through a Medicare GME affiliation agreement, to increase or decrease
their IME and direct GME FTE resident caps to reflect the rotation of
residents among affiliated hospitals for agreed-upon academic years.
Consistent with the broad authority conferred by the statute, we
established criteria for defining an ``affiliated group'' and an
``affiliation agreement'' in both the August 29, 1997, final rule (62
FR 45966, 46006) and the May 12, 1998, final rule (63 FR 26318). In the
August 1, 2002, IPPS final rule (67 FR 49982, 50069), we amended our
regulations to require that each Medicare GME affiliation agreement
must have a shared rotational arrangement. The term ``Medicare GME
affiliation agreement'' is defined at 42 CFR 413.75(b) as a written,
signed, and dated agreement by responsible representatives of each
respective hospital in a Medicare GME affiliated group, as defined in
Sec. 413.75(b), that specifies--
The term of the Medicare GME affiliation agreement (which,
at a minimum is 1 year), beginning on July 1 of a year;
Each participating hospital's direct and indirect GME FTE
caps in effect prior to the Medicare GME affiliation;
The total adjustment to each hospital's FTE caps in each
year that the Medicare GME affiliation agreement is in effect, for both
direct GME and IME, that reflects a positive adjustment to one
hospital's direct and indirect FTE caps that is offset by a negative
adjustment to the other hospital's (or hospitals') direct and indirect
FTE caps of at least the same amount;
The adjustment to each participating hospital's FTE counts
resulting from the FTE resident's (or residents') participation in a
shared rotational arrangement at each hospital participating in the
Medicare GME affiliated group for each year the Medicare GME
affiliation agreement is in effect. This adjustment to each
participating hospital's FTE count is also reflected in the total
adjustment to each hospital's FTE caps (in accordance with criteria 3);
and
The names of the participating hospitals and their
Medicare provider numbers.
We also define the term ``Shared Rotational Arrangement'' in that
section of our rules as a residency training program under which a
resident(s) participates in training at two or more hospitals in that
program.
To encourage the training of residents in rural areas, section
407(c) of the Medicare, Medicaid, and SCHIP Balanced Budget Refinement
Act of 1999 (Pub. L. 106-113) (BBRA) amended section 1886(h)(4)(H) of
the Act to add a provision (subsection (iv)) stating that, in the case
of a hospital that is not located in a rural area (an urban hospital)
that establishes separately accredited approved medical residency
training programs (or rural tracks) in a rural area, or has an
accredited training program with an integrated rural track, the
Secretary shall adjust the urban hospital's cap on the number of FTE
residents under subsection 1886(h)(4)(F), in an appropriate manner in
order to encourage training of physicians in rural areas. Historically,
the Accreditation Council for Graduate Medical Education (ACGME) has
separately accredited family medicine programs in the ``1-2 format''
(meaning, residents in the 1-2 format receive their first year
experience at a core family medicine program, and their second and
third year experiences at another site, which may or may not be rural).
Section 407(c) of Public Law 106-113 was effective for direct GME
payments to hospitals for cost reporting periods beginning on or after
April 1, 2000, and for IME payments applicable to discharges occurring
on or after April 1, 2000. We refer readers to the August 1, 2000,
interim final rule with comment period (65 FR 47025, 47033 through
47037) and the FY 2002 IPPS final rule (66 FR 39828, 39902 through
39909) where we implemented section 407(c) of Public Law 106-113. The
regulations for establishing rural track FTE limitations are located at
42 CFR 413.79(k) for direct GME and at 42 CFR 412.105(f)(1)(x) for IME.
(We note that additional legislative and regulatory changes were made
to Rural Track Programs in the December 27, 2021 final rule, 86 FR
73445.) When we first implemented the rural track regulations in the
August 1, 2000 IFC, we specified that the caps associated with rural
tracks are separate and distinct from a hospital's general FTE caps.
Specifically, we defined Rural track FTE limitation at 42 CFR 413.75(b)
as the maximum number of residents training
[[Page 28415]]
in a rural track residency program that an urban hospital may include
in its FTE count and that is in addition to the number of FTE residents
already included in the hospital's FTE cap (emphasis added). As a
result, the rural track FTE limitations are not part of the regular FTE
caps that hospitals may aggregate in Medicare GME affiliation
agreements.
The rural track FTE limitations are calculated in the same manner
as the adjustments to any allowable new program, in accordance with 42
CFR 413.79(e)(1). That is, at the end of the 5-year cap building window
for the rural track program, the urban hospital's and rural hospital
respective IME and direct GME rural track FTE limitations are
calculated as the product of three factors (limited to the number of
accredited slots for each program):
The highest total number of FTE residents trained in any
program year during the fifth year of the first new program's existence
at all of the hospitals to which the residents in the program rotate;
The number of years in which residents are expected to
complete the program, based on the minimum accredited length for each
type of program.
The ratio of the number of FTE residents in the new
program that trained at the hospital over the entire 5-year period to
the total number of FTE residents that trained at all hospitals over
the entire 5-year period.
Thus, while the calculated rural track FTE limitations calculated
at the end of the 5-year window may reflect the division of the
rotations between the urban and rural hospitals over the 5 initial
years of the program, the future rotations amounts may change somewhat
(albeit adhering to greater than 50 percent of the duration of the
training occurring in the rural hospital/rural area). As rotations
shift to meet patient care needs, the respective rural track FTE
limitations may not quite match the amount of FTEs actually training in
the urban and rural hospitals. We have been asked that the same
flexibility with cap sharing afforded to teaching hospitals to share
general FTE cap slots via Medicare GME affiliation agreements also be
afforded to urban and rural teaching hospitals that together train
residents in a rural track program. This flexibility would allow the
urban and rural hospitals to share their rural track FTE limitations in
a manner that best matches the rotations occurring in the urban and
rural hospitals. Stakeholders representing urban-rural training
partnerships specifically raised this request with regard to separately
accredited 1-2 family medicine programs that have existed for a number
of years, and either already have established their rural track FTE
limitations, or have just recently reached or will reach the end of
their 5-year cap building windows.
We have considered this request and agree it would be equitable to
allow an urban and rural hospital jointly training residents in a 1-2
separately accredited family medicine program to aggregate their
respective IME and direct GME rural track FTE limitations and enter
into a ``Rural Track Medicare GME Affiliation Agreement'' to share
those cap slots, and facilitate the cross-training of residents. We are
proposing to allow urban and rural hospitals that participate in the
same separately accredited 1-2 family medicine rural track program and
have rural track FTE limitations to enter into ``Rural Track Medicare
GME Affiliation Agreements.'' We propose that programs that are not
separately accredited in the 1-2 format and are not in family medicine
would not be permitted to enter into ``Rural Track Medicare GME
Affiliation Agreements'' under this proposal. These Rural Track
Medicare GME Affiliation Agreements, which we propose to define in this
proposed rule, will be structured similarly to regular Medicare GME
affiliation agreements, but we propose two distinct requirements.
First, in an effort to ensure that regular FTE caps and FTE
residents in non-rural track programs are not commingled with the rural
track FTE residents, and that rural track FTE limitations are not being
used to provide additional cap slots for non-rural track FTE residents,
we propose that the responsible representatives of each urban and rural
hospital entering into the Rural Track Medicare GME Affiliation
Agreement must attest in that written agreement that each participating
hospital's FTE counts and rural track FTE limitations in the agreement
do not reflect FTE residents nor FTE caps associated with programs
other than the rural track program. We note this attestation is
important for both the urban and rural hospital, as both urban and
rural hospitals may have regular FTE caps that could be part of regular
Medicare GME affiliation agreements (see 42 CFR 413.79(e)(1)(iv) and
(v) and 413.79(f)). Second, we propose to only allow urban and rural
hospitals to participate in Rural Track Medicare GME Affiliated Groups
if they are separately accredited 1-2 family medicine programs that
have rural track FTE limitations in place prior to October 1, 2022. We
are proposing to choose these criteria and this date of October 1,
2022, as the date by which eligible hospitals must have rural track FTE
limitations in place because the effective date of section 127 of the
Consolidated Appropriations Act (CAA) is cost reporting periods
beginning on or after October 1, 2022, and we are proposing to limit
this proposal to only rural track FTE limitations established under the
BBRA of 1999 that are unaffected by section 127 of the CAA. In this
proposed rule, we are distinguishing between rural track programs with
rural track FTE limitations associated with the BBRA of 1999 in effect
prior to October 1, 2022, and Rural Track Programs (RTPs, defined at 42
CFR 413.75(b)) started or expanded to new participating sites under the
authority of section 127 of the CAA. We explain this distinction later
in this section. First, we refer readers to the December 27, 2021,
final rule (86 FR 73445) for details about section 127 of the CAA.
Generally, that provision removes the requirement that rural track
programs be separately accredited by the ACGME, places in statute
(previously in regulation) the requirement that rural track residents
must spend greater than 50 percent of their training time in a rural
area, and allows urban and rural hospitals to receive adjustments to
their rural track FTE limitations for adding new rural training sites
to an existing rural track program. In that December 27, 2021, final
rule, we addressed a comment (86 FR 73456) asking whether multiple
rural hospital training sites added under the new section 127 authority
may share their rural track FTE limitations via a Medicare GME
affiliation agreement. We responded that effective October 1, 2022, we
are not permitting the formation of Medicare GME affiliated groups for
the purpose of aggregating and cross-training RTP FTE limitations.
First, we explained that we believe Medicare GME affiliated groups for
RTPs would be premature, as only starting October 1, 2022, would
hospitals have the first opportunity to add additional participating
sites. Subsequently, there would be the 5-year cap building period in
which Medicare GME affiliations are not permitted, even under existing
Medicare GME affiliation agreement rules (42 CFR 413.79(f)). Second, we
stated that before we create Medicare GME affiliation agreements unique
to RTPs, we believe it would be best to first modify the Medicare cost
report form to add spaces for the hospitals to indicate the number of
any additional RTP FTEs, and the caps applicable to those FTEs. We also
stated that we wish to assess flexibility within
[[Page 28416]]
a hospital's own total RTP FTE limitation, before sharing those slots
with other hospitals. We would need to be vigilant to ensure that the
RTP FTE limitations are not comingled with regular FTE cap adjustments
currently used in Medicare GME affiliation agreements. Therefore, we
concluded with our belief that it is best to reassess allowing Medicare
GME affiliation agreements for RTP FTE limitations at some point in the
future. For these same reasons, at this time, we believe it is
appropriate to only propose to allow rural track Medicare GME
affiliation agreements with urban and rural hospitals that have a rural
track FTE limitation in place prior to October 1, 2022. We will assess
allowing these agreements with RTP FTE limitations established after
October 1, 2022, in the future.
We are proposing the following new definitions at 42 CFR 413.75(b)
and requirements:
Rural track Medicare GME affiliated group is an urban
hospital and a rural hospital that participates in a rural track
program defined in 42 CFR 413.75(b), and that have rural track FTE
limitations in effect prior to October 1, 2022, and that comply with 42
CFR 413.79(f)(1) through (6) for Medicare GME affiliated groups.
Rural track Medicare GME affiliation agreement is a
written, signed, and dated agreement by responsible representatives of
each respective hospital in a rural track Medicare GME affiliated
group, as defined in 42 CFR 413.75(b), that specifies--
++ A statement attesting that each participating hospital's FTE
counts and rural track FTE limitations in the agreement do not reflect
FTE residents nor FTE caps associated with programs other than the
rural track program.
++ The term of the rural track Medicare GME affiliation agreement
(which, at a minimum is 1 year), beginning on July 1 of a year;
++ Each participating hospital's direct and indirect GME rural
track FTE limitations in effect prior to the rural track Medicare GME
affiliation;
++ The total adjustment to each hospital's rural track FTE
limitations in each year that the rural track Medicare GME affiliation
agreement is in effect, for both direct GME and IME, that reflects a
positive adjustment to one hospital's direct and indirect rural track
FTE limitations that is offset by a negative adjustment to the other
hospital's (or hospitals') direct and indirect rural track FTE
limitations of at least the same amount;
++ The adjustment to each participating hospital's FTE counts
resulting from the FTE resident's (or residents') participation in a
shared rotational arrangement at each hospital participating in the
rural track Medicare GME affiliated group for each year the Medicare
GME affiliation agreement is in effect. This adjustment to each
participating hospital's FTE count is also reflected in the total
adjustment to each hospital's rural track FTE limitations (in
accordance with criteria 3); and
++ The names of the participating hospitals and their Medicare
provider numbers.
In addition, we are proposing to require that no later than July 1
of the residency year during which the rural track Medicare GME
affiliation agreement will be in effect, the urban and rural hospital
must submit the signed agreement to the CMS contractor or MAC servicing
the hospital and send a copy to the CMS Central Office. The hospitals
may submit amendments to the adjustments to their respective rural
track FTE limitations to the MAC with a copy to CMS by June 30 of the
residency year that the agreement is in effect. We propose that
eligible urban and rural hospitals may enter into rural track Medicare
GME affiliation agreements effective with the July 1, 2023, academic
year.
With regard to how the rural track Medicare GME affiliation
adjustments would be reported on the Medicare cost report, first, for
background, we note that on the previous Medicare cost report CMS-Form-
2552-96, the rural track FTE limitation was combined, together with the
``cap'' add-on for new (non-rural track) programs on Worksheet E, Part
A, line 3.05, and on Worksheet E-3, Part IV, line 3.02. On the current
cost report CMS-Form-2552-10, the rural track FTE limitation is,
likewise, combined together with the ``cap'' add-on for new (non-rural
track) programs on Worksheet E, Part A, line 6, and on Worksheet E-4,
line 2. Going forward, we intend to add lines to the cost report to
accommodate separate reporting of urban or rural hospital rural track
FTE limitations, and the positive or negative adjustments made to the
rural track FTE limitations, including those applicable to the
affiliated agreements.
In summary, we are proposing to allow urban and rural hospitals
that participate in the same separately accredited 1-2 family medicine
rural track program and have rural track FTE limitations to enter into
``Rural Track Medicare GME Affiliation Agreements''. We propose that
programs that are not separately accredited in the 1-2 format and are
not in family medicine would not be permitted to enter into ``Rural
Track Medicare GME Affiliation Agreements'' under this proposal. We are
proposing to add new definitions at 42 CFR 413.75(b) of rural track
Medicare GME affiliated group and rural track Medicare GME affiliation
agreement. We are also proposing to require that the responsible
representatives of each urban and rural hospital entering into the
rural track Medicare GME affiliation agreement must attest in that
agreement that each participating hospital's FTE counts and rural track
FTE limitations in the agreement do not reflect FTE residents nor FTE
caps associated with programs other than the rural track program. In
addition, we propose to only allow urban and rural hospitals to
participate in rural track Medicare GME affiliated groups if they have
rural track FTE limitations in place prior to October 1, 2022. We
propose that eligible urban and rural hospitals may enter into rural
track Medicare GME affiliation agreements effective with the July 1,
2023, academic year.
G. Proposed Payment Adjustment for Certain Clinical Trial and Expanded
Access Use Immunotherapy Cases (Sec. Sec. 412.85 and 412.312)
Effective for FY 2021, 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 (85 FR 58599 through
58600). Effective for FY 2022, we revised MS-DRG 018 to include cases
that report the procedure codes for CAR T-cell and non-CAR T-cell
therapies and other immunotherapies (86 FR 44798 through 448106). We
refer the reader to section II.D.17. of the preamble of this proposed
rule for discussion of the agenda items for the March 8-9, 2022 ICD-10
Coordination and Maintenance Committee meeting relating to new
procedure codes to describe the administration of a CAR T-cell or
another type of gene or cellular therapy product, as well as our
established process for determining the MS-DRG assignment for codes
approved at the March meeting.
Effective for FY 2021, we modified our relative weight methodology
for MS-DRG 018 in order to develop a relative weight that is reflective
of the typical costs of providing CAR T-cell therapies relative to
other IPPS services. Specifically, under our finalized policy we do not
include claims determined to be clinical trial claims that group to MS-
DRG 018 when calculating the average cost for MS-DRG 018 that is
[[Page 28417]]
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 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 MS-DRG 018 to the extent such claims can be identified
in the historical data (85 FR 58600). The term ``expanded access''
(sometimes called ``compassionate use'') is 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.\605\
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Effective FY 2021, we also finalized an adjustment to the payment
amount for applicable clinical trial and expanded access immunotherapy
cases that group to MS-DRG 018 using the same methodology that we used
to adjust the case count for purposes of the relative weight
calculations (85 FR 58842 through 58844). (As previously noted,
effective beginning FY 2022, we revised MS-DRG 018 to include cases
that report the procedure codes for CAR T-cell and non-CAR T-cell
therapies and other immunotherapies (86 FR 44798 through 448106).)
Specifically, under our finalized policy we apply a payment adjustment
to claims that group to MS-DRG 018 and include ICD-10-CM diagnosis code
Z00.6, with the modification that when the CAR T-cell, non-CAR T-cell,
or other immunotherapy product is purchased in the usual manner, but
the case involves a clinical trial of a different product, the payment
adjustment will not be applied in calculating the payment for the case.
We also finalized that when there is expanded access use of
immunotherapy, the payment adjustment will be applied in calculating
the payment for the case. This payment adjustment is codified at 42 CFR
412.85 (for operating IPPS payments) and 42 CFR 412.312 (for capital
IPPS payments), for claims appropriately containing Z00.6, as described
previously, and reflects that the adjustment is also applied for cases
involving expanded access use immunotherapy, and that the payment
adjustment only applies to applicable clinical trial cases; that is,
the adjustment is not applicable to cases where the CAR T-cell, non CAR
T-cell, or other immunotherapy product is purchased in the usual
manner, but the case involves a clinical trial of a different product.
The regulations at 42 CFR 412.85(c) also specify that the adjustment
factor will reflect the average cost for cases to be assigned to MS-DRG
018 that involve expanded access use of immunotherapy or are part of an
applicable clinical trial to the average cost for cases to be assigned
to MS-DRG 018 that do not involve expanded access use of immunotherapy
and are not part of a clinical trial (85 FR 58844).
For FY 2023, we are proposing to continue to apply an adjustment to
the payment amount for expanded access use of immunotherapy and
applicable clinical trial cases that would group to MS-DRG 018 using
the same methodology adopted in the FY 2021 IPPS/LTCH PPS final rule
(85 FR 58842), which is the same methodology we are proposing to use to
adjust the case count for purposes of the relative weight calculations:
Calculate the average cost for cases to be assigned to MS-
DRG 018 that contain ICD-10-CM diagnosis code Z00.6 or contain
standardized drug charges of less than $373,000.
Calculate the average cost for all other cases to be
assigned to MS-DRG 018.
Calculate an adjustor by dividing the average cost
calculated in step 1 by the average cost calculated in step 2.
Apply this adjustor when calculating payments for expanded
access use of immunotherapy and applicable clinical trial cases that
group to MS-DRG 018 by multiplying the relative weight for MS-DRG 018
by the adjustor.
Additionally, we are proposing to continue to use our finalized
methodology for calculating this payment adjustment, such that: (a)
When the CAR T-cell, non CAR T-cell, or other immunotherapy 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 2021
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. We note that we are in the process of making modifications to
the MedPAR files to include information for claims with the payer-only
condition code ``ZC'' in the future. Payer-only condition code ``ZC''
is used by the IPPS Pricer to identify a case where the CAR T-cell, non
CAR T-cell, or other immunotherapy product is purchased in the usual
manner, but the case involves a clinical trial of a different product
so that the payment adjustment is not applied in calculating the
payment for the case (for example, see Change Request 11879, available
at https://www.cms.gov/files/document/r10571cp.pdf).
Consistent with our calculation of the proposed adjustor for the
relative weight calculations, and our proposal to use the FY 2021 data
for the FY 2023 ratesetting, for this proposed rule we are proposing to
calculate this adjustor based on the December 2021 update of the FY
2021 MedPAR file for purposes of establishing the FY 2023 payment
amount. Specifically, in accordance with 42 CFR 412.85 (for operating
IPPS payments) and 42 CFR 412.312 (for capital IPPS payments), we are
proposing to multiply the FY 2023 relative weight for MS-DRG 018 by a
proposed adjustor of 0.20 as part of the calculation of the payment for
claims determined to be applicable clinical trial or expanded use
access immunotherapy claims that group to MS-DRG 018, which includes
CAR T-cell and non-CAR T-cell therapies and other immunotherapies. We
are also proposing to update the value of the adjustor based on more
recent data for the final rule.
H. Hospital Readmissions Reduction Program: Proposed 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
[[Page 28418]]
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 (also known as ``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).
FY 2021 IPPS/LTCH PPS final rule (85 FR 58844 through
58847.
FY 2022 IPPS/LTCH PPS final rule (86 FR 45249 through
45266).
We have also codified certain requirements of the Hospital
Readmissions Reduction Program at 42 CFR 412.152 through 412.154.
3. Current Measures
The Hospital Readmissions Reduction Program currently includes six
applicable conditions/procedures: Acute myocardial infarction (AMI);
heart failure (HF); pneumonia (PN); 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. In the FY
2022 IPPS/LTCH PPS final rule, we finalized suppression of the CMS 30-
Day Pneumonia Readmission Measure (NQF #0506) for the FY 2023 program
year due to the impact of the COVID-19 PHE (86 FR 45254 through 45256).
In this proposed rule, we propose to resume use of this measure in the
Hospital Readmissions Reduction Program beginning with the FY 2024
program year, with an exclusion of patients with principal or secondary
COVID-19 diagnoses from both the cohort and the outcome. We are also
providing information on technical specification updates for all of the
condition/procedure-specific readmission measures in the Hospital
Readmissions Reduction Program to include a covariate adjustment for
patients with a clinical history of COVID-19 in the 12 months prior to
the index admission.
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.
4. Flexibility for Changes That Affect Quality Measures During a
Performance Period in the Hospital Readmissions Reduction Program
In the FY 2022 IPPS/LTCH PPS final rule, we adopted a policy for
the duration of the COVID-19 PHE that has allowed us to suppress the
use of quality measures via adjustment to the Hospital Readmissions
Reduction Program's program calculations if we determine that
circumstances caused by the COVID-19 PHE significantly affected those
measures and the associated ``excess readmissions'' calculations (86 FR
45250 through 45253). As described under that finalized policy, if we
were to determine that the suppression of a Hospital Readmissions
Reduction Program measure was warranted for an applicable period, we
would 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 calculations, or the
measure was removed entirely through rulemaking. We also explained that
we would 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 (86 FR 45251). We stated that we would publicly
report a suppressed measure's data with appropriate caveats noting the
limitations of the data due to the COVID-19 PHE (86 FR 45251). To
provide stakeholders an opportunity to review this proposed rule prior
to release of the Hospital Specific Reports (HSRs) that incorporate
updates to the CMS 30-Day Pneumonia Readmission Measure (NQF #0506), we
are postponing incorporation of the CMS 30-Day Pneumonia Readmission
Measure (NQF #0506), which would typically be included in the July
update of the Compare website hosted by HHS (